Workforce Rebalancing Builds Pressure in the Pipeline

Understanding the differences between how employees and employers are reimagining work helps leaders build better future workforce strategies.   

Recent dramatic changes in the way we work, and how we think about work, have caused a tidal shift in how employees view their priorities and prospects in daily life.

The COVID-19 pandemic accelerated a work realignment trend that was already in progress, and further transformed people’s understanding of work success, purpose, and value.

Rising inflation, The Great Resignation, and calls for increased commitment and action on environmental, social, and governance (ESG) issues, are further reshaping a workforce terrain that manufacturers are all trying to navigate with new eyes. As the initial waves of health-driven change roll into new ones, the workforce is now resettling into pools based on how we work, what we value, and who we are.

It’s a new moment for both employees and employers alike, with new opportunities and a need for greater context around the how, what, and why of work. Understanding these key shifts will help manufacturers already dealing with the current labor crisis, better prepare new approaches to how they can successfully attract and retain their key workforce.

Work Reimagined

The EY 2022 Work Reimagined Survey reveals insights from more than 17,000 employees and 1,575 employers across 22 countries and 26 industries. The findings help highlight the primary motivators of workforce turnover and retention in today’s tight labor market and help highlight areas of focus for manufacturing leaders who are looking to lean into the opportunities of the moment.

The details of employer sentiment, however, can vary widely. The survey data reveals three distinct segments of employers based on their perception of business productivity and organizational culture:

Optimists (32%)

Employers who have been proactive in their approach to flexible work, real estate, and technology are more likely to agree they’ve seen positive outcomes. These optimists, almost a third of the sample, indicate they feel they have more agency in the present uncertainty. By giving clarity to their workforce and leaning into the change, these businesses invested in a strategic direction and can see the benefits. By taking a consistent, strategic, and cross-functional approach to the current climate, these optimists are more likely to believe they’re steering their own course.

Pessimists (11%)

A smaller set of employers feels disempowered by the moment, though. Their perception of outcomes related to culture and productivity is drastically lower than optimists and indicates less investment in clear actions toward improving technology, onsite amenities, and further flexibility for the workforce. By not being proactive, these employers seem to have remained in a wait-and-see posture while the labor market and overall economic situation has shifted. These employers have not positioned themselves to attract new talent and their veterans may well continue to leave, further deteriorating confidence in their competitiveness.

Massive Middle (57%)

The majority of employers remain somewhere in between the highs and lows without a distinct perspective on productivity and culture outcomes. This shows that employers and employees alike are still undecided about what the future holds. There’s an opportunity here for those more forward-thinking employers among them to now start building leading strategies to help them win the race for talent.

Some employees may feel empowered by work flexibility, seeing more opportunity for advancement with virtual assignments and a broader mix of employment opportunities. But there is also some acknowledgement that further acceptance of hybrid/flexible working conditions may risk slower career advancement. There’s a noticeable perception gap between employers and employees with 72% of employers believing new ways of working may cause some segments of the workforce to lose competitive advantage, compared to just 56% of employees.

For employers, pay represents a fixed cost during a time of growing inflation. Only 18% of employers believe pay increases/reviews are needed to address employee turnover, showing a clear disconnect to what employees say they want in a new role, and what employers are expecting to most deliver to help employees thrive. Employers, meanwhile, put more emphasis on learning and skills, flexibility, and employee psychological/mental wellbeing and safety.

Upskilling Committed Workers

The focus on learning and skills by employers could be a reaction to The Great Resignation. If turnover is high and employers show less confidence in productivity gains made through the pandemic, then an employer may be more likely to invest in upskilling the remaining workforce. This positioning from employers may also align with the needs and expectations of a subset of employees more likely to be company-committed. These individuals are more likely to be concerned about the risks of burnout and their mental wellbeing, more likely to work full-time in an office, and have a more favorable view of work-life balance. The strategies and priorities of most employers therefore appear to be in line with this segment of employees who show more loyalty to their present employer.

5 Areas of Focus

The world of work is clearly in a state of transformation, spurred on by the challenges of recent years and the expectations of those to come. Manufacturing leaders should now consider finding cross-functional ways to respond to opportunities when they arise:

1. Operationalize hybrid models: Hybrid work is here to stay, so employers should build a structure with intent. They need to understand which roles are best suited to remote/hybrid work, and build the systems required to create value while streamlining functions. This may include building an integrated mobility strategy to manage tax compliance for a geographically diverse workforce, along with structuring rewards and even real estate strategy to attract and retain the workforce they need.
2. Reinvent the workplace: It’s not enough to repaint an office and expect workers to return to cubicles. Employers should consider a renewed integrated workplace plan that considers the physical space and amenities needed to empower productive workers. But it should also reflect how the workforce engages in social networking and learning both in the physical office and in the digital realm.
3. Create a work-technology experience: From grocery shopping to hailing a cab, we all know the importance of a good user interface and design for business. A virtual workplace and employee experience platform should be on par with consumer technology providing a seamless technology experience across all work contexts. Done well, this can contribute to efforts identifying areas requiring culture change and moving the organization toward a more equitable reality.
4. Reshape and optimize programs and career frameworks: The pandemic and so much more have redefined employee expectations, so employers should update their rewards and career advancement models to respond to a still fluid labor market.
5. Define culture and organizational networks: Before fully undertaking a large-scale transformation, employers should also assess the fitness of their organizational culture. This includes understanding which key aspects of an organizational culture to preserve and how to engage key influencers to reduce friction toward the new physical and digital realities of work.

These areas of focus may differ between organizations, but leaders should work to find the right constellation of solutions that address the specific makeup of their workforce, the desired direction of their organization, and the continued assessment of transformation in progress.

Acting With Intent

Today, work is being reimagined by both employees and employers, but their visions don’t always align. Both see flexibility and hybrid work as the new normal, though further details reveal divisions. Employees are still willing to leave their jobs to advance their career and pay potential. Global uncertainty connected to inflation and labor costs are fueling reluctance among employers who are not eager to reset pay and career opportunities. If companies don’t address pay equity between internal and external labor markets, then efforts toward improving culture, productivity, and DE&I will be neutralized by labor turnover.

By acting with intentionality, and with a better understanding of employee perceptions and values in changing times, manufacturing leaders can build more trust across their workforce and orient their organizations toward a more optimistic future.  M

(Unless cited, all statistics in this article are from the EY 2022 Work Reimagined Survey. The views expressed by the authors are not necessarily those of Ernst & Young LLP or other members of the global EY organization.)