Executive
Perspectives

Investing to Win Talent
July 2021

LABOR BOTTLENECKS LEAD TO MORE CAREER CHANGESIN THIS DOCUMENT

Many employees are reconsidering their fit with their current job
after a challenging year. They are asking for greater recognition andflexibility while looking for alignment of values with their employer
on topics that matter, such as diversity and environment.

INVEST TO RETAIN AND WIN TALENT
Amid increased calls for greater compensation, companies should also
invest in talent by prioritizing employee value proposition improvementsthat re-recruit current employees and attract new talent. Companies
should innovate flexible working models, embrace digital tools thatenable connectivity, and reimagine diversity, equity, and inclusion (DEI)
as a powerful investment to unlock the potential of their employees
across a broad array of identities throughout their careers.
Sources: BCG analysis and case experience2

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

BCG Executive
Perspectives

After record layoffs during the COVID-19 pandemic, many workers
are opting out of the workforce as global labor force participation
dropped by hundreds of millions. Hiring demand has spiked as
economies recover, leading to labor bottlenecks that will be resolved
differently in each talent segment (e.g., wage, industry, region).

1

TALENT TRENDS

Investing to Win Talent
1

Global labor force participation is 3 pp below average,1 resulting in a smaller labor pool

2

Strong hiring recovery is causing labor bottlenecks as labor demand outpaces supply

3

Decrease in pandemic-era employee well-being is reflected in 56% considering a job change2

4

Employees now rank compensation and flexibility as most important workplace factors2

5>50% would decline a job if the company did not have same environmental/diversity views3

Companies must re-recruit current talent and attract new talent by investing in improved
employee value proposition

2

IMPLICATIONSFOR LEADERS

1

Co-create flexible working models with current employees, tailored to specific roles

2

Embrace digital tools for connectivity and collaboration from the C-suite to the frontline

3

Invest in building a DEI capability that supports employees’ diverse identities throughout
their careers

1. International Labour Organization, comparing 2020-2021 with 2000-2019. 2. BCG/Future Forum white paper. 3. BCG Decoding Global Talent (2021)
Sources: ILO, Future Forum, BCG analysis and case experience3

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

Summary

Jobs lost

Recruiting

Retraining

Flexible models

Societal impact

36%

56%

68%

76%

70%

Of global workers
were laid off orforced to reduce
working time due
to COVID-19

Open to looking
for otherpositions within
the next year while
20% are alreadyactively looking1

Of workers arewilling to retrain to
obtain skills for acompletely newjob

Are looking foradded flexibility inwhere they work1

Say that companies’
diversity andclimate views
have become more
important to job
searchUK

Australia

Philippines

Germany

China

France

US

Japan

55%
23%

63%
54%

77%
50%

79%

N/A

73%

1. Based on knowledge worker survey only
Sources: BCG Decoding Global Talent (2021) for jobs lost, retraining, and societal impact; BCG/Slack Future Forum Pulse Survey, conducted April 26-May 6, 2021. Number of respondents = 10,541 knowledge workers across US,
Australia, Germany, Japan, France, and the UK

4

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

Exampledata

Global trends

The past year has reshaped the global talent market

Global labor force participation is 3 pp below average,
resulting in a smaller labor pool
Global labor force participation1
dipped during the pandemic

In US, mid-career labor force
participation continues to remain lower
Change in labor force participation rate relative to June '18 (pp)~200M people

3

Mid-career2

Later career2

Early career2

2020

2021

0

62%

59%
-3

Average labor
participation, 2000-2019

Average labor
participation, 2020-2021

Shock of past year led global workers to reconsider valueof their work, causing some to sit out and wait for higher
pay or improved conditions

2019

Increased childcare requirement has impacted
mid-career and particularly working mothers
Virus fears have affected later career and those withmanual or service jobs
Government unemployment stimulus leads to lower
participation especially for early career and lower
wage segment of workers

1. Proportion of working-age population that engages actively in the labor market, either by working or looking for work. 2. Data was provided in 5-year bands so representative groups were selected – early career 25-29, mid-career 3539, later career 60-64
Sources: International Labour Organization, BCG/BHI, BLS, NBER, BCG Center for Macroeconomics

5

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

1.1

Strong hiring recovery is causing labor bottlenecks as labor demand
outpaces supply

In the US, job openings have recovered andstarted to make up for the pandemic dip

Globally, companies are struggling to fill roles
and are acting to improve hiring and retention

Monthly job openings (millions) as of May 2021

10

Hiring: American companies are beginning to offer signingbonuses for lower-wage jobs that did not previously offer signingbonuses (e.g., housekeepers, movers, fast-food employees)

50Retention: European banks and other high-wage employers
worked with regulators to allow increased bonus pool

2017

2018

2019

2020

2021

Immigration: Singapore and Australian governments areunder pressure to reopen borders to allow flow of skilled migrant
workers (who make up 30+% of workforce in both countries)

