In a market that’s starving for talent, cultivating SKILLS is the way to go!

Hello!

Welcome to today’s edition of “Return Driven Strategy (RDS).” I’m excited to share another business insight in this article.

For those of you who are not yet familiar with this, RDS is a pyramid-shaped framework with 11 tenets and 3 foundations. When applied properly, these principles help businesses attain high financial returns and performance.

Let’s apply this framework in the context of current workforce trends.

Keep reading below why the worsening skills gap in the workforce must be addressed sooner rather than later.

In a market that’s starving for talent, cultivating SKILLS is the way to go!

Estimates show that by 2030, over 85 million jobs in the U.S. could be left vacant as slowing population growth fails to keep pace with an onslaught of retirements.

Over the past 70 years, birth rates have steadily declined, leading to one of the lowest workforce entry rates in U.S. history.

Moreover, an older cohort of workers continue to exit the workforce in droves due to retirement.

So, despite the jobs market showing signs of cooling, role vacancy rates continue to remain unusually high and above their pre-pandemic average.

Not only do these trends result in a shrinking headcount; they also lead to an exodus of skills and specialized talent, further worsening the talent crunch the U.S. workforce is experiencing today.

Simply said, the talent crunch is real and enterprises must battle amongst each other to attract and retain top talent.

In light of this problem, employers have resorted to creating initiatives to attract and retain talent, which have included tapping into the 72-million strong independent workforce and leveraging the dynamic capabilities of generative AI tools.

Optimizing the Workforce Mix with Independents

Historically, the traditional payroll jobs market has pulled away professionals from independent work into full-time employment.

However, this trend has greatly changed due to the confidence surrounding independent work as support networks and infrastructure have significantly broadened over the past few years.

Another factor that has led to the rising popularity of independent work has been the breakdown between the traditional pact that bound employers and employees.

For those of you who might now know, at the dawn of Corporate America, enterprises and employees forged an implicit agreement: Workers exchanged their loyalty for job security, career progression, and benefits such as a guaranteed pension and medical coverage.

Over the past several decades, however, this pact has disappeared due to benefits being cut back and mutual loyalty between employers and employees eroding to the point of nonexistence.

The decline in the number of full-time employees (FTEs) have led to an increasing dependence on independent workers, composed of Millennials (ages 29-43), Gen X (ages 44-59), and Gen Z (ages 18-28) workers.

Perhaps more importantly, these cohorts of workers are tech-savvy and well-educated as they possess a high level of proficiency in the use of technology and AI tools.

Due to these attributes, enterprise demand for independent talent is high, which is reflected in the fact that there are over 11 million independents serving businesses in various capacities as of 2024.

Leveraging AI

Since the debut of ChatGPT in 2022, generative AI tools have seen adoption across multiple industries as these have been seen as a potential game changer not only for productivity but also for the worsening talent crunch.

AI tools bring forth a bevy of opportunities for businesses to streamline processes, automate mundane tasks, and supercharge the analysis of large amounts of information.

However, as powerful as these tools are, we are still at a stage where they require human intervention for them to be truly effective and impactful in the workplace.

A Widening Skills Gap

While generative AI and the independent workforce have proved to be powerful resources in addressing the talent crunch enterprises have to deal with today, we believe there’s another crucial issue that businesses leaders have to address:

The skills gap .

The declining supply of workers not only leads to a shrinking headcount, but also an exodus of skills and specialized talent that are crucial to ensuring long-term business success.

It must not be forgotten that skills are a crucial driver of success since these are what enables an organization to meet objectives and foster innovation.

Needless to say, without skills, a business cannot succeed.

Traditional training programs and performance reviews are no longer enough; enterprises must embed the acquisition and improvement of skills into the fabric of their operations.

This essentially means businesses must invest in the skills development of their employees in order to keep pace with industry changes and create a system that enables both organizations and workers to stay ahead of the curve.

The Skills Gap Through RDS’ Lens

Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven” emphasized the importance of engaging employees as a crucial step in attaining high levels of performance.

According to them:

“While employees clearly require some level of monetary compensation, seldom is this enough to generate the type of engagement that propels firms into the highest levels of cash flow performance. In fact, the highest levels of cash flow driving employee performance stem from non-monetary sources. And it should go without saying that non-monetary means of motivation contribute even further to monetary success.”

In a jobs market that’s starving not only for headcount but also skills, it is crucial for businesses to facilitate the upskilling of employees whose labors are the bedrock of financial performance and success.

In a world where changes happen each day, skills growth must become a strategic priority for business leaders because failure to do so could spell the difference between success and failure.

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If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo.

Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.

Hope you found this week’s insights interesting and helpful.

EXCITING NEWS AHEAD

The world of work has shifted, and there’s no going back. The barriers to entry have never been lower for talented professionals to work independently, and today’s massive external workforce is hardly a pandemic-produced fad. Business owners can only survive in the new work landscape by partnering with this deep talent pool.

With decades of experience in both small-business entrepreneurship and executive management at PwC, I truly believe that the future of work is independent.

With that, I’m happy to share with you that my book, co-authored with Walter Scott Lamb, is now available for pre-order on Amazon!

This is an essential read for both independent professionals and corporate executives. Here, we provide educational and practical guides to unpack the ever-growing workforce and offer you crucial ways to become a client of choice.

Click on the link above to pre-order your copy. Let this book help you future-proof your career and organization in the new world of work.

In the competitive world of global business, the strength of a company often lies not just in its products or market share. It’s also about having a secret weapon, an edge that competitors can’t easily replicate.

Learn more about General Electric’s (GE) “Deep Bench” as seen through the lens of RDS in next week’s article!