February 7, 2021

During the spring of business owners and managers were focusing on getting the systems and processes in place to allow as many of their staff as possible to work from home in order to protect lives and the NHS during the Covid-19 pandemic. The dramatic shift to home working was the most extensive and rapid change in working patterns since the outbreak of the Second World War in 1939.

Despite temporary relaxations of the restrictions – and, at one point, encouragement from the government to ‘go back to work’ – new lockdowns across the UK were a clear sign that widespread working from home was not a temporary blip, something for employers and employees to ‘get through’ until we returned to ‘business as usual’, but a permanent cultural shift. Indeed, although working from home doesn’t suit everyone, large swathes of the workforce don’t feel safe returning to the workplace full time.

The implications for organisations are huge. Employers and employees are having to adjust to an entirely different modus operandi, with impacts on every single aspect of the employee experience. Traditional approaches to communication and collaboration, learning and development, hiring and onboarding, performance management, compensation and benefits, work-life balance, and health and wellbeing, all need to be recalibrated for the new environment. As part of this employers need to pay particular attention to ensuring parity of treatment between those who can work remotely and those who can’t, or don’t want to – a division that many feared was creating a two-tier workforce even before the pandemic hit.

Many organisations have learned that necessity really is the mother of invention. Small, nimble teams, built quickly to respond to the emergency, have made important decisions faster and more successfully than they might otherwise have done. Global management consultancy McKinsey describes it as ‘the great unfreezing’ – clear goals, focused teams and rapid decision-making have replaced the corporate bureaucracy in which many organisations wallowed.

Another crucial aspect of this shift was that firms had to quickly deploy the best talent to the critical challenges, regardless of hierarchy. And many have found that the traditional virtues of experience and expertise were less useful than adaptability, agility, resilience, creativity and determination. Not only do companies have to reflect on what talent looks like in their organisation, they also need to work harder at engaging and developing it, suggests McKinsey.

The four key areas companies now need to focus on are:

  • recovering revenue.
  • rebuilding operations.
  • reskilling the organisation. and
  • accelerating the adoption of digital solutions.

Being able to attract, retain, engage, develop and deploy the right talent has never been more important. Unfortunately, talent management has been on the back burner for the past few months; it now needs to move front and centre.

So far, productivity seems to have held up – despite employers’ traditional fears that ‘working from home’ meant ‘shirking from home’. Research from the Chartered Institute of Personnel and Development (CIPD) found that 28% of employers saw productivity rise over recent months, 37% said it had no effect, and just 28% reported a decrease.

But this looks set to change. Demotivated employees, robbed of the social interactions work provides, often working harder than they did in the office
with reduced feedback from managers, perhaps struggling with inadequate technology, and trying to juggle work and family responsibilities, can easily slip into mental ill-health. We know that learning new skills boosts motivation and engagement – yet training and development has been put on hold in many companies.

This lack of training in itself will cost employers dear. Despite inevitable job losses over the coming months, critical skills – not least the technology and digital skills that are essential to our successful transition to a new way of working – remain in short supply. 

As such, competition for those skills is fierce, and employees who have them are in high demand.  Not only does HR have to work hard to build those skills in its organisation, because it can’t rely on buying them in, it also has to work harder than ever to prevent talent defecting to competitors that offer a better employee experience.

According to Rob McCargow, director of AI at professional services firm PWC: “There’s been more progress on many fronts in the past eight months than there’s been in the past six years, because it’s been a matter of ‘survive or die’.” However, many organisations had to start from a low base, particularly when it comes to automation technology. They are now running to catch up, with significant implications for talent management and company productivity – as new research testifies.

Organisations have to balance short-term workforce challenges – including the requirement to navigate local realities, individual employee needs, and the unpredictable nature of the months ahead – with long-term strategic workforce needs. The UK findings are largely reflective of the whole.

