Companies must be prepared for major reinventions, but as managers try to establish a solid basis for growth and change, the right talent is becoming increasingly scarce. A new approach to workforce management is crucial for successful business transformation.

THE SPEED OF CHANGE in the business world has accelerated to unprecedented levels in the last few decades. C-level managers must prepare their organizations to be future-ready and robust against the impact of further rapid or unexpected changes. This demands continual reinvention with a complete overhaul of the strategy, operations, organization and processes for many companies. For instance, having previously transformed from digitizing analog resources to digitalizing all systems and networks, managers are now striving for sustainable, responsible and smart business models. They must rethink the products and services they will provide in future and the new infrastructure, technology, materials and tools their company needs to deliver them. Even more importantly, they need the right skills and capabilities to drive their new strategy forward. However, ensuring a strong workforce base – the vital human factor of business transformation – is currently a real and ongoing challenge and a top priority on C-level agendas. 

The supply of valuable employees that leaders will rely on, both to maintain business stability and output, and adopt new approaches and processes, is dwindling. Tom Gellrich, Senior Partner, People and Organization Transformation at Roland Berger, says, “A business might be lacking in talent and skills among existing employees and struggle to expand their workforce, yet still need to undergo a reinvention and reposition themselves. Any organizational transformation is much harder without the right people who have the right knowledge, skill sets and competence necessary for this.” Nina Feuersinger, Partner at the same division, agrees. “Some businesses could even be booming right now with full order books, but looking ahead, facing severe workforce shortages, they will struggle to deliver products and services to their customers. This is a huge concern for top managers.”

The complexity C-level managers are facing, particularly in western Europe, includes a combination of these factors:

• An aging population with an average workforce age of around 50 years old – a large proportion of older employees may consider early retirement or leave for other reasons in the next ten years.

• Many blue- and white-collar workers with a limited skill set who have performed the same role for years, even decades, making it potentially harder to adapt to change with enhanced or new skill sets.

• A scarce supply of specific, much-needed technical skill profiles, including IT specialists, data engineers, data scientists and analysts.

• Changing expectations of candidates who increasingly opt for more flexible and mobile work models and move away from long-term loyalty to one organization.

• More diverse expectations between individual employees and across different generations, meaning incentives and rewards and pathways for promotion need to be reconsidered.

Keeping core competence on board, winning new talent and gaining employee buy-in for skills development are all key to maintaining business success and riding out the inevitable stormy years of company reinvention. Often, managers don’t even know how to address this multi-faceted and complex issue. Volker Rothfuss, Partner, People and Organization Transformation, says, “A future lack of people with the relevant skills is something even experienced managers haven’t seen in the last 20 years.” There are no true benchmarks for this, which is why many leaders are approaching consultants to help them shape this new vision and ensure a sustainable, future-proof company setup.

Gellrich, Feuersinger, Rothfuss and their colleagues help clients – leaders in diverse industries, from automotive to technology – to devise a structure for shaping the future workforce, including outlining a vision and recommending measures. The culture and values of the organization are explored and considered from the outset. Shaping this vision is no easy feat, however, as it is hard to quantify and measure skills and competencies. Workforce demand is not something which is currently considered and neatly incorporated within a set of KPIs, thus making it difficult to measure. A CEO would therefore need to steer and manage workforce demand in ways not dissimilar to their company budgeting or other areas of business planning. Even with so much uncertainty involved – as managing large numbers of individuals is always intricate – there has to be some kind of plan on an organizational level. It is important to establish a strategy for people transformation, based on quantitative workforce supply analysis and demand planning. Without this, it would be difficult to understand what a company requires overall to achieve its projected outcomes.

The journey for managers needing to shift their workforce to fit future business could be divided into broad phases of a vision, strategy and then an operating model needed to implement that strategy. This can be broken down further into organizational structures, processes, systems, people, knowledge and so on. However, as Gellrich explains, “It can be really difficult for top management to align on one common agenda, vision and strategy – and how to implement it.”

Company leaders would need to acquire the necessary know-how of tools and methods for facilitating any agreed plans, so they can anticipate the skills they need their workers to have going forward. Experts with knowledge of the relevant industry can help them build up a quantification model to determine workforce gaps and establish a skills roadmap. CEOs and people managers are encouraged to think well ahead so they will have the right people in place when they need them – as some measures for the workforce transformation process can take years. Planning for that is thus a struggle, as even the next five years hold so many unknown factors and change is so rapid. Leaders must be flexible in addressing workforce challenges and be aware that accumulating new skills and talent can take time.

