As internal auditors put the finishing touches on their risk assessments before preparing their 2021 audit plans, there is one risk that should not be overlooked: talent disruption. While there has been some degree of challenges in organizations' talent pools for years, I believe a perfect storm is coming that will create more pervasive talent disruption risks in 2021 than any time in memory.
There has been plenty of speculation about how businesses will operate in a post-COVID-19 world, including short- and long-term changes to managing talent. While no amount of speculation or crystal-ball gazing can provide definitive answers to how these issues will manifest, one thing is certain: Talented executives and staff are becoming restless and are gazing beyond the confines of their employers for new opportunities.
There are plenty of studies that point to a significant percentage of employees — as high as a third — questioning the wisdom of returning to the workplace. Others speculate about how work-from-home will change recruiting, salaries, and other compensation. Still others question the impact on workplace culture, team chemistry, and how technology could mitigate or alter any disadvantage of not being physically present to network and build alliances.
Earlier this year, EY gathered a group of 100 senior professionals from around the world to examine the impact of COVID-19 and identify steps that business leaders need to build into their thinking about the future. Part of that discussion focused on talent. Those sessions identified several trends that point to significant talent disruption. For example:
The EY brain trust also addressed the pandemic's influence on two trends that could accelerate changes to business models: digital transformation and the corporate shift to long-term value. From Beyond COVID-19: Will You Define the New Normal or Watch It Unfold?:
"With virtual and digital replacing physical wherever possible, adoption of automation, AI, and AR/VR will surge, participants predicted. The ability to deploy computing power, bandwidth, the cloud, and cybersecurity will define winners. Success will depend on continuous business model innovation with agile, open collaboration.
"At the same time, several participants observe that the pandemic has put human welfare and sustainability front and center. Consumers see a new role of companies for good and will value companies demonstrating a long-term value agenda in culture, purpose, and ethics."
An even more fundamental change in business models is examined in 9 Future of Work Trends Post-COVID-19 from Gartner. A 2019 survey by the global research company found 55% of organizational redesigns focused on increasing efficiency by streamlining roles, supply chains, and workflows. The pandemic has shown that, while this approach can increase efficiency, it offers little flexibility to respond to disruption.
Just a year later, business leaders are gravitating to business models that stress responsiveness by avoiding rigid structures, embracing agility, and providing employees with varied, adaptive, and flexible roles that also promote cross-functional knowledge and training.
Another consideration is demographic dynamics to the post-COVID-19 work environment. For example, research by ManpowerGroup exposed significant variations by generation and gender. A recent survey by the firm found:
- Generation Z is most keen to return to the workplace to develop their careers and socialize (51%), while millennials are least positive (38%).
- Generation X values being in the workplace to concentrate and collaborate away from household responsibilities. Boomers, meanwhile, choose socializing and collaborating with colleagues (34%) as a top reason to return.
- Almost half of men (46%) feel positive about returning; only one-third of women (35%) feel the same.
- Men with children list spending time with their family as a top benefit to working remotely.
Women feel more negatively about going back to work, increasing in concern the younger the children — 61% for children up to 5 years old, 53% for ages 6-17, and 50% for those 18 and over.
Significantly, the ManpowerGroup report reflects fundamental changes in the way employees think about the workplace, with 43% agreeing that the pandemic marks the end of full-time work in the office and 80% desiring more remote work to support a work-life balance.
A final consideration is one that hits close to home with me: The work-from-home experience has provided many a glimpse into an alternate lifestyle. This forced experiment, while uncomfortable at first, has generated new insights for many about priorities and relationships.
Indeed, I expect that I will always look back on 2020 as the year when the isolation created by COVID-19's shelter-in-place dynamic changed my life. It effectively interrupted a busy schedule of nearly nonstop travel that dominated my existence over much of the past 10 years. This dramatic reinvention of my professional persona — from a globetrotting spokesman for the profession I love, to a homebound business executive — likely accelerated my decision to pass the torch to a new CEO for The IIA at the end of March 2021.
Clearly, I am not alone. The global health crisis has fundamentally changed how we work, play, and, for many, see our futures. This portends a fundamental change to the employment contract and a dramatic talent disruption for organizations. Risk professionals must be prepared to not only understand and manage this emerging risk, but to exploit it, as well. Internal auditors certainly should not manage this risk for their enterprise. However, it should be on the radar for potential assurance to management and the board that it has been identified and is being effectively managed.
As always, I look forward to your comments.