It seems like the war for talent is never-ending. Ever since the dawn of modern business, organizations have been seeking to attract and retain the best possible people they could. This isn't new. The phrase the war for talent was coined in 1997 and refers to the changing landscape around attracting and retaining talent--basically, that it's getting more challenging. This was 30 years ago. Today it's not just challenging, it's downright hard and complex.

Facebook understands this better than most. It starts with one simple question: "If you had the best talent in the world, what would you need to do to attract and retain them?" Organizations like Facebook aren't just looking for people; they're looking for the best people. This is perhaps one of the largest changes we've see; technology is replacing bodies, which means that organizations are looking for something more. We also have to remember that the war for talent isn't just about attracting potential employees but also keeping existing ones.

Let's break it down a bit more; the war for talent is being fueled by a few things.

Skills Gap and Talent Shortage

A McKinsey Quarterly article stated that by 2020, the world could have 40 million too few college-educated workers, and developing economies could have a shortage of 45 million workers with secondary-school educations and vocational training. In more advanced countries, as many as 95 million workers could lack the skills needed for employment. The most recent ManpowerGroup Talent Shortage Survey found that 38% of employers are having difficulty filling jobs.

There is little agreement on what is causing this skills gap, what the potential solutions are, and whether the skills gap is even a real thing. Most of the executives I speak with acknowledge that the skills gap is real. But what makes this even more challenging is that we aren't sure what the jobs of the future will be. Consider that by the time most people graduate from college, the skills they have learned are mostly rendered obsolete. This means organizations are looking to hire employees for jobs that don't yet exist. The number one thing potential and current employees can do to succeed in this type of environment is to learn how to learn. In other words, have the ability to learn new things regularly and apply the things that you learn to new and current situations and scenarios.

What's fascinating is that organizations that focus on creating employee experiences aren't feeling this skills gap as much as those who aren't. It appears that in the coming years, organizations are going to want to hire people, and there just won't be enough high-skilled labor to go around.

Changing Demographics

According to a recent report, the face of the workforce will change dramatically over the next decade in terms of numbers and ages of employees. Today, millennials are already the largest demographic, surpassing baby boomers in 2016. By 2020, they are expected to comprise 50% of the workforce, and 75% by 2025. We also see Gen Z (the generation after the millennials) creeping into the workplace, and they currently comprise over 25 million people in the US alone. Not only that, but the labor participation rate in the US appears to be gradually yet consistently shrinking. This changing mix of demographics brings new values, attitudes, expectations, and ways of working. Still, this isn't new. Our organizations have always had to adapt to new generations entering the workforce, but the overall sense is that previous adaptations were very slow and gradual and have now become more aggressive.

Changing Face of Talent Competition

In the past, organizations competed on skills and seniority, location, and direct rivals. This meant that if you lived in San Francisco, you would compete against other people in the area, or that if you were Coca-Cola, you'd compete against Pepsi, Ford versus Toyota, and Boeing versus Airbus. Today, everyone is competing with everyone. Coca-Cola is competing with Toyota, and McDonald's is competing against Airbus. This competition also extends to the gig economy, where smart and talented individuals might decide to drive for Uber or join an online freelance marketplace instead of working for you.

Psychology (and Sociology)

Employee experience is very much a psychological and sociological pursuit. Organizations are now taking these pursuits more seriously as they try to truly create environments where people want to show up to work. This is no longer just a challenge that an organization can overcome with perks, higher pay, or gimmicks. Instead, the business world is turning to social scientists to really help them understand why and how people tick. It should come as no surprise that industrial organizational psychology is one of the fastest growing professions. These scientists are influencing how we hire and recruit people, design our office spaces, lead and manage, and even build and run our HR departments. This speaks to the trend toward focusing on longer-term organizational design instead of shorter-term engagement programs.


Business Turbulence

Almost 90% of the Fortune 500 have disappeared since the original list was created in 1955. To really disrupt a large global company, you used to have to be a large global company. Today competition can come from a door-to-door fax salesperson (Spanx), a college dropout (Facebook), a former customer (Netflix), or someone who just raises a ton of money (Uber). The point is that in a world that appears to be getting smaller, at a time when change is getting faster, your competition can come from anywhere, and you'll never see it until it's in your face. In this environment, organizations are struggling to hire the best talent that will help them see potential threats and uncover new opportunities. By focusing on employee experience, many companies are hoping to reverse that trend.