Connected workforce: concept for modern HR management

"We are running out of workers." With these words, Detlef Scheele, former President of the Federal Employment Agency, described the situation on the German labor market in 2021. Since then, the shortage of skilled workers and managers has continued unabated. Companies - regardless of their size and industry - are finding it increasingly difficult to fill vacancies and retain qualified employees. Indeed, some companies are even threatened with incapacity to act. To prevent this, new conceptsformodern HR management are needed. Our solution is the Connected Workforce.

The shortage of skilled workers and managers has many causes

The shortage of skilled workers and managers is not a new phenomenon that has suddenly appeared overnight. Rather, it is a creeping process that has gained significant momentum in recent years and is now approaching its peak ever faster. According to the Skilled Workers Report of the German Chamber of Industry and Commerce (2023/2024), half of companies are complaining about a lack of staff. A total of around 1.8 million jobs remain unfilled. This means that more than 90 billion euros in added value is lost. This corresponds to around two percent of gross domestic product. The lack of qualified personnel has an impact on companies' ability to operate. 82 percent expect negative consequences in their own company, such as

• adding to the workload of the existing workforce (60%)
• increasing labor costs (59%)
• Restriction of supply (40%)
• Loss of orders (40%)
• reduced innovation and competitiveness (22 %)
• decrease in investment in Germany (16%)
• reduction in regional attractiveness as a business location (15%)
• Closing the business (9 %)
• Relocation abroad (8 %)

If you look at the causes of this development, one quickly ends up with demographic aspects. However, attributing the tense situation on the labor market to this alone is too short-sighted. There are many reasons for the shortage of skilled workers and managers:

Demographic change

We are getting older and older. While life expectancy at the time of birth was 35.6 years (men) and 38.5 years (women) when records began in 1871, people in Germany now live more than twice as long according to the 2020/2022 mortality table from the Federal Statistical Office: men have a life expectancy of 78.3 years, women 83.2 years. It is interesting to note that people of advanced age are also living significantly longer today: 65-year-old men live an average of 17.6 years longer. For women it is 20.9 years. One of the reasons for the increased life expectancy is improved working conditions and corresponding personnel strategies.

If you put demographic change in relation to the shortage of skilled workers and managers, the buzzword "baby boomers" is not long in coming. in 2022, people born in the mid-1950s to late 1960s were the largest age group in Germany at around 14 million. The fact that they are gradually retiring from working life - with decreasing Birth rates - is a major problem for the local economy. While 1.36 million babies were born in Germany in 1964, the figure was only 663,000 in 2011 - the lowest since the peak in the 1960s. in 2022, 738,800 newborns were born. The figures prove it: younger generations cannot close the gap in the labor market - neither now nor in the future. This is because the number of people of working age (20 to 66) will fall from 52 million (2018) to an estimated 40 million by 2060. Without concepts for modern HR management, many companies will fall by the wayside.

Changing values

A multi-layered change in values is also taking place: Many older people are fit and want to continue working. in 2012, according to the Federal Statistical Office, 47% of people aged between 60 and 64 and 11% of people aged 65 to 69 were in employment. in 2022, the employment rate was 63% (60 to 64-year-olds) and 19% (65 to 69-year-olds) respectively. It is striking that highly qualified 60 to 64-year-olds are more likely to be in employment (74%) than low-skilled people of the same age (50%). The self-employment rate is 31 percent for the over 65s and 13 percent for the 60 to 64-year-olds.

However, instead of adapting theirHR strategy and creating working environments that enable even more older people to pursue their careers, companies prefer to focus on millennials. This is problematic because this group of people, which includes those born between 1980 and 1999, no longer finds fulfillment (only) in their jobs. As Deloitte found out in the Global 2023 Gen Z and Millennial Survey, 68 percent of millennials have a full-time job, 16 percent work part-time and one percent have a temporary job or are self-employed. When asked about their professional goals, millennials want a work-life balance, work-life balance, career opportunities and a high salary. In their private lives, they are concerned with aspects such as the rising cost of living, climate change, the unstable global situation, the scarcity of resources, health issues and interpersonal relationships. This means that what is important in life is changing. Away from the unconditional pursuit of professional success towards a satisfied life in which work plays a subordinate role. Strategies and concepts for modern HR management must take this development into account.

