We’re in the thick of change: U.S. talent is increasingly being found and employed elsewhere; more workers of traditional retirement age are making different kinds of late-career plans; and the implied worker/employer “social contract” remains broken. New strategies will emerge to correspond to the shifting processes of work and talent, as well as the psychology of the modern worker.

Some say the United States has a talent shortage and is lacking engineers in the national talent pool. Others say there are plenty of knowledgeable, experienced workers and engineers in the talent pool but the jobs are being sent to other countries for less-costly talent. The talent-shortage debate rages on, as noted in a recent survey by consultancy Novations Group.

The survey says that most companies have seen some signs of a talent shortage, yet 39 percent report no such indications. At the same time, one-third of organizations have already taken steps to update selection and recruitment criteria. Nevertheless, 10 percent of employers expect no shortage of talent in the next decade.

Huh? You’re not alone if you’re confused. IMT readers’ feedback, too, has suggested a bit of both. So where are we left?

We’re left with talents shifting. The shift is not simply in offshore-outsourcing job functions or in attaining talent internationally, but in the age of employees and in the psychology of the talent pool.

First, the workers: The world is becoming a smaller, flatter — and more complicated — place to do business. Many American workers nowadays feel they are considered a burden rather than an asset, due in part to “cost-effective” plant locations. While manufacturing is creating jobs, these jobs are not in the U.S.; these jobs and capital investment are taking place in Asia and elsewhere.

Cost comparisons still drive most offshoring decisions, says Everest Research Institute, and will continue to do so for the next 30 years. For instance, despite recent Indian wage rises, salaries for software engineers are still about one-fifth of those for Western engineers. In addition to cheaper labor in other countries, the prevalence of lean practices and automation have many managers believing U.S. engineers and factory workers are, quite simply, overpaid for what they do.

As such, since 2000, U.S.-based multinationals have consistently reduced the number of workers employed in the U.S. and increased the number employed abroad.

Thirty-three million young professionals with university degrees AND work experience now live in 28 low-wage countries, according to McKinsey & Co., compared with 15 million in eight high-wage nations — including 7.7 million in the U.S. The number of these educated and skilled workers from the low-wage countries is increasing at an annual rate of 5.5 percent, compared with a mere 1 percent in the high-wage countries, reports a recent Workforce Management article entitled The Great Global Talent Race.

How do we move forward?

Second shift, the age: Consider the increasing number of people working into older age. The American Association of Retired Persons (AARP) says approximately 65 percent of America’s so-called baby boomers anticipate working at least part time in retirement.

Yet while many in this age group are willing and wanting to continue working and thus are making different kinds of plans late in their career, many companies “still push older workers out the door”, saying they cost more than younger workers.

If this does not change, then the workforce will shrink dramatically and find itself in greater need of massive talent infusion than the scenario addressed above indicates.

However, experts say this will change as businesses suffer from labor shortages and need workers with experience. And if, as experts say, this does change, then the “business of work” itself will change.

According to researcher MarketWatch, “job requirements will have to change — and in fact already are changing — as employers respond to the aging workforce,” adjusting the way work gets done, limiting the physical requirements for the job, or providing different types of support for the mature workers.

These “adjustments” sound trite, as the payoff of companies offering a flexible route to semi-retirement is huge. These folks have been working for decades and they have vast knowledge and experience that can be leveraged. And, of course, a so-called “brain drain” can be, maybe not entirely eliminated but at least delayed. Indeed, the business of work will change: four generations will have to continue adapting insofar as they must coexist in the workplace.

The final addressed shift: A cultural shift in the “mind” of the workforce has already occurred but is under the radar, said Charlie Grantham and Jim Ware in Future of Work Agenda earlier this year.

They wrote:

The psychology of the worker — or, more accurately, the talent pool — has already changed. People today hold vastly different beliefs about the relationships between themselves and the organizations that provide them a living in return for their efforts.

The implied “social contract” that existed between workers and employers, the two said, is “broken,” and has been for some time. Job security has long been a thing of the past. U.S. industry has lost ground over the last few years in worker healthcare costs, pensions and an arcane tax code.

Then there is ethics, governance and worker productivity. The world sees Enron, WorldCom and Qwest — companies making corporate crime an integral part of its business strategy — and they hear recent Wal-Mart horror stories on labor…and this is U.S. business and industry. This changes the “mood,” or social attitude, of workers. There is increased government regulations, and consider the elimination of benefits and the massive number of lay-offs in the auto industry. And an ever-increasing disconnect between employers and employees (executives, management, and engineers/machinists/on and on and on). The “Them versus Us” mentality does not seem to be the best way out.

We are in the throes of change. New business strategies will emerge — and already have — that correspond to the shifting processes of work and the psychology of workers. The authors of “The New American Workplace,” IMT’s Recommended Reading for the last two issues, conclude their book with several possible scenarios for the future of the American workplace. There is the “ever-present risk that the United States will be left behind in the new global competition.” However, “a virtuous circle of actions can prevent that from happening: entrepreneurial initiatives, sound corporate management practices, supportive government investments in education and research, and the collective efforts of the American workforce.”

Sources

Offshoring in India to Floursich, Despite Wage Hikes
by Linda Tucci
SearchCIO.com, Aug. 9, 2006

The Great Global Talent Race
by Fay Hansen
Workforce Management, April 10, 2006

America braces itself for surge in older workers
by Nic Paton
Management Issues, Aug. 3, 2006

Transforming the Business of Work
by Charlie Grantham and Jim Ware
Future of Work Agenda, February 2006