The Herman Trend Alert

January 11, 2017

2017 Workforce/Workplace Forecast

Each year at about this time, The Herman Group issues its annual forecast. Use this foresight within your organization and in your career to proceed wisely and drive more profit to the bottomline by knowing what is coming.

1. Smart systems and AI will increasingly replace low-skilled workers.

As the march of automation continues, more people with low skills will lose their jobs, and that goes not only for bank tellers and grocery checkout people, but telemarketers as well. With robots like Baxter, who sells for $22,000 and can do many kinds of work without ever getting sick or needing any time off, low-skilled factory jobs will disappear faster and faster. There are even products in beta that can replace recruiters for initial interviews and human resource administrators who answer simple questions about benefits. Several times this year, we have been inadvertently chatting with a computer-generated personality, including one recently that began with . . ."Oh, sorry, I had to adjust my headset." But here's the challenge, someone must program the systems and repair them, when they breakdown. And that leads us to the next item. . .

2. Tightening markets for STEM jobs will mean intensifying workforce shortages.

Though Obama, employers, and even parents have placed more emphasis on STEM (Science, Technology, Engineering, and Math) education, we are still in a critically deficit talent situation. Further limiting the number of immigrants we can import---an avowed Trump policy---will only serve to make that situation worse. Our forecast is that there will be no reduction in the number of H-1B visas, but the bill to increase the restrictions will probably pass the US Congress. Outside of the US, there will be increasing shortages of all kinds of skilled jobs.

3. The Contingent Workforce will progressively become more important to employers everywhere.

As we forecasted in our book Lean & Meaningful: A New Culture for Corporate America, the contingent workforce has become significantly important to organizations worldwide. Globally, we expect to see more people hired as contract workers (flexible, temporary, or part-time) to help businesses quickly scale staff up, or down in response to changing demand. As stated in our recent Herman Trend Alert about contingent workers, by the year 2025, more than 50 percent of the global workforce will be contingent workers. Read the whole alert athttp://www.hermangroup.com/alert/archive_12-7-2016.html

4. More employers will suffer from lack of talent.

As we forecast in 2016, employers have stepped up to the plate and invested a little more in training and development. However, it has been not nearly enough. Many employers are still reluctant to spend  the money; they don't see it as the investment it is. One solution is mentoring---having experienced employees provide mentorship to younger, less-experienced employees. One hotel brand recruits Sophomore college students, majoring in Hospitality and Tourism, to work full time, while they attend school full-time as well. That way, they predispose the young people to working for them after graduation. Particularly effected will be the hospitality sector, because hotel construction has continued apace.The Hotel Restaurant Management (HRM) and Tourism programs in colleges and universities worldwide simply cannot keep up with the demand. In that sector, we are also seeing a growing demand for English skills, especially in Asia. Another sector that will continue to be affected is healthcare. Aging populations will ensure that any healthcare graduates will almost certainly be employed and we'll see ongoing shortages in various skill categories as well. We encourage employers to provide internships and apprenticeships to create their own talent pipelines.

5. Students worldwide are graduating without the requisite basic skills.

Lack of basic literacy and numeracy skills will continue to be problem for employers. Some companies have resorted to teaching these basics onsite. Through Khan Academy and other websites, increasing numbers of students will learn their skills in a hybrid combination of in-classroom and short instructive videos. These methods are becoming more and more accepted. The greater understanding of what works to educate children is helping to turn things around------just not nearly fast enough.

6. Some communities having some success with workforce development, but not enough.

Though a handful of areas are having success with what author Edward Gordon calls RETAINs (Regional Talent Innovation Networks), the numbers are woefully lacking. RETAINS are public/private partnerships created to respond to the employers' increasing workforce needs, especially for folks with higher skill levels. Employers have continued to dumb down their jobs or divide the work among multiple people, in response to their inability to find the workers they need. Many employers are looking for ways to automate out of these workforce challenges, as quickly as possible. 

7. Climate change and rising sea levels will continue to affect productivity.

Whether you're thinking about delayed or cancelled flights affecting road warriors or floods, tornados, and severe storms affecting local populations, areas worldwide are increasingly being challenged by storms and natural disasters. Allowing people to work from home has become an accepted workaround and we see an amplification in that trend. Worker productivity will continue to be diminished by the need to cope with severe weather. Rising sea-levels will cause more flooding which in turn will cause more problems for employees across the globe.

8. 3-D printing will create and eliminate jobs.

Once you move out of printing toys, the major advantage of 3-D Printing is the elimination of the need for inventory of parts. That means that once you have a 3-D printer and the raw materials it needs, companies can save up to millions of dollars on inventory of parts they no longer need to carry. We expect this revolution to hit automobile parts manufacturing any day now. The only resource that the car mechanic will need is the design for the part (downloadable from a website) which will be available for a fraction of the cost of the part---never mind the fact that you are saving the shipping. So we may eliminate the auto parts manufacturing jobs, but we will create jobs for technicians who know how to service and repair the machines.

9. China's continued slowdown will keep unemployment rates there and elsewhere high.

In 2016, we nailed the reduction to be seen in unemployment rates in the US; we said they would not drop below a level of 4.5 percent---and they didn't. Our lowest level was 4.6 percent. Still we know that there are millions of "discouraged workers" who have dropped out of the labor market. In response, we see a continued uptick in people starting their own businesses. Fueled by continued relocation of production facilities out of China to lower-cost regions, China's unemployment will remain high. Whether they lack workforce or life skills, employers across the globe, will continue to face the challenges of finding people who are employable.  

10. Use of gamification in training and development will increase.

While the use of gamification by some organizations has been eliminated, due to poor designs and implementation, we have seen other employers and markets use it successfully to engage and retain their internal and external customers. The new generations, Millennials and Gen Zers love to play games. To work, games must include the right intrinsic and extrinsic rewards. We especially like the games intended to teach teamwork and valuable skills.

11. Organizations will focus more on enhancing the Employee Experience.

There is an increasing number of employers worldwide that are driving more profit by engaging their internal and external customers with enhanced experiences. As we move into the future, expect to see greater emphasis placed on creating positive experiences for all of the stakeholders, including investors, suppliers, employee's families, and even the community. The person leading that effort will be the CExO (Chief Experience Officer). Our author Joyce's forthcoming book Experience Rules will detail how to best provide those experiences, as will subsequent Herman Trend Alerts.

12. Reduced regulation will be a welcome change for US employers.

With a Republican in the White House and Republicans in control of both houses of Congress, US employers are in for welcome reductions in regulations that have hampered growth and cost them millions of dollars. We expect to see this reduced enforcement in a number of areas including regulations from OFCCP (Office of Federal Contract Compliance Programs) and OSHA (Occupational Safety and Health Administration).

13. Expect more wildcards.

Due to our inability to know whether President-elect Trump will follow through on his promises, we can safely forecast there will be many more wildcards (Significant, and mostly unexpected events---natural and man-made) in the coming year. Some areas that will probably take hits: the environment, tourism, healthcare, and public television. We already know, with reduced immigration, there will be more workforce shortages. However, business may prevail and we may enjoy the good (and relatively inexpensive) work of our immigrant populations, except for the criminals, who probably weren't working in the legitimate economy anyway.

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