Fracturing World
Meet the four forces shaping your workforce strategy
Specialization. Scarcity. Rivalry. Humanity. Companies that understand—and harness—these forces will have an edge in creating vibrant workforces capable of achieving sustained, positive outcomes.
If you lead, manage, or plan a workforce, you’re familiar with disruption—and have seen a lot of it lately, including geopolitical and social crises and the biggest public health emergency in living memory. And you’ve spent time and energy on everything from designing remote and hybrid work experiences, to understanding the “great resignation,” to simply trying to keep your people safe.
Against this backdrop, you need to keep sight of the urgent, fast-moving workforce challenges you face—without losing sight of the long game. You need to inspire and support your people now, even as you help them redefine the nature of their jobs and roles so they can thrive in a highly uncertain future. Only by getting the balance right can you create the kinds of sustained outcomes that will benefit the company, your workforce, and even society.
A good place to start is by grounding your thinking in a better understanding of the dynamics that your workforce strategy arises from, and that it depends on. Four underlying forces—specialization, scarcity, rivalry, and humanity—have been shaping workforces at key points throughout human history, and they’re highly relevant again today. Taken together, the forces offer a framework to help companies understand the interplay between workforce strategy, business strategy, culture, and technology.
Meet the four forces
Four forces have shaped workforce strategies at key moments throughout human history—and they’re at it.
Navigate the interplay of four forces to create a more future-ready workforce.
Specialization
Today, digitization promotes specialization among organizations by easing collaboration. As companies focus on what they do best, they may tap external specialists or ecosystem partners for the rest. Consider how merchants rely on Amazon’s e-commerce engine for sales and fulfillment tasks they formerly would have done in-house.
For individual workers, meanwhile, the effects of technology are visible in any number of highly specialized roles (think data scientists, cyber-risk specialists, or software engineers) that your company must define, harness, and anticipate. The anticipation piece is key for at least two reasons: fail to predict what kinds of experts your business will need, and you will miss opportunities; fail to anticipate how roles are changing, and what were once specialized skills may become less valuable or even obsolete. This can happen anywhere in your organization.
As a leader, you face tricky questions in dealing with increasing specialization. How do you develop a view on what new skills you need and when? And where will you get them? Your access to specialized talent may be affected by factors as varied as your employee value proposition and the regulatory environment in which you operate.
Scarcity
We live in a world where all manner of shocks can alter the workforce in unpredictable ways.
Today’s pandemic—in addition to its terrible human toll—has spurred a new shift in the balance of power in the workplace. Demand for labor has increased sharply in some industries, as workers have quit to seek better opportunities in new fields (or even started their own businesses).
Scarcity also emerges from technological shifts. For example, automation is creating redundancies in some fields, while a growing need for workers in advanced and emerging technologies is generating shortages in others. Demographic trends also help determine how scarce or plentiful workers are—and have huge economic and social implications.
But scarcity isn’t just about head count or even dealing with the unprecedented challenges. For example, your company may have the right experts and specialists in place, and plenty of workers to fill vital roles. But you may still face a scarcity problem if your workforce lacks the broad-based skills it will need to succeed. The company may have a deficit in leadership or management skills, for example, or decision-making skills, project management skills, or even interpersonal skills. Companies frequently try to address such deficits through skill-building and reskilling efforts.
Rivalry
Fast-forward to today, when the digital revolution has created new forms of workforce rivalry. Consider how digitization has blurred traditional sector boundaries; or how the widespread move to remote and hybrid working makes geographic barriers much less relevant; or how technology companies have boosted pay for in-demand skills that companies in other industries also rely on.
As a leader, therefore, your rivalry challenge is both perennial and brand new. As always, you want your organization to stand out as an employer so you can assemble the right people and talent programs in order to bring your business model and strategy to life. But to compete in the future, your strategy might depend on your being able to attract and retain a workforce with a very different set of skills than you have today—to support your move into adjacent businesses. Consider the skills shifts necessary for Apple to move from its roots in product design into services such as banking, and health and well-being.
Humanity
Companies are increasingly seeking to differentiate themselves on their humanity—for example, by taking ethical and responsible stances on issues related to climate change and social justice. When successful, such efforts help the world, and help firms attract and retain workers. Indeed, fully 75% of respondents to a recent PwC survey said they wanted to work for an organization that would make a positive contribution to society.
Similarly, if you make your workforce more diverse and inclusive—across all elements of the human experience and identity—you help society while helping address challenges of specialization and scarcity. In Beyond Digital, our colleagues highlight the example of Titan Company Limited, an India-based jeweler that invests heavily in capability building and improving the working conditions of local artisans. This helps the community while supporting a healthy pipeline of workers in jewelry production.
Finally, humanity requires you to think deeply about your company’s culture, with a view to connecting (or reconnecting) people with your organization’s purpose and making clear to them how they may tangibly contribute to it. When the company’s purpose resonates with people, and they see clearly how they further it, not only are they more likely to stay (which could help with any of the other three forces), but they tend to be more engaged—and productive.
