Even as parts of the world return to a state resembling normal, the fallout from the coronavirus pandemic continues to unfold. Referring to this global event as “unprecedented” has become so commonplace as to be clichéd, and yet, the term hits the nail on the head. The unprecedented nature of this worldwide disaster renders its effects unpredictable, and as we march into the future, those effects continue to develop in ways we could only have guessed.
Pandemic lockdowns had an immediate and marked effect on work. Who could or should go to work, where that work took place, how it was done—these work life fundamentals changed overnight for the majority of the population. Had lockdowns lasted only two weeks, as first predicted in those optimistic old days, we might have snapped back to normal. Sixteen months in, no one can hope for a magical reset. The transformation of work translates to a transformation of employment. If the workforce is out of whack, so will be the job market and the future of work.
The pandemic changed the borders around work, perhaps permanently. People grew comfortable working from home and realized this broadened their options, or they were laid off and found during the job search that many organizations were hiring remote workers. We’ve seen mass upheaval across the board as workers, particularly those in white-collar roles, found that they were no longer limited by their locations.
The blurring or broadening of borders has dramatically impacted the job market, and hiring managers across the globe are beginning to see the havoc that has wreaked on talent acquisition. Discrete competitive job markets are not exactly news: it’s well-known that developers have long been in high demand in areas like Boston, Silicon Valley, and New York, for example. But in today’s candidate-driven market, demand is quickly outpacing supply. Even managers who are used to hiring from a limited pool are finding that talent acquisition has escalated from a spirited competition to an all-out war.
A member of 3Sixty Insight’s broad community of vendors and users of technology for human capital management reported that despite the relative isolation of his region in Canada, hiring was never too difficult. True, he was hiring from a limited pool, but he was also competing with a limited number of other companies. Now, his company is finding itself getting into bidding wars—and as they’re consistently outbid, they’re having a terrible time finding the talent they need. Another friend of 3Sixty who hails from Australia reported similar challenges down under: his company, which is in the tech space, traditionally recruits students for its workforce, and those students typically come from other nations. With borders closed, no one has been coming into the country for school, so the talent pool is suddenly extremely limited in scope.
Clearly, the landscape of borders around employment is evolving at an unprecedented rate in this unprecedented global climate. The wider acceptability or proof of concept for remote work is opening possibilities for employees, but when talent from a limited pool is pulled elsewhere, that puts strain on those employers’ ability to hire. Companies could expand their search to include other regions, just as the organizations recruiting their local talent away have done, but many have a hesitation: what might they have to pay in that case?
Compensation certainly can vary dramatically with geography. Every region has an associated cost of living, and companies with widespread workforces have struggled for years with the attendant problems of fairness. These companies were previously the exception, not the rule, but the mass upheaval of the pandemic has really called attention to it. Should an employer continue to pay the same salary for an employee who is no longer commuting to the office? What if that employee has relocated to a less expensive area—can the employer adjust pay accordingly?
We think these are the wrong questions to ask, and they stem from a fundamental disagreement: whether employees should be considered costs or assets.
It’s an idea that has surfaced more than once on our #HRTechChat video podcast series. From a pure dollars-and-cents standpoint, it makes sense to limit expenses. If you can get what you need for the least amount of money, that’s clearly ideal. But while that one-dimensional perspective may apply to your office supplies and to your depreciating equipment, it’s not the right way to view a professional. Your employees are assets, not costs to contain. We can defend this in dollars-and-cents terms if we recognize that you vest in an employee. Or, if we consider a more holistic, truer-to-life assessment, we simply need to acknowledge that mere numbers cannot accurately convey what your employee has to offer your company.
What, after all, is the intrinsic worth of a person? It’s a philosophical question that may sound overblown and out-of-place in this conversation, and yet, many companies will soon be forced to grapple with it. Employees are compensated, or they should be compensated, according to their intrinsic worth to the company. This has nothing to do with the employee’s geography or circumstances and everything to do with what they offer. Budgets are a reality, and certainly companies are limited by what they can afford, but keeping payroll scaled appropriately is very different from prioritizing lowered costs over all else. The critical number is what you’re willing to pay for a role.
Consider the bidding wars that regional upheaval has instigated. With talent so scarce, workers are commanding higher prices. Get sucked into a bidding war and you may very well find yourself paying top dollar for a mediocre employee. Viewing talent as a commodity and hiring as an auction is a risky proposition.
It’s time for a paradigm shift. Moving employees from the cost column to asset column changes the whole conversation. Fear not: this change in perspective will not necessarily translate to skyrocketing wages. It will, however, ensure that your company is paying the right amount for the talent you need, and for the right reasons. Cost containment tunnel vision makes you a victim of economics: if you’re focused purely on paying the least amount possible, you’re at the mercy of supply and demand. But there’s more to payroll than the number in the general ledger.
As a number, payroll is concrete. As a sizeable element of employee sentiment, it’s abstract. Remember, your investment in your employees goes far beyond salary. You invest by providing a modern learning management system, a flexible learning ecosystem, an agile workforce, and room for internal workforce mobility—in short, everything that’s going to make them want to join you and make them want to stay.
As the world returns to work, the question of what will make employees want to stay should be at the front of every forward-thinking manager’s mind. People have been cooped up for a year and a half. True, some are just itching to return to the office, but others have got comfortable with their routine and are even now applying for remote jobs, desperately seeking any alternative so they can avoid being forced to come back. It’s not called the Great Resignation for nothing.
So how will companies counterbalance this? A massive global event could hardly help but to influence the zeitgeist, and we don’t know yet what the psychological ramifications will be. Will employees be willing to return to physical premises? If they aren’t, are companies going to be in a position to make demands? Would you insist that your employees come back to the office, or require them to be vaccinated, in an environment in which doing so risks losing them?
Let’s assume, for argument’s sake, that your company is one of the few that will be able to make demands and get away with it. You’re still going to have to pay the piper of employee experience. We wrote earlier this year that employee morale is paramount at any given moment. Employee experience has certainly suffered at the hands of COVID-19, and we can’t expect morale to be unscathed in those circumstances. Employers didn’t have much choice about lockdown last year, or much control over their employees’ office space during the extended work-from-home period. Now, as we consider a return to the office, employers who recognize that environment is inextricably linked to employee experience have a real opportunity to turn it around.
Furthermore, and ironically, if an employer elects to require that employees return to the office, that company will end up investing in the employee experience anyway—most likely in the form of ensuring the creation of aesthetically pleasing office environments that account for these employees’ day-to-day well-being. Think feng shui, but rooted in actual ergonomic science. It’s no accident that a company like Herman Miller, for example, takes a very keen interest in the whole notion of optimizing the employee experience from the perspective of workplace design. I’m looking forward, in fact, to a coming episode of #HRTechChat where we’ll be delving into this idea with that company’s vice president of global research and insights.
The aftermath of the coronavirus pandemic is still evolving. It has exacerbated some trends, rendering job markets more competitive and remote work more common, and has initiated others. No one can say how far the ripple effects will last, but it’s clear that even the immediate future of work looks very different from the past.
Note: I’d like to extend many thanks to Natalie Harrington, Research Associate, for her very sizable contributions to the development and writing of this article.