Four forces have shaped workforce strategies at key moments throughout human history—and they’re at it again. By understanding how the forces have operated in the past, you can better prepare your contemporary workforce to weather tomorrow’s challenges.
Navigate the interplay of four forces to create a more future-ready workforce.
Given the highly interrelated nature of the forces, there’s no single best way to approach them. Perhaps one force represents a pressing threat, or an exciting opportunity. If so, start there.
But don’t stop there. The relationships between the forces can themselves be a useful nudge toward valuable conversations with your team—talks that lead to insights in other areas well beyond HR or even workforce strategy. Let’s look at how this is playing out in practice.
A company in the TMT sector was facing slowing growth and a maturing product portfolio. The company’s strategy had always focused on cost—it acquired depreciating assets from other players and managed them for maximum efficiency. This approach was reflected in people’s incentives, and over time became a defining characteristic of the company’s culture. Yet, what had been a strength also created a worrying blind spot as the business environment changed around employees.
This became clear to company executives in the wake of what turned out to be a missed opportunity: a deal proposed by a key customer to partner on improving one of the company’s products. Why was it missed? In part because the account managers whom the customer approached with the idea had a broad-based skills deficit that the TMT company’s leaders weren’t fully aware of (a problem of scarcity). They lacked the management skills and decision-making skills that could have helped them engage with the customer in a new, more collaborative, creative, and potentially quite profitable way.
Similarly, the TMT company’s senior executives had not considered how customers might themselves be a source of innovation, let alone how this might challenge the company’s long-held strategy. Consequently, the company hadn’t anticipated the need for the kinds of engineers it would have required to customize the product (a problem of specialization). Therefore, even if the sales force had pursued the partnership, the company would have struggled to hold up its end.
Finally, all of this was exacerbated by misaligned incentives. The account managers were closest to the company’s customers, and therefore best positioned to spot growth and innovation opportunities, but they were rewarded for keeping costs low. In other words, they weren’t looking for growth opportunities because the company was effectively paying them not to.
The episode was galvanizing for the company’s leadership, spurring them to ask bigger questions, starting with how the strategy ought to change to adapt to the changing environment. Leaders also began soul-searching about how the workforce strategy could better align with the future objectives of the business. It was in posing these sorts of questions that the four forces became part of management discussions.
Ultimately, the discussions about the forces helped inform the company’s choices, including a move to ramp up the business’s learning and development capability to upskill its workforce in targeted areas. The work is continuing, in the form of a new change program to help anticipate workforce skills requirements and match them to the various segments of the company’s product portfolio.
As the TMT company’s example suggests, the four forces can prompt uncomfortable yet necessary C-suite conversations. This was true at a large financial-services company. Specialized skills were not an issue here; the company had formidable pockets of specialized talent. In fact, for years it had been benchmarking specialist tech skills and employee experience metrics against top-tier technology industry players—and not just its direct competitors—to stay ahead of the curve (a smart practice that harnessed rivalry to address specialization).
Nonetheless, company executives could see they were facing a skills scarcity challenge. The organization no longer had enough people in the right places with a deep understanding of regulatory risk, or with “softer” human skills in areas such as collaboration and problem-solving. Moreover, the leaders recognized that they too needed to amp up certain skills to ensure they had the necessary end-to-end vision and deep sense of accountability. Without these things, the executives realized, the company would continue to have a hard time linking its specialists together in a consistent way across its business lines—and customers would continue to suffer for it.
Ultimately, the leadership team saw that the company needed to change its culture in order to put a greater emphasis on care and diligence, renew the organization’s sense of purpose, and start rewarding how work got done and not just what (or how much) work got done. Only then could they be sure to consistently attract and retain the right people.
These realizations sparked a transformation that included improving workforce diversity and inclusion (a focus on humanity); addressing skills deficits in leadership development and succession planning (scarcity); imbuing more humanity into their culture to better attract and retain people (rivalry); and tapping into skills across a wider range of geographic locations to help address both scarcity and specialization.
Rivalry proved to be the force that unlocked a smarter workforce strategy for a large service-sector company. Its executives had started the workforce planning process with specialization in mind—specifically, the need for specialist engineers.
But as the leaders looked more closely, some began challenging the assumption that the company needed to continue to compete strongly in major cities with the largest concentrations of engineering skills. After all, these were the same cities where everyone—including competitors from other industries—was fighting hardest for talent (rivalry).
Instead, the company’s leadership stepped back and got creative. Their plan? Select a region outside the major cities and become the employer of choice there, in part by forging links with local universities, communities, and government authorities (which even offered investment incentives). Although building up the resulting pipeline of talent would take time, the leaders knew that a longer-term approach would ultimately support its business strategy more effectively than simply competing head-on in existing talent hot spots against rivals with potentially deeper pockets.
Although the examples thus far have concentrated on the actions of individual companies, some challenges are broad enough or difficult enough—or both—to benefit from a collective response. Achieving greater workplace diversity and racial equity (at its core a challenge of humanity) is just such a problem. To address it, more than 250 companies in the US city of Atlanta have come together under the auspices of the Metro Atlanta Chamber of Commerce to form ATL Action for Racial Equity.
As part of the effort, which launched in February 2021, participating organizations prioritize actions from shared “playbooks” that provide guidance and resources to help advance Black talent, promote inclusive economic development, expand access to education, and invest in workforce development.
The initiative encourages companies to report statistics on Black representation in their businesses and supply chains (to keep feet to the fire), and to promote a range of initiatives that, for example, improve access to credit, create safe spaces on city streets, and work to end the racial profiling of young Black men. The participants are also encouraged to revisit their hiring and development processes to align recruitment and upskilling practices with workforce representation goals. Although the program is in its early days and much work remains, the results to date are encouraging. For example, a recent survey of participants found that 82% of companies track representation of the Black workforce, and 55% assess pay equity across race. Among the participating Fortune 1000 companies, fully 80% have formal supplier diversity programs as well.
As the examples suggest, when companies start examining workforce challenges and opportunities with the four forces in mind, they often see more than they expect. And that’s the point: your workforce considerations directly affect everything else, including your business strategy, organizational model, and operating approach. Anything that provides more insight into these relationships and how to improve them is worth your time and management attention. Begin with three questions:
A global financial-services company took this lesson to heart as it addressed an urgent rivalry challenge. Though the company was consistently losing people to competitors, its leaders recognized that their best hope would be in taking the time to invest in a multiyear commitment to strengthening elements of the company’s humanity. The organization dramatically increased efforts to help local communities, made meaningful environmental, social, and governance (ESG) commitments, and doubled down on purpose (and followed its commitments with action). The company carried this spirit through to its reskilling efforts, going so far as to make learning and development a distinctive part of the employee value proposition. By showing employees that leaders were committed to helping them learn and grow, the company has over time improved its relationship with clients and strengthened employee engagement, retention, and productivity. The company’s rivalry problems are now largely behind it. Now, it is the one luring people away from blue-chip rivals.
As workplaces, customer behaviors, and economic conditions continue to change in response to COVID-19, companies should focus on three key actions.
Global Leader, Strategy and Leadership for the PwC Network, PwC United States
Global Leader, Financial Services Advisory, PwC Singapore