Talent shortage is the biggest barrier to business strategy success

Talent shortage is the biggest barrier to business strategy success

Labor market volatility is creating significant challenges across all industries and at virtually all levels, as companies continue to struggle to retain the talent needed to drive initiatives forward, while managing rising labor costs and inflation.

Spurred by the pandemic, which continues to dramatically alter our workplace and workforce, business leaders are focused on meeting customer expectations and creating business value through new products and services, innovation, automation, talent acquisition and development.

As businesses continue to emerge in a changing economy, a global talent management solutions company Vaco and its consulting platform, MorganFranklin Consultingwanted to learn more about the mindset of business leaders to see how the new economy is changing their plans and priorities, and to assess how well adaptable businesses will adapt to this new paradigm.

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The result Processing Trends Survey, explores the perspectives of more than 160 North American business leaders. The data collected reflects the transformation perspectives of business leaders across all departments, including C-suite, IT, HR, finance, sales and marketing, and operations. Survey respondents represent a variety of industries, including technology, financial services, retail and consumer services, as well as healthcare and life sciences.

Resource constraints, including difficulties in acquiring talent, emerged as a notable barrier for almost all respondents, regardless of industry. Likewise, automating and streamlining manual processes is a priority for business leaders when considering their transformation goals and priorities for 2022.

The main drivers of transformation in the new year are: 1) continued digital and technological advancements, 2) increased shared services and outsourcing to reduce costs, 3) implementation of automation and improving financial reporting processes, 4) ensuring more engaged leadership to fuel success, and 5) investing in talent.

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Expanding digital capabilities is central to transformation across industries
With a growing remote workforce, a tightening talent market, a demanding digital environment, and changing stakeholder needs, companies are focusing on increasing operational efficiencies to stay competitive and viable. For many, the implementation of technology is the basis for greater efficiency. Forty percent of respondents said implementing new technology solutions is their top priority for 2022. Some 30% will focus on launching a new product or line of business, while 24% will implement RPA and/or process automation in the new year. Another 20% ranked improved risk management (e.g. cyber), compliance and internal controls as a competitive advantage for tomorrow’s workforce. Another 20% indicate that optimizing back-office processes is crucial for the vitality of the new economy.

Increasing shared services or outsourcing is a priority area of ​​cost reduction for almost a third of business leaders
Thirty-one percent said increasing shared services or outsourcing is a top priority to reduce costs in 2022. In some industries, outsourcing is a major driver of cost reduction: retail and consumer services (41%), energy and construction (33%), and technology (31%). As companies look to 2022, their focus on outsourcing reflects a growing sensitivity to controlling financial waste and prioritizing the time and energy of their key employees. This trend allows employees to focus their efforts on revenue-generating activities and growth efforts.

Financial reporting will see a significant positive impact from automation
Thirty-three percent said general ledger and financial reporting will be the business areas most impacted by increased automation/process improvement in 2022. These tools will transform a variety of business functions , from payroll processing to marketing to customer support. Operations functions will be the second highest impact area (33%), followed by forecasting and budgeting (18%) and sales and marketing (12%). IT rounded out the responses at 8%.

Engaged leadership is seen as the most critical factor for successful transformation
Forty-six percent said engaged leadership is the most important area of ​​focus for successful transformation in 2022. Other key areas of success identified are a continued focus on people, process, technology and security (42%), change management and effective communication (38%), future vision and roadmap of initiatives (30%) and project management (22%).

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Talent shortage is seen as the biggest barrier to successful business strategy
Nearly half (49%) said a shortage of qualified candidates to fill vacancies is the biggest barrier to growth. The continued impact of COVID-19 (43%) is the second biggest impediment, followed by rising costs of benefits, such as healthcare (25%), supply chain stagflation (23%) and the political climate (16%). The job market was unlike anything business leaders (and job seekers) had experienced before – leading to employee quits, pay hikes, and more.

Perhaps the unifying theme of transformation in 2022 will be how companies respond to one of the most disruptive and uncertain labor markets they have seen in decades. Survey data shows that business leaders are already focusing on key strategies to navigate the challenging hiring landscape, ranging from a focus on shared services and outsourcing to prioritizing the change management and investment in automation to improve efficiency.

While the research revealed common obstacles, barriers and challenges to transformation, it also revealed some kernels of optimism:

  • 45% of business leaders said their leadership teams were effective at driving transformation initiatives.
  • 70% of business leaders rated their organization’s ability to use technology and automation in transformation efforts as “good” or “excellent”.
  • 44% of business leaders said virtual/hybrid working was an enabler, rather than a hindrance, to their organization’s ability to execute large-scale transformation initiatives.

A successful and sustainable transformation is a comprehensive, multi-year undertaking that changes the way a business operates at all levels.