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Looming Talent Shortage Rattles HR Departments
HR departments have long grappled with the varying needs of a diverse workforce, but now the stakes for doing this successfully may be greater than ever.
That's because a talent shortage looms as Baby Boomers, those born after World War II and prior to 1960, reach retirement age. Gen Xers, the label for people born from 1961 to 1970, number only about half that of Boomers. "We expect that in 10 years the talent shortage is going to be worse than it's ever been," says Row Henson, an Oracle HCM fellow.
"HR departments that succeed in the era of tight talent will be those that excel at retaining workers," she adds. "We know absolutely that it's cheaper to retain than to hire, so HR needs to look at how it develops the existing workforce so people want to stay," Henson says.
"The challenge is that each generation of workers, from Boomers to Gen Xers and the upcoming Generation Y (born from 1971 to 1980), is motivated by different professional incentives," Henson says. "Knowing what drives each of these groups is essential for retaining talent in the coming years."
"We know that work/life balance is very important to Gen Y people, who seek work hours that allow them to take their kids to school in the morning and pick them up in the afternoon," she explains. "Flexibility to Baby Boomers often means the freedom to work part time. Many want to retire early but still retain healthcare and other benefits."
The flip side of flexibility is an increased burden on HR departments to develop and manage all these different options. "Large companies spent years and a lot of money trying to standardize. Today's challenge isn't about standardization. It's about building a standard framework that allows for flexibility," Henson says.
One of the keys to this framework is the ability to leverage technology for innovations such as shared HR services, self-service HR functions, and centralized help desk capabilities.
"Companies should also consider how to align their HR processes more effectively with broader company goals," Henson says. "HR has traditionally been the touchy-feely part of the organization. Today, HR has to become a business partner aligned with the business objectives," she says. "It needs to be the owner of the corporate culture and employee branding. It needs to identify critical competencies and look at how they develop them. And within the HR department itself, people need to learn how to develop better analytical skills, process flexibility, and adaptability."
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