In-house development of young workers is essential for business survival

Amid the ‘Great Resignation’ and global demand for talent, Franziska Spoddig and Ian MacRae explain why firms need to invest in their early career employees

Changing demographics

There is no escaping the fact that employers need to do more to develop young workers. The Covid pandemic has accelerated the labour market problems that have been approaching for decades. The largest generation of workers are retiring, and not enough is being done to train younger workers, cultivate skills and provide opportunities. The largest cohort of employment is now millennials (born between 1981 and 1996), at about 50 per cent of the workforce. New entrants Gen Z (born from 1997 onward) have been joining the workforce for nearly a decade now.

Employers with a great deal of foresight have been addressing the potential for worker shortages and generational transfer of knowledge for a decade or more. Excellent onboarding programs, internal development and high retention rates have offset a demographic and economic time bomb for companies that were prepared. Companies with great compensation packages, good communication, early digital adoption and even flexible working long before 2020 are well-positioned to survive the ‘Great Resignation’. But many others are now suffering from high turnover and lack of available talent, and few plans for adapting to demographic challenges that have been inevitable for decades.

“It’s hard for people to commit, hard to make them feel attached to the core company” – HR director, France

It’s not surprising. Many employers forget about the importance of cultivating employee talent when there is a surplus of workers, especially when there are plenty of workers with decades of experience. Why upskill the next generation of workers when there are plenty of people available? The answer is something that many employers have overlooked: workers are not immortal, and failing to invest in skills development across the workforce means that employers will ultimately pay the price – and those that failed to invest before are going to be the least attractive employers, with the biggest hurdles ahead of them in developing both the infrastructure, the tools, the tech and the know-how to hire high potential talent and turn it into high performance.

International research from Berlin-based startup Instill conducted research to qualitatively understand the future of work, with a focus on the impact of young workers. It conducted in-depth interviews  with 46 senior leaders (35 per cent male, 65 per cent female) from companies in 10 different countries (primarily in Europe and North America). It found that although the previous years and challenges associated with Covid, most negative employment effects from the Covid pandemic affected younger workers. The least stable employment was for both men and women in their 20s, unemployment rates were particularly pronounced for younger workers, with young women experiencing a 10 percentage point increase (from 4 to 14 per cent), and young men an 8 percentage point increase in unemployment.

“Women and younger people, through isolation in the home office, tend to be most vulnerable” – talent acquisition manager at remote-first company, Germany

Younger workers were also employed in the industries that were hardest-hit by Covid. The experiences of younger workers were by no means homogenous: many worked in sectors where remote work was not an option, like retail, trades and hospitality. Younger office workers were far more likely to come into the office because of lack of space and resources needed for home working, and a fear of missed opportunities for learning, networking and developing the relationships that are critical to development and advancement, that are particularly important early on in a career trajectory.

Fewer in-person connections during Covid remote working created additional challenges for those who did not already have established relationships and workplace networks. “Less interaction is happening because we are less spontaneous [about making plans] with colleagues,” said one people and culture manager whose Germany-based organisation was working hybrid). These types of spontaneous in-person social interactions have advantages, especially for workers who are trying to learn not just the job but the nuances of workplace relationships, informal networks within and between companies as well as the unstructured support and advice that knowledgeable co-workers can offer.

None of these challenges should be construed as an argument against remote or hybrid work: it just highlights that are there are particular advantages for newer employees and younger workers in having structured and unstructured time with colleagues. Furthermore, younger workers and those early in their career tend to have lower incomes and consequently many do not have the same resources to have fully equipped, ergonomic, quiet and efficient workplaces. Hybrid or remote-first workplaces should consider how the savings from remote working arrangements can be used to ensure remote employees have the right tools, tech, support and resources to work effectively. As remote-first moves back towards hybrid working models, the availability of co-working spaces and the distribution of resources between remote, hybrid and office workers will need to ensure that all employees have access to the same opportunities and tools needed to do the work.

Attracting and retaining young talent

There should be no doubt about it: talent shortages are here to stay, and companies that do not adapt to the changing labour force will be chronically understaffed. There is no substitute for investment in skills development, and nothing that cultivates commitment from younger employees than investment in learning and development. It is true that people don’t leave bad companies, they leave bad managers. It is also true that people don’t stay for good companies, they stay because of strong, effective and proactive relationships that come from development, mentoring, reverse mentoring, intrapreneurship and knowledge sharing.

Training and development must be a strategic priority

Younger workers aren’t looking for sympathy. They are resilient, excited to enter the workforce, tech literate, and motivated to contribute to and improve their workplaces. This is a challenge that employers must rise to: train and develop the next generation of workers. Don’t expect new graduates to have years of experience. Training needs to be done in house, and clear development pathways need to be available. The labour market is not an unlimited talent pool to draw from – don’t expect your competitors to fully train your future staff or colleges and universities to educate graduates with the same levels of experience to replace workers who have been in the labour market for a generation. All developed economies are facing the same problems so international competition for talent is only going to heat up over the coming decade. Train and develop workers in house, invest in people and offer them career pathways and compensation packages that rewards loyalty. Commitment to work and a company cannot be expected when it isn’t a mutually beneficial relationship: and the next generation has many choices in a labour market dominated by understaffing and talent shortages. The alternative is losing out to the competition that has been planning for this demographic trend that has been obvious for decades.

“People need to realise they have things in common to build relationships, but there are so many of us and we don’t know what we have in common” – people and culture manager, remote-first company, USA

Franziska Spoddig is CEO of Instill and Ian MacRae is a work psychologist and author of Dark Social