managing tomorrow’s people* - pwc€¦ · pwc graduate survey findings 30 contacts 32. the...
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Managing tomorrow’s people*The future of work to 2020
*connectedthinking
Contents
Introduction 02
2020: where three worlds co-exist 04
Corporate is king:welcome to the Blue World 06
The journey to Blue 06
Life in the Blue World: the main themes 07
Work in the Blue World: the people challenges 09
The Blue HR business model 10
Companies care: welcome to the Green World 12
The journey to Green 12
Life in the Green World: the main themes 13
Work in the Green World: the people challenges 15
The Green HR business model 16
Small is beautiful:welcome to the Orange World 18
The journey to Orange 18
Life in the Orange World: the main themes 19
Work in the Orange World: the people challenges 21
The Orange HR business model 22
Are you ready for tomorrow’s world? 25
Appendix 27
Definitions: Scenarios, Millenials 27
Our methodology 28
Global forces 29
PwC Graduate Survey findings 30
Contacts 32
The journey to 2020
At the beginning of 2007, a team fromPricewaterhouseCoopers gathered to explore thefuture of people management. Our thinking wassparked by the rising profile of people issues on thebusiness agenda – the talent crisis, an ageingworkforce in the western world, the increase in globalworker mobility and the organisational and culturalissues emerging from the dramatic pace of businesschange in the past decade. We wanted to explorehow these issues might evolve and howorganisations need to adapt to stay successful. Manystudies have attempted to capture a vision of theworkplace of the future, but we set out to understandthe people challenges that will impact organisationsand consequently the implications this will have onthe HR function as we know it. Few businessthinkers have proposed that the marketing or financefunctions might cease to exist in their present forms,but some are starting to say this about HR.
With the help of the James Martin Institute forScience and Civilisation at the Said Business Schoolin Oxford, we used ScenariosA1 to think about thefuture of people management. Our team has
identified three possible ‘worlds’ –plausible futures to provide acontext in which to examine theway organisations might operate inthe future. In addition we surveyedalmost 3,000 MillennialsA1 – new
graduates from the US, China and the UK whorepresent a generation just joining the workforce, totest their views and expectations on the future ofwork.
We hope you will help us to encourage debatearound this critical topic. It is said that the future isnot a place we go to, but one which we create. Andwhile things happen that we cannot predict, we canstill be prepared.
Michael RendellPartner and leader of Human Resource ServicesPricewaterhouseCoopers LLP
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Foreword 01
A1 – Appendix 1, see appendix page 27
2,739In July 2007, 2,739 graduates
from China, the US and the UKtold us about their expectations
of work. They had all beenoffered jobs with PwC but had
yet to start. Some of the keyfindings are highlighted
throughout this report
While some of the findingsseem to confirm current
received thinking about thefuture of work, a number of
themes defy conventionalthinking.
PwC is the biggest recruiter of graduates in the UK and
a leading global recruiter of graduates. A3
Introduction
When we started our research we had somepreconceived ideas about tomorrow’s world. Manystudies have been undertaken to explore the futureof society, the environment, business and even theworkplace. Our challenge was to focus explicitly on the business context and the impact on peopleand work.
While we cannot claim to have identified all thepossibilities, several strong themes have emerged:
1. Business models will changedramatically
The pace of change in the next decade will be even more fundamental. Technology, globalisation,demographics and other factors will influenceorganisational structures and cultures. Our scenariosoutline three organisational models of the future:
• large corporates turning into mini-states andtaking on a prominent role in society
• specialisation creating the rise of collaborativenetworks
• the environmental agenda forcing fundamentalchanges to business strategy.
2. People management will present one ofthe greatest business challenges
Businesses currently grapple with the realities ofskills shortages, managing people through changeand creating an effective workforce. By 2020, theradical change in business models will meancompanies facing issues such as:
• the boundary between work and home lifedisappearing as companies assume greaterresponsibility for the social welfare of theiremployees
02
A3 – Appendix 3, see appendix for a full breakdown of the findings page 30
• stringent people measurement techniques tocontrol and monitor productivity and performance
• the rise in importance of social capital andrelationships as the drivers of business success.
3. The role of HR will undergofundamental change
HR has been perceived by many as a passive,service oriented function, but given the context oftomorrow’s workplace and business environment, webelieve HR is at a crossroads and will go one of threeways:
• with a proactive mindset and focused onbusiness strategy, HR will become the heart ofthe organisation taking on a new wider peopleremit incorporating and influencing many otheraspects of the business
• the function will become the driver of thecorporate social responsibility agenda within theorganisation
• the function will be seen as transactional andalmost entirely outsourced. In this scenario, HRwill exist in a new form outside the organisationand in house HR will be predominantly focusedon people sourcing.
