Retail is not returning to ‘normal’. The pre-pandemic challenge of online retailers taking market share from ‘bricks and mortar’ players has only accelerated during the pandemic and consumers are likely to maintain their ‘new’ behaviours when it comes to retail and hospitality. On the positive side it seems there is an opportunity to elevate the ‘in store’ experience as we all yearn for reconnection. But delivery will likely require new skills and a new focus on talent. Therein lies the challenge.
The labour market in Australia continues to heat up – with ‘not-seen-since-the-1980s’ levels of unemployment forecast for FY22, participation rates at record levels, and wage growth stubbornly anchored at or below 2% p.a. These are the ‘hard’ metrics; then there is the psychological impact of wanting something new and different after 16 months of putting our lives on hold – a perfect storm for labour market fluidity and employee turnover is rapidly approaching. And the ‘canary in the mine’ is the retail and hospitality sectors.
Like any situation in life when the status quo is disrupted, there will be winners and losers out of this changing situation, depending on the approach that companies adopt.
Employees around the world are overwhelmingly saying they want to continue with some form of flexible working and the majority of those who demand ongoing flexibility in their working arrangements (54%) are looking for flexibility in both where they work and when they work. That is, they wish to be able to set their own work schedule, wherever possible, considering the needs of their colleagues, their customers, and their companies.
If you will, a self-organising collective of colleagues focused on delivering their organisation’s Purpose. And this was a particularly strong ‘demand’ in the EY research across the Australian Retail and Hospitality sectors – 63% of respondents (compared to 43% across all sectors and countries) would like to set their own rosters/schedules.
Why is this happening? Well, having had a taste of flexibility during the COVID-19 pandemic, people have welcomed the ability to better balance their work and personal commitments. From focusing on their health by increasing their exercise levels, to being able to more readily (and less stressfully) care for their loved ones, or simply finding themselves feeling more creative working outside of a traditional work environment.
And at a very practical level those who are working hybrid have more money in their pockets at the end of the month because they don’t have to buy as many train tickets, or fill up the car with petrol as often, or are saving on coffees and lunches – advantages they won’t want to give up in this low wage growth environment. That’s not to even mention the environmental benefits of less road traffic and air travel.
What does this mean for your organisation? Well, once again in Australia we foresee the war for talent kicking up another notch. Given the positive macroeconomic conditions described earlier the imbalance between demand and supply of workers is exacerbated by the fact skilled migration is on hold, overseas students are not able to travel, and the relaxation of our borders seems to be even further away with every passing month. Put simply, supply is falling further behind demand.
So, what can employers do to address the skills gaps that many were already facing prior to COVID- 19 and which now may be exacerbated by an increase in employee turnover? Flexible working creates some opportunities for those who are willing to take them.
Some questions to consider as you work through this for your organisation:
- Are you focused on attracting people and skills from talent pools you may not have been able to in the past? For example, are you looking at regional and rural areas outside of your own city or state for skilled and enthusiastic employees? Are you looking for skills in other adjacent industries?
- Are you looking at talent pools outside of Australia for the skills that you, your business, and your customers need? What’s stopping someone who lives in Tokyo working full time for an Australian business delivering personalised, online shopping support to your Australian customers?
- Are you focused on creating a new, post-pandemic experience for both your customers AND your employees? If you offer flexibility in where and/or when your employees work or creative benefits programs, for example, or are you singing this out from the rooftops – in your job advertisements, in communications with your customers, and most importantly, with your current employees to minimise the attractiveness of other industries that are adopting this approach?
While the answer might seem simple and exciting, it is a little more complex. Like most things in life, great outcomes very rarely come from taking the easy path. There is a real opportunity for government, employers, employees and employee representative bodies (unions) to come together to form a new social compact around ways of working that can benefit all parties. But it does require new thinking, new policy, and new practices. Organisations who lean in now have the opportunity to gain a real competitive advantage in the war on talent.
Will your next great hire come from Hobart or Helsinki?
Matt Lovegrove is a people advisory services partner at EY.