  1. Remote work will increasingly be ‘a talent magnet’. Employers expect flexible working policies to become more important to attracting and retaining talent than they were before Covid-19, and view them as a long-term investment.
  2. Technology is critical to the new ways of working. But many workers are under-equipped. Some 72% of UK HR leaders felt confident their companies had the technology they need to navigate the changing environment – yet the focus is on remote collaboration tools, when it needs to be much wider.
  3. Upskilling and reskilling are vital. Competition for scarce skills is fierce, but organisations are overlooking training and reskilling programmes at the very time that they are most critical – and despite calls from employees themselves for help with developing their skills.
  4. There’s a growing divide between those who can work remotely and those who can’t. This presents big challenges for HR leaders, particularly given separate SAP research showing employers treat different categories of worker differently.
  5. HR must pay closer attention to issues of social justice, economic equality and worker wellbeing more generally. Yet just half the survey respondents said they build in diversity considerations to their succession and development plans.
  6. Organisations should build rather than buy. Although critical skills are at a premium, when
    it comes to succession and development, most organisations expect to hire new people rather than promote from within.

“Organisations need mobile access to everything [all systems] so that people can do everything at home that they can do in the office.”

Overall, research points to a worrying level of complacency from business owners and managers. For example, their confidence that their companies have the technology they need to adapt to the changing environment seems misplaced. “Most of us would agree that, after months of Teams, Zoom, and so on, virtual meetings are okay, but a poor substitute for being in the same room with someone.”

Not only do organisations need “better cameras, audio and connectivity so we can better replicate the face-to-face experience,” but they also need “mobile access to everything – HR systems, finance, procurement and the like – so that people can do everything at home that they could do in the office,” he says. “On top of that companies really need to better understand the employee experience around these changed ways of working, they need to actively monitor workforce sentiment and then act upon it. The survey respondents confident in their companies’ technology were probably thinking in terms of a phone, broadband and a laptop. However, the bar on digitalisation has been raised significantly over recent months.”

Most organisations belief their staff have adapted well to new ways of working, other findings point to worrying gaps in:

  • maintaining productivity
  • increasing communication with employees, and
  • investment in reskilling and upskilling – both factors that would help to boost productivity.

Why talent management has never been so important – and how it’s changed

Despite rising unemployment – not least as a consequence as the major downturn in the hospitality industry – there is fierce competition for scarce skills. Some companies are hiring – in particular digital companies, which need more staff to handle the surge in technology requirements the pandemic has created. Not only are people working remotely, but there has also been a big shift to online shopping, banking, restaurant services and so on. Amazon and Walmart hired at least 250,000 new staff to help them meet demand during the pandemic, while UK retailers Tesco and Kingfisher, and delivery companies DPD and Hermes, hired tens of thousands of people to cope with demand.

Every organisation has to be digital now, and the demand for technology skills is rising accordingly.

But it’s not just technology skills that companies need to develop in their people. Employees also need to learn to be more adaptable, resilient, agile, and how to lead and manage teams remotely – and in challenging circumstances. The pandemic should not be seen as a one-off crisis, but, a dress rehearsal for a more turbulent world.

Upskilling and reskilling people is a ‘win win’.  It is critical to organisational agility, because organisations are going to need to redeploy people, not just because of the current pandemic but also in response to further, future disruption. It is very attractive for the workforce too. They want new skills, not least to help them remain relevant and marketable.”

But talent management looks very different in a world where large swathes of employees work from home and large swathes either can’t or don’t want to.

Even before the pandemic, experts were concerned about the emergence of a sort of ‘two-tier workforce’, with ‘knowledge workers’ enjoying superior pay, benefits, development opportunities and so on, to those who, by implication, lack knowledge. But the divide is now so pronounced that it has become a ‘sharp bifurcation’.

Trying to harmonise the way they treat talent across the organisation has become an even bigger challenge, where more people are choosing to, or having to, work from home.

Leaders need to think hard about how to meet varying employee needs while maintaining consistent organisational goals, policies and culture.

For instance home working might suit older people, with families, but younger people at the beginning of their careers appreciate being in the office, which, for them, is as much a social space as a work-space.

Organisations need to factor such considerations into a carefully considered cost-benefit equation. Many anticipated they would reduce their office footprint over the coming year – but while lower overheads, or even the sale of buildings, may provide a useful boost to their finances, consideration must be given to the impact on culture, collaboration, innovation, and mental health.  A likely middle ground could be “offices acting as a hub, where people need to be at certain points or regular intervals, and they may be a meeting place as much as anything.”

