Over the past three years, the global workforce has transformed. The pandemic has completely altered the labor market–and right now, billions of workers are being affected by the highest inflation rates in generations. Job security is declining amid economic uncertainty–but talent shortages show no sign of slowing down.
While the height of the “Great Resignation” may have passed, the war for talent is far from over. Job vacancy rates continue to be ahead of pre-covid levels across all sectors and companies are still struggling to attract and retain workers.
According to our latest Talent Trends data, two-fifths of organizations indicate that talent scarcity is a negative factor or their biggest pain point. If there was ever a time for leaders to make talent strategy an imperative, it is now.
Last week when the world’s business leaders gathered at the World Economic Forum in Davos, talent scarcity was unsurprisingly a big focus. One message came out on top: The onus is on employers to step up and meet employee expectations if they want to attract and retain workers.
Businesses must treat talent in the same way they’d treat a customer by finding ways to differentiate themselves. Randstad’s Workmonitor 2023 report has found that employees want the full package of a secure, flexible, happy, inclusive, and inspiring workplace.
Flexible but stable work is the new frontier for workers
There has been a big debate about whether or not macroeconomic uncertainty will trigger a reversal in demands and expectations workers became accustomed to during the pandemic. Despite a dip in job security, workers are not willing to forgo flexibility and work-life balance.
Last week at the WEF, flexibility at work, including the future of working from home, was debated at length. Rowing back on this key gain for workers would be a mistake. The reality is that this is now non-negotiable for many workers. Offering flexible work is a business imperative.
Employees are willing to walk away from a job if expectations aren’t met. 42% of workers are prepared to quit if requests for better conditions are not met. A further third would rather be unemployed than unhappy in a job. Older workers in particular value flexibility–and for many, it has allowed them to re-enter the labor market after the pandemic.
Workers want a sense of belonging and purpose at work
Alongside these practical requests, value alignment and a sense of belonging are incredibly important for workers. They want their employers’ values and purpose to align with their own.
Much of this is driven by Gen Z and Millennials who seek more satisfaction from work than a pay cheque alone provides. This means leaders need to think carefully about how to manage tomorrow’s talent agenda.
Over half of the workers in our study said that they would quit a job if they felt like they didn’t belong there, and this is especially true of Gen Z (61%). Two-fifths of people wouldn’t accept a job if it didn’t align with their social and environmental priorities.
Support is a differentiating factor for businesses
The rising cost of living is significantly impacting and putting pressure on workers. Inflation is resulting in workers–particularly younger ones–taking on new roles or extending hours at their current workplaces.
Alongside those seeking additional work or hours, the global economic outlook also means many older workers are rethinking their retirement plans. This trend towards “unretirement” is one of the most marked swings in sentiment we have seen this year in our Workmonitor study. Last year, 61% thought they’d retire before 65. Now, only half think this would be possible.
Employee support is becoming a new differentiator in the ongoing scramble for talent. People increasingly expect their employers to help them through the cost-of-living crisis, whether that’s in the form of increased salaries, subsidies, or monthly pay boosts.
Many employers are already doing this–just under half of people said their company was helping them deal with increased living costs. Businesses that support their employees throughout tougher economic conditions will reap the rewards in retention when times are less hard.
The economic challenges we’re facing have put a new tilt on some of these ongoing trends–but companies must step up to these expectations if they want to build engaged, loyal, and fulfilled workforces. By stepping up, employers can help prevent talent shortages while creating a more content and productive workforce–which is to everyone’s benefit.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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