Introduction
When we talk about looming shortages that will impact enterprises and the wider economy, we tend to think of natural resources and supply chain disruptions. Although the shortage of human capital sometimes comes up as a serious topic of discussion, few organizations give it the attention it deserves. Many companies seem to continue to act on the belief that an employee is a fungible commodity, easily replaceable and always renewable. However, signs of workforce disaffection are multiplying, particularly in Luxembourg. In fact, according to a PwC survey dated July 2023, among all European countries, following the health crisis, Luxembourg has been the hardest hit by the “Great Resignation” phenomenon, with almost 25% of employees admitting they are ready to quit their jobs.
While economic players now have to cope with ESG pressure and the need to onboard new talents able to drive their transformations, broader social changes and shifting attitudes towards work show another complete game change. Those who fail to quickly take stock of these upheavals may well miss the opportunity to be part of tomorrow’s ecosystem.
1. Fragile workforce
Over the past several years, a number of factors have precipitated the shrinkage of human capital available to companies. For many workers, Luxembourg is no longer the El Dorado it once was, particularly as the cost of living has become prohibitive for many prospective employees. Housing in particular has become “the question that overshadows all others” at the legislative elections1.
Covid, geopolitical tension, and the environmental crisis have further shaken up employees’ sense of normalcy. This general feeling of uncertainty transcends all generations and has prompted questions about the meaning of work. Many employees no longer recognize themselves in their company’s strategy and feel that they have become the latest adjustment value for their employer in the struggle for profits.
Employees are increasingly leaving organizations in order to try their hand at self-employment to regain a form of freedom and the sense of direct service to the client. Stories in the press point to increasing numbers of professionals being self-employed. Other employees choose to do as little as possible, a phenomenon referred to as quiet quitting.
Corporate work is also increasingly viewed as being quite literally sickening, harming the physical and mental health of employees. This can be observed in the spectacular rise in the number of cases of burnouts and, more generally, the sharp increase in work-related mental illnesses, revealing a new toxicity of today’s work life2.
What becomes of those who suffer from long-term illness in the workplace is just as telling. After being off work for six months, only a minority will return to work despite full recovery. This immense waste is not only a major vector of social exclusion, it is also costly for the employer and the community. Despite these obvious negative impacts, few companies have preventative measures in place or a system to monitor employees during long absences with the aim of reintegrating them into employment in the long term.
Nearly all reports affirm that employees yearn for fulfillment and professional development at work as well as recognition and appreciation of their efforts. Employees also want a balance with their private lives and well-being at work.
Above all, they want to feel they are contributing to some positive impact on society.
2. The sustainable development injunction: an unprecedented challenge but a unique opportunity to bring the workforce back into the company
Environmental issues and structural uncertainty pose complex challenges for businesses. Companies are urged to find the path to sustain themselves over the long term and develop themselves without compromising the ability of future generations to meet their own needs. If they do not play by the rules, employees may further withdraw, along with clients and other economic partners.
Furthermore, companies need to recruit new employee profiles to be able to innovate.
Old formulas to attract, incentivize and retain employees are out of fashion. The once tried-and-true offer of the financial package has lost its luster and incidentally seems no longer affordable. Offering remote working to meet the desire for more flexibility has also become just a standard concession.
From now on, it is precisely the company’s willingness to embed its business in a sustainable dimension that will determine its attractiveness in the eyes of employees. To achieve this, the employer must meet three challenges: it will have to Inspire, Empower its employees, and get prepared to Revise some of its critical processes as well.
INSPIRE
Companies must determine the positive impact they want to make. They may target environmental ESG performance in their core business strategy, or they may develop a complementary strategy to create positive impact. There are many ways for a company to get involved and contribute to sustainability objectives, from financial commitment to technical support brought to the community. Companies may also involve their employees in such initiatives, or they may tailor benefits packages that are sustainable.
Employers equally need to build a human-centered culture instead of a culture centered on profits and brand, and this must permeate the entire corporate governance framework of the company as well as leadership behavior. The concept of the company culture is multi-dimensional and is built on concrete measures . Leadership plays an essential role by promoting a proactive approach to employee well-being, fostering a climate of trust and collaboration, and leading by example.
EMPOWER
In a context of complex uncertainty and versatility, where the business model has to be reinvented, the company must be able to capitalize on all the skills available within the organization, encourage experimentation and the expression of multiple viewpoints; it must give employees a voice at the highest levels of the organization.
This implies rethinking the governance structure and asking important questions. Are board agendas sufficiently comprehensive? Are all internal functions contributing to the goal duly represented and given a voice on steering committees and boards? Is it perhaps necessary to create new committees or functions? Should certain functions perhaps disappear?
The role of the manager is also essential in this program. The new manager will have to be the driving force behind the new corporate culture. He or she will need to remain open to change, act as mentor, and welcome different points of view. To drive projects forward, managers will need to mobilize the resources around them. They will have to be able to ensure team cohesion, and ensure that well-being remains a central focus.
REVISE CRITICAL PROCESSES
To bring in the right profiles to build and run a sustainable strategy, companies will have to recruit with an eye on new types of skills and focus on those that are essential skills. In this new context, the method of replacing an outgoing employee with his or her clone (same education, years of experience, and expertise) is a thing of the past. The company must look primarily for creativity, agility, and development potential in new talent.
To allow their employees to feel empowered, companies will have to pay renewed attention to and enrich their employee onboarding processes, which has often been overlooked. The onboarding process is obviously vital to accelerating performance, reducing the risks of early resignation, and quickly engaging employees in their mission. Beyond that, it conveys the company culture and can instill in a new hire a sense of belonging which is another essential component of employees’ motivation to join and stay with the organization.
The same applies to training programs which allow employees to develop themselves, as well as to induction processes which allow staff to be fully empowered when they are promoted.
Talent evaluation and management is one more example of a process that needs to be revisited to incorporate new criteria and dimensions in line with new business needs.
Ultimately, these revised processes certainly should require close monitoring measurements through KPIs.
Conclusion
The employment landscape is fundamentally shifting, and the very fabric of the employer-employee relationship is tearing at the seams. However, with the challenge of sustainability, which obliges companies to reassess their values and their relationships with all of those who sustain their survival and success, employers have a unique opportunity to become desirable again.
It would be a mistake to see the transformation into a desirable employer as secondary to sustainable development, and to not understand that, on the contrary, it is a prerequisite. By taking steps to change into a company that allows employees to enjoy fulfillment and grants them a voice, the company will have the means to retain and attract the human capital they need to build their sustainable future – as well as to take on more fully the challenges of sustainable development.
Employers urgently need to comprehend the scale of the changes required at different levels of the organization as it takes time to move from one management model to another that is more complex and to redefine its internal governance rules. It takes years to cultivate a new corporate culture, disseminate it, and develop the tools to make it work.
- https://www.barrons.com/news/luxembourg-eu-s-richest-country-grapples-with-housing-crisis-dfb5a251 ↩︎
- In Belgium, the proportion of long-term sick leave due to burnouts in 2022 rose by 18.5% compared to 2019. ↩︎
