One of the great maritime concepts with direct application in the business world is “sea change.” Sea changes are transformational events that alter the world in profound ways. What follows will bear little resemblance to the past, and the assumptions that worked well before can be off by orders of magnitude. What once led to success could now be a recipe for failure.
Black swan events (i.e., those that are possible though improbable) can precipitate sea change. One could argue there have been three in the 21st century: the terrorist attacks on 9/11, the Great Recession, and the COVID-19 pandemic. Each dramatically altered the path to the future on a global scale. The COVID-19 pandemic is the latest and undoubtedly most profound. Yet, there are silver linings among the dark clouds, including remarkable advances in technology and proof that we can work in different ways.
Sea change doesn’t happen in a vacuum. The US is undergoing a significant demographic shift: younger baby boomers are exiting the labor market early, and millennials are now the majority. Millennials are informed by past market influences; they are no longer interested in 30-year careers in one place, and opportunities to do so are becoming rarer. Tours of duty lasting three to four years are fine when diversifying skill sets while avoiding getting trapped in corporate rightsizing that may have marked their parents’ experiences.
Some economists argue current changes in the labor market are the most profound since the end of WWI and WWII. Few to none of us remember that period, but it is an understatement to say that 1946 looked little like 1939. It has become clear that 2022 won’t resemble 2019 in many critical ways.
In our most recent Aite-Novarica Budgets and Projects Report, one of the most critical issues insurer IT organizations face is talent. Many companies are losing institutional talent and memory, and attracting and retaining new talent is a challenge in a complex, hybrid labor market. Some corporate responses, including tone-deaf or “one size fits all” return-to-office plans, only exacerbate the issue.
Failing to recognize this sea change has insurer CIOs and their teams facing the very real possibility of capsizing. The lifeline of offshoring/outsourcing is facing the same challenge. The Times of India recently reported that demand for IT talent now exceeds pre-pandemic levels, and people are on the move. The loss of institutional memory may increase.
Insurers must consider new ways to deal with tomorrow’s labor needs. The world is becoming more dynamic and will reward agility as the shelf-life of technology grows ever shorter.
Explore non-traditional talent sources
Insurers once hired recent US military graduates, whom they tested on aptitude and trained as needed for emerging technology jobs. Many tech firms are pursuing a modern variant of this practice by connecting with people much earlier. Forget the end of four-year college programs: pursue rising sophomores or juniors. Engage community colleges where curricula may be more fluid. Connect with high school STEM programs. If this model of recruitment works in basketball, why not for IT talent?
Develop apprenticeship/cooperative education programs
These are terrific “try before you buy” opportunities that allow employers and employees to scope each other out in equal measure. Students can be highly motivated since they can’t graduate without successful experiences on the co-op front. Apprenticeships provide a form of mentoring that allows institutional knowledge transfer.
Rethink work
The nature of work today is profoundly different from what it was 40 years ago, but there’s still a whiff of the 1980s in some of what we do. Recently, BMW found they needed far fewer people to build cars and significantly more talent to support the robots standing on the production line. Their internal training program reskills people and guarantees high-paying work to successful graduates.
Rethink benefits
During and after WWII, labor shortages and a need for stability led to the growth of defined benefit retirement plans, a golden handcuff with profound implications. We no longer live in a world where thirty-to-forty-year relationships and associated liabilities make sense to anyone. If the idea is to stabilize relationships over a five-to-ten-year period, other benefits could have much more impact.
Student debt saddles millions of millennials and Generation Z; benefits that absolved them of that liability would improve their financial wellness and create the foundation for a new type of sea change on recruitment and retention.
Rethink retirement
The end of a career is a binary event at many companies: here today, gone tomorrow. Yet, many can’t or don’t want to retire fully; they just don’t want to work 40+ hours a week. A step-down program of 20 hours a week that involves virtualization and supports working from anywhere could be a powerful tool for retaining talent and institutional memory. It also buys companies time to perfect knowledge transfer protocols.
We live in a disorienting time. Under the right circumstances, it could also be exciting. One significant element of sea change is that the big players in the past don’t carry the same luster under changing circumstances. GE splitting in three is a current example. Packard, the American Rolls Royce, was gone a few years after its greatest successes in the 1940s.
If you’d like to discuss this or any other Aite-Novarica research, please let me know at [email protected].
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