Labor bottlenecks
Recovering hiring rates have not been matched by a recovery of labor force participation. Labor bottlenecks are expecteduntil labor supply normalizes with demand, but recovery will vary by segment/region (e.g., in the US, wages are
growing faster for lower-wage jobs1 [4.4%] than higher-wage1 jobs [2.9%], implying deeper bottlenecks in lower-wage jobs)
1. As of June 1, 2021. Based on 12-month moving averages of monthly median wage growth rates for first-quartile versus fourth-quartile wages, computed hourly
Sources: BLS, BHI Center for Macroeconomic, Federal Reserve, press search

6

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

1.2

Decrease in pandemic-era employee well-being is reflected in
56% considering a job change

Employee well-being has declined
over the past year…
23%

36%
Increase in well-being
Decrease in well-being41%

Of employees saw
decreases in well-being
compared with only 23%
who saw increases

Largest decreases were seen bymanual and service workers,
as well as employees below
the manager level
No change

Sources: Well-being from Dec. 2020 BCG/The Network web survey and analysis (n=208,807). Job switch data from Future Forum Pulse Survey,
conducted April 26-May 6, 2021. Number of respondents = 10,541 knowledge workers across US, Australia, Germany, Japan, France, and the UK… contributing to employees
wanting to switch jobs
After the events of the past year,56%
Of knowledge workers are open to
considering other positions in thenext year with 20% actively
looking for a new role today
7

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

1.3

Employees now rank compensation and flexibility as most important
workplace factors

1.4

Importance of workplace factors ranked according to a Future Forum1 study

1

Rewards (pay, benefits, recognition)

2

Flexibility

3

Relationships with coworkers

4Workload5

Relationship with manager

6

Autonomy of work

7

Alignment of job with values

8

Career advancement opportunities

9

Development opportunities

10

Company trajectory

Short-term benefits such as
financial compensation
and recognition rose inimportance during pandemic

Relationships continue
to remain top priorities
throughout pandemic

1. Future Forum consortium was launched by Slack and is also led by BCG, Herman Miller, and MLT
Source: Future Forum Pulse Survey, conducted April 26-May 6, 2021. Number of respondents = 10,541 knowledge workers across US, Australia, Germany, Japan, France, and the UK

Employees are asking
for increased flexibility
92%

In whenthey work76%

In where
they work

Remote working allows
new models as some seek
to work from lower-costdomestic locations orinternationally
Flexible talent models canalso increase the use of
remote gig workers
8

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

as of May 2021

>50% would decline a job if the company did not have sameenvironmental/ diversity views, especially important over the last year

Employees will not accept jobs if employers do not match theirpersonal beliefs1

52%

51%

…a trend that is becoming
more important

7 in 10
Respondents said diversity
and climate have become
more important factors overpast year2 to their job search

Would exclude companies that
do not match beliefs inenvironmental responsibility

Would exclude companies that do
not match beliefs in diversity,
equity, and inclusion (DEI)

1. Percentage of respondents who agree with that statement “I would exclude companies that do not match my beliefs in environmental responsibility/diversity andinclusion.” 2. Respondents who agree that “The issue of environmental responsibility/diversity and inclusion became more important to me over the last year.” 3. For
environment, 55% ages 21-30 would exclude companies that do not match beliefs versus 49% for ages 60+. For DEI, 54% ages 21-30 would exclude companies that do
not match beliefs versus 47% for ages 60+. Source: Dec. 2020 BCG/The Network web survey and analysis. Number of respondents = 208,807

Younger respondents are more
willing3 than older respondents
to exclude companies that do
not match their beliefs acrossenvironment and DEI
9Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

1.5

2

Companies must re-recruit current talent and attract new talent
by investing in improved employee value proposition

While increasing wages is the key and immediate lever among 5 offerings to improve employee
value proposition, companies should consider culture, working model, and people next:

1

Rewards
Compensation, benefits, andrecognition for work

3

Working model
Flexibility in when and where
employees work, work-lifebalance, and workspace

2

CultureCollaborative environment
with a strong focus on growthand (remote) development

4

PeopleDiversity of team andrelationships/affiliation
with coworkers

Source: BCG analysis and case experience

5

PurposeCompany’s reputation,
values, type of work, andviews on societal issues

10

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

Employee value proposition offerings

Challenging global labor markets require companies to improve their employee value
proposition by first catering to current talentCo-create flexible working models withcurrent employees, tailored to specific roles

85%

Of respondents in a talentmanagement survey say working
with current employees toaddress needs andexpectations is the key successfactor in competition for talent

Creating working models with employees
offers benefits:• Improved internal buy-in once
future model is launched• Ability to customize using input
from specific roles and functions

Software company
embraced nonlinear
workday by setting teamlevel agreements about“core team collaboration
hours” while allowing
individual flexibility
for other hours

Iterative process

Companies should use an iterative process that leverages input from current
employees to develop and implement flexible talent models

1

2

3

C-suite announces flexible
working models as priority
and that voices of all
employees will be included
in development process (e.g.,
via surveys, advisory panels)

Organization leaders
brainstorm flexible working
initiatives. They should test
feasibility and crowdsource
new ideas from frontline
employees to prioritize
initiatives (e.g., hybrid
collaboration, flexible hours)