The case of the sluggish sales force – Scarcity & Specialization Case
A company in the TMT sector was facing slowing growth and a maturing product portfolio. The company’s strategy had always focused on cost—it acquired depreciating assets from other players and managed them for maximum efficiency. This approach was reflected in people’s incentives, and over time became a defining characteristic of the company’s culture. Yet, what had been a strength also created a worrying blind spot as the business environment changed around employees.
This became clear to company executives in the wake of what turned out to be a missed opportunity: a deal proposed by a key customer to partner on improving one of the company’s products. Why was it missed? In part because the account managers whom the customer approached with the idea had a broad-based skills deficit that the TMT company’s leaders weren’t fully aware of (a problem of scarcity). They lacked the management skills and decision-making skills that could have helped them engage with the customer in a new, more collaborative, creative, and potentially quite profitable way.
Similarly, the TMT company’s senior executives had not considered how customers might themselves be a source of innovation, let alone how this might challenge the company’s long-held strategy. Consequently, the company hadn’t anticipated the need for the kinds of engineers it would have required to customize the product (a problem of specialization). Therefore, even if the sales force had pursued the partnership, the company would have struggled to hold up its end.
Finally, all of this was exacerbated by misaligned incentives. The account managers were closest to the company’s customers, and therefore best positioned to spot growth and innovation opportunities, but they were rewarded for keeping costs low. In other words, they weren’t looking for growth opportunities because the company was effectively paying them not to.
A financial-services company connects the dots
As the TMT company’s example suggests, the four forces can prompt uncomfortable yet necessary C-suite conversations. This was true at a large financial-services company. Specialized skills were not an issue here; the company had formidable pockets of specialized talent. In fact, for years it had been benchmarking specialist tech skills and employee experience metrics against top-tier technology industry players—and not just its direct competitors—to stay ahead of the curve (a smart practice that harnessed rivalry to address specialization).
Nonetheless, company executives could see they were facing a skills scarcity challenge. The organization no longer had enough people in the right places with a deep understanding of regulatory risk, or with “softer” human skills in areas such as collaboration and problem-solving.
Ultimately, the leadership team saw that the company needed to change its culture in order to put a greater emphasis on care and diligence, renew the organization’s sense of purpose, and start rewarding how work got done and not just what (or how much) work got done. Only then could they be sure to consistently attract and retain the right people.
These realizations sparked a transformation that included improving workforce diversity and inclusion (a focus on humanity); addressing skills deficits in leadership development and succession planning (scarcity); imbuing more humanity into their culture to better attract and retain people (rivalry); and tapping into skills across a wider range of geographic locations to help address both scarcity and specialization.
Putting it all together
As the examples suggest, when companies start examining workforce challenges and opportunities with the four forces in mind, they often see more than they expect. And that’s the point: your workforce considerations directly affect everything else, including your business strategy, organizational model, and operating approach. Anything that provides more insight into these relationships and how to improve them is worth your time and management attention. Begin with three questions:
- What’s our starting point?
It’s a good idea to document your position against each of the forces. Ask: Which roles risk being automated most quickly (specialization)? Where are our biggest skills surpluses and deficits—and which employees are most at risk of leaving (scarcity)? What’s our employee value proposition, and how could it be stronger (rivalry)? What’s our current commitment to an orgnizational purpose, as well as to the communities in which we operate (humanity)?
The point of this discussion is to get a clear-eyed baseline of the bets that you have already placed yet might not be aware of. Look closely for how one force might be affecting others in subtle ways.
- Do the forces help or hinder our strategy?
UCLA professor Richard Rumelt reminds us that strategy isn’t an aspiration; it’s a plan. And if your strategy is a good one, designed upon a unique set of attributes or conditions that distinguishes you from rivals, then the four forces are a great (and fast) test to see where things are likely to go right—and wrong—in your strategic execution. Are you really going to hire the 10,000 data researchers next year that your strategy implies? A clear-eyed look at the four forces relative to your strategy could spark some awkward, but important, conversations. - Can we translate our business strategy into workforce strategy?
Winning companies create differentiation. What’s the unique value your company creates, and what must your people be uniquely good at to make it happen? And by contrast, where are your efforts better spent on creating partnerships and ecosystems?
Now, with this in mind, take your starting point from the first question and look ahead, say, five years. What force shifted the most or the fastest? Where might you be the furthest ahead, or behind? What moves have your competitors been making to undo your plans?
To make these discussions rigorous, use a scenario-based approach—and be prepared to revisit and adjust your scenarios regularly to maximize their efficacy. In a recent PwC survey of business and HR leaders, respondents whose companies used both scenario-based planning and dynamic planning (to revisit strategies and reallocate funding as needed) were nearly twice as likely to say their company had met or exceeded its financial and other targets. This resonates with our experience, which suggests that the most successful companies find ways to keep an eye on the long view, even as they address their more pressing, short-term workforce challenges.
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