Managing
tomorrow’s people*
The future of work to 2020




*connectedthinking
Contents

Introduction                                    02   Small is beautiful:
                                       ...
Foreword                                                                                                           01




...
02
                                      Introduction

                       2,739          When we started our research ...
03




                                                      3. The role of HR will undergo                        “HR nee...
04
                             2020: Where three worlds co-exist

             We believe it                      We iden...
Figure 1
                                                     2020: three worlds




           Managing tomorrow’s people...
Corporate is king: the Blue world

Where big company capitalism
reigns supreme

In a nutshell:
The globalisers take centre...
07




90%                                                     Corporates divide the haves and                        “Our...
08




                  75%        Corporates drive lifestyle choices                      • Mass consolidation has had a...
Who leads people                                  Organisational                                   Employee profile       ...
10                            A people management model for the Blue World
                              In the Blue World...
11
  Future view


Extract from
a newspaper in 2016
People metrics are integral to
analysts’ pricing strategies     WORLD ...
Companies care: the Green World

Where consumers and employees
force change

In a nutshell:
Companies develop a powerful s...
13




94%                                                     components of the supply chain through vertical
           ...
14




                90%       Managing people in the Green World
                          • New graduates look for emp...
Who leads people                             Organisational                               Employee profile                ...
16                             A people management model for the Green World
                               In the Green W...
17
  Future view


Extract from
operating review                     G-Bank
                                     Sustainab...
Small is beautiful: the Orange World

Where big is bad, for business, for people and for the
environment

In a nutshell:
G...
19




0.6%                                                   Complex supply chains                                   “Div...
20




             11.5%        Labour market enters the guild era                  • Employees are usually aligned to gu...
Who leads people                          Organisational                              Employee profile                    ...
22                   A people management model for the Orange World
                     Our third world is in many ways t...
23
  Future view


Extract from
employment networking
site in 2020
In the Orange World, Workbook,
an employment networking...
24
                       Summary

     A summary of                     Blue World                           Green World ...
Are you ready for tomorrow’s world?                                                                                       ...
26




   ...We will also need      between two and five employers in a lifetime. But       How can organisations plan for...
27
  Appendix


A1 Definition
Scenarios                                               Millenials
We worked with the James ...
28   A2 2020: our methodology


                                                            Scenarios
                    ...
Figure 6
                                                 Global forces




           Managing tomorrow’s people Appendix...
30                           A3 PwC graduate survey findings


     In July 2007, 2,739                                   ...
31




                                                        Total   China   US      UK

                               ...
32
       Acknowledgements                                       Contact


     There were numerous people involved in thi...
This publication has been prepared
for general guidance on matters of
interest only, and does not constitute
professional ...
pwc.com
Managing tomorrow’s people
How the downturn will change the future of work
About Managing tomorrow’s people



At the end of 2007, PricewaterhouseCoopers (PwC)*                                     ...
Contents                                                                               01




Introduction                ...
02
                                 Introduction



‘To echo the recent              The credit crisis and subsequent glob...
03




•	 The opportunity for radical new ways of working will             Is your people strategy fit for the future? Do ...
04
2020: Where three worlds co-exist                                                                                         ...
06
     The Green World: sustainable business
     is good business


