Changing Workforce Composition

Managing a workforce in today’s world can seem like a game of Jenga. During this game players take turns removing one piece at a time from a tower of blocks. Each block removed from the structure is placed on top of the tower. The result of each move creates an increasingly taller, and progressively more unstable, structure.

Contemporary organizations are facing rapid and fundamental changes to the manner in which work is performed, similar to the blocks being stacked on top of the Jenga tower. In order to ensure that our work environments don’t start to resemble a real-life Jenga game, we need to foster a greater understanding of the key workplace changes and their impacts in order to ensure that we aren’t building our way to instability.

There are three major trends in workforce composition:

1.  Shifting demographic patterns;
2.  Accelerating pace of technological change; and
3.  The journey towards economic globalization.

These trends will shape what the workforce and workplace of the future will look like. Organizational impacts include: size, composition and skills in demand; the nature of work and the arrangements to deliver that work; and, the compensation for services provided.

One of the key demographic shifts is the “aging out” of the workforce by the Baby Boom generation. Even though the number of Boomers working to an older age is significant (mostly due to advances in health care as well as poor financial security), given the size of this generation, there simply aren’t a matching number of individuals coming into the workforce. As a result, employers are faced with managing an older workforce and a shortage of workers at the same time.

Demographic studies illustrate that the workplace is more diversified with an increasing level of female participation and different ethnic groups at all levels. With the labour and skills shortage, employers are hiring more immigrants and individuals with employment challenges and further diversifying their teams. These factors contribute to a more balanced distribution across age, gender and race/ethnicity and organizations will need to ensure that they are able to meet the needs of each group. (For example, the younger generation may have different demands in terms of training and flexibility than their older counterparts.) With employee desires to drive their own career and excel in a dynamic work environment, employers are faced with more demand for non-standard employment relationships (e.g., contract, self-employment, multiple employer) and work arrangements (e.g., remote workers, internationally sourced and located sub-offices, gig vs employee).

The second trend is the accelerating pace of technological change. Changes come with synergies across technologies and disciplines, and will generate exponential rates of advances in R&D, production processes and the nature of products and services. Examples of these changes already in place include self-checkouts in retail stores, remote robotic surgical procedures, virtual assistants, and AI-generated customer service interactions (i.e. think “Alexa 2.0 Goes to the Office”) to name a few.

These technological advances will continue to increase demand for a highly (and differently) skilled workforce, promote a higher productivity growth, and will shift the actual organization of businesses along with the fundamental nature of employment relationships.

The traditional workforce structure is changing and we’ve already seen shifts in the form of remote workers, contract vs employment relationships (i.e., the gig economy) and employees actively seeking statuses other than fulltime (and often for multiple employers). These changes impact all stages of the employee life cycle and as such, impact organizational practices in the areas of recruitment and retention, engagement and development.

The third trend is a continued path of economic globalization, which is also influencing how and who employers hire. With technology and workplace tools evolving in areas of communication and collaboration, it has become more feasible to outsource beyond traditional geographic and cultural borders. Organizations are moving from vertical integration to one that is more specialized, outsourcing non-core functions.

A major shift in the workplace of the future will be to move from the standardized, one-size-fits-all employment relationships to more individualized or personalized arrangements. Workplace composition will continue to evolve, depending on the circumstances of the employee, employer and the environment in which they operate.

With a goal of stabilizing the workplace while maximizing the opportunities to grow, our ability to understand the reasons why and how things like workforce composition are changing will be a key foundation for building solid processes to support the change.

And with the knowledge of how the workforce is changing and a focus on having the right HR processes in place, we will have a better chance of creating a workplace where people want to work and which supports the growth of our business.


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