People and the perfect storm

People and the perfect storm

I am old enough to remember the use of the term “personnel” to describe people working in an organisation. A few years down the line the term in vogue was “human resources”. Now we see variously the use of the terms “talent” and “people” to describe the functions that are allegedly responsible for attracting, retaining, rewarding, developing, and managing people in ways that the organisation benefits from them.

There has however been little change in how organisations treat people regardless of the label on the department.

Over the past few years, I have heard numerous stories of how people are failing to find employees in a range of functions. It is of course well-known that software developers are hard to find and harder to retain, and that their pay keeps going up and up. This is regardless of the fact that software coding is one of the first functions that is being automated at speed and we are very rapidly arriving into an era of low code and no code. People are also failing to find talent in marketing, especially if it’s specialised marketing or digital marketing aimed at emerging segments of consumers and investors,  and in other specialised functions such as company secretarial services. A fascinating emerging phenomena is the talent that audit firms need in order to audit ESG and cyber functions. The available talent there is so minuscule and the fight so fierce that one can only imagine where it may go.

Amidst all this, a high-profile story in recent British headlines is the paucity of long-distance heavy goods vehicle (HGV) drivers. The Financial Times’s Sarah O’Connor recently wrote an article (FT link may require registration) explaining the complex factors that are leading to that shortage. The reductionist narrative however continues to say it is all about Brexit. It is not. It is about the complex and unsustainable interplay of wages and work conditions.

The gig economy, that serves the last mile, is of course well-known (although recent court debacles such as that faced by Uber should give companies reliant on that model a pause for thought). A hyper-fast hyper-local 10 minute delivery type economy is also emerging and already facing backlash. The servant economy is built on exploitation – there is no other way to put it – and the fact that in a hyper-capitalistic system people need to work within the system to earn anything that remotely looks like a decent living. And yet their lives are precarious in many ways. So far the system needs people, as the much-hyped automation of functions and jobs is not proving to be nearly the science fiction dream that was sold.

Stories abound of how candidates for certain jobs now frequently tell the recruiter the previous night that they won’t appear for an interview; sometimes they don’t tell the recruiter at all. Sometimes they receive an offer and then vanish. Sometimes they receive an offer but the day before the joining date inform the employer that they won’t be joining; sometimes they just don’t inform the employer. This phenomenon of “ghosting” while shocking to recruiters and employers, is not new. This is unfortunately exactly what recruiters and employers have done to many job candidates over the last few years when the power balance was squarely with recruiters and employers. Now the game is playing out in reverse.

I had written earlier about how protest was becoming a strategic lever that organisations could not ignore. These protests were being undertaken by employees of companies, who were forcing employers to come off contracts that violated human rights or enabled human right abuses. That was not the beginning of the shift in the power balance but it certainly was a big marker that employers, who ignored it, did so at their own peril.

On the other hand, there is also the continuing narrative of how long-term employees in organisations are treated. These employees get shit done as employers know. The reason is not just that they have skills and experience cumulated over the years, but also that over the years they build social capital across the organisation so that they can work the informal channels and relationships to get relevant information and keep things moving. Their social maps are not fully codified or understood but they often lubricate cross-team collaboration, catalyse skunkworks and strategic projects, enable retention of talent through mentoring and lateral moves. The positive impact is, if at all, unevenly understood, leave alone quantified and correlated to understand the effectiveness or efficiency of actual organisational decision making.

Nowhere was this more evident as during the pandemic when everybody was sent home and nearly all organisations continued to work as if very little had changed. That was down to employees who knew how to get work done. As any longstanding leader in business will tell you there are only two things we do in business. First is identifying what needs doing. Second is knowing how to get those things done.

None of this can be automated and in times of crises, organisations often find themselves relying on these seasoned executives for operational resilience.

And yet how do companies treat experienced employees?

They get stuck on particular pay grades while new hires keep getting more money; their lateral moves are thwarted by “human resources”; come appraisal and reward time, they find themselves competing with newly hired talent on higher pay and are frustrated; they are edged out in thinly veiled ageist discrimination in favour of a younger workforce; and their concerns are not on the radar of boards that focus only on C-level executives, their performance and pay, their retention.

It should surprise nobody then that we are finding ourselves faced with the tsunami being called “the great resignation“.

When we take all these factors into account they point to only one thing: the power balance between employers and potential and current employees is shifting.

There is a growing dissatisfied employee – and potential employee — base in our hyper-capitalistic system where power and reward have long resided away from the people, who have kept these organisations going. And no, automating their jobs is not going to be a workable threat in the near-term.

If your boardroom conversation on risk is not taking these tides in talent into account, and if your C-Suite is not worried by the direction of travel and the outcome of this phenomenon, it is safe to say you are in deep trouble as an organisation. 

(Disclaimer: These are my own views and do not reflect the views of the boards of JP Morgan US Smaller Co.s Investment Trust or Temple Bar Investment Trust or London Metropolitan University, where I serve as a non-exec director, and chair various committees at the time of writing.)

Related reads:

  1. The battle over the future of work is about autonomy, by Emma Jacobs in the FT
  2. People, Pandemic, and Places of Work, an earlier post on this blog
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