     G-Bank in 2020                                 ...
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  1. 1. Managing tomorrow’s people* The future of work to 2020 *connectedthinking
  2. 2. Contents Introduction 02 Small is beautiful: welcome to the Orange World 18 2020: where three worlds co-exist 04 The journey to Orange 18 Life in the Orange World: the main themes 19 Corporate is king: welcome to the Blue World 06 Work in the Orange World: the people challenges 21 The journey to Blue 06 The Orange HR business model 22 Life in the Blue World: the main themes 07 Work in the Blue World: the people challenges 09 Are you ready for tomorrow’s world? 25 The Blue HR business model 10 Appendix 27 Companies care: Definitions: Scenarios, Millenials 27 welcome to the Green World 12 Our methodology 28 The journey to Green 12 Global forces 29 Life in the Green World: the main themes 13 PwC Graduate Survey findings 30 Work in the Green World: the people challenges 15 Contacts 32 The Green HR business model 16
  3. 3. Foreword 01 The journey to 2020 about the future of people management. Our team has At the beginning of 2007, a team from identified three possible ‘worlds’ PricewaterhouseCoopers gathered to explore the – plausible futures to provide a future of people management. Our thinking was context in which to examine the sparked by the rising profile of people issues on way organisations might operate the business agenda – the talent crisis, an ageing in the future. In addition we surveyed almost 3,000 workforce in the western world, the increase in Managing tomorrow’s people Foreword MillennialsA1 – new graduates from the US, China global worker mobility and the organisational and and the UK who represent a generation just joining cultural issues emerging from the dramatic pace of the workforce, to test their views and expectations business change in the past decade. We wanted on the future of work. to explore how these issues might evolve and how organisations need to adapt to stay successful. We hope you will help us to encourage debate Many studies have attempted to capture a vision around this critical topic. It is said that the future is of the workplace of the future, but we set out to not a place we go to, but one which we create. And understand the people challenges that will impact while things happen that we cannot predict, we can organisations and consequently the implications still be prepared. this will have on the HR function as we know it. Few business thinkers have proposed that the marketing or finance functions might cease to exist in their present forms, but some are starting to say this about HR. Michael Rendell With the help of the James Martin Institute for Partner and leader of Human Resource Services Science and Civilisation at the Said Business PricewaterhouseCoopers LLP School in Oxford, we used ScenariosA1 to think A1 – Appendix 1, see appendix page 27
  4. 4. 02 Introduction 2,739 When we started our research we had some preconceived ideas about tomorrow’s world. Many • large corporates turning into mini-states and taking on a prominent role in society In July 2007, 2,739 graduates studies have been undertaken to explore the future • specialisation creating the rise of collaborative from China, the US and the UK of society, the environment, business and even the networks told us about their workplace. Our challenge was to focus explicitly expectations of work. They had on the business context and the impact on people • the environmental agenda forcing fundamental all been offered jobs with PwC and work. changes to business strategy. but had yet to start. Some of While we cannot claim to have identified all the the key findings are highlighted possibilities, several strong themes have emerged: 2. People management will present one throughout this report of the greatest business challenges While some of the findings 1. Business models will change Businesses currently grapple with the realities of seem to confirm current dramatically skills shortages, managing people through change received thinking about the and creating an effective workforce. By 2020, the future of work, a number of The pace of change in the next decade will be radical change in business models will mean themes defy conventional even more fundamental. Technology, globalisation, companies facing issues such as: thinking. demographics and other factors will influence organisational structures and cultures. Our • the boundary between work and home life PwC is the biggest recruiter disappearing as companies assume greater scenarios outline three organisational models of the of graduates in the UK and responsibility for the social welfare of their future: a leading global recruiter employees of graduates. A3 A3 – Appendix 3, see appendix for a full breakdown of the findings page 30
  5. 5. 03 3. The role of HR will undergo “HR needs to fundamental change ensure it is fit for HR has been perceived by many as a passive, purpose in order service oriented function, but given the context of tomorrow’s workplace and business environment, to be proactive we believe HR is at a crossroads and will go one of and maintain or Managing tomorrow’s people Introduction three ways: develop its • with a proactive mindset and focused on influence in the business strategy, HR will become the heart of the organisation taking on a new wider people future.” remit incorporating and influencing many other Keith Murdoch, aspects of the business Remuneration and • the function will become the driver of the Benefits Manager, corporate social responsibility agenda within the British American Tobacco organisation • stringent people measurement techniques to control and monitor productivity and • the function will be seen as transactional and performance almost entirely outsourced. In this scenario, HR will exist in a new form outside the organisation • the rise in importance of social capital and and in house HR will be predominantly focused relationships as the drivers of business success. on people sourcing.
  6. 6. 04 2020: Where three worlds co-exist We believe it We identified a number of global forces that will have significant influenceA2, and of those we felt is possible that all that individualism versus collectivism and corporate three worlds will integration versus fragmentation would be the most significant. From this axis we identified three worlds co-exist in some and business models for the future. form, perhaps (See figure 1 opposite.) distinct by We tried to capture the events and trends which geographic region, draw a picture of life in tomorrow’s world and the people management challenges that might prevail. or industry sector The forecasting timelines and world descriptions for example. are not intended to be taken literally as complete visions of alternative futures. They are designed to present ideas and illustrate the more important points around the people management challenges. We believe it is likely that all three worlds will co-exist in some form, perhaps distinct by geographic region, or industry sector for example. As you read this document think about how your own organisation might be positioned within these scenarios and what implications this has upon your current people management strategy. A2 – Appendix 2, see appendix page 28
  7. 7. Figure 1 2020: three worlds Managing tomorrow’s people Introduction 05
