Meeting the challenges of tomorrow's workplace: a coming shortage of skilled workers will force companies to focus on their strengths and turn outside for support - CEO Perspectives

Chief Executive, The, August-Sept, 2002

Among the host of challenges chief executives face at the start of the 21st century, none rank higher than issues relating to the workplace of the future. In survey after survey, CEOs rate high-quality employees as the most important factor in their companies' success, while simultaneously acknowledging that finding and keeping qualified workers is their most daunting task.

The challenge is a multifaceted one, the issues involved numerous and complex. Demographics, psychographics, educational and skills gaps, technology, worker mobility and globalization all play a role. Solutions must also be multidimensional, reflecting both the broader realities of the labor marketplace, particularly in the U.S., and the specific needs of individual companies. They will draw on a variety of "new" sourcing strategies, including full-blown business process outsourcing, employee leasing, services contracting, non-traditional work arrangements such as job-sharing and telecommuting, creative compensation plans and more.

This is, literally, a make-or-break issue for many companies -- and their chief executives -- and it's one that does not afford the luxury of a long-term time horizon to craft a strategic solution. "The problem is here right now, and it's compounding," says Robert Morgan, president of the Human Capital Consulting Group of Spherion Corporation, the recruitment, outsourcing and technology company based in Fort Lauderdale, Fla.

As Mark A. Huselid, an associate professor in the Department of Human Resource Management at Rutgers University and the editor of Human Resource Management Journal, puts it, "The ability to execute strategy well is a source of competitive advantage, and 'people' are the linchpin of effective strategy execution."

THE CHANGING FACE OF THE 21ST-CENTURY WORKER

Over the next several years, the workforce will undergo the most dramatic changes it has experienced in more than half a century. Given that people costs account for some 65 percent of corporate spending, and that workforce optimization has a direct impact on shareholder value and a company's bottom line, those changes are critical to the future success of organizations in every sector of the economy, public and private.

The American workforce of tomorrow will be smaller, less male, more ethnically diverse and sorely lacking in the skills needed to function in a knowledge-based service economy. It will be more mobile, less loyal and have higher expectations than previous generations of workers. At the same time, the fastest growth and greatest demand for workers will be in jobs historically considered low-skilled but requiring increasingly complex skill sets in the future -- call center agents, retail salespeople and office administrators, to name a few.

From 1980 to 2000, the number of people in the 25-54 age group, historically the prime source of the nation's workforce, increased by 35 million. For the period from 2000 to 2020, it is projected to grow by just 3 million, according to a Harvard University study. The current decade alone will see an out-migration of 24 million workers, representing 18 percent of the experienced workforce. Of new workers joining the workforce during that time, about 20 percent will be immigrants, with limited command of English and few strategic skills. Things get even worse at the start of the next decade, when the first baby boomers hit 65, the traditional retirement age, and the outflow of experienced workers picks up steam. A projected decline in the 35-44 age group -- the traditional source of new leadership -- will make succession planning tougher for chief executives, who face serious workforce challenges at all levels of their organizations.

AN ALARMING LACK OF KEY SKILLS

The skills required by the workforce of the future are changing in virtually all occupations, but by and large, employees are not obtaining them sufficiently. Science, math and computer skills will be in the greatest demand, but far too small a percentage of today's students focus on those areas. Enrollment is down at many technical schools and vocational programs, a troubling development because they often do a better job of preparing young people for certain professions than do four-year colleges.

Skill-set requirements vary by occupation, of course, but in the future almost all jobs will require some degree of technical expertise, even those not traditionally viewed as requiring higher-level knowledge. For example, topping the list of employers' key expectations of administrative staff is that they be skilled in new and emerging technologies, according to the International Association of Administrative Professionals, based in Kansas City, Mo. Employers want proficiency in the Internet, intranets, e-mail, online services and a wide variety of PC software. They want administrative staff members who can act autonomously and often remotely, who add value with broader skills beyond the traditional scope of the secretary, and who demonstrate strong interpersonal skills.