In the early industrial age, companies had a hierarchy built around manufacturing and machinery. But now workplaces are organized much differently. Their new priority? The talent. We’ve entered an era where the shortage of workers, obsolescence of skills, and new levels of employee agency will present employers with historic challenges. Most companies are not ready.

The new Intelligence Age is a time when skills, employee creativity, information and AI will define our companies. In a recent From Day One webinar about “The Long-Term Shortage of Talent in the Post-Industrial Age: How Companies Can Respond,” speakers explored three strategies for success: rethinking the organization as dynamic rather than static, rethinking management with human-centered leadership, and rethinking HR as no longer an expense center, but rather a function like R&D that must build and invest in the company's people.

All told, this means we need to redesign our companies around the person and shift to a new model for work. The time to act is now, experts say.

The Changing Power Structure in the Labor Market

The renowned Josh Bersin, founder & CEO of The Josh Bersin Company, says that with Baby Boomers retiring and declining fertility rates, there will be smaller generations coming forward to replace them. Employers will have a high demand for skilled workers but a much smaller talent pool, he says.

“If you look at the supply and demand of workers and the labor force, it’s absolutely different from what we’ve seen in the past,” said Sania Khan, chief economist and head of market insights at Eightfold, an AI-driven talent intelligence platform.

This could signal tough times ahead, especially in an age where companies are defined more and more by people and ideas than by machinery and products. “Scarcity of talent is one of the biggest challenges out there for companies,” said moderator Steve Koepp, From Day One’s chief content officer and co-Founder.

Bersin notes that his company is getting consistent feedback from employers post-pandemic that they are having trouble sourcing new talent and with the retention of what is “a highly empowered workforce. We have employees saying, ‘I'm going to quietly quit. I'm going to work my wage. I'm going to do what I need to do. I don’t care what you say. You don’t like hybrid work? Tough luck, I’ll go find a job where I can work remotely.”

Bersin predicts this is a long-term trend, and companies need to get smarter about finding and keeping their people. This is especially true in industries like healthcare, which is facing a major labor shortage despite a recent BLS report predicting 54% of new jobs will be in healthcare due in part to that same aging population that is decreasing the workforce.

A Renewed Focus on Employees and Productivity

With technology changing rapidly and more and more roles relying on it, companies will need to prioritize upskilling and reskilling opportunities to keep their workforce up-to-date and competitive. “Companies will need to focus on their employees,” Khan said, noting that companies that don’t prioritize training are already experiencing higher employee turnover.

Another way to curb turnover is to take a hard look at workplace policies and make sure they are serving employees personally to make the organization more attractive, whether that is through flexible hours, hybrid options, and even AI assistance, Khan says.

Bersin’s organization just finished a report on the prevalence of the four-day workweek or work time reduction. “This is becoming a big deal because employees want flexibility. We’re finding that this idea creates job productivity, and forces companies to redesign jobs,” Bersin said. “There are things that we’re going to do that seem unnatural now to deal with this labor shortage. In the future they will be commonplace. That’s just one example.”

This changing definition of productivity, a focus on “revenue per employee” rather than hours worked, will also serve working parents well, Khan says, as they manage to get more work done in a shorter period.

“Hiring more people isn’t necessarily more productive,” Khan said. Companies will start to measure their success by how efficiently they are utilizing their human resources to generate revenue, a focus on output rather than the size of the team. “The companies that are really good at productivity are good at human resources. They’re good at training, facilitating workshops, redesigning jobs, flattening the corporate hierarchy, changing the role of leaders, and democratizing career development,” Bersin said. “These things that might have felt like ‘nice-to-haves’ ten years ago are becoming critical to becoming productive in this new economy.”

Reimagining a Skills-based Hierarchy

In the information age, employment has been less about job titles and more about the work, Bersin says, with employees taking on tasks and using their skills for objectives far beyond their stated job description in order to accomplish the mission of the day, week, or month. “These rigid job descriptions, titles, and hierarchies are getting in the way of reorganizing and redesigning the company to be more efficient,” Bersin said. He anticipates an existential change in which the titles of managers and corner office perks will be deprioritized in order to get the work done.

In turn, companies will be looking less at what skills prospective employees currently have and instead look at adjacent skills that show an employee has the potential to be upskilled to be the right fit, Khan says. A focus on skills, says Bersin, can also pave the way for automation. Employees can be allowed to utilize the top of their skill set if their lower-level, less skilled tasks can be automated.

“If you look at the needs of an organization, you can put employees in specific, goal-centric projects,” Khan said. “Instead of just having you siloed to one department, you can now move around to where you’re needed based on your skills.” This would also allow employees to be well-versed in the whole enterprise, rather than just one area, so both the individual and the organization benefit. And tools like Eightfold can use machine learning to help companies analyze what skill areas are lacking and fill those gaps with talent.

How Leaders Can Adapt to the New Workforce

“Leaders have to understand this labor shortage existentially and operate in a company where transformation and growth isn’t an episodic thing–it's never-ending,” Bersin said. “The new model of leadership is, ‘can you build a company that can move people around, that can develop people, that can hold people accountable, but also give them the opportunity to move when you need them into a new place?’ Those are different kinds of leadership skills.”

And with the hierarchy flattening, workers need to be prepared to sometimes be leaders and other times be more subordinate depending on the current project. “We have to democratize the concept of leadership.” Those with flexibility and an appetite for innovation will be most attractive to potential employers, Khan adds.

And in a talent-driven company, HR will become more and more essential, and will be called on to understand a wide variety of skills, roles, and changing corporate models to operate within skills-based planning, Bersin says. Gone are the days where HR will be associated with conflict resolution and complaints. Instead, HR is becoming a forward-thinking, technology, and data-driven career path.

Editor’s note: From Day One thanks our partner, Eightfold, for sponsoring this webinar. You can read more from Josh Bersin on the post-industrial age here.

Katie Chambers is a freelance writer and award-winning communications executive with a lifelong commitment to supporting artists and advocating for inclusion. Her work has been seen in HuffPost, Honeysuckle Magazine, and several printed essay collections, among others, and she has appeared on Cheddar News, iWomanTV, and CBS New York.