  8. 8. Corporate is king: the Blue world Where big company capitalism reigns supreme In a nutshell: The globalisers take centre stage, consumer preference dominates, a corporate career separates the haves from the have nots. 2011 2012 2013 2014 2020 The Indian World’s biggest The brain-drain of A decade of M&A Global warming economy expands search engine and Eastern European consolidation changes the dramatically as largest technology workers starts to across industry climate of Europe; it goes through company merge reverse as workers sectors peaks as the snow on the a new wave of return home Alps melts, skiers cross-border to set up and head to the US acquisition sprees lead corporates, and becomes a building on global leader in expertise gained several industry in several sectors sectors
  9. 9. 07 90% Corporates divide the haves and “Our search for have nots talent is now a of Chinese respondents expect The power of corporations means that a much global search. they will use a language at work greater divide has opened up between those The competition working for global corporations and those other than their mother tongue working in smaller enterprises. Employees of for talent will only Managing tomorrow’s people Blue World mega-corporations have everything they need laid increase further.” Size matters on. Those working for smaller businesses remain at the whim of housing markets and basic statutory Hanspeter Horsch The sheer size of corporations in 2020 means entitlements, needing to self-supplement Associate Director, that a significant number now operate with annual educational support, health and insurance Human Resources turnovers that far exceed the GDP of many coverage, what remains of the public health Samsung Semiconductor individual countries, particularly in the developing system, and so on. Europe GmbH world. With echoes of the business models promoted by companies like General Motors in the middle of the last century, many companies now Welcome to the technology age provide the equivalent of the welfare state for their Technology is all pervasive, entire cities in the employees to ensure they lock the best talent into US, Japan and the UK operate with ubiquitous their organisations. Internally managed service high-speed wireless networks that allow all centres are sophisticated and highly efficient – commercial transactions, entertainment and using processes perfected by the outsourcers of communications to be handled by every individual the ‘nineties. People metrics become an essential on credit card-sized devices. Pinpointing exactly part of everyday life to keep track of individual what you want and being shown where it is performance and productivity. available from wherever you happen to be is now taken for granted, allowing businesses continuously to refine and individualise their relationships with consumers, employees and shareholders.
  10. 10. 08 75% Corporates drive lifestyle choices • Mass consolidation has had an impact on cultural issues. Leadership teams now have a Sophisticated measurement and segmentation high focus on the evolution of the corporate of respondents strategies mean companies can target goods and culture with rigorous recruitment processes to think that workplace services across their customer base and to ensure new employees fit the corporate ideal. employees. For example ‘green politics’ is seen as flexibility will not Existing staff are subject to compulsory a lifestyle choice rather than a meaningful political corporate culture learning and development exist; they believe movement. Corporations provide environmental programmes. products and services to those who express a they will be working preference. • Huge people costs drive the need for robust formal office hours metrics and analysis. Employee engagement, performance and productivity are all measured Managing people in the Blue World systematically. Leadership can access people • Companies have become the key provider of data on a daily basis. This also provides an early services to employees. People management warning signal of non-corporate behaviour or now encompasses many different aspects of below standard performance. employees lives’, often including housing, health • Technology pervades every realm of business and even education for their children. and leisure activity. The line between inside • This strategy has led to an increase in staff work and outside work is often blurred by retention rates as people policies seek to lock in technology with employers providing the talent, but the top talent is still hard to attract platform. This also provides employers with and retain, many senior executives use personal added insights to staff preferences. agents to seek out the best deals.
  11. 11. Who leads people Organisational Employee profile 09 strategy? challenges • The Chief People Officer (CPO) is a powerful • Quality assurance across the globe drives • People are graded and profiled at the age of and influential figure, sometimes known as the need to create consistency across the 16 and categorised for work suitability both the ‘Head of People and Performance’ who organisational supply chain. in terms of capability and individual sits on the leadership board. preference. • The challenges of size and scale mean that • Metrics and data are used to drive business these organisations are at greater risk from • The top talent is highly prized and fought performance through complex staff external threats such as technology over. In most cases people are linked to an segmentation strategies which identify terrorism or meltdown and they find it organisation by the age of 18. Managing tomorrow’s people Blue World thousands of skills sets – creating precision difficult to effect change quickly. • University education is managed by the around sourcing the right candidates for the • As companies try to reinforce corporate company according to the organisational right tasks as well as on the job performance values, these can often be at odds with career path chosen by the individual. measurement and assessment. cultural values and can present challenges. • At the top level, employees take far greater • The science of human capital has developed • Organisations must develop models and control of their careers; often senior to such a degree that the connection systems designed and run by HR executives have their own personal agents between people and performance is professionals which enable individuals and who represent them to find the best roles explicitly demonstrated by the CPO. their agents to negotiate the value of their and deals. • As organisations increase in size, their risk human capital based on employees’ • Lower level employees are also taking management systems are similarly extended. personal investment strategies. active charge of their careers; they are • The people risk agenda is one which is taken aware of the value that their human capital seriously by the board – as a result, the CPO represents and are demanding about the and HR business partners become more circumstances in which they will invest. influential. • Those outside the corporate sphere find • Those responsible for people management employment choices are limited to smaller increasingly need financial, analytical, companies that are unable to provide the marketing and risk management skills to same level of development and financial measure the impact of the human capital in benefits. their organisation and to attract and retain the best talent.
  12. 12. 10 A people management model for the Blue World In the Blue World where corporate is king, the people and performance model below is the closest to what many leading companies are aspiring to today – linking HR interventions to improvements in business performance and using more sophisticated human capital metrics to evaluate corporate activity. Under this scenario the management of people and performance becomes a hard business discipline, at least equal in standing to finance in the corporate hierarchy. Human resources: the current model People and performance: the 2020 model Figure 2
