The region is facing a major challenge. Workforce is changing. Achieving social development that provides sustainability to economic progress will depend on interpreting this change smartly.

By Martín Padulla

In my previous column I wondered about which labour market model do we want in Latin America. An intellectual exercise that has a strong impact on reality.

I believe it is important to give thought to these concepts based on what is going on nowadays in our region, particularly considering that changes are occurring at a considerable speed.

Companies in our region are facing the most challenging labour environment ever seen. As it was stated in  “How to deal with intergenerational conflict in the companies” there are currently five different generations working at the same place, interacting in different levels of experience, skills, working and communication skills.

Workforce 2020, an independent research developed by Oxford Economics, was recently published. The research comprehended a survey which included 5400 employees and executives and interviewed 29 directors from 27 countries. One of the mains conclusions the survey reached was that the challenge of managing a progressively more mobile, diverse and international workforce is a major opportunity for gaining productivity, talent development and the commitment of those who are linked to the company. The big issue is that many companies in our region are not prepared to gain profit from such situation.

The future of labour will include freelance workers, long term outsourced workers, temporary workers and new phenomenon, such as crowdsourcing, will become more frequent.

However, the research states that most companies (75%) have still failed to make important progress in creating a workforce that may accomplish their future business objectives. I would dare to say that if we took a sample only in our region, such percentage might be even bigger. In several cases, the reason for this gap is the lack of a defined strategy, while in others is for cultural issues. In our region, the main reason is the lack of an adequate regulatory framework to address this future

Edward Cone, Chief Editor of Thought Leadership in Oxford Economics, show the leaks that must be fixed in order to move forward: “Our research shows that top level directors are far away from the HR department on matters such as priorities and business strategy and employees are not getting what they want from their employers in terms of incentives, benefits and training”.

Having said that: which are the most critical problems? The research aims to shed light on this issue.

1. Compensation plans:
According to Workforce 2020, compensation plans are the most important variable for 75% of survey respondents. Pension plans, flexibility and spare time are put way above other advantages. As compensations is considered the most important variable, workers concerns lie in not falling behind due to lack of skills or being incapable of adapting to change. “Becoming obsolete” is the major concern, twice as worrying as employment loss.

2. The millennials challenge

Despite the fact that over 50% of directors have pointed out that millennials have had a positive impact in companies, less than one third of such executives states to be actually paying attention to the particular needs this group of workers has. The main reason is that directors do not understand the way millennials behave and think.

There is a common idea that millennials have a very different approach when compared to other generations; however, this study showed there are no major differences on a key aspect: millennials, as well as other workers have similar priorities as regards how to achieve their career and income goals and in achieving objectives in order to move forward. Both groups have similar points of view when it comes to corporate values and reaching work-life balance.

The great challenge for companies in the region is to seize the group with larger knowledge and skills linked to technology as well as with major innovation capacity. The key seems to rely on creating the working conditions so that this group may develop and learn in order to counteract the lack of experience.

3. The talent shortage is growing
Nevertheless, very few companies are investing on their workers, including millennials. Less than half of surveyed employees stated that their company provides the technology training they need to reach their goals and less than one third say their company provides them with the ultimate technology available in the market.

Talent retention policies will progressively demand more creativity to encourage the mix of formation, proper working environment, innovation and growth possibilities.

4. Lack of leadership.
The lack of adequate leadership is quoted by directors as the second impediment to reach their objective of creating a workforce responsive to their future business goals. Almost half of the survey respondents have stated that their professional growth plans are being obstructed by the lack of access to adequate leaders for their organizations.

5. Workforce is changing.
The economy has reached a point where almost everything may be acquired as a service. In such context, companies are hiring outside their organizations the experience and resources they lack, and they do so according to the changing demands of the business and of their clients. This means that companies are formed of extended and complex human capital, in which temporary workers, consultants, subcontracted and specialized workers, and even projects such as “crowdsourcing”, stand out.

Lighter, more flexible and efficient organizations. More work for people. Around 83% of the directors from those companies that took part of the Workforce 2020 survey, said that they would increase the number of temporary workers and consultants hired.

The region needs to increase productivity while lowering the level of labour informality and has the tools to do so. Both, companies and workers, need this. One of the most important tools is the ratification in every country of ILO’s Convention 181 on Private Employment Agencies to guarantee an adequate balance between flexibility and security.
6. Compensation, development and technology models must change

According to this research, 46% of companies state they will request changes in their compensation plans, 45% will request a rise in training investment and 39% assure they will implement changes on technology policies in order to support mobility.

Around 53% of directors state that the development of workforce is a key distinguishing element for their company, but they also acknowledge not having the necessary tools and organization for such development.

Only 38% admits having deep information about the staff they manage to understand their strengths and potential vulnerable aspects from a skills perspective. 39% say they use quantifiable and comparative metrics to design the staff development policies.

Clearly, there is plenty to do within companies. And a lot more to be done at a public policies level in order to promote these actions.

It is very important to know what the right path to follow is. Labour market are most important for the development of people. Workers, entrepreneurs, businessmen and governments need to reach agreement through social dialogue in order to avoid mistakes that later on shall be paid by the entire society.

In Latin America we are already living inside knowledge societies. Our markets have become sophisticated, many of our countries have reached relevant commercial agreements with the main powers of the world. Interaction with Pacific-Asia is a fact. It is very common to see in companies within our region, foreign workers from every continent developing their careers. With out any doubts, such diversity shall enhance human capital in our organizations, as far as we are capable of creating functional working environments for the future.

If we manage to build labour markets adequate to the needs of the future, we shall be promoting a major social growth, which shall grant sustainability to the economic progress.

If, on the contrary, we think about the future using concepts of the past, a world of labour with post-war era categories, the 2020 shall find as walking through the wrong path.

About Martin Padulla

Managing Director of staffingamericalatina. Martin Padulla is Sociologist (USAL), MBA (UCA) and labour markets expert. He published “Flexible Work in South America” and “Regulatory framework for private employment agencies in Latin America” two books about the new realities of work in Latin America.

mpadulla@staffingamericalatina.com

About staffingamericalatina

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