Dossier: Managing Knowledge

Why now is the time to address workforce challenges

2nd March 2023
By Tobias Sattler, Managing Director and Claire Monari, Manager, People & Organisation Consulting, PwC Switzerland

The workforce-related challenges faced by leaders of organizations in all sectors across the world are mounting. Recent empirical research in the form of one of the largest labour market studies ever conducted worldwide paints a more detailed and nuanced picture of what is going on ‒ and points to concrete ways of responding.

What is going on in the workplace?

The Great Resignation has been making a lot of noise in recent news. But what does it mean? Is it really happening?

The reality is more complex than the headlines would suggest. Many organizations are indeed struggling to find the right people, but the uncertainty in the market is affecting different geographies and sectors differently. High-tech firms, for example, are letting people go, while the professional services and consumer goods industries are finding it hard to attract the talent they need.

What we see happening is first and foremost a talent shortage in countries around the world, accompanied by rising unemployment. Many people between the ages of 15 and 24 are struggling to acquire the skills they will need in the workplace. Leaders ‒ including those of public entities such as Customs authorities and leaders in the trade community ‒ must think about the workforce of the future and start developing the necessary talent today within their own ranks.

Another factor is the way expectations are growing and changing. The message coming from employees worldwide is that they do not want to be taken for granted. They are finding new confidence in the shifting world of work. They are calling on employers to listen, learn and engage.

The challenges extend to the public sector. Leaders of public entities, like their counterparts in other sectors, are having to deal with complex challenges related to digitalization, automation, workforce diversity, equity and inclusion, culture and sustainability. The sheer variety of these potential stumbling blocks and their impact mean it is important to address both the financial and human capital elements of the equation. At the same time, public entities face increased pressure from both their workforce and members of the public to demonstrate that they are consistently putting their values into practice and walking the talk when it comes to workforce matters.

Looking ahead, thriving organizations will need to understand how to unleash their workers’ full potential and better adjust to their expectations. Comprehensive research in connection with PwC’s Workforce Hopes and Fears Survey 2022[1] provides some precious insights into how to address this challenge.

Retention strategies: meaning is as important as money

When it comes to retaining people, fair and equal pay is key. But it is not enough by itself to retain workers, who in our survey were almost as likely to cite intangible factors related to the meaning and purpose of their work. Job fulfilment and the ability to be one’s true self at work were ranked second and third among the people considering a job change.

Managers who sense that these elements are at play ‒ or even starting to emerge ‒ must take steps to reshape the employee experience. Making jobs fulfilling requires deep empathy on the part of managers, and the ability to translate the organization’s overall purpose into specific actions and behaviours so that people can see how their work contributes to that purpose.

Empowerment, specialization and scarcity

Even though organizations are investing more and more into their workforce, skill scarcity remains a big challenge for many. People who have specialized skills and training are in great demand. This highlights a need for more targeted training to develop these skills. With many jobs requiring a level of specialist training, this brings out a new element of workforce empowerment. On the flip side, we see that upskilling is one of the strongest measures to empower people. For example, the survey suggests that people who believe that they have scarce or specialized skills not only feel more confident, but are also more satisfied and more likely to recommend their organization to others.

In this context, leaders need to anticipate. As the global environment grows more uncertain, deliberate workforce planning is becoming even more important ‒ and more difficult ‒ than ever. Organizations can increase their agility and resilience by envisioning different scenarios of what the future could look like and drawing conclusions about what it means for their people and their organization ‒ and subsequently feeding these insights into their workforce strategy. Quality workforce analytics, investments in training, and leadership that encourages and empowers re-skilling and continuous learning and development are all ways of doing this.

Simultaneously, there is an opportunity to reduce the perception gap between HR and executives if they work together more closely to develop, deploy and track a common workforce strategy that is fully integrated into the organization’s wider strategy. Given that the implementation of new technology is more sustainable when co-developed and deployed with people at the centre, organizations should also be preparing for and deploying technology with humans in mind. Doing so can significantly improve the organization’s impact and the value of its technology investments.

Politics and social issues

In today’s workplace, discussions about political and social issues are becoming more normal. This new shift is breaking down the barriers to talking about sensitive political and social issues at work, as these are no longer as divisive or the polarizing distraction that managers might fear. On the contrary, the findings of the Hopes and Fears Survey 2022 show that, among the respondents who have political and social conversations at work, the positives ‒ a better understanding of co-workers, a more open and inclusive work environment, and increased empathy ‒ outweigh the negatives.

Even though supporting and encouraging sensitive conversations is not easy, leaders can create spaces to direct these discussions to the positive. They can also facilitate progress by establishing norms, offering resources and helping ensure that these conversations happen in safe, non-judgmental environments. These environments should emphasize listening ‒ not reaching solutions or generating consensus ‒ and thus represent growth opportunities, including for senior executives, who are often much more comfortable in problem-solving mode. The leader’s role here is to help the organization to create a safe space and bring meaning, humanity and social impact to the workforce ‒ not to deliver answers.