  13. 13. 11 Future view Extract from a newspaper in 2016 People metrics are integral to analysts’ pricing strategies WORLD FINANCIAL NEWS 3rd April 2016 NEWS IN BRIEF Managing tomorrow’s people Blue World Italian pharmaceutical The quarterly report generating a much giant Como saw its will be looked at improved return on shares climb higher closely by companies human capital. yesterday in inside the industry and expectation of positive beyond. Many credit Mr Fabrizzi said, “You news in its quarterly Como’s unusually have to measure the results due next week. rapid rise and things you attach value The company, now dominance of parts of to. Measuring the worth an estimated the sector to the way performance of our € 20bn has profited CEO Mario Fabrizzi people has allowed from the success of its manages the us to quickly make new line of statins in organisation’s human improvements to any Europe and America, capital, which the underperforming part but also in China, the company also reports of the business, to fastest growing on in detail. Last year make effective plans pharmaceutical market earnings per employee for succession and to globally. rose by 7% while costs return real value to our per employee fell 5%, shareholders.”
  14. 14. Companies care: the Green World Where consumers and employees force change In a nutshell: Companies develop a powerful social conscience and green sense of responsibility. Consumers demand ethics and environmental credentials as a top priority. Society and business see their agenda align. 2010 2012 2013 2018 2020 The UK launches The US signs the India becomes a Hybrid or fully A group of the London Kyoto II agreement key player in the electric cars scientists confirm Carbon Trading and becomes a corporate social outnumber that the rate of Exchange leading advocate responsibility petrol-powered global warming for actions to agenda with a cars is slowing reduce the rate of focus on global warming preserving the Indian culture and heritage
  15. 15. 13 94% components of the supply chain through vertical integration. Rigid contractual obligations are in “We are place covering every eventuality. developing an of respondents believe they will employer brand work across geographic borders How green are you? reflecting our more than their parents did. The audit process and quarterly company reports identity as an Managing tomorrow’s people Green World are characterised by a focus on measuring Consumers drive corporate behaviour employer and greenness detailing carbon emissions ratings, and The environmental lobby is so pervasive that carbon exchange activity, as well as the more promoting our companies must be quick to react to consumer traditional company valuations. This is an indication long term concerns about any aspect of their business which of the importance shareholders and investors place on these issues which are reflected in the share commitment could be deemed unethical. Clear communication and clarity about products and services is essential. price. with our employees.” Supply chain control Big corporate fines Hughes Fourault, Companies have strong control over their supplier In the business world ethical behaviour is the most Global Head of networks to ensure that corporate ethical values important attribute to attain and preserve. Brands Compensation, Benefits are upheld across the supply chain, and be able to can rise and fall on the basis of perceived green and International Mobility, troubleshoot when things go wrong. This has led to credentials, with government imposed corporate Société Général many organisations taking greater ownership of key fines for bad behaviour in this highly regulated world. Corporate responsibility is not an altruistic nice to have, but a business imperative.
  16. 16. 14 90% Managing people in the Green World • New graduates look for employers with strong of US respondents environmental and social credentials; in will actively seek out response HR departments play a key role in developing the corporate social responsibility employers whose programme. corporate • Employees are expected to uphold corporate responsibility values and targets around the green agenda. Most are given carbon credit tokens which are behaviour reflects Working across teams in different locations used like ration books to be cashed in for therefore presents enormous challenges to their own. printing documents in hard copy, company global businesses, and the HR function travel and other anti-societal activities. dedicates significant energy to generating virtual • The HR function is renamed ‘People and social networks across the operation and the Society’, the leader being a senior member of client base. the company’s executive team. • Most companies provide staff with corporate • The need to travel to meet clients and transportation options between work and home colleagues is replaced with technological to minimise the need for car use. This has led to solutions which reduce the need for face-time. many companies choosing to relocate parts of Air travel in particular is only permitted in their operation to where people are based and exceptional circumstances and is expensive. out of big cities.
  17. 17. Who leads people Organisational Employee profile 15 strategy? challenges • The CEO drives the people strategy • Quality assurance and vigilance to • The common belief is that employees for the organisation, believing that the minimise risk is paramount. choose employers who appear to people in the organisation and their match their beliefs and values. The • The greatest threat to businesses in behaviours and role in society have a reality is that the talent pool for the this scenario is the possibility of direct link to the organisation’s brightest and best remains non-socially responsible behaviour success or failure. competitive, and whilst CSR rankings either within the organisation or in any are a factor, the overall incentive Managing tomorrow’s people Green World • The CEO works closely with the Head part of its supply chain. package remains all important. of People and Society (HPS) who, • Organisations operate in a highly Incentives however are not just with a team comprising a mix of HR, regulated world, where employment reward-related; for example, they marketing, corporate social law makes it difficult to lay people off include paid secondments to work responsibility and data specialists, in line with market fluctuations. They for social projects and needy causes drives the social responsibility struggle to monitor everything across – a popular trend post-2010. programme. the operation to be compliant with the • Because organisations adopt a more • Employment law drives responsible ethical ideal for which they strive. But holistic approach to developing employer behaviour and forces the being compliant is not enough: their people, including personal HPS to develop innovative solutions in organisations are under pressure to development and measuring the times of downturn – such as sending raise the bar and establish policies impact they have on the wider world, employees on secondments to other and practices which go beyond employees are more engaged and as organisations where they can develop regulatory requirements. The danger a result are often likely to have a job their skills and contribute to the wider in such a regulated world is that for life. society, bringing employees back in companies are so preoccupied with when the economic environment compliance policies that the ability to improves. The HPS is therefore a be flexible and explore new well-networked individual. opportunities is hampered.