Even those who have the option of working flexibly don’t necessarily have access to the infrastructure they need to be productive from afar. Having the right hardware and software is only part of it: there are additional complex factors at work – for example, internet bandwidth and privacy to support multiple members of a household working remotely, and the need to juggle work with caring responsibilities, including home schooling. The signs are that women are disproportionately affected: 75% of the 1.1 million people who left the US workforce in September were women – due, in many cases, to losing their struggle to balance ‘work-work’ and ‘home-work’.

It seems a shameful squandering of talent that could be avoided, the report suggests, with a simple intervention – ‘ramping up childcare options’. Yet this isn’t a priority among many businesses: many companies don’t consider healthcare and other benefits to be important to attracting and retaining talent. This looks like a clear own goal when many potential employers believe their social reputation (including commitment to diversity and equality) helps them both find and retain skilled talent.

Indeed, modern talent strategies have to be much more concerned with social justice, economic inequality and worker wellbeing more generally, notes the report, emphasising that such strategies need to go beyond lip-service to concrete action. This means ensuring that hiring practices, development and promotion opportunities, appraisal and reward, are all inclusive.

And when it comes to succession and development, most organisations expect to hire new people rather than promote from within – yet, as we’ve noted above, critical skills are at a premium. The ‘buy rather than build’ tactic may plug some short-term gaps but addressing short-term priorities at the expense of building for the future has never been a sustainable strategy – and, in the most challenging work environment since the Second World War, it looks like an act of self-harm. Maintaining productivity depends on harnessing, developing and nurturing all the talent the company has at its disposal.

“Modern talent strategies have to be much more concerned with social justice, economic inequality and worker wellbeing.”

How you can take steps to improve

Let’s now look in a bit more detail at some of the important areas it will need to address in order to manage talent more effectively: technology, skills development, the role of the line manager, performance management, mental health, and a more unified and inclusive workforce – all of them interrelated.

Technology

Analysis

We have a poor record in the UK of investing in workplace technology and automation. Short-termism and high employment have been the main culprits, but experts cite poor quality of management too. Ian Brinkley, a freelance labour market economist, who has held leading roles at the CIPD, Work Foundation and TUC, blames the management deficit on government policies designed to create increasing numbers of university graduates, relegating much- needed managerial and technical competencies to
a poor second.

This managerial weakness has become more pronounced in the digital era, and Brinkley believes the way to close the productivity gap is to invest more in training the workforce, including managers, invest more in technology and automation, and, critically, “bring together new technology and a better trained workforce in ways that make them more productive.”

Brinkley nails the lie that technology will replace jobs.

Research shows that AI and automation technology are far more likely to replace tasks and augment jobs – in essence removing some of the ‘grunt work’ from jobs and giving people the skills to work with or alongside the technology. Deloitte believes ‘the augmented employee’ – the combination of person and machine – will be a staple of future workplaces, with benefits to wellbeing, engagement and productivity.

In some cases the HR department is one of the worst offenders when it comes to failing to embrace technology, according to a report last year from the CIPD. People and Machines: From hype to reality found that HR is less likely than any other organisational function to be involved in either strategic decisions to invest in artificial intelligence (AI) or its implementation. This is to their cost – admin is estimated to account for 60% of their role – and to their organisations’ cost.

Learning and talent management are huge potential beneficiaries of automation: training can be tailored for individuals based on searches in the company’s learning management system, knowledge base or intranet – something that comes into its own when people are working remotely. SAP’s Theaker suggests HR could encourage people working at home to devote some of the time they would typically spend commuting to online learning.

Diagnosis

  • Do you understand the benefits of automation technology and AI, particularly when it comes to learning and talent management?
  • Has your organisation invested in either?
  • Are you in the room when IT makes decisions about new technologies?

Implementation strategy

  • Learn about how automation technologies could help.
  • Communicate with staff to dispel the myth that their jobs are at risk, and emphasise the benefits.
  • Ensure you are part of the debate about the choice and implementation of any new technology.
  • Pitch any potential new technology in terms of a value exchange with employees, highlighting what they stand to gain.
  • Prioritise online learning – something that people can do wherever they are.