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“HR needs toensure it is fit forpurpose in orderto be proactiveand maintain ordevelop itsinfluence in thefuture.”
Keith Murdoch,Remuneration andBenefits Manager,British American Tobacco
We identified a number of global forces that will have significant influenceA2, and of those we felt that individualism versus collectivism and corporateintegration versus fragmentation would be the mostsignificant. From this axis we identified three worldsand business models for the future. (See figure 1 opposite.)
We tried to capture the events and trends whichdraw a picture of life in tomorrow’s world and thepeople management challenges that might prevail.The forecasting timelines and world descriptions arenot intended to be taken literally as complete visionsof alternative futures. They are designed to presentideas and illustrate the more important points aroundthe people management challenges. We believe it islikely that all three worlds will co-exist in some form,perhaps distinct by geographic region, or industrysector for example. As you read this document think about how your own organisation might bepositioned within these scenarios and whatimplications this has upon your current peoplemanagement strategy.
04
We believe it is possible that all three worlds
will co-exist in someform, perhaps
distinct bygeographic region, or industry sector
for example.
2020: Where three worlds co-exist
A2 – Appendix 2, see appendix page 28
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Companies care:The Green World
social responsibility dominates the corporate agenda with concerns
about demographic changes, climate and sustainability becoming the key drivers
of business
Small is beautiful:The Orange World
companies begin to breakdown into collaborative networks of
smaller organisations; specialisation dominates the
world economy
Corporate is king:The Blue World
big company capitalism rules as organisations continue to grow
bigger and individual preferences trump beliefs about social
responsibility
Fragmentation
Integration
Collectivism Individualism
2020: three worlds
Figure 1
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
The Indian economy expandsdramatically as it goes through a new wave of cross-borderacquisition spreesand becomes aglobal leader inseveral industrysectors
2012
World’s biggestsearch engine andlargest technologycompany merge
2013
The brain-drain ofEastern Europeanworkers starts toreverse as workersreturn home to set up and lead corporates,building onexpertise gained in several sectors
2014
A decade of M&Aconsolidationacross industrysectors peaks
2020
Global warmingchanges theclimate of Europe;as the snow on theAlps melts, skiershead to the US
07
90%
of Chinese respondents expect they will use a language at workother than their mother tongue
Size matters
The sheer size of corporations in 2020 means that a significant number now operate with annualturnovers that far exceed the GDP of many individualcountries, particularly in the developing world. With echoes of the business models promoted bycompanies like General Motors in the middle of thelast century, many companies now provide theequivalent of the welfare state for their employees to ensure they lock the best talent into theirorganisations. Internally managed service centres aresophisticated and highly efficient – using processesperfected by the outsourcers of the ‘nineties. Peoplemetrics become an essential part of everyday life tokeep track of individual performance andproductivity.
Corporates divide the haves and have nots
The power of corporations means that a muchgreater divide has opened up between those workingfor global corporations and those working in smallerenterprises. Employees of mega-corporations haveeverything they need laid on. Those working forsmaller businesses remain at the whim of housingmarkets and basic statutory entitlements, needing toself-supplement educational support, health andinsurance coverage, what remains of the publichealth system, and so on.
Welcome to the technology age
Technology is all pervasive, entire cities in the US,Japan and the UK operate with ubiquitous high-speed wireless networks that allow all commercialtransactions, entertainment and communications tobe handled by every individual on credit card-sizeddevices. Pinpointing exactly what you want andbeing shown where it is available from wherever youhappen to be is now taken for granted, allowingbusinesses continuously to refine and individualisetheir relationships with consumers, employees andshareholders.
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“Our search fortalent is now aglobal search.The competitionfor talent will onlyincrease further.”
Hanspeter HorschAssociate Director, Human Resources Samsung SemiconductorEurope GmbH
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Corporates drive lifestyle choices
Sophisticated measurement and segmentationstrategies mean companies can target goods andservices across their customer base and toemployees. For example ‘green politics’ is seen as alifestyle choice rather than a meaningful politicalmovement. Corporations provide environmentalproducts and services to those who express apreference.
Managing people in the Blue World
• Companies have become the key provider ofservices to employees. People management nowencompasses many different aspects ofemployees lives’, often including housing, healthand even education for their children.
• This strategy has led to an increase in staffretention rates as people policies seek to lock intalent, but the top talent is still hard to attract andretain, many senior executives use personalagents to seek out the best deals.
• Mass consolidation has had an impact on culturalissues. Leadership teams now have a high focuson the evolution of the corporate culture withrigorous recruitment processes to ensure newemployees fit the corporate ideal. Existing staffare subject to compulsory corporate culturelearning and development programmes.