  18. 18. 16 A people management model for the Green World In the Green World where companies care, corporate responsibility (CR) is good. The CR agenda is fused with people management. As society becomes a convert to the sustainable living movement, the people management function is forced to embrace sustainability as part of its people engagement and talent management agendas. Under this scenario successful companies must engage with society across a broader footprint. Communities, customers and contractors all become equal stakeholders along with employees and shareholders. Human resources: the current model People and society: the 2020 model Figure 3
  19. 19. 17 Future view Extract from operating review G-Bank Sustainable business report G- BANK In 2020, it is a legal requirement that companies disclose their G-BANK recognises its statutory responsibilities under the environmental activity. This also Climate Change Act 2015, Ecosystem Change Act 2016, acts as a key differentiator when and all other sustainability legislation. We have been active Managing tomorrow’s people Green World recruiting and retaining talent. participants in the International Business Panel on Climate Change since it was established in 2010. The group has adopted the European allowed G-Bank to retain its status as Sustainable and Responsible a AA+ company within the S&P Corporations guidance and has sustainability index. comprehensive company-wide policies Key environmental data is provided on sustainability, energy and climate below change, and responsible procurement. We require all suppliers to be certified Key Environmental Statistics 2020 2019 as carbon balanced and eco-friendly. Energy use – properties During 2020 G-Bank made further Total energy consumption – Gw 1,015 1,200 changes in its energy providers in 25 Energy consumption/FTE – Kw 0.10 0.13 countries, so that 95% of our total Renewables as a 95% 91% energy consumption now comes from % of total energy consumption renewable sources. Our extensive use of videophone technology and virtual CO2 emissions – properties meeting software means that business CO2 – kilotonnes 21.0 21.8 travel has reduced by 75% over the CO2 – tonnes/FTE 0.21 0.23 past five years. In the last quarter of the year our Business travel environmental auditors completed their Total travel-related CO2 – kilotonnes 1.0 1.9 annual sustainability audit and issued Travel-related CO2 0.01 0.02 an unqualified opinion. This has per FTE – tonnes/FTE
  20. 20. Small is beautiful: the Orange World Where big is bad, for business, for people and for the environment In a nutshell: Global businesses fragment, localism prevails, technology empowers a low impact, high-tech business model. Networks prosper while large companies fall. 2009 2010 2012 2014 2020 Facebook global Skill shortages Record number 71% of Europeans The California membership push up wages in of corporate shop at local Gaming Guild reaches 1 billion China, switching demergers and farmers markets, achieves record people the balance of spin-offs popularity of pay deal for its power to the supermarkets in 7 Star rated individual away steep decline contractors from the collective
  21. 21. 19 0.6% Complex supply chains “Diversity is a Supply chains are built from complex, organic huge challenge, Only 0.6% of UK respondents associations of specialist providers, varying greatly but also a great think that they will mainly work from region to region and market to market. The solution is now not to outsource, but to fragment. opportunity. from home Looser, less tightly regulated clusters of companies Getting diversity Managing tomorrow’s people Orange World are seen to work more effectively. Often functions A free economy are picked up on a task by task basis by ‘garage’ right will be a Trade barriers come down creating a truly free operations, with each transaction bought and sold critical future by the second on one of a number of electronic market economy and countries such as China success factor trading platforms, with local and global exchanges. quickly realise that without embracing full for us.” free-market forces they will be unable to compete. Millennials drive technology use Peter Johann Director Global HR Networks are key The millennial generation, comfortable with technology, is driving the usage of technology as Management The dream of a single global village has been BASF the interaction with services, government and work, replaced by a global network of linked, but with an emphasis on choice and anti-monopoly separate and much smaller communities. The thinking encouraging innovations in this area. exponential rise in the efficiency of online systems for buying, selling and trading services and skills has debunked completely the old orthodoxy that economies arise from scale. Businesses are much smaller and roles are more fluid.
  22. 22. 20 11.5% Labour market enters the guild era • Employees are usually aligned to guilds and access opportunities through professional In a tightening labour market individuals develop portals provided by guild networks – work of Chinese female portfolio careers, working on a short-term, can be bought, sold and traded in this way. respondents expect contractual basis. They join craft guilds which Employment contracts are flexible to manage career opportunities, provide training and to have more than accommodate staff churn and a rapid development opportunities. turnaround. ten employers during • Workers are categorised and rewarded for their career Managing people in the Orange World having specialist expertise; this has created • Organisations recognise that their employees increased demand for workers to have a and the relationships they have across their personal stake in the organisation’s success networks are the foundation of company with direct ownership share schemes and success. Companies seek to promote and project delivery-related bonuses becoming sustain people networks. This is achieved the norm. through incentivising employees around • Recruitment has become largely a sourcing achieving connectivity goals and collaborative function and has been merged with the behaviours. management of the huge number of contracts • As guilds become more important, they take on and price agreements required for each many of the responsibilities previously assumed company’s network of partner organisations. by employers including sourcing talent, medical insurance and pensions, development and training.
  23. 23. Who leads people Organisational Employee profile 21 strategy? challenges • People strategy is replaced with • Organisations are heavily reliant on • The responsibility for skills sourcing strategy, as maintaining the their external networks to deliver what development shifts wholesale to optimum supply chain of people is they need, and a combination of individuals. key to this networked world. watertight contractual agreements • People are more likely to see combined with a healthy degree of • The People Sourcing Director liaises themselves as members of a business trust is imperative. with expertise networks and guilds to particular skill or professional network Managing tomorrow’s people Orange World attract what they need for the best • When a part of the network breaks than as an employee of a particular price. down, the smaller size of company. organisations means they are able to • Employees rely on achieving high flex and adapt quickly to change. But scoring ‘eBay’ style ratings of past job the flip side of this means that the performance to land the next lack of company infrastructure and contract. resources to deal with sudden problems can be a challenge • Specialisation is highly prized and workers seek to develop the most • There is also a strong emphasis on sought after specialist skills to technology to support the supply command the biggest reward chain and to develop social capital package. and collaboration.