Skills development

Analysis

Employees are always motivated to brush up their skills, and boosting employee skills and career development have long been staples of leadership ‘to do’ lists. A 2015 global research programme from Oxford Economics and SAP Success Factors revealed serious worries among workers that their skills would not keep them employable in the long term, and earlier this year further SAP research found that more than two-thirds of employees believe they will need to learn new skills even to keep their current job.

But this is another area where the pandemic has accelerated progress and demand. Further research by SAP among some 1,500 employees around the world found that three-quarters are more motivated to improve their technical or professional skills as a result of Covid-19 than they were before.

“Five critical skills that everyone will need are creativity, curiosity, compassion, collaboration, and critical thinking.”

And while digital skills are increasingly important, so are human skills. Technology can do menial and repetitive tasks much better than a human, but it can’t replicate the ‘soft skills’ which, as technology advances, will become increasingly important in order to provide oversight and counterbalance.

Soft skills really will become hard requirements, the five critical skills everyone will need are creativity, curiosity, compassion, collaboration, and critical thinking.

The McKinsey Global Institute Workforce Skills Executive Survey 2018 identified the set of skills that are ever more important in an increasingly automated world as: leadership, communication and negotiation skills; basic digital, advanced IT and technology design skills; and critical thinking, creativity and project management skills.

In the current climate, there are some specific remote- working skills that need to be developed, too – such as leading remote teams, building resilience in difficult circumstances, and successful selling in virtual environments.

Diagnosis

  • What skills, both soft and hard, are critical to your business in the short, medium and long term?
  • What skills gaps do you have?
  • How do you intend to plug them?
  • What are employees themselves asking for in terms of skills development?

Implementation strategy

  • Prioritise the skills you need to help your business recover revenue and rebuild.
  • In addition to hard skills (digital, technical, professional) and more human skills, consider coaching programmes for line managers and agility and resilience training for leaders.
  • Ensure that workplace workers and home workers get equal access to training and development.
  • Tailor training to individual needs, based on regular dialogue between team members and line managers.
  • Implement ‘action learning’ to give people on-the-job experience solving real problems the pandemic
    has created.

The role of the line manager

Analysis

Nowhere, arguably, is the need for upskilling greater than it is for line managers. Line managers have long been the ‘squeezed middle’ between demanding team members and demanding bosses, but they
have been squeezed even tighter during lockdown. Not only is it more difficult to manage people remotely, but they have also had to look out for their teams’ mental health.

The CIPD produced a prescient report before lockdown called Developing Effective Virtual Teams, which emphasises the need to build trust and social cohesion – things that, in the current climate, are “harder to maintain and easier to undermine,” says Jonny Gifford, senior advisor for organisational behaviour at the CIPD.

Stephen Bevan, head of HR research and development at the Institute for Employment Studies (IES), says the role of the line manager has become even more critical during the pandemic. “The thing that has the biggest impact on mental health, and, by extension, performance and productivity, is quality conversations between line managers and their
team members,” he says. “You have to ask the right questions, know what to do with the answers, and be prepared to act on them. It’s about asking people how they really are.”

“The role of the line manager has become even more critical during the pandemic, while also having to look out for their teams’ mental health.”

The ‘authenticity’ created by seeing people on Zoom calls in their ‘natural habitats’ is agreed to be positive. While some managers feared it would undermine their authority, IES research shows it builds engagement and benefits mental health. Seeing bosses flanked by bookshelves or drying washing gives teams ‘permission’ to bring their ‘whole selves’ to work. We tend to see more of company leaders too, which is a good thing.

But as lockdown continues, and we set in for the winter, experts are warning that line managers have to encourage the creation of peer networks too. IES research shows, says Bevan, that “those who feel cast adrift have very poor mental health.”

Diagnosis

  • How are you supporting line managers, whose job has become even more difficult during the crisis?
  • Do they understand the importance of quality conversations to the mental health of their teams?
  • Are you helping them adopt a coaching approach?

