As published on Medium.com
The International Financial Reporting Standards (IFRS) definition of an asset is “a resource controlled by [an] enterprise…from which future economic benefits are expected to flow to the enterprise.”
For as long as any of us can remember in the era of modern, technology-centric business, company assets have been largely product or service innovations — intellectual property — and the designs, physical equipment, production facilities, and supply chain networks required to facilitate the production and distribution of those assets.
And while the tech boom certainly gave us our fair share of parents’ basement-to-billionaire inventors and entrepreneurs, most of the jobs that made enacting these pioneering visions a reality were replaceable. They required skilled, intelligent workers, yes. But there seemed to be a never-ending pipeline of new talent gunning for these highly sought-after positions.
Unfortunately, in a matter of just 2 years, the COVID-19 pandemic shattered this 21st century status quo and gave way to an economic paradox that doesn’t appear likely to go away anytime soon:
- Retirements are accelerating
- The birth rate is declining
- Labor force participation is shrinking
- Higher education enrollment is decreasing
Put simply, there are more job openings than we’ve seen in quite some time, and this number is growing. Yet, labor force participation is declining even faster — people are actively choosing not to enter the workforce. All the while, higher education institutions are gradually becoming overpriced, relatively useless relics of an era when a college degree was the ticket to financial stability. That era is no more.
So, what does this mean for companies?
First, employee retention is more important than ever. Recent data suggests that U.S. employee voluntary turnover — people quitting their jobs — is set to jump nearly 20 percent, or by about 6 million workers, by the end of 2022. Employees are bolder now, having tasted remote work during COVID-19 lockdowns and ingrained in the new individualistic, “side hustle” and part-time era that is rapidly emerging. The power dynamic has shifted. Many employees no longer need their employers. They can simply go elsewhere to get what they want or choose to set out on their own.
Second, management teams must prioritize workforce innovation. While this does not have to come at the cost of continual product or service innovation, applying the same creativity to employees is essential. Current macroeconomic headwinds have been tough on everyone, but they have at least narrowed the portfolio of options for managers looking to expand benefits and opportunities for workers. The traditional model of end-of-year bonuses and steady raises is on the sidelines, at least for now, but this actually can make managers’ jobs easier if approached the right way.
So, if we remove monetary reward from the equation for a moment, how do we incentivize employees to stick around, while investing in workforce innovation that will pay dividends — to both employee and employer — down the road? Some proven methods to consider are noncash rewards and internal education.
Incentive reward programs that motivate employees to achieve individual and team benchmarks are proven tools when implemented correctly. For example, employees could receive points for years of service (retention) benchmarks, practicing safe behaviors, completing new trainings or certifications, matching or exceeding sales targets, recruiting new employees, being recognized by peers, or anything in between. The goal is for workers to see an opportunity to earn recognition everywhere they turn, thereby boosting both their own performance and the company’s overall return on workforce investment. Typically, a points system works best, as workers can redeem their points for lifestyle merchandise they might otherwise not be able to afford.
Hand in hand with a creative incentive structure is internal education investment. In fact, as mentioned, companies can motivate employees to advance their knowledge and skillset by using just such incentives. Over the past few years, the number of companies reporting the inadequate readiness of job applicants and traditional recruiting targets has increased, while college enrollment and graduation rates have seen a similar decrease (companies such as Bank of America, Verizon, and Ashley Furniture are even building their own internal academies).
Put simply, private industry is evolving faster than college curricula, and the abundance of content and education individuals can find online is making the prospect of taking on debt to pay for a degree just to check the box less and less worth it. The idea of real-world training and learning the skills that will help you advance quickly is tremendously appealing. Thankfully, if executed properly, this could go a long way in solving the emerging retention problem as well. “Join our company, and we will teach you everything you need to know to expand your skillset, advance, and achieve your career goals.”
When investors purchase a stock, typically they believe a particular company is undervalued by the market and has tremendous growth potential thanks to its new or unique product or service innovations — that it will “disrupt” the market and earn them a worthwhile return on their investment. In this case, management’s job is to listen to shareholders and guide the company in the direction it believes will return the most value to them.
Now, the same management teams must become investors themselves when it comes to their employees, because times are changing and the “new normal” demands labor force innovation. To “beat the market” — achieve workforce productivity that diminishes the impact of the emerging talent gap — managers now must devote the time and invest the resources that will maximize employee potential. If approached correctly, companies can achieve far more with far less, and if successful, both employers and employees will be far better off.