  24. 24. 22 A people management model for the Orange World Our third world is in many ways the most radical. In this world, economies are comprised primarily of a vibrant middle market, full of small companies, contractors and portfolio workers. People management is about ensuring these small companies have the people resources they need to function competitively. This allows an important role to be carved out for HR, one where the people supply chain is a critical component of the business and is strategically led by the HR function. But the flip side is that this could also see in-house HR becoming a sourcing or procurement function, with the high-end people development aspects of HR being managed externally by guilds. Current model Operational model in 2020 Figure 4
  25. 25. 23 Future view Extract from employment networking site in 2020 In the Orange World, Workbook, an employment networking site, is used as a key route for people Managing tomorrow’s people Orange World to find jobs, host their work experience and join networks
  26. 26. 24 Summary A summary of Blue World Green World Orange World the people Resourcing Long careers and career Holistic whole company Short-term careers. Lots of and planning. Succession plans for approach to manpower planning. contracting. HR strongly focused management Succession key performers. on filling fixed-term vacancies. characteristics Talent Strong performance focus Broad definition of talent. Minimal – key players in the in 2020 Management across all levels. Top talent have Competencies focus. central ‘core’ only, but liaison personal agents. with external agents crucial Employee Engagement around Engagement around work-life Short-term engagement around Engagement performance and performance balance and social responsibility. projects. metrics. Heavy promotion of corporate culture attributes and behaviours. Reward and Strongly performance-related. Focus on total reward over Contract based-pay for projects. Performance Pay for performance. Highly career life-time. Individual stake in projects as structured according to role incentive for contractors. segmentation. Learning and Begins at school. Focus on skills Holistic approach to learning Minimal provision in house. Skills Development for the job – metrics driven. – much provided in-house. training via new crafts guilds. But secondments and paid sabbaticals for worthy causes are common Table 1
  27. 27. Are you ready for tomorrow’s world? 25 What will the world look like in 2020 – Blue, Green, “HR will continue Orange or something else entirely? We believe it is highly plausible that all three organisational models to increase its described in this report will feature in tomorrow’s alignment to Managing tomorrow’s people Are you ready for tomorrow’s world world, sometime or somewhere and to some the business, extent. We already see some multinationals heading in the direction of the Blue World business model. with greater The energy industry has been demonstrating accountability for elements of the Green World for some time. We firmly believe that, as the CSR and sustainability delivering specific The world of work is going to become even more corporate agenda grows many other industries (and complex. Our message is: take a long hard look geographies) will take on characteristics of the objectives. This at your organisation models and current people green business model, for example the retail and manufacturing sectors. Consumer preference will management strategies; how are you addressing will result in a reward, international mobility, employee have a huge impact when it comes to the green engagement, development and learning? Think greater need for agenda. about how these might change in the future and HR to quantify The Orange World in some ways represents the whether or not the strategy you currently have in itself in respect of most radical departure. Will big business find place is future proof, is sustainable, sufficient and itself outflanked by a vibrant, innovative and relevant for the plausible worlds of tomorrow. how we deliver entrepreneurial middle market? Will the work The survey we conducted is clearly representative against the expectations of the millenials be such that portfolio lives will become far more pervasive? Will some of only a part of the millennial generation. But what bottom line. ... truly surprised us is the desire in this group for larger organisations introduce internal markets and stability and regularity in a changing world. Many formal networks in place of old style hierarchies to people said they expect to work regular hours, from create structures where agility, speed and flexibility the office or on location, and would have only are key to success?
  28. 28. 26 ...We will also need between two and five employers in a lifetime. But How can organisations plan for the equally let’s not ignore the Chinese women in our to prepare ourselves future of people management? sample who expected far more flexibility and to for a new generation have at least ten employers in a lifetime – perhaps these might be workers for the Orange World of the entering the market future. place. A significantly Our final message is to the HR function itself. We more mobile believe there is a significant opportunity for the HR generation with function to really own the people management agenda within organisations, to truly drive strategy differing expectations and have the tools and information to become one from an employer, of the most powerful and influential parts of the and we will need to business operation. But – and yes there is a but – we can also see that complacency and a failure by adapt to reflect this.” HR to take the lead could result in the function Michael Poulten being outsourced almost entirely, or absorbed by Personnel Manager line managers or into other functions such as Reward and Benefits finance or marketing. The fate of HR as a function Tesco Stores hangs in the balance. The challenge for HR is to figure out how to make itself relevant for tomorrow’s world. Figure 5
  29. 29. 27 Appendix A1 Definition Scenarios Millenials We worked with the James Martin Institute for Wikipedia says ‘The Millenials’ are also known as: Science and Civilisation at the Said Business ‘Generation Y – a term used to describe someone School in Oxford to think about the factors that born immediately after Generation X…one of Managing tomorrow’s people Appendix currently affect business and those which we several terms (also including The Internet believe will grow in importance in the future. We Generation) used to identify the same group. There mapped these around a matrix and developed a is much dispute as to the exact range of birth years number of scenarios: plausible futures around each. that constitutes Generation Y and the Millennials The result was the three worlds which we describe and whether these terms are specific to North in this report. Shell famously used scenarios to help America, the Anglophone world, or people them to predict the Middle East oil crisis in 1973. worldwide.’ The process can help organisations think differently For the purposes of this document, we refer to about the future and plan for the inevitable ‘Millennials’ as those who entered the workforce surprises. after 1 July 2000.