Implementation strategy

  • Help line managers to manage virtual teams.
  • Encourage them to be authentic: the informality of team meetings from home environments is beneficial for trust, engagement and mental health.
  • Equip them with coaching skills in order to get the best out of their teams.
  • Encourage them to participate in peer networks

Performance management

Analysis

Another area where line managers need to raise their game is performance management – and, in most cases, what’s required is a mindset shift. Rather than focusing on inputs – hours at the screen, emails sent, calls made – they need to focus on outputs – like collaboration, innovation and the quality of work produced, advises Bevan. The challenge is to find ways of measuring this. But trusting people and giving them autonomy over how and when they work is more likely to boost performance than the online surveillance some companies have introduced.

Performance management has evolved from the annual, retrospective event that was dreaded by both appraiser and appraisee, to a more continuous, informal, development dialogue with frequent goal setting and a focus on the positive rather than negative. Not only is this easier to manage in a remote context, but it also supports the need for agile decision-making as organisations navigate tricky, uncharted and unpredictable waters.

Bevan suggests that to get the most out of talent you should ask people regularly what, inside and outside work, is giving them energy and draining them of energy – an approach that helps you identify barriers to performance and give them strategies to overcome them.

Nevertheless, organisations will need to find ways to ensure that performance goals and bonuses are fair, particularly with much of the workforce still furloughed. And they should bear in mind the warning of Ben Wigert, director of research and strategy, Workplace Management at Gallup, and Heather Barrett, a senior consultant at the consultancy, that “the worst possible strategy” is to avoid progress reviews and pay conversations altogether. In a paper published in August, called Performance Management Must Evolve to Survive Covid-19, they write: “… when people have conversations with their manager about progress and pay, they are more engaged and feel better about the pay they receive – even if they don’t get a pay increase.”

Diagnosis

  • Do you see appraisals as an annual retrospective event, or an ongoing dialogue?
  • Have you sustained performance management during the pandemic?
  • When measuring performance do you focus on inputs or outputs?
  • What outputs do you use and how do you measure them?

Implementation strategy

  • Treat performance management as a continuous, informal development dialogue.
  • Set goals frequently and focus on the positive rather than the negative.
  • Use a coaching approach and provide regular feedback.
  • Ensure that goals and rewards are fair and equitable, particularly given many staff are furloughed.

The inclusive workforce

Analysis

Lots of the change’s organisations have made over the past few months had previously been dismissed by many as ‘too difficult’. Managers can therefore look back with a certain amount of pride at what they have achieved at their organisations during a time of unprecedented crisis.

If nothing else, the pandemic has shown the critical importance of being able to adapt, quickly, to changing circumstances. But for the hard-won gains to be sustainable, organisations need to build on them. Flexing the workforce has helped them adapt. Remote working is just one aspect of more flexible working that many experts have been calling for, for years.

But the greater flexibility organisations now realise they require needs to go further still. For instance, the shift towards working from home will require employers to rethink the traditional benefits package, which has been largely focused on office workers – free canteen, subsidised gym membership, entertainment corners and so on. In a world of hybrid working, employers will need to find ways of extending such ‘perks’ to people when they’re working at home too – not least because the ‘benefit’ of being able to work from home will, of itself, quickly become a hygiene factor.

Organisations must also pay closer attention to what we’ve traditionally thought of as ‘D&I’ – a concept that now needs to stretch beyond simply ‘diversity’ and ‘inclusion’ to ‘equality’ and ‘equity’ for all elements of the workforce. The growing demand from all stakeholders for a more inclusive approach gained new momentum during 2020 through the Black Lives Matter protests, which highlighted stark racial and social equalities. It would be a short-sighted employer that didn’t work hard to ensure that all its hiring practices, development and promotion opportunities, appraisal and reward, were inclusive from hereon in. The penalty for not doing so will be damage to its reputation and to its ability to fill key posts.

Yet CIPD chief executive Peter Cheese urges employers to be more ‘inclusive’ still when they think about talent, and consider ‘contingent’ workers, such as contractors, freelancers, temps and project workers, under the same banner. For the most part organisations treat these contingent workers tactically: attempt is made to involve them in the organisation.

The value to the economy has been thrown into sharp relief during the pandemic – many thousands of ‘gig’ or zero-hours-contract workers have been on the front line during the crisis, performing vital jobs from hospital cleaning to food delivery, and are rightly designated ‘key workers’, while digital experts have been drafted into many organisations to help them adapt to the seismic changes of the past few months. As the demand for key skills mounts, and core workforces shrink, organisations need to take a more strategic approach and “look at the workforce in its totality.