When it comes to societal goals, transparency is everything

People want organizations to take a stand, and are demanding that their employers look beyond financial performance to broader environmental, social, and governance (ESG) considerations ‒ particularly regarding transparency. The area in which survey respondents say that transparency is most important is the organization’s record on protecting worker health and safety. This, no doubt, is related to some extent to the pandemic and the need to recreate working environments with public health in mind. Nonetheless, economic impact, workplace diversity and environmental impact (including climate) were not far behind in the survey.

To remain attractive as an employer over competitors, organizations have to be transparent in their reporting and responsible in their actions on ESG. More and more organizations are investing in activities to measure their environmental, economic and social impact, and regularly report on the outcomes of efforts to keep their workforce informed and involved. To facilitate this process, organizations can develop specific action plans to improve and continuously protect worker health and safety, as well as address diversity and inclusion in the workplace. Here it is key for organizations to communicate their promises clearly and then act on them.

Hybrid work: meet your workforce in the middle

Flexible approaches resonate with the workforce. The majority of those surveyed believe that in the coming year, their employer will provide work options they like. Sixty-two percent of respondents whose function allows them to do so prefer some mix of in-person and remote work, and 63% said they expect their organization to offer that kind of approach in the next 12 months, compared with 72% in the 2021 survey.

That said, it is also crucial not to overlook people who cannot work remotely. Workers without the remote option are also far less likely than others to say that they find their job fulfilling, believe that their team cares about their well-being or feel that they are fairly rewarded financially or that they can be creative in their work. As organizations revisit their workforce strategies, they must take these people into greater account. In addition, as part of their broader social responsibility mandate, employers need to consider the role that people who cannot work remotely have played in the overall community responses to the pandemic. After all, these people often serve a critical role in society, providing services that cannot be delivered virtually.

Investing in the employee experience yields financial returns

HR managers and business leaders know that improving the employee experience is good for both the workforce and business. But where to start? How can organizations prioritize their investments to secure better ‒ and more predictable ‒ results? Across the organizations included in the study, investing in people’s mental and physical well-being delivered the highest returns. Training, and career development, ran a close second and third, respectively.

The key is directing resources to where they are needed most. Before pouring resources into the employee experience, it is vital to work closely with HR leaders to examine individual strengths and weaknesses and elicit honest and robust feedback from people to make informed decisions on where to invest. Building and maintaining trust between leadership and staff is essential to attract and retain talented workers. At the same time, organizations still struggle to establish and maintain a culture that reinforces trust at all levels and breaks down communication barriers.

Conclusion: It is time for focused, vigorous, informed action

With the global geopolitical context also fluctuating, organizations, and public entities, need more than ever to constantly adapt and accelerate their level of responsiveness in the deployment of their resources and programmes across the world. Lukewarm agreement or action will not create the impact needed to regain trust and address today’s biggest workforce risks.

Leaders are most likely to succeed if they take vigorous and prompt action to strengthen their organization’s capacity to meet today’s pressing challenges and prepare for the future of work. It is also important to consider and overcome the factors that tend to block progress.

In our survey, leaders said that the most recurrent blocks to change when it came to their future of work strategy included organizational culture, factors outside their control, e.g. legal or regulatory factors, and a lack of senior leadership capabilities to overcome them.

Leaders will need to engage with the wider workforce. This involves initiating a conversation around the meaning of trust. It will also involve building an organizational culture that fosters security, growth, productivity and openness to technological changes. Factors that lie outside leaders’ control need to be predicted and, whenever possible, evaluated to make the best of the factors that can be controlled and worked with.

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About the study

With 52,195 employees from 44 countries surveyed online, PwC’s Global Workforce Hopes and Fears Survey 2022 is one of the largest labour market studies ever conducted worldwide. The survey spans Europe (18,558 respondents), North America (7,301), Latin America (4,694), the Middle East (1,565), Asia (15,906), Oceania (2,086) and Africa (2,086), with sample sizes guided by each country or territory’s share of global GDP.

The average sample size per territory was 1,200. Overall, 42% of respondents were female and 57% male. Millennials provided 46% of the responses, Generation X 30%, Boomers 13% and Generation Z 11%. Of those surveyed, 84% worked full time; 73% were in professional or administrative roles, 15% in skilled manual work and 12% in semi-skilled or unskilled manual work.

Organizations of all sizes were covered, from entities employing only one person to those with 10,000-plus employees.

Sector coverage was also comprehensive: 26% of respondents worked in industrial manufacturing, 21% in retail and consumer, 15% in government and public sector, 12% in technology, media and telecommunications, 10% in health industries, 9% in financial services, and 5% in energy, utilities and resources.