Another aspect of the change in values is the fact that a relevant number of people do not have to or do not want to work - and therefore do not pursue a career. We are talking about the so-called "generation of heirs", who are financially independent from birth. The German Institute for Economic Research found out in 2021 that the richest ten percent of the population receive around half of all inheritances and gifts. This group of people own two-thirds of the total wealth in Germany. What's more, if the richest twenty percent are the beneficiaries of inheritances and gifts, they receive up to four times more than the rest of the population in such a situation. Of course, there are many wealthy people who are at the top of large companies and do their job with passion and great dedication. At the same time, these people participate in professional life of their own free will - not because they have to earn a living. If a relevant number of those people who belong to the legacy generation decide not to work, this will further widen the personnel gap on the labor market.

Global "War for Talents"

The struggle for promising talent and experienced professionals is no longer only taking place within Germany. Rather, there is a global battle for workers. At the same time, the former "employer market" has developed into an "employee market": Highly qualified workers in particular are aware of their importance to companies and are free to choose their employer. This is because employees no longer want to work for a company, but with one - in partnership and on an equal footing. Many high potentials are also willing to go abroad for an attractive job. Or expressed in figures from the Mercer's Global Talent Trends Report from 2022:

• 96% of HR managers consider the current job market to be employee-oriented.
• 90% of HR managers believe that more needs to be done to build a trusting corporate culture.
• 70% expect above-average staff turnover, especially among younger and digitally savvy talent.
• 62% of people only work for companies that enable remote or hybrid work.

The global war for talent means that the traditional job market is largely empty. In order to attract talent and professionals, companies have no choice but to recognize the value of "partnership" instead of "leadership" and to adapt their HR strategy and establish concepts for modern HR management.

Freelance revolution

Parallel to these developments, a freelance revolution is taking place: All over the world, fewer and fewer people want to be employed in permanent positions. As is so often the case, the development in the US shows where the trend can also go in this country. Because in the USA

• 90% of managers prefer self-employed workers (Harvard Business Review: Rethinking the On-Demand Workforce).
• Supplement their workforce with freelancers by 72% of HR managers (Harvard Business Review: What Successful Freelancers Do Differently).
• 66% of managers want to replace their permanent employees with freelancers (Mercer's Global Talent Trends Report 2022).

Even if Germany is lagging a little behind, the figures are still significant: according to Statista, there were 3.9 million self-employed people in Germany in 2023. The majority (75 percent) plan to continue working as freelancers in the future. Across Europe, around six million highly qualified people offered their services as freelancers in 2022. This corresponds to a self-employment rate of 12.4 percent. The reasons why people work as freelancers vary considerably:

• independence (91%)
• flexible working hours (85%)
• free choice of clients and projects (82 %)
• Varied work life (78%)
• Free choice of work location (73%)
• Creating a life according to their own values (68%)
• Higher earnings (62%)

This means: The number of freelancers is increasing - also in Germany. This is why companies will find it even more difficult in future to find qualified employees for permanent positions through the usual channels. This makes it all the more important to take this development into account in your own HR strategy and implement modern HR management.

Modern HR management: don't wait, get started!

In view of the shortage of specialists and managers, which incidentally also affects the new talent, i.e. the group of younger employees, there must be no lingering in old patterns. It is not an option to give up and hope that the situation on the labor market will ease again. No, companies need to rethink and actively address the fact that innovative concepts for a changing world of work are needed in order to attract and retain employees - and thus remain competitive. Companies therefore face no less a challenge than critically questioning their HR strategy and developing new approaches for modern HR management to develop. The concept of the Connected Workforce is the solution from Deutsche Interim AG.

How does the Connected Workforce work?