Diagnosis

  • Who do you consider to be ‘talent’ in your organisation?
  • How valuable to you are your contingent workers, and do you treat them tactically or strategically?
  • Do you understand what different elements of your workforce need to be engaged, healthy and productive?
  • Do you tailor your approach accordingly?

Implementation strategy

Overhaul your policies and processes to ensure that no section of the workforce is disadvantaged.

  • Overhaul your policies and processes to ensure that no section of the workforce is disadvantaged.
  • Tailor benefits and support to ensure that everyone is engaged and able to contribute.
  • Build diversity considerations into your succession and development plans.
  • Take a strategic approach to your entire workforce, whether people work directly or indirectly for you.
  • Bear in mind the principles of ‘good work’, which apply to everyone.

“As the demand for key skills mounts, and core workforces shrink, organisations need to take a more strategic approach.”

Conclusion

Many Businesses have a rare opportunity to capitalise on enforced and unprecedented changes to working practices.  So far, their focus has been migrating communication, processes and practices to an online environment, thereby accelerating trends that have been around for a decade or more. Technology has now untethered talent from location.  

The opportunities to be gained from the full potential of what’s being described as ‘the fourth industrial revolution’, management needs to redefine what ‘talent’ really means to them, and then work out how to attract, retain and motivate that talent to make their organisations profitable, productive and sustainable. The company’s culture, employer brand, vision, mission and values will be ever more important in order to unify dispersed workers in the new business climate, and trust, inclusivity, diversity and equality will be bywords in a world where adaptability and agility are key.

Many organisations are still firefighting, but they have to start looking to the medium-to-long term now and work out how to become sustainable. Their focus should be on becoming more productive, and, as they become increasingly digital and the competition for scarce skills grows fiercer, managing their talent effectively becomes more important than ever. Delivering a great employee experience and truly world-class talent management are now mission critical.”

“Company culture, employer brand, vision, mission and values will be ever more important to unify dispersed workers.”

Key takeaways

Embrace technology. The UK has been slower than our competitors to adopt automation technology because of short-termism, high employment and poor management quality, which has damaged our productivity. ‘The augmented employee’ – a combination of worker and machine – will be a staple of future workplaces, so HR, which has resisted automation, needs to ‘get with the programme’.

Focus on building new skills. Many organisations have put skills development on hold over recent months. But upskilling and reskilling the workforce has never been more important. Digital skills are in high demand as organisations adapt to an online world, but they also need other skills to help them make seismic strategic shifts and become more agile. Employees want new skills too: research shows that training, development and progression opportunities are major determinants of people’s happiness at work, propensity to stay and productivity.

Develop line managers. The UK is agreed to have suffered from a ‘management deficit’, but during the pandemic the role of the line manager has been increasingly important. Not only do they have to manage teams remotely they also need to spot signs of mental ill-health, which have become more pronounced during periods of lockdown and uncertainty. They need support and guidance to perform this twin role and investing in coaching skills is likely to deliver a strong return.

Pay close attention to mental health. The Centre for Mental Health forecasts that around half a million more people will experience a mental health difficulty over the coming year as
a result of the pandemic – on top of the one in six workers who are already experiencing mental ill health. Working from home doesn’t necessarily deliver the work-life balance benefits people seek, particularly during prolonged periods, and younger people feel most isolated. Line managers need to check in with their teams regularly and ask them ‘how they really are’.

Bake inclusivity and fairness into all HR practices. The need for diversity and inclusion in recruitment, development, promotion, appraisal and reward has been given new momentum by the inequalities highlighted by the Black Lives Matter protests. Also, when competition for scarce skills is growing fiercer, organisations need to make sure they harness all the talent at their disposal, and not risk excluding certain groups by failing to invest in targeted interventions and benefits.

Take a wide view of talent. Not only should HR seek to ensure equal treatment of those who can work at home and those who can’t, it should also extend its view of talent to embrace ‘contingent workers’ – freelancers, contractors, zero-hours and gig workers – who are likely to be increasingly important to creating the kind of flexible, agile, responsive workforce required to navigate ‘the new next’.

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