The battle for talent is starting to define our organizations’ chances for survival. However, instead of feeling intimidated, I recommend rereading Karl Marx and Adam Smith who, together, offer us possible solutions. When speaking with business managers, a recurring issue tends to come up: “We’re missing talent;” “I can’t find the people I need.” This doesn’t come as a surprise. If we believe official economic statistics, there has never been a better balance between supply and demand in the job market. Despite financial crises, inflation, the energy crisis, and wars, the United States has registered an unemployment rate of 3.4% during the first quarter of 2023; Germany has registered 5.7%; and Brasil, 8.6%. In February, the OECD registered a historic low of 4.8%, considered barely above “full employment.”
However, the macro environment only explains a portion of the micro environment. It’s not about a lack of demand (jobs), but a lack of supply (opportunities).
I recently confirmed this when speaking with various Latin American organizations. “We’re willing to pay our candidates what they want, but we never get past the interview process. It’s starting to impact our line of business in the medium-term because we can’t scale,” said the founder of one of the largest nutrition companies of the region.
The same issue came up with a Central American finance company: “In many interviews, we tell our candidates that we’re willing to meet their salary requirements but, even so, they turn down the offer,” their CEO said to me. Paraphrasing Bill Clinton, “It’s not the money.”
It’s not the money
Now that, more than ever, the future of our businesses depends on creativity and innovation, it’s time to relearn. And we need to do so without hesitation, because the 21st century is redefining the laws of the free market that we once viewed as unalterable, especially when it comes to talent and creativity. Before the pandemic, many of us hoped that creativity and talent were endless, and that it was simply a matter of the price we were willing to pay in order to make the most of them.
In only a few years, humanity discovered a new set of life priorities based on three pillars: first, that our ability to project, imagine, and create ourselves is limitless; second, that technology offers solutions for those goals that allow us to make the most of them; third, that the quality of life is no longer a desired asset, but a reason for defining how we do what we do. In other words, we no longer work to subsist, but to improve.
As leaders, we need to understand that the value of our supply is no longer about job stability or year-end bonuses. Now, it’s about the culture it represents, the creativity it offers for professional development, and, most of all, its aspirational culture.
Faced with this reality, HR has become a challenge in itself. The department has lost the advantage of being the strongest player in the negotiating table, and now needs to compete with their candidates in an increasingly competitive, short-term market. Their problem isn’t a lack of talent, but a lack of supply. Talent abounds—but it also chooses—all in an environment in which previous formulas for valuing work have shifted in a world that is now made up of various possibilities of work, including office, hybrid, flexible, and remote models. In other words, we’re forced to redefine the laws we once viewed as unalterable, but that would prove Karl Marx and Adam Smith right.
Today, negotiation power is in the hands of the “proletariat,” following Marx’s ideology. Simultaneously, competition for talent is defined by the free market’s law of supply and demand that Smith’s theory left us. The problem is that today, we need to understand that creativity, which adds value to the talent we’re competing for, also redefines its “productivity model.” It can no longer respond to a determined “p” price multiplied by a “q” quantity, for the market to redefine its price.
It’s high time to abandon old models
When competing in the search for answers for an increasingly elusive talent, the impact of Chat GPT’s artificial intelligence serves as a good example. The algorithm is starting to decrease the need for human talent when writing an article, taking a photo, investigating, or answering questions for any basic investigation. Chat GPT generates better and more results in less time—for free, without the pressure of unions, or the need to offer personal benefits or reach agreements. This also occurs in the service industry, where AI replaces more and more tasks that were previously assigned to people. Not always achieving the desired efficiency, but it’s only a matter of time for its results to improve.
It’s high time for our organizations to recognize that today, when it comes to talent, the future is at stake. Specifically, HR is being called to abandon their old models and understand that they currently play a strategic role for guaranteeing the future of our business with new concepts and models, regardless of whether they like it or not.
The challenge: learning to measure our value as an organization from the standpoint of the appeal that the experience of working in our business can have for our current and future collaborators.
This experience, however, can no longer be limited to the benefits once offered by technology sectors (gym memberships, yoga classes, or other wellbeing benefits).
We need to shift our point of view and know how to design our businesses for them to become places of professional and personal development. The opportunity for personal development that we create will be just as important as those for career development. The quality of the relationships we build and nourish with collaborators will be a key factor within this model, especially in a world of work that, together with transformation in technology, is leaving behind its physical limitations.
Creating this appeal can be just as important or challenging as achieving a good experience with our traditional clients. Ultimately, our collaborators are “internal clients.” But they’re also clients that live with us for a period of time, and we depend on them wanting and being able to offer the best versions of themselves during that time period. Creating the best employee experience regarding professional and personal aspects will be what allows us to encourage and leverage the holy grail that is collaborators’ creativity. Creativity no longer responds to the free market, but we depend on leveraging the collective creativity that brings together our organization in order to guarantee our future.
By Alberto Bethke, CEO and founding partner at OLIVIA