Launch experiments forflexible working initiatives
with small teams to test
and measure efficacy

Sources: BCG Creating People Advantage (2021), BCG case experience4
Collect feedback from bothmanagers and their teams.
Repeat experiments or moveto other initiatives

Process example:
Technology company
completed co-creation
process with employees
on initiatives such as
location-agnostic roles,
which allowed them toreach a larger potential
talent pool

11

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

Example:Defining modelwith employees

2.1

Embrace digital tools for connectivity andcollaboration from the C-suite to the frontline
Leaders must rethink connections with the advent of more remote/hybrid
collaboration in order to unlock potential and enable a strong talent culture

1

2

Retrain managers/leaders on digital
tool fluency and provide resources
on how to lead in a remote/hybrid
world (e.g., online empathy)

Align in-person team time
to work on collaborative
activities while saving otheractivities for remote team time

3

4

Ensure managers are experimenting
and building muscle through daily
use of digital tools (e.g., virtual
training platforms, coffee chat pairing,or asynchronous working like Trello)
Track metrics and reward
successes when new models
are preserving productivity,
innovation, and satisfaction

Strong digital tools important for digital skills future

41%

Believe technology
will significantly
disrupt their role

As technology continues to evolve, leaders must invest time toupskill themselves and their teams on digital tools,
unlocking team’s potential in a digital talent future. Continue
evolving connections as external digital talent is hired

Sources: BCG/Future Forum White Paper, BCG Decoding Global Talent (2021), BCG case experience

Digital tools need to be
deployed alongsideleadership andculture change toensure that new ways
of working aresustained

ExampleAt a large insurer,
managers created virtual
team sessions where
agents encourage one
another or makesuggestions in private
chats as they make sales
calls. Team leaders canprovide live feedback in
private breakouts fromthe team room

12

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

Digital future

Building virtual connections

2.2

Invest in building a DEI capability that supports
employees’ diverse identities throughout their careers
DEI leaders have evolved programs beyond simple segmentation. They integrate
DEI into their processes and initiatives by treating DEI as a capability to develop

Customizing for diversity and inclusion

3 steps for companies to ensure a step change in DEI:

1

2

3

Redefine why DEI isbeneficial and should be
developed as a capability

Reset who to segment intotalent identities and adapt
over course of career

Reinvent how to customize
offerings in a practical,
data-driven manner

Winning and maintaining talent canbe a key differentiator. Thus, DEI
can be approached as a strategic
capability

Consider full multiplicity ofidentities and evolving workand life contexts that shapeemployee experiences in theworkplace (e.g., only child of
aging parents, career switcher)~1/3 of employees found none of
50 common DEI initiatives to behighly effective, reinforcing need to
identify initiatives that more fully
address employee needs

Reframe benefits of DEI initiatives
around their ability to enable
employees to thrive individuallyand collaborate effectively

Build a comprehensive
understanding of underlying
needs at critical intersectionsof identity and context where
employers can shape outcomes

Source: BCG It's Time to Reimagine Diversity, Equity and Inclusion article (2021)

Develop holistic initiatives thatrecognize the diversity of needs
within any demographic group andlook beyond near-term tactics andbenefits to shape an enduring
ecosystem of support

DEI examples:
Food & beverage company
revamped diversity
mentorship program toinclude accompanying
cultural transformationthat measured
outcomes and improved
diversity in pipeline toengage and prepare
diverse leadersService company
expanded assistance forcaregivers during COVID19 to encompass broader
types of caregiving by
creating a support network
to account for additional
responsibilities and needs

13

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

2.3

Companies around the world grapple with challenging labor markets while
thinking through their talent model
As of 15 July 2021

A global worker shortage means
millions of jobs and not enoughapplicantsJune 13, 2021

Four-day week ‘an overwhelming
success’ in Iceland

July 1, 2021

Employers are offering bonuses forroles that usually don’t see such perks

July 6, 2021

As office life beckons again, thepandemic’s digital nomads weighbenefits of a return

July 8, 2021

Over 50% of hospitality workers
wouldn’t return to their old jobs forany reason
June 2, 2021

CEO pay increasingly tied to diversity
goals

June 17, 2021

After pandemic and Brexit, UK begins
to see gaps left by European workers

July 13, 2021

Hybrid work: What the office could
look like now
14

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

June 29, 2021

Source: BCG

Decoding Global
Talent, Onsite andVirtualCreating People
Advantage 2021

Future Forum:
Investing in a Flexible,
Inclusive, andConnected Workforce

Decoding Global Waysof Working

It’s Time to
Reimagine Diversity,
Equity, and Inclusion

Amplified Calls for
Racial Equity Need
Amplified Responses

Decoding Global
Reskilling andCareer Paths

Building the OnDemand Workforce

I Want to Work but I
Don’t Want a Job:
Why Flex Jobs Are
Next Big Thing for the
Future of Work
15

Copyright © 2021 by Boston Consulting Group. All rights reserved. BCG Executive Perspectives updated 22 July 2021 Version 2.0

Additional perspectives on talent

Disclaimer

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Executive
Perspectives

29