Our Connected Workforce concept is based on the assumption that the boundaries of traditional employment models will continue to dissolve. Instead of trying to fill all vacancies with permanent employees, modern HR management is needed: the aim is no longer to select employees based on whether they are willing to accept a permanent position, but rather on whether they are professionally qualified to take on a specific task. Strengthening the core workforce with highly qualified freelancers as needed always makes sense when

• specialist expertise is lacking internally,
• complex transformation and change projects need to be implemented,
• manage crises effectively and
• otherwise fail to close personnel gaps.

The basic idea behind the Connected Workforce is therefore to form a networked workforce of permanent and freelance employees - a Connected Workforce - in which only professional qualifications and other relevant skills determine whether people are involved in a project. The aim is to deploy each individual employee - permanent and freelance alike - in such a way that he or she completes tasks in the best possible way. The more effectively permanent and external employees work together, the better the results can be expected.

Good to know
Flexible workforce management forms the strategic foundation of the connected workforce. In our blog post of the same name, we reveal the advantages it offers, the challenges it poses and the success factors, among other things.

Success factors of the connected workforce

In order for concepts for modern HR management such as the connected workforce to work, companies are required to make strategic, structural and operational changes. On the one hand, companies need to adapt their HR strategy so that employees can choose between flexible work (time) models - from part-time work to remote and hybrid work to workstations and the like. On the other hand, a mindset that promotes openness is needed: openness towards collaboration with freelancers. Openness towards their (perhaps superior) qualifications and skills. Openness to a new way of working together. The connected workforcewill only unfold its full potential when companies stop thinking in traditional personnel pigeonholes. Companies will then be able to put together project teams based on skills and integrate freelancers seamlessly.

With this in mind, the factors that promote good collaboration with freelancersare not surprising. Freelancers particularly value

• interesting projects (76%),
• good working relationships (65%),
• regular communication with the team (55%),
• working from home as the most efficient working environment (48%) and
• good briefings (41%).
  

The Connected Workforce proves itself in practice

As an instrument of modern HR management, the Connected Workforce is no longer a theoretical construct. Rather, the concept proves its practicality on a daily basis. Because we ourselves at Deutsche Interim AG work according to this principle. We employ

• full-time permanent employees,
• Festangestellte in Teilzeit,
• Festangestellte, who work several jobs at the same time,
• permanent employees who work on site and/or remotely in a home office or coworking space under a fixed contract,
• Freelancers with extensive experience who contribute their professional expertise,
• Freelancers, who work on site and/or remotely in a home office or coworking space and
• working students who apply theoretical knowledge from their studies in practice.
  

What does interim management have to do with the connected workforce?

The question remains: How do companies get hold of these highly qualified self-employed people? Professional interim management providers such as Deutsche Interim AG have candidate pools comprising several thousand highly qualified and very experienced specialists and managers. Placed with companies, these high potentials not only close specialist skills gaps, but also generally support companies where they need help most urgently - on a temporary or permanent basis. Companies that work with freelancers and form a connected workforce do so in particular for the following reasons:

• to close professional gaps within the permanent workforce
• to benefit from specific, up-to-date expertise, because many freelancers successively train themselves
• be pioneers and early adopters of innovations
• use freelancers as a source of inspiration
• Flexibly access a talent pool
• Get additional staffing capacity during peak times
  

Connected Workforce: Acting today for tomorrow

The time has never been riper for a rethink. It is not only the developments on (international) labor markets that are forcing companies to act. The social transformation is also fundamentally changing the way we live and work (together). It is important to pursue an HR strategy that takes current and future transformation processes into account. And this includes pursuing modern HR management and setting the strategic, organizational and structural course for the connected workforce. Those who are able to strengthen their core workforce with freelancers today will have a strategic competitive advantage over the competition tomorrow.

By the way: As the author of this article, I benefit from the contemporary HR strategy of Deutsche Interim AG on a daily basis. I work here part-time as a permanent employee, while also working as a freelance editor. Modern HR management is possible - if you only want it. At the end of the day, everyone benefits: my employer, my customers and myself as a satisfied employee.

Our brochure provides everything you need to know about the Connected Workforce - compactly summarized on two pages. Download it now for free!