Massachusetts can win the new world of work
We're well-positioned, but cannot ignore competition for talent, cost of living, and other challenges
MASSACHUSETTS CAN WIN in the new world of work. That is the message that emerged from the Massachusetts Business Roundtable’s third annual Talent and Competitiveness Survey of its member CEOs and senior leaders from some of the largest employers across the Commonwealth.
The survey, conducted in collaboration with McKinsey, included responses from more than 50 employers, a focus group of more than 40, and individual interviews with another 20. Two themes emerged as top of mind – the economy and the workforce – and there are encouraging signs for both.
Employers are generally positive about the state, particularly their ability to access world-class talent. When we asked employers in the survey if they expected to leave the state in the next 1 to 2 years, none indicated they were. They cite an ecosystem like nowhere else in the world, with a unique combination of people, ideas, and foundational industries. There is much to celebrate, to build upon, and to win.
However, warning lights are flashing. Most employers are facing challenges meeting their talent needs and are concerned with broader issues regarding cost pressures and the economy. This is leading to a variety of responses, including fewer employers considering expanding in the state, a significant increase in hiring remote workers out of state, and further reductions in office space. At the same time, we are seeing shifts in the workforce and employers are continuing to grapple with how to manage a hybrid and inter-generational workforce.
1: Invest in talent – the core of Massachusetts’ competitiveness. For 69 percent of survey respondents, their ability to attract and retain diverse and world-class talent in Massachusetts is the key factor influencing their decision to stay in the state over the next 1 to 2 years. About 75 percent of respondents expect some difficulty in recruiting talent over the next year and they are adjusting by looking for talent out of state, with 31 percent of respondents having more than 10 percent of their employees working remotely outside of Massachusetts, a threefold increase since before the COVID-19 pandemic. Continued investment in reducing the cost of living and cost of doing business, and overcoming barriers that prohibit untapped talent from participating in the workforce, are essential strategies for the state and employers to recruit, retain, develop, and diversify talent.
2. Align skills training with employer needs. The skills selected as “most critical” by respondents were problem-solving, creativity, critical thinking, team management, and interpersonal and emotional skills. On the other hand, less than 40 percent of respondents selected technical, software, or functional expertise as the most critical skills for their sectors. To meet current skills needs, Massachusetts employers are taking a variety of actions, including offering access to education and training programs (70 percent), partnering with academic institutions (47 percent), and almost a quarter partnering with affinity or professional organizations. Even so, employers continue to struggle to find talent with the skills necessary for the roles they are looking to fill. The recently launched MassTalent initiative is a great example of how to align employers and workers intentionally in key industries.
3: Continue to promote policies to attract and retain employers and employees to the state. Fears about the economy and longstanding concerns persist. About 79 percent of respondents are concerned about inflation and a recession over the next 1 to 2 years, while 76 percent of those expect these to hurt their profits and 52 percent to impact their talent pipeline. More than half of respondents said the cost of living and cost of doing business were factors that would influence their decision to leave or remain in Massachusetts, and those that are considering reducing their presence here or adding new roles outside of the state cite the cost of living (73 percent), quality of infrastructure (64 percent), and business tax (64 percent) as top drivers of their decisions. Addressing the high costs of housing and childcare, investing in transportation infrastructure and broadband, and maintaining a competitive tax environment all would contribute to the recruitment and retention of talent.
4: Keep experimenting with the new world of work. The vast majority of respondents (96 percent) allow some form of hybrid work, with only 4 percent requiring full in-person presence. With these changes, 47 percent of respondents plan to reduce their overall real estate footprint here, an acceleration compared to 36 percent in 2022. Organizations overwhelmingly remain committed to increasing diversity, equity and inclusion efforts, particularly in hiring and advancement. However, all employers interviewed noted they are dealing with a multitude of challenges in adjusting to a hybrid, multi-generational workforce, including a majority of employers that expect advances in artificial intelligence and other digital trends to positively impact profits and support their talent needs.
Solutions are at hand. The governor and Legislature have all proposed tax relief measures to address the high costs of living and doing business. Increased attention is being paid and investments are being made to reduce barriers for untapped talent to access the workforce. And the employer community is partnering with state government and other stakeholders, under the leadership of Secretary of Economic Development Yvonne Hao, in a promising process to develop an economic development strategic plan for the Commonwealth.A new world of work is upon us, one that is hybrid, diverse, and driven by technology and changing worker expectations. Massachusetts is well positioned to adapt and compete, with key sectors of the economy such as health care, life sciences and academic research institutions continuing to attract world-class talent and develop groundbreaking and transformative ideas and innovations. We must collectively commit to solutions to address the mounting cost pressures, the persistent outmigration of our talent, and demographics that show slowing population growth in our state. Addressing these issues collaboratively, thoughtfully, intentionally, and in partnership with the business community, will ensure that Massachusetts can indeed win in the new world of work.
JD Chesloff is president and CEO of the Massachusetts Business Roundtable, a public policy organization comprised of CEOs and senior executives from large employers across the Commonwealth with the mission of making Massachusetts the most desirable place to live, work and do business by engaging private sector executives and public leaders to ensure access to a robust, diverse and talented workforce that enhances the Commonwealth’s competitiveness in a global economy.