3 gigantic reasons to invest in HR
1. Workforce crisis
2020 and 2030
One strong reason for HR to get creative and globally oriented is upcoming Workforce crisis 2030. The people who are turning the world around today will retire by 2025. The workforce crisis we meet is characterised by labour shortage in developed world by about 30%, which is disastrous in local and global range. This downturn workforce trend presented by Boston Consulting Group worth looking into for everyone in order to be build successful HR strategy. Enrolling talents into the company eventually will be one of the main competitive advantages in future.
In 1960s, Europe has seen a babyboom followed by economic growth after Second World War. The result was the labour surplus and kick for countries economic development 15 years later. Nevertheless, fertility rates were in decline after that, causing that nowadays we have larger workforce than we will have in 2020 and even less by 2030. The babyboomers of previous century currently are 40-55 years old professionals, top managers and experienced workers who, when retire, leave Europe with large labour shortage, which is called Workforce crisis 2030.
Offered solutions are
not liked by everyone
Labour crisis put lots of pressure on HR. While most of Europe will be experiencing labour shortage in 2030, the Nordic countries are expected to have enough workers to fill available jobs, mostly thanks to immigration and gender equality policies. The success of implementing following steps will determine the economy’s competitiveness and lead out of labour crisis:
- Raise the retirement age or encouragement the workers to stay at job after retirement age
This policy is heavy to implement but has proved to be effective.
- Change immigration policies and recruit internationally
Recruiting workers from the developing economies like India, which will have labour surplus, will partially improve the situation.
- Bring more women into the workforce
Closing the gender gap is not a question of equality anymore; it is one of the solutions to solve the crisis.
- Launch education and training initiatives
One of the greatest solutions is to predict future skills and start preparing own staff already today. Investments to education in developing countries will bring skilled personnel to Europe to fill the gap.
So even if today, in 2015, and for the next couple of years we will not meet the lack of staff, starting from 2020 it will be harder to fill up positions in the companies and the situation in 2030 will be crucial. Situation looks scary? The BCG report did not take in consideration political instability in Europe, which has a huge impact on the labour market.
Prolonging the life years or idea of living for centuries has been a medical aim for long time. On the other hand, aging of population creates an economical dependancy on young population causing increase of taxes and retirement age. Besides, when the birthrates do not seem to go up, Europe is left with labour shortage. HR gets a task to find the right person not from hundreds of candidates but from a lot smaller number of them. HR specialists are expected to get creative when looking for new workers to fulfill company's needs.
2. Globalisation reason
McKinsey analysis confirms BCG prediction. While Europe will have to deal will open jobs, globally situation will be different. Looking closer to the effect of labour shortage in 2020, the advanced economies will experience deficit of college-educated workers with 10%. Described shortage will be substituted by 10% surplus of workers with secondary degree. Nevertheless, workforce is estimated to gain tertiary education back by 2030 being 30% higher than in 2010.
If another current trends of education development continue, China and India will account for 40% of all young people with a tertiary education in G20 and OECD countries by the year 2020, while the United States and European Union countries will account for just over a quarter. (OECD 2012 Education Indicators in Focus – 2012/05). According to BCG Decoding Global Talent study in 2014, two-thirds of workers globally say they would take job abroad. Consequently, recruiting workers from worldwide can solve lack of specialists in the country. To do so HR should search internationally and be geographically open-minded.
For instance, lets take a
look into IT talent pool
The Earth becomes a little planet with airplane travels and Internet velocity. As well the possibility to find right person for company's development is not limited geographically anymore. The time to think bigger, not locally, has come.
3. The war for millennials
Globalisation, digitalisation, Big Data and new technologies require superb handling. And even if there are computers to help us to process all incoming information, they are not able to create neither new technologies nor business approaches. And if machines can't handle "it", than who can? New generation of multi. Multitasking and multiskilled at the same time person, who is able to analyse and operatively process the information as well as not only acquainted but PC's best friend is #1 demand on the global labour market.
Millennials are the only
hope not to get to crisis
As people who are the moving force for today’s world will go to pension by 2025, consequently, the biggest responsibility lays on the shoulders of this decade’s millennials. The skills of young experts with the help of technology have to increase the productivity in times replacing about 30% of todays workforce. So already today companies have to look for and invest in the future talents who will aid company’s growth and optimise the working process. According to New Bersin by Deloitte research, U.S. companies have already increased their talent acquisition spending by seven percent on average in 2014. And numbers are expected to grow.
Moreover, supervision and development of automation and new technologies require new skills. The future lays in hands of creative minds who can transform there visions into reality. Dream HR obtains a superpower to recognize the talents around the globe and find the best way to utilize there skills and abilities. Internal work is going to take next level: spendings on corporate activities on team building and staff motivation will increase significantly over the years. Companies will do whatever it takes to recruit and retain the talents.
Investing in HR means foresee future need of skills and develop them inside the company. Constant internal education guarantees leading the markets in long-term view.