“To Infinity and Beyond” Buzz Lightyear
At the recent Maryland State Bar Association Corporate Counsel Institute, Fred L. Hencke, Senior Vice President of Global Business at Segal and a HR Consultant and Business Transformation and M&A Solutions Leader, shared a glimpse into the future of talent, culture, and technology affecting the workforce, the workplace and the very nature of work.
Top Ten Leading Indicators for 2022 and Beyond
- Labor shortages will continue for several more years –public/private partnerships will ramp-up to meet the growing demand.
Many analysts believe that labor shortages will continue for another ten years especially in the area of skilled trades, nursing, manual jobs, software engineers, and cybersecurity experts. Private and public partnerships are quickly developing apprenticeship programs especially in healthcare, construction, and software development to fill the void. Hencke stated that 60% of organizations say they can’t find applicants with the right skills while 30% of job seekers say their skills do not match available jobs. 42% of companies say they plan to launch upskilling or reskilling initiatives.
As programs are rolled out law firms can help organizations:
- With job descriptions and posting jobs with implied preferences
- Applying assessment methods that discriminate, are not job relevant, or potentially invade privacy (including the interview process)
- Compliance missteps related to state specific guidelines on background and reference checks
- Including pay in the formal job offer that does not align with the skill requirements and responsibilities of the job
- Remote, hybrid, and flexible work arrangements are here to stay as people re-geared their lives during the pandemic and do not want to go back to the way it was.
70% of employees considered remote, hybrid and flexible work arrangements as an important element in their next job. “People had a taste of working remotely or partially remotely and re-geared their lives around this framework,” said Hencke. Many are not going to go back full-time on site. 52% of companies have implemented new (or revised existing) remote and hybrid work policies for portions of the workforce, but some roles are/will be required to be on site. 21% of companies report they’ve implemented new (or revised existing) remote and hybrid work policies for the entire workforce.
Law firms can help organizations moving to a remote or hybrid work environment with:
- Employee Accommodations
- Hiring/onboarding processes
- Baby Boomer retirements and labor shortages will drive increased use of artificial intelligence (AI), robots, automation, and analytics to capture and transition knowledge to younger generations and to streamline highly manual work.
Examples include robotics laying rebar in construction, drone site inspections, chat bots leading customer service, nobots providing advisory services and elective surgery to improve patient outcomes. Statistically, Hencke found that 85% of workers are not satisfied with employer career support including technology enablement. 85% of people said they want technology to help define their future and 82% believe AI can support their careers better than humans.
- Reactions to the vaccine mandates are raising many questions around societal safety versus individual preferences. Employers will have their own individualized guidelines based on their particular workforce, locations and preferences regardless of federal mandates.
This issue seems to play out weekly in our schools and in the transportation industry. Hencke’s research found that 75% (3 out of 4) of employees want vaccine requirements if returning to the workplace. 27% of employees polled state they will refuse to come back to the office unless there are vaccine requirements; and, finally 28% of employees have no qualms asking their colleagues if they are vaccinated.
Law firms are seeing an increased volume of activity in:
- Auditing, developing, and implementing compliance programs on hybrid work models
- Advise on return to work protocols and processes
- Guidance to ensure compliance education is efficient and thorough
- Detecting early warning signs of potential compliance issues
- The rise of the “Health Consumer” and increased utilization of telemedicine will continue to challenge the traditional patient-primary care physician model and create a more competitive, consumer-friendly ecosystem.
A significant portion of venture capital and private equity funds are being directed towards creation of patient care portals and remote diagnostic capabilities. Hencke stated, “patients have an increased focus on health literacy, healthcare provider portals, and ultimately better outcomes.” More focus on health literacy and digital accessibility is also part of the mix. 41% of patients say improving digital tools and communications should be a top priority for health organizations. There was a 40% increase in consumers who have switched or stopped going to a provider because of poor digital experience since 2019. That percentage translates to 2 out of 5 people switching providers because they did not have a good digital experience. 28% of corporate board members state they have introduced telehealth to address employee well-being in 2021. That percentage is increasing for the foreseeable future.
- Organizations will need to digitize key aspects (especially the customer journey) of their business or risk not being viable within the next 10 years.
Several companies were forced to create digital access and capabilities during the pandemic and some that did not are not around today. “The pandemic accelerated what was already in motion,” said Hencke. He also stated that there was already an increase in technologies prior to the pandemic – the pandemic just accelerated what was already in motion. “Customer service is essential to the digital revolution, but organizations cannot ignore employee and partner experience in the mix,” said Hencke. This will require new skills and collaboration across the organization. Customer relationship managers, IT, HR, operations and legal are some of the departments that need to collaborate.