  30. 30. 28 A2 2020: our methodology Scenarios Our scenario planning exercise revealed that individualism, collectivism, corporate integration and business fragmentation would be the most significant factors affecting global business for the purposes of our study. We aligned these along two axes, around which we developed our scenarios further. We call these ‘worlds’. We began with four worlds: yellow, red, blue and green, with the yellow and red worlds straddling the top half of the We started our research by examining the forces quadrant. In these fragmented worlds we that currently affect global business and are likely discovered through our analysis that the differences to have significant impact on the future. Clearly across individualism and collectivism were hard to there are many social, environmental, religious and define in the fragmented world. Both of these demographic factors that will have significant worlds relied upon networks to survive, were, small, influence but we felt that some of these issues have nimble and adaptable. The motivations were the been tackled extensively in other studies. We chose only variant factor where the red world was more to focus on a number of potentially conflicting self-serving than the collective altruism of the factors which we feel have the greatest impact on yellow world. We decided therefore to combine our subject matter – people management. Initially these themes to create a single orange world which we explored the following eight forces: (see represented the fragmented business model. diagram opposite).
  31. 31. Figure 6 Global forces Managing tomorrow’s people Appendix 29
  32. 32. 30 A3 PwC graduate survey findings In July 2007, 2,739 Total China US UK graduates from Yes 93.9% 97.2% 92.1% 92.9% China, the UK and Do you believe you will work across geographic borders more than your the US were polled parents did? No 6.1% 2.8% 7.9% 7.1% about their Do you envisage using a language other Yes 52.7% 89.4% 32% 35.3% expectations of than your first language at work? work. They had all No 47.2% 10.4% 68% 64.7% been offered jobs Will you deliberately seek to work for Yes 86.9% 87.2% 90.2% 71.2% at PwC but had yet employers whose corporate responsibility behaviour reflects your own values? to start. No 13% 12.6% 9.6% 28.8% A mix of Do you think you’ll work...? 74% 75.7% 71.8% 79% locations Mainly from 4.6 7.4% 3.8% 0.6% home Mainly in an 21.2% 16.7% 24.3% 20.4% office Not answered 0.1% 0.1% 0% 0%
  33. 33. 31 Total China US UK Mainly flexible Do you think your office hours will 13.9% 17.6% 12.9% 7.4% hours be…? Mainly regular 11% 7.1% 14.0% 10.0% office hours Managing tomorrow’s people Appendix Regular office 75% 75.1% 73.1% 82.5% hours Not answered 0.1% 0.2% 0.1% 0% How many employers do you think 1 8% 9% 8% 7.4% you will have in your career? 2-5 78.4% 74.4% 80.4% 79.6% 6-9 7.9% 6.3% 8.5% 9.7% 10+ 5.5% 10.3% 3.2% 2.6% Not answered 0.1% 0.0% 0.1% 0.6%
  34. 34. 32 Acknowledgements Contact There were numerous people involved in this Michael Rendell project both within and outside Partner and leader of Human Resource Services PricewaterhouseCoopers. Our particular thanks to PricewaterhouseCoopers LLP (UK) Angela Wilkinson and team at the James Martin +44 (0) 20 721 24945 Institute and to all the companies who shared their michael.g.rendell@uk.pwc.com views and insights. Sandy Pepper Our thanks to the core project team: Sandy Pepper, Partner/Project leader Cecilia Nordqvist, Matthew Blakstad, Leyla Yildirim, Human Resource Services Rachael Davison, Andrew Smith, Jackie Gittins, PricewaterhouseCoopers LLP (UK) Sonja Jones and the rest of the team who took part +44 (0) 20 721 34948 in the scenarios workshop. We would also like to sandy.a.pepper@uk.pwc.com thank Sivaramakrishnan Balasubramanian, Indrani Rana (India), Svetlana Kruglova (Russia), Shinya Karen Vander Linde Leader, People and Change Yamamoto (Japan), Steve Rimmer (US) and many PricewaterhouseCoopers LLP (US) other contributors from across our global network +1 (703) 918 3271 of PricewaterhouseCoopers firms. Our final karen.m.vanderlinde@us.pwc.com acknowledgement goes to our internal human capital teams around the world who helped us to Leyla Yildirim conduct the graduate survey. Marketing Human Resource Services PricewaterhouseCoopers LLP (CI) +44 (0) 1481 75 2039 leyla.yildirim@uk.pwc.com
  35. 35. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, Managing tomorrow’s people to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2007 PricewaterhouseCoopers LLP. All rights reserved. ‘PricewaterhouseCoopers’ refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.
  36. 36. pwc.com
  37. 37. Managing tomorrow’s people How the downturn will change the future of work
  38. 38. About Managing tomorrow’s people At the end of 2007, PricewaterhouseCoopers (PwC)* This new report looks at the impact of the global economic published its first report on the future of people management. downturn on people management. We explore how the We believed the growing talent crisis, demographic shifts, actions of businesses as a result of the crisis determine their advances in technology and the rise of sustainability readiness for the upturn and their ability to compete in the issues on the corporate agenda would dramatically change second decade. organisational models and the way in which companies manage their people.1 Quotes from CEOs featured in this report were taken from the PwC 12th annual global CEO survey. The report, Managing tomorrow’s people: the future of work to 2020, produced with the help of the James Martin Institute for Science and Civilisation at Said Business School, Oxford, explored three scenarios or ‘worlds’ which we believe will co-exist in 2020. The report generated a high level of interest from business leaders, HR professionals, the media, academics and bloggers around the world. It is clear that the future of work is a hotly debated subject. This led us to produce a follow up study at the end of 2008 on the views of the new generation – Millennials at work: perspectives from a new generation. The report detailed insights from over 4,000 new graduates from 44 countries and was designed to help companies understand how millennial attitudes to work differ from previous generations. *PricewaterhouseCoopers’ refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. 1 See Appendix 1: Global forces
  39. 39. Contents 01 Introduction 02 2020: where three worlds co-exist 05 The Green World: sustainable business is good business 06 The Blue World: corporate is still king 12 The Orange World: tribes thrive 18 Managing tomorrow’s people Contents Summary 25 Conclusion: is your people strategy fit for the future? 26 Some of the key decisions made by each company as a result of scenario planning 29 Appendix 1: global forces 30 Appendix 2: from scenarios to real options 31 Publications 36 Acknowledgements 37 Contacts 37