• Huge people costs drive the need for robustmetrics and analysis. Employee engagement,performance and productivity are all measuredsystematically. Leadership can access peopledata on a daily basis. This also provides an earlywarning signal of non-corporate behaviour orbelow standard performance.
• Technology pervades every realm of business andleisure activity. The line between inside work andoutside work is often blurred by technology withemployers providing the platform. This alsoprovides employers with added insights to staffpreferences.
75%
of respondents think that workplace
flexibility will not exist; they believe
they will be workingformal office hours
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Who leads peoplestrategy?
• The Chief People Officer (CPO) is a powerfuland influential figure, sometimes known asthe ‘Head of People and Performance’ whosits on the leadership board.
• Metrics and data are used to drive businessperformance through complex staffsegmentation strategies which identifythousands of skills sets – creating precisionaround sourcing the right candidates for theright tasks as well as on the job performancemeasurement and assessment.
• The science of human capital has developedto such a degree that the connectionbetween people and performance is explicitlydemonstrated by the CPO.
• As organisations increase in size, their riskmanagement systems are similarly extended.
• The people risk agenda is one which is takenseriously by the board – as a result, the CPOand HR business partners become moreinfluential.
• Those responsible for people managementincreasingly need financial, analytical,marketing and risk management skills tomeasure the impact of the human capital intheir organisation and to attract and retain thebest talent.
Organisationalchallenges
• Quality assurance across the globe drives theneed to create consistency across theorganisational supply chain.
• The challenges of size and scale mean thatthese organisations are at greater risk fromexternal threats such as technology terrorismor meltdown and they find it difficult to effectchange quickly.
• As companies try to reinforce corporatevalues, these can often be at odds withcultural values and can present challenges.
• Organisations must develop models andsystems designed and run by HRprofessionals which enable individuals andtheir agents to negotiate the value of theirhuman capital based on employees’ personalinvestment strategies.
Employee profile
• People are graded and profiled at the age of16 and categorised for work suitability both interms of capability and individual preference.
• The top talent is highly prized and foughtover. In most cases people are linked to anorganisation by the age of 18.
• University education is managed by thecompany according to the organisationalcareer path chosen by the individual.
• At the top level, employees take far greatercontrol of their careers; often seniorexecutives have their own personal agentswho represent them to find the best roles anddeals.
• Lower level employees are also taking activecharge of their careers; they are aware of thevalue that their human capital represents andare demanding about the circumstances inwhich they will invest.
• Those outside the corporate sphere findemployment choices are limited to smallercompanies that are unable to provide thesame level of development and financialbenefits.
10 A people management model for the Blue WorldIn the Blue World where corporate is king, the people and performance model below is the closest to what manyleading 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 themanagement of people and performance becomes a hard business discipline, at least equal in standing tofinance in the corporate hierarchy.
HR business partners
Reward
Policy
Resourcing
HR shared services
Change agentsOrganisational development consulting
Learning and development
Talent management Identification (including recruitment)
Career management
Learning and development
International deployment
People management information systems
Metrics, analysis and benchmarking
External reporting
People metrics and reporting
People shared servicesRewards administration –current, deferred and retirement income
Housing, health, schools and other benefits
Employment records
Performance management (linking objectives with metrics)
Reward strategies and plans
Reward and performance
Specialist centres of excellence
Human resources: the current model People and performance: the 2020 model
Figure 2
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Extract from a newspaper in 2016
People metrics are integral toanalysts’ pricing strategies
Future view
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Italian pharmaceuticalgiant Como saw itsshares climb higheryesterday inexpectation of positivenews in its quarterlyresults due next week.The company, nowworth an estimated € 20bn has profitedfrom the success of itsnew line of statins inEurope and America,but also in China, thefastest growingpharmaceutical marketglobally.
The quarterly reportwill be looked atclosely by companiesinside the industry andbeyond. Many creditComo’s unusuallyrapid rise anddominance of parts ofthe sector to the wayCEO Mario Fabrizzimanages theorganisation’s humancapital, which thecompany also reportson in detail. Last yearearnings per employeerose by 7% while costsper employee fell 5%,
generating a muchimproved return onhuman capital.
Mr Fabrizzi said, “Youhave to measure thethings you attach valueto. Measuring theperformance of ourpeople has allowed us to quickly makeimprovements to anyunderperforming partof the business, tomake effective plansfor succession and toreturn real value to ourshareholders.”
WORLD FINANCIAL NEWS 3rd April 2016
NEWS IN BRIEF
Companies care: the Green World
Where consumers and employees force change
In a nutshell:
Companies develop a powerful social conscience and green sense ofresponsibility. Consumers demand ethics and environmental credentials as a top priority. Society and business see their agenda align.