There will be a need for more specialization of skills which will drive more recruiting standards. Digital skills rather than job titles will be used for recruiting. Companies are financially investing more in individuals that have specialized skills.
As a result of digital transformation, companies on average expect to see a return on investment of at least 17% and 11% increase in productivity. Global spending on the necessary technologies and services for digital transformation will reach $2.3 trillion by 2023.
As organizations rushed to employ digital solutions during the pandemic they may have created some exposure relative to regulatory compliance. Law firms should be helping organizations that may have created those exposures by digitizing too quickly with:
- The Sarbanes-Oxley Act of 2002, (SOX compliance)
- Unbalanced contract terms
- Data privacy
- Labor standards
- Work locations guidance
- Pay equity
- Employee experience will become central to attracting, retaining, and engaging workers.
The youngest generation expects automation in the workplace especially in this age of social media where a bad experience can go viral very quickly. The youngest generation also wants a positive digital experience when they are on boarding to a new job. “They will decide within the first 90 days of employment if they will stay with an organization long term or not,” said Hencke, “that’s why the on boarding experience is very important.”
73% of employers are having difficulty attracting employees. 78% plan to make the changes they made during the last two years in response to the pandemic permanent and do more virtually including interviewing, on boarding, etc. 53% are putting greater focus on employee experience – this is very real and companies are getting serious about it.
- Environmental, Social and Governance (ESG) issues will continue to rise in importance to address climate, societal, and ethical issues. Corporations will be required to report on several more metrics to satisfy increasing regulatory and legislative requirements.
ESG issues are now mainstream. The youngest generation wants to know if the organization is committed to environmental, social and corporate governance and not just paying lip service. Hencke said, “more and more companies including the ESG disclosures in corporations annual reports and filings’ and there is also an increase in public communications to attract talent and investors.” Investors are looking carefully about how companies: address environmental issues – mainly how they perform as stewards of nature; socially – how they manage relationships with employees, suppliers, customers and the communities where they operate; governance – how they deal with leadership issues, executive pay, audits, internal controls and shareholder rights.
As part of Hencke’s research, he asked board members if their company had programs to ensure that employees understand the ESG positions of the organization, and when was the last time they were revised? 67% revised them within the last 18 months, 5% revised them more than 18 months ago and at the bottom 10% of companies do not have any programs.
Law firms are now engaging in ESG matters more often:
- ESG reporting and disclosures can create significant litigation and liability risks for companies that do not exercise appropriate care and diligence
- Assist with providing guidance and oversight at the board level
- Including ESG disclosures in their SEC filings
- Data privacy will become a much larger issue day by day as social media platforms receive more scrutiny. This will lead to the rise of more secure and private social media options and exchanges.
Hencke stated there is a “dramatic increase in private access, search engines and media platforms.” 50% of social media users keep accounts on private mode. 71% check privacy settings when first joining and 50% updated privacy settings in 2021. 250,000 users had information exposed in recent breaches.
Law firms are increasingly providing guidance on:
- Internal policies regarding employee use of social media
- Mitigation strategies to address negative press from employee social media activity
- Diversity, equity and inclusion (DE&I) and social justice movements will lead to pragmatic changes in workforce diversity, board member diversity, business financing, supply chains and corporate governance.
Much of the focus is shifting to economic justice as it relates to job opportunities, pay practices, fair trade and business financing. Pragmatic changes are being implemented to level the playing field for minorities, minority owned businesses and women such as candidates for board positions, connecting minority talent pools to recruitment channels, addressing unfair loan and business equity practices, and ensuring that minority owned businesses have the opportunity to be included as potential suppliers and sources.
83% of Gen Z state commitment to diversity and inclusion is a deciding factor in their job selection. Women are nearly two times more likely to leave their current job if there are fewer women colleagues. For every 10% more diverse a company’s senior leadership is, earnings before income tax is 1% higher.
Law firms have an opportunity to influence pragmatic changes:
- Lawyers provide guidance to ensure their clients are aware of all relevant regulatory and legislative compliance requirements.
- As diversity, equity and inclusion discussions continue, anticipate additional diversity related laws and compliance guidelines.
In sum: Labor shortages and remote work is here for the foreseeable future. Artificial intelligence and robotics will lead the way with automation and improving health care. Organizations need to continue to improve the digital experience for employees and customers while simultaneously ensuring data privacy. ESG and diversity and inclusion principles continue to be important to employees, customers and investors.
Data for the Top Ten Future 2022 Leading Indicators for Talent, Culture and Technology was provided by the Segal and Corporate Board Member Survey (October 2021) of more than 225 public company board members across 15 industries and at firms ranging from less than $50M to greater than $10B in market capitalization.