Labour market calls for more talent mobility

How do companies guarantee that all looming skill gaps are dealt with in a timely way? The traditional approach – hiring permanent, payrolled employees – is still favoured in most European countries, according to an international survey conducted by European HR and payroll services provider SD Worx. However, more and more HR departments are expanding their horizons. With COVID-19 making smart workforce management even more pressing, employers should seize the opportunity to thoroughly revisit their talent strategies.

The labour market has put employers to the test lately. The growing need for new (digital) skills and competencies, the mass outflow of baby boomers and the global pandemic has companies struggling to find the right talent.

This is how companies are addressing their skills needs today, according to the survey:

As expected, buying talent is the number one option when companies are looking to strengthen their workforces. Nearly half the time (47%) European companies turn to new permanent employees to resolve skill and competency gaps, with Spain (65%), Belgium (52%), the Netherlands (52%), Italy 51%) and Switzerland (48%) all having above-average numbers. The only countries where buying talent is not the most common practice are Ireland and the United Kingdom, where the war for talent is waging even stronger than on the continent, due to lower unemployment numbers.

A first alternative to buying talent is finding solutions within the company. The SD Worx survey reveals that, today, upskilling and reskilling employees is a very common practice in most countries. German and British employers in particular put great emphasis on moulding their employees into the best versions of themselves. But Austria, France, Switzerland, Poland and Ireland also follow this path, with building talent being the preferred course of action in about one third of the cases. This is mostly done via formal training courses, but temporary exchanges and internal internships are also valuable initiatives that enable employees to develop new skills and competencies.

“Building talent is closely related to boosting internal mobility. This often allows employers to fill vacancies in a cost-effective way. Moreover, by focusing on sustainable employability, employees will be more productive and loyal to the company”, Cathy Geerts, Chief HR Officer at SD Worx.

Another way of adding flexibility to a company’s workforce is by employing contingent workers – workers that are not on the permanent payroll of organisations. Examples include freelancers, on-call workers and seconded staff. Although this practice is still not top of mind for most employers, things might be about to change. About 30% of European companies already employ contingent workers and another 30% considers doing the same.

So, why exactly should employers at least consider hiring flex workers? According to those companies that already employ flex workers, these are the main reasons*:

*The main reasons differ depending on the type of industry, the required skills, the business context and other parameters.

COVID-19 has split up the labour market into businesses that need to upscale and others that need to downscale. This imbalance could be addressed by sharing talent between companies and sectors – aka external mobility. For example, in Belgium, SD Worx brings companies from different sectors together. But companies could do this themselves as well. Even more, over 1 in 4 European companies already claim that talent sharing is somewhat to very common in their workforce management policies.

“The current business climate forces companies to rethink their workforce management strategies. In short, organisations need to strike a balance between having a solid permanent workforce to cope with constant skill needs and, at the same, having a more flexible workforce available to quickly respond to changing staffing requirements. Each company should decide which practices, such as internal and external mobility, best fit their context, but one thing’s for sure: there are more options than ever”, concludes Cathy Geerts.