Many business leaders are asking when the workplace will get back to normal. If by normal, they mean “2019,” the short answer is “never.” And that might be a good thing. Blame, or credit, Covid-19.
The pandemic accelerated three workplace trends that were already under way: the search for meaning, the desire for flexibility, and the pace of technological transformation, which has enabled hybrid and virtual work but also is fundamentally changing jobs and the skills required. It also led to “the great attrition” — meaning the unceasing restlessness of much of the workforce. As the human-resource expert David Green notes, “Employee expectations have gone up.” Organizations are therefore examining how they recruit, develop, and retain talent.
Traditional tools, such as compensation and promotion, are still important and work well for a significant chunk of the workforce. But many people — in fact, the majority of the potential talent pool — want more, or have different priorities, and it is up to employers to attract and retain this group. Call it “the great renegotiation.” The worker-employer contract is changing — fundamentally and permanently. This will likely remain the case even if the economy continues to struggle, because the roles and skills where the fight for talent is fiercest will still be in demand.
Research has found correlations between purpose and earnings, engagement, and loyalty. If people consider what they do boring or pointless, or if the workplace itself is unpleasant, nothing else matters. So an increasingly important part of the value proposition that employers have to offer employees is engagement in work that they find meaningful, exciting, and personally sustainable. Employers need to create a more personalized, flexible, dynamic, and inclusive system that delivers high performance results in a digital and data-enabled world. That is what we’ve recently been trying to create at McKinsey, building on our strengths in talent attraction and development but making significant changes
What we’ve learned, through research and our own experience, is that companies will need to make changes if they want to succeed in the emerging talent market. Doing so is more challenging than what most companies are used to — but it’s also more rewarding for employee and employer alike.
From pedigree to potential.
Job descriptions typically list specific education and experience requirements. That can dissuade candidates from applying who can do the job but may lack a certain credential. To broaden their search, companies can shift the focus from degrees to skills — not lowering entry barriers but changing them. For example, rather than assuming a management job needs an advanced degree, a certain number of years of experience, or an understanding of specific terms or concepts, companies can test for relevant qualities. At McKinsey we have broadened our campus-based sources of great talent from about 700 core schools in 2020 to about 1,400 today, and we plan to expand to more than 5,000 within the next few years. We now use game-based assessments to allow candidates to demonstrate critical-thinking skills; this levels the playing field for those without prior business experience or case-study preparation support.
Given tight labor markets, a number of employers are moving in this direction. The official policy of the U.S. government, for one, is “to limit the use of educational requirements” in federal contracts, and in 2021 the government called on agencies “to increase the use of skills and competency-based hiring for employment.” In order to expand its recruiting reach, Okta, which provides secure business applications, no longer requires college degrees for certain sales positions and has created a successful program that trains these recruits.
From preset career paths to self-authorship.
Research shows that people want the ability to personalize their jobs in a way that supports flexibility and well-being. Moreover, rather than following a pre-determined career track up a corporate ladder, they want to create their own career paths. Given the rapidly changing nature of work, and how quickly skills can become obsolete, employees have to take charge of their own professional development.
Among those who left and then returned to work during the pandemic, most took jobs in a new sector. This was particularly easy for those with in-demand skills that are not industry-specific, such as data scientists and blockchain engineers. The implication is clear: Companies cannot simply fill empty slots with workers like the ones they are replacing.
According to recent survey, almost a third of the employees who left their jobs did so to start a business, evidently in the belief that they could do better on their own. Employers can turn this narrative on its head by providing more development, apprenticeship, and personal opportunities than people can do by themselves.