Over the past few decades, five big power changes have taken place that have given the individuals within an organisation more power than the organisations they work for. But what are these shifts and what do they mean to individuals and businesses?
Ask any leader what the most important part of their business is and they’ll tell you it’s their people. Bill Gates himself has attributed early success at Microsoft to the people they hired saying that:
“The key for us, number one, has always been hiring very smart people”.
Until recently though, businesses were able to call the shots. They controlled the knowledge in the marketplace and the stock markets agreed that their huge values were largely down to their tangible assets like machinery, premises and equipment.
This meant that opportunities were limited for employees, it made switching jobs risky, and resulted in a significant majority of the workforce either having a job for life or switching only a handful of times in their career.
What’s more, the way businesses approach and secure talent has become outdated and ineffective – a theme we talk more about in our ‘Talent Gamble’ slideshare.
Today’s job market is far different, but why is that and what can you do to take advantage of it both as an individual and a business?
These are the five seismic shifts we have seen over the last few decades:
1. Markets Now Recognise The Value Of People
Over the last 40 years, intangible assets such as brand, culture and leadership have grown in importance in terms of a company’s competitive advantage and are now worth three times more than tangible assets in a company’s valuation. The fundamental driver of intangible assets is people. By removing employees from the list of intangible assets the company’s value falls dramatically.
For example, Apple’s market value grew significantly once the technology market realised the ability of its employees to innovate time and time again, but it took the company over a decade of bringing out innovative products repeatedly for that to happen. If the employees who are driving the innovation leave the company, it is likely that Apple’s market value will drop considerably. This shift from tangible to intangible assets has shifted the power from the employer, to the employee as human capital increasingly replaces financial capital as the primary promoter of growth within a business.
2. Easier Access To Employment Information
Information relating to employment, for example salaries and open positions, used to be closed information and costly to those looking for it, resulting in companies paying large sums of money to external companies to find talent and conduct market research. But because of the Internet today, this information is now widely available to all, for free or at a relatively small fee. Businesses advertise job opportunities on their corporate website and job boards while creating an online brand and presence through the use of social media; and employees can use job websites to upload CVs, check their market value, and see what other opportunities are available.
3. Marketplaces Are More International
Stock prices have long been an indicator of investor faith in a company. In 1980, only 5 percent of the world’s gross domestic product was invested outside home markets and, 30 years later, this had risen to around 27 percent as companies actively involved themselves in prospecting global markets. This has shifted the focus of power from the sustainability of a company’s strategy to the role of the company’s strategists (i.e its leadership, leadership pipeline and global talent) in achieving sustained growth.
4. Firm Specific Benefits Are In The Spotlight
Since the decline in final-year salary pension schemes, employees are no longer tied to one organisation with average tenure falling by 35%. The cost of switching jobs has reduced and the tendency to switch has increased, so as a result employers have to demonstrate why they should be your choice for your next move. As an individual you should look for a list of benefits that a business can provide you with if you join them.
From a businesses point of view, an effective EVP (Employee Value Proposition) can bring businesses significant benefits, such as improving the commitment of new hires by up to 29 percent and reducing the significant cost of replacing a hire if it doesn’t work out (we work out that cost in our ‘True Cost Of A Bad Hire’ infographic).
5. Supply & Demand Of Talent
Skills shortages and the baby boom to bust in North America and Europe have meant that talent has become a scarce commodity in many locations and industries. The gap between the supply and demand of talent is expected to widen rapidly making real talent scarce. According to LinkedIn, 90% of the talent pool is not actively looking for a new job role, meaning that the best people are often happily employed. This means that businesses have to work extra hard to lure top people away from their current positions, and for the best jobs it will be businesses chasing individuals not the other way around.
So What Does This All Mean?
From an individual’s point of view, these 5 shifts give you more control when choosing your next career move. When considering a potential employer, weigh up the whole package they can offer you from a finance and benefits point of view and don’t underestimate your value… if you are top talent, businesses should be moving heaven and earth to secure you.
From a businesses point of view, these changes emphasise the importance of being an employer of choice. Companies must implement HR strategies and practices that will strengthen employee attraction, retention and engagement.
If you want to learn more about attracting and securing top talent, view our ‘Talent Gamble’ slideshare and download our ebook ‘Hiring & Holding Onto Your Superstars’ to see what you should be doing to attract and retain the best.