The talent market is transforming in the aftermath of the COVID-19 pandemic. Now is the time to take a holistic approach to talent to help your workforce become more sustainable and build a more agile, effective organization.
The past 18 months have seen us emerge from the height of pandemic, and with it, the job market has undergone a seismic shift. During the pandemic’s peak, the market was unequivocally candidate-driven. Companies were in a frenzy to hire, often overstaffing, overpaying, and offering generous perks to secure the right talent. It made sense at the time - everyone was trying to stay ahead of the game and keep things running smoothly. But now, many are asking: where do we go from here? While candidates still dominate the conversation in industries with high skills gaps, we’re seeing hiring conundrums mount. Unemployment remains steady, yet many teams are understaffed, and candidate experiences are suffering. We must rethink talent and how we attract, hire, onboard and retain them.
In the scramble to secure talent, many organizations lost sight of a critical element: ensuring the right people with the right skills were in place from a workforce planning standpoint. The focus on quantity over quality meant that in some cases, companies ended up with mismatched skills and poor alignment. It was a case of hiring in bulk rather than hiring smart.
As the economic climate evolved, companies began to realize that their profits were taking a hit. This prompted a shift in strategy. Reducing wages wasn’t a viable option, so businesses began to rethink their operating models. For some organizations, this initially meant major layoffs to course-correct some of the over-hiring frenzy. For most, this strategic reevaluation has included exploring low-cost markets, redefining roles, leveraging AI, and adopting new technologies. The goal was to create a more agile, diversified, and less regionally-dependent workforce.
As a result, organizations are now increasingly aligning their workforce strategies with their overall business objectives. This includes adopting a skills-based approach to hiring and development, which ensures that the right people with the right skills are in place to meet future demands. According to the World Economic Forum, "with 23% of jobs expected to change in the next five years, millions of people will need to move between declining and growing jobs".
While this approach can be great, it’s not in itself a cure-all, and has in some instances led to a complex and confusing job market. Success hinges on having the right people to implement the strategy effectively, and thinking through the organizational approach and stakeholder engagement.
This shift is also transforming the role of recruiters, who now, more than ever, need to act as strategic partners and be more insight-driven by using AI and real-time talent intelligence to inform hiring decisions that will move the needle. Instead of spending time on tactical sourcing, they’re focusing on driving change, inspiring candidates, and leading meaningful conversations.
With the pandemic frenzy behind us, there's more time to focus on long-term strategy again. During the pandemic, strategies were reactive – everything was on fire, and resources were stretched thin. But now, even though many companies are still overstaffed, there's room to tackle those strategic projects that were previously put on the back burner. But there's a catch: these projects need to prove their ROI quickly. CFOs and procurement teams are now deeply involved in HR and talent acquisition processes, demanding clear business cases and tangible results.
This added scrutiny means projects take longer to get approved, but it also allows for innovation and impactful change. For example, our clients are asking us to build the right work structures, design effective organization models for talent acquisition, and optimize tech stacks. AI is a hot topic, too - if it’s not already on a company’s roadmap, they’re looking for recommendations on how to integrate it.
More broadly, the integration of AI and other advanced technologies are also transforming the workforce. Organizations are leveraging these tools to boost productivity and support strategic decision-making. However, it's crucial to balance technological advancements with the development of human capabilities such as creativity, empathy, and strategic thinking.
As noted by Deloitte, in their 2024 Human Capital Trends Report "instead of prioritizing business issues at the expense of human outcomes, organizations should take a human sustainability approach to improve outcomes for workers, customers, and society more broadly."
The concept of human sustainability emphasizes creating value for employees, enhancing their well-being, and improving their employability and equity within the organization. Studies have consistently found that organizations engaged in practices related to human sustainability produce stronger business results. For example, organizations that rank highest on addressing human sustainability issues consistently outperform the Russell 1000 and have a 2.2% higher five-year return on equity.
Having a holistic and sustainable approach to talent is essential. It's not just about having one element in place; it's about ensuring that all components – culture, mental health, diversity, equity, inclusion and belonging (DEIB), recruitment strategies, technology, leadership, and onboarding – work together seamlessly. For a sustainable workforce, these elements must work together in harmony.
Moreover, organizations need to break down silos. In the past, learning and development (L&D), recruitment, and other HR functions were often treated as separate entities. Now, it’s critical to integrate these functions to ensure a cohesive talent lifecycle. HR and procurement are collaborating more closely on talent related initiatives, for example. This integration helps utilize talent effectively, regardless of whether they prefer contracting or full-time roles, focusing on skills and fit rather than employment type.
We’re undoubtedly in a period of transition. The talent market is moving forward, but it’s a confusing time for many. Companies must navigate these changes carefully, ensuring they are not just hiring for today, but building an agile and resilient workforce for the future, underpinned by a sustainable talent strategy that is fit for purpose to meet ongoing demands.