  40. 40. 02 Introduction ‘To echo the recent The credit crisis and subsequent global recession has created We outline three possible worlds or business models the biggest challenge to economic prosperity since the which will co-exist in the future, illustrating three fictitious words of our CEO, “the 1930s. Focused on survival, many companies are slashing companies as they look back from 2020. Some common workforce headcount and drastically reducing their themes have emerged: future is not cancelled”. expenditure on people. While managing costs • Demands for greater transparency and social The economic crisis has raised fundamental questions about responsibility in business have been magnified by and capital closely, we the institutions and practices of modern business life. Belief in the crisis and combine with the call for environmental a self-regulating financial system has been shaken, confidence responsibility already present in the green agenda. This will still invest for future in the foundations of business has been eroded and a new impact many areas of people management, particularly growth by continuing generation of workers are reassessing the relationship between in relation to how people are rewarded. This is expressed employer and employee. in our Green World scenario. to hire graduates, Here, as part of our Managing tomorrow’s people series, we • Increased focus on hard people metrics to measure run development explore the impact of the downturn on people management, performance and productivity as companies look at a programmes and target the different options open to companies and the scenarios we long-term reality of having to do more with less. Our Blue believe will play out in this time of great change. As we head World scenario imagines the performance and efficiency reward to our better towards the upturn, we examine how the decisions companies culture necessary for global companies (some larger than performers. We do not make today will affect their ability to compete in the future. many individual countries) to succeed within a new order of economic superpowers. want gaps in our future talent pipeline.’ Carole Crossley, VP HR International Mobility, BP plc
  41. 41. 03 • The opportunity for radical new ways of working will Is your people strategy fit for the future? Do you think you ‘The ability to emerge in our Orange World scenario. We take the concept can compete with the companies outlined in this report? of outsourcing and globalisation of the workforce to an One thing is certain, the decisions you are making today attract people – extreme portfolio working model where people organise are already creating a legacy for the future and determining their working lives like individual businesses in a highly how successful you will be in 2020. to motivate them networked world. while they’re with The global economic downturn has forced many companies to you and motivate Managing tomorrow’s people Introduction make important and difficult choices about how they manage and motivate people, with both immediate and long-term them to stay with consequences. you – is going to As you read this document think about your people be the challenge. management strategy as a result of the downturn. What Michael Rendell scenarios are plausible realities for your business in the decade Partner and leader of Human Resource Services We’re in a period ahead? And what practical steps do you need to take now2 to PricewaterhouseCoopers LLP (UK) when the demand realise your vision and limit the possibility of long-term damage to your talent pipeline? for people is going to be greater than it’s ever been before.’ James E. Rogers, Chairman, President and CEO, Duke Energy Corporation, US 2 See Appendix 2: From scenarios to real options
  42. 42. 04
  43. 43. 2020: Where three worlds co-exist 05 The Orange World Tribes thrive Managing tomorrow’s people 2020: Where three worlds co-exist In the Orange World businesses are fragmented, ‘companies’ are usually small, lean and nimble, relying on an extensive network of suppliers. They have multiple clients and contracts and access a globally diverse workforce of ‘team workers’ on a supply and demand basis. Communication networks are enabled by continual technological advancement and innovation. Loose collaborative ‘cloud’ networks come and go project by project. Employees in the Orange World are technology savvy and networked to communities of other employees with similar skills. The Green World The Blue World Sustainable business is good business Corporate is still king Companies have a powerful social conscience intrinsic to the brand and ‘green’ In 2020, Blue World companies embody big company capitalism and individual sense of responsibility. The focus is on sustainable and ethical business preferences override belief in collective social responsibility. Blue World practice and a strong drive to minimise and mitigate risky business practices. companies have invested in size, technology, the talent pipeline, strong The responsibility ethos is enforced by governments and regulators and is more leadership and sophisticated metrics. They have highly engaged and committed prevalent in certain industries such as energy, automotive and financial services. workforces who are well trained, skilled and operate globally. Work may be Green World employees engage with the company brand because it reflects pressurised and fast-paced, but staff enjoy a wide range of benefits which help their own values. They are recognised for good corporate behaviour, not just them run busy lifestyles and ‘lock’ them into the organisation. For those who business results. perform well, the rewards can be very high. Figure 1
  44. 44. 06 The Green World: sustainable business is good business G-Bank in 2020 into the environmental agenda. G-Bank’s strategy explicitly recognises the need for strong environmental credentials G-Bank is a US based investment and commercial bank, in as an essential part of an ethical and sustainable business. business since 1922. In a tough new regulatory environment G-Bank has provided shareholders with steady growth and Employees are rewarded with a rich selection of benefits but the solid (if modest) returns by managing risk within its workforce company rarely offers short-term incentives for performance. and business. Its behaviour is always geared toward the long This is partly due to the rigorous US regulatory framework and term, to ensure both economic and environmental sustainability. partly that G-Bank’s business model is geared towards slow but It’s corporate responsibility values permeate throughout the sustainable growth. organisation. G-Bank realises that failure to uphold these values G-Bank reports extensively on its people risk and reward could damage the brand with customers, and lead to penalties performance as well as a host of other metrics around being enforced by governments or regulators. customer knowledge, ethical behaviour and supply chain efficiency. During recruitment, G-Bank assesses professional Managing people in the Green World qualifications but also the contributions made to society G-Bank’s relatively conservative approach to lending meant and environment of the individual. it was able to weather the storm during the great credit crisis In G-Bank, as with many other Green World companies, people of 2008-10. G-Bank recognised that increased government management focuses on achieving high levels of employee scrutiny and the demands for more ethical business behaviour engagement. Pay is moderate compared to pre-crisis standards. arising from the credit crisis would inject renewed vigour Timeline of company 2009 2011 2015 2016 2018 G-Bank adopts new G-Bank is first US bank to G-Bank adds a permanent Announces early adoption G-Bank relocates HQ to new ‘principles for pay’ for its publish audited accounts representative from an NGO of guidelines from Climate energy efficient eco building executive cadre; at least of its environmental activity to its board of directors Change Act 2015 and in the suburbs 60% of any individual’s Ecosystem Act 2016 pay must be based on group performance

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