The rapid change of pace in the talent landscape is challenging current approaches to talent management, forcing executives to reevaluate strategies, adopt new tools, redefine company cultures and provide premium benefits. Case in point: In 2017, the number of unique worker categories participating in the workforce at the same time was greater than any juncture in history, and spanned millennials to baby boomers, full-time to part-time, freelance and gig workers, and all minority groups. Compounding the challenge, 2017’s values-based workers placed increasing emphasis on ideals such as flexibility, learning & development and tools for increasing efficiency. With 2017’s developments in mind, here are the four trends I see that HR professionals need to be ready for this year.
1. Algorithms for hiring
In 2016, algorithms entered the recruitment space as a hypothesis to explore. In 2017, this hypothesis became a proven concept as progressive organizations began incorporating new algorithmic hiring tools into their strategies. We have seen proof-cases from our clients where they have successfully used algorithmic hiring to minimize bias and discrimination, shorten their hiring cycle and lower their hiring costs. Simultaneously, algorithms become accepted in other areas of our lives such as matching us to a driver, or even our spouse.
In 2018, algorithmic-based recruitment tools will become the norm and this evolution will happen at an astonishingly swift rate. In the late 1990s, human capital executives were evaluating the impact of shifting recruitment advertising from newspapers to online job postings. The full transition from concept to mainstream took about four years. We can expect the algorithmic shift to happen in just one or two years. By 2019, using AI to hire will be mainstream and will empower executives to think about and manage their entire talent strategy differently. The integration of AI will equip executives with new tools that can fuel need, on-demand, which will free organizational leaders to see their workforces differently. They’ll be empowered to match full-time positions to full-time needs, and flex in other areas of their business in correlation with market demand.
2. Skills become talent currency
Recruitment was born out of the military’s needs to enlist soldiers during WWII. Since its creation, titles and years of experience have been its foundation. Traditionally, worker values matched this structure, with a strong focus placed on tenure in one discipline. Today, the average worker has several different job types throughout their career and they value experience and learning over tenure. These dynamics have led to a natural mismatch of worker values to recruitment structure. Simply put, the way companies hire no longer matches the way candidates want to work.
We will see this system come crashing down in 2018, and skills will replace titles and years of experience as the new currency of the talent landscape. When companies — and technology – match based on titles and years of experience, they miss many opportunities to properly staff roles. For example, just because someone has not done a telephone customer service role in the past does not mean they do not have the skills to do so. Perhaps they have been an outside sales representative for five years and previously worked in retail directly assisting customers. If they also have a basic technology skillset, chances are they will make a formidable telephone customer service agent.
For another perspective see “The Single Smartest Thing That a Hiring Manager Can Do“
This skills-based approach, coupled with technology, also allows nontraditional workers such as veterans to quickly translate military skills into civilian skills. As we move into 2018, there will be a bigger focus on using technology to provide new opportunities for diverse minorities or underserved groups. When candidates are evaluated on their skill profile versus a past title or subjective items such as personality, a better match is made and talent is reallocated in a way that benefits both the worker and organization. The truth is that companies will not be able to find the talent they need if they look only at W2 workers’ titles in 2018. They will need to recruit based on skills and needs. Those that crack this code will find a productive and expanded candidate pool.
3. Portable benefits become available and affordable
A study of the on-demand economy shows 40% of U.S. workers will generate a portion of their income in the freelance or gig economy by 2020. That’s just two years away. In fact, this trend is partially driving the two trends discussed above: AI and skills. Freelancers often market and demonstrate different aspects of their skillsets for different projects. And, as a starting point, companies are more trusting of AI tools in short-term or project-based hiring. The synergy between these major trends tells us that they are here to stay. From an economic standpoint, it makes sense. However, a deeper analysis of the landscape reveals that the current ecosystem is unsustainable.
Voluntary quit rates are still steadily increasing post 2016 recession, as workers continue to move away from a structured system where their healthcare, training, development and ability to save for their future is guided by the benefits offered to W2 employees and supported by the HR department. New freelancers find themselves in an unstructured environment where they are now responsible for personally seeking out and establishing these securities. Studies show that higher skilled and higher-educated freelancers are often successful in securing such benefits, however, the cost structure is unbalanced as they lose the economies of scale found in traditional benefits.
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On the flip side, less skilled and educated workers often do not know where to seek such securities, do not procure them and move into a now-unprotected class. Without acknowledgement and governmental guidance, this group will continue to grow in size and eventual damaging productivity levels in the country, as it is widely known that an uncared-for worker is often an under-engaged and less productive worker.
In 2018, portable benefits will progress as a suggested solution to this pending crisis. Portable benefits will follow the freelancers and gig workers from job to job, rather than remain dependent on the employer. Models are being explored to leverage economies of scale, making portable benefits not only available, but also affordable, for the new workforce. As an example, at tilr we’ve partnered with Anthem to bring the first U.S. insurance program for the new workforce to market, and it will debut in Q2 2018. Last year, Senator Warner proposed a bill that grants funding to explore models for federally supported portable benefits. Employers of choice will quickly begin to follow suit, working from a place of compliance to offer securities to all categories of workers.
4. HR vendor consolidation to continue
In 2016 and 2017, the industry experienced significant consolation with major job boards being purchased, and classic and non-traditional acquisitions of major recruitment technologies. Some of the most notable transactions include Microsoft’s purchase of LinkedIn, Apollo entering a new category with new ownership of CareerBuilder and Ikea’s purchase of Taskrabbit. This trend will accelerate in 2018 as the industry works to reinvent itself, replacing passé and broken technology with new strategies and algorithm-based tools. Traditional staffing firms and technologies will seek to make themselves relevant via technological development, partnerships and continued acquisitions. The capital required to drive this type of evolution will drive additional investment and, hence, consolidation. With the clear opportunity that AI presents in recruitment and the anticipated speed at which it will advance, we can expect to see more non-traditional consolidation with savvy investors moving into the explosive category.