C-level managers will consider where they want their business to go, how they can build their company for the future, and the skills and competence required, and they will need to communicate this strategy at least to mid-level managers first. Top management needs a strong, consistent overarching narrative for employee representatives so they in turn can tell their divisions clearly and with empathy of the changes which will impact the various teams. Team leaders will need to know how to translate that into what it means for their people. Employees will expect their leaders to have the answers instantly to questions like ‘Where do we fit in with all of this? and ‘How will you prepare and empower us for the future?’ Anything too vague or unsettling will stir up not only the emotions of loyal workers, who they could risk losing, but also trade unions and works councils.

Getting the buy-in from these worker representatives is, however, easier once they explain there are no plans for mass redundancies. Gellrich says, “Existing employees are such valuable assets to companies. They have so much valuable knowledge and networks. Managers know that good people are hard to come by, so even in times of major changes, there’ll rarely be hard layoffs, it’s more about bringing employees into new roles.” The way forward would involve reskilling, training, redeployment and perhaps relocation of tasks to fulfill the company’s reinvention strategy. For this, unions and councils are more likely to be happy to collaborate or could, for instance, set up a collective future agreement.

Each organization is different in terms of what it stands for and the relationship and dynamics between leaders and employees. Managers and consultants at the helm of any workforce changes must keep this in mind. Every action or other measure taken towards this transformation must serve and support the culture and values of the organization which evolved and developed over many years.

Of course, the buy-in of your employees is essential. Clear communication with all involved parties goes a long way to successfully transforming the workforce, but as Feuersinger points out, “It’s not only about telling your staff what they will need to do in future, but also ensuring there’s a willing attitude towards learning and changing their roles, too. And it’s vital that everyone speaks the same language regarding new skills, roles and capabilities, so everyone has a common understanding of the direction they are moving towards together.”

Five core measures can be implemented towards workforce transformation, depending on the unique situation of each business:

Investment in training programs must be considered for all staff to acquire the skills relevant for their required contribution. There should be a structured approach to training employees in new skills or for new roles based on clear career development pathways which could be laid out by HR managers or similar.

Transferring internal knowledge is a cost-effective measure all companies can consider for growth and quality assurance. For instance, a whole team could be sent for a year’s placement at another branch of the company to learn best practice for a certain function or process. And whereas in the past, long-time workers could mentor newbies on how tasks are carried out and how to use certain tools, now a valuable knowledge exchange in both directions is essential, as colleagues born into the digital age can demonstrate how to analyze data, use apps and algorithms to save time and effort or personalize services.

Bearing in mind that some workforce members may be reluctant to adopt these novel approaches and no longer feel they are the expert in their work area, Gellrich says, “I think every good manager has to lead by example. They must demonstrate that they’re personally competent regarding their own leadership tasks, that they are keen and capable of development, adapting to a new complex environment and have a purpose which drives them.”

Companies now need to be flexible and open to different ways of searching for new talent. A range of AI tools can help with this – the days of candidates responding in detail to job descriptions on job portals are over and sourcing strategies must be active. Speed is essential and bots, for instance, can support the entire recruitment process. Times have also changed in the sense that candidates are often only keen to join a firm if their vision resonates with them. People want to like who they would be working for, and want to agree with the company’s purpose, what it stands for. Rothfuss says of this, “The personal aspects are very powerful. Good candidates join because of the prospect of having great colleagues to work with and when there’s a clear pathway for their professional development and the impact they can make.”

Approaching and communicating with prospective talents early is one method towards beating competitors in the same field. Some companies can invest in apprenticeships to give new talents the chance to acquire and develop hands-on skills in certain areas within their company. Reaching them in the early years of university, rather than waiting for them to graduate and embark on a master’s or PhD., is another method. The prospects for these sought-after candidates have to be attractive to generate any interest. The term “employee value proposition” is used to describe the options and benefits that can be offered to different talents, such as the key purpose of the company, the chance to grow in the company within a number of years, being part of a great team, being able to make decisions and work autonomously and so on. The approach to this needs to be flexible, to customize it between one potential employee’s interests and those of another.