Batten down the hatches: Both a “‘skills tsunami”’ and a “‘silver tsunami”’ are on the horizon, according to a panel of McKinsey executives.
Back in 2010, the U.S. had around 12 million more unemployed people than it had job vacancies, senior McKinsey partner Anu Madgavkar said during the consultancy’s media day last week. “Despite the ups and downs of Covid, things are more normal now, but we still have a deficit—2.5 million more vacancies than job seekers.”
That imbalance, coupled with the ever-present advancements in AI, has led to what Madgavkar calls a “skills tsunami.” She defined the term as the massive shift in capabilities workers are soon going to need. There’s also, she added, a “silver tsunami,” which describes the institutional loss of talent and perspective as millions of older workers head into retirement.
Reacting to both those tsunamis with agility comes back to employee support and nurturing. “How do we increase internal mobility to help our existing workforce learn more skills?” Madgavkar said. “How do you come back to performance management? The companies that do that well, end up most successful.”
A key aspect to performance oversight will be continual productivity growth. On the panel, Kweilin Ellingrud, a director of the McKinsey Global Institute, defined productivity growth as simply “producing more, with either the same or less inputs.” It matters to everyone, even those at the very bottom of the corporate ladder, because over time, productivity growth drives standards of living. The good news: Median productivity growth has increased sixfold since the turn of the millennium, Ellingrud said. “Globally, productivity is a great story.”
AI, of course, will play a significant role too. Per McKinsey’s newest research report on the state of AI, released Thursday, nearly two-thirds of companies are already using generative AI regularly—double the percentage that said the same 10 months ago. Three quarters of respondents said they think gen AI will lead to “significant” or “disruptive” changes in their industries going forward.
To be prepared for those changes, many American businesses are currently considering a “relayering” of their workforce, which in practice often means leaving more room for nuance in organizational structure—and often redefining the middle manager role from scratch.
“Clients are asking, how do I equip the middle manager to deliver full value for his other teams?” Brooke Weddle, a senior McKinsey partner, said. “That requires, probably, fewer managers, and for those that remain, re-scoping their role.”
Then there are the persistent talent shortages, both in tech and skilled trades. “Given the churn we’re experiencing, not only do we not have enough skilled trade workers, we have a mismatch resulting in what we call $5 billion worth of cost to U.S. companies,” Weddle said.