Workforce-related personnel choices will be critical to the CEO in the future because of two things, namely remote work and a labor shortage.
Workforce-related choices in personnel will be highly critical in the future.
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These choices, which are always vital in a CEO’s job, are due to two historically significant and uncommon macro-trends, namely the transition to remote work and the severe and long-lasting labor shortage. As we move into a new era, headhunters will still be needed. However, in the future years, CEOs will have to make three crucial workforce-related decisions.
1. What will work equilibrium look like in the future?
How flexible will a CEO’s rules on remote work be?
According to all indicators, a considerable percentage of office employees will work from home in the future, either partially or entirely. Too much freedom in remote work might jeopardize company culture and long-term creativity.
However, too little may result in worse retention rates and personnel recruitment challenges.
Many employees now consider remote work an essential factor in employment selection. We don’t know how these employees consider other aspects like job enthusiasm, creativity, drive, and teamwork.
How will a company’s choice of remote work policy affect the kind of employees it hires vs. a rival that takes a different approach? The influence of remote work on corporate success is still up in the air. We’ll learn a lot more in the following years after comparing rivals with widely diverse remote work rules.
Companies will need to strengthen their in-house workforce analytics skills to make better judgments on remote work policies, including performance measurements such as work quantity, quality, client and coworker feedback, and the drivers of recruitment and retention.
2. What can be done to help address the labor shortage?
The United States is witnessing its worst labor deficit in recent history.
Although some of it is attributable to transient pandemic-related circumstances, it will not go away in the near future — even after the epidemic has passed.
Meeting the need for 3-4 million more jobs in a recovering U.S. economy in 2022 will be a huge problem. By early 2023, the unemployment rate is expected to fall to 3.5 percent, its lowest level in 70 years.
Until the next recession, the labor market will remain historically tight. Researchers expect a recession in five to ten years. This will have significant repercussions for companies, requiring them to make critical choices about pay, hiring, and retention.
Companies are more likely than at any other moment in recent decades to boost salaries and prices significantly. Wages for new workers will continue to rise at a high pace, despite the fact that the cost of living is already growing at its quickest rate in over 40 years.
The decision for CEOs will be how much they should enhance existing personnel compensation, either via yearly hikes across the board or exceptional one-time adjustments.
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Because retention rates are historically low, companies are forced to spend more on recruiting and training new employees. The implied labor cost would be considerably higher than pay and benefits. Simultaneously, corporate executives must determine how much of the increased labor cost to customers via pricing hikes.
In comparison to rival movements, this choice might have an influence on the company’s market share.
Wage and price increases aren’t the only options accessible to company owners when dealing with a labor shortage. Labor is in short supply for the foreseeable future. Salaries are on the rise. in every department. Technology continues to advance fast. Which means an expensive replacement.
Automation is likely to decimate personnel. That will take both time and money to handle properly.
Your best bet might be process optimization. Furthermore, corporate and consumer activities hastened digital transition, making it simpler to remove mundane professions like telemarketing, information clerks, cashiers, and restaurant waiters.
3. Workers’ and operations’ personnel locations are shifting.
As a result of the confluence of labor shortages and the rise of remote work, both employees and businesses will be forced to relocate.
Millions of Americans will migrate over the next decade as a result of the transition to remote employment, with many opting for cheaper living outside of big metropolitan cities.
Furthermore, those cities will see a significant drop in everyday commuters spending money near their workplace. As a consequence, economic activity in certain city centers may stagnate or even decline. Meanwhile, activity in other residential regions such as smaller cities, suburbs, and rural areas would increase.
Because of the wide disparity in economic development among regions, many organizations’ personnel workforces may need to change their geographical footprints.
Some businesses, particularly in more costly places, may decide to start or grow in less expensive areas. This pattern may already be in place.
For example, the percentage of Silicon Valley tech business personnel posting online job advertising for openings in other metro regions has risen dramatically. Because of the pandemic and the consequent rise in remote-work options, this trend started in 2019 and intensified in 2020.
Remote is more flexible. But it can become a mess and frequently leads to more dissatisfaction depending on the work location. Furthermore, rivals from more costly places may offer more incredible rates. How CEOs choose to approach these three sets of personnel choices will significantly impact the direction their firms go in the following years.