2010
The UK launchesthe London CarbonTrading Exchange
2012
The US signs theKyoto II agreementand becomes aleading advocatefor actions toreduce the rate ofglobal warming
2013
India becomes akey player in thecorporate socialresponsibilityagenda with afocus on preservingthe Indian cultureand heritage
2018
Hybrid or fullyelectric cars outnumber petrol-poweredcars
2020
A group ofscientists confirmthat the rate ofglobal warming is slowing
94%
of respondents believe they willwork across geographic bordersmore than their parents did.
Consumers drive corporate behaviour
The environmental lobby is so pervasive thatcompanies must be quick to react to consumerconcerns about any aspect of their business whichcould be deemed unethical. Clear communicationand clarity about products and services is essential.
Supply chain control
Companies have strong control over their suppliernetworks to ensure that corporate ethical values are upheld across the supply chain, and be able totroubleshoot when things go wrong. This has led tomany organisations taking greater ownership of key
components of the supply chain through verticalintegration. Rigid contractual obligations are in placecovering every eventuality.
How green are you?
The audit process and quarterly company reports arecharacterised by a focus on measuring greennessdetailing carbon emissions ratings, and carbonexchange activity, as well as the more traditionalcompany valuations. This is an indication of theimportance shareholders and investors place onthese issues which are reflected in the share price.
Big corporate fines
In the business world ethical behaviour is the mostimportant attribute to attain and preserve. Brandscan rise and fall on the basis of perceived greencredentials, with government imposed corporatefines for bad behaviour in this highly regulated world.Corporate responsibility is not an altruistic nice tohave, but a business imperative.
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“We aredeveloping anemployer brandreflecting ouridentity as anemployer andpromoting ourlong termcommitment with ouremployees.”
Hughes Fourault, Global Head ofCompensation, Benefits and International Mobility, Société Général
14
Managing people in the Green World
• New graduates look for employers with strongenvironmental and social credentials; in responseHR departments play a key role in developing thecorporate social responsibility programme.
• Employees are expected to uphold corporatevalues and targets around the green agenda.Most are given carbon credit tokens which areused like ration books to be cashed in for printingdocuments in hard copy, company travel andother anti-societal activities.
• The HR function is renamed ‘People and Society’,the leader being a senior member of thecompany’s executive team.
• The need to travel to meet clients and colleaguesis replaced with technological solutions whichreduce the need for face-time. Air travel inparticular is only permitted in exceptionalcircumstances and is expensive. Working acrossteams in different locations therefore presents
enormous challenges to global businesses, andthe HR function dedicates significant energy togenerating virtual social networks across theoperation and the client base.
• Most companies provide staff with corporatetransportation options between work and home tominimise the need for car use. This has led tomany companies choosing to relocate parts oftheir operation to where people are based andout of big cities.
90%
of US respondentswill actively seek out
employers whosecorporate
responsibilitybehaviour reflects
their own.
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Who leads peoplestrategy?
• The CEO drives the people strategy forthe organisation, believing that thepeople in the organisation and theirbehaviours and role in society have adirect link to the organisation’s successor failure.
• The CEO works closely with the Headof People and Society (HPS) who, witha team comprising a mix of HR,marketing, corporate socialresponsibility and data specialists,drives the social responsibilityprogramme.
• Employment law drives responsibleemployer behaviour and forces theHPS to develop innovative solutions intimes of downturn – such as sendingemployees on secondments to otherorganisations where they can developtheir skills and contribute to the widersociety, bringing employees back inwhen the economic environmentimproves. The HPS is therefore a well-networked individual.
Organisationalchallenges
• Quality assurance and vigilance tominimise risk is paramount.
• The greatest threat to businesses inthis scenario is the possibility of non-socially responsible behavioureither within the organisation or in anypart of its supply chain.
• Organisations operate in a highlyregulated world, where employmentlaw makes it difficult to lay people off inline with market fluctuations. Theystruggle to monitor everything acrossthe operation to be compliant with theethical ideal for which they strive. Butbeing compliant is not enough:organisations are under pressure toraise the bar and establish policies andpractices which go beyond regulatoryrequirements. The danger in such aregulated world is that companies areso preoccupied with compliancepolicies that the ability to be flexibleand explore new opportunities ishampered.
Employee profile
• The common belief is that employeeschoose employers who appear tomatch their beliefs and values. Thereality is that the talent pool for thebrightest and best remains competitive,and whilst CSR rankings are a factor,the overall incentive package remainsall important. Incentives however arenot just reward-related; for example,they include paid secondments to workfor social projects and needy causes –a popular trend post-2010.
• Because organisations adopt a moreholistic approach to developing their people, including personaldevelopment and measuring the impact they have on the wider world,employees are more engaged and as a result are often likely to have a job for life.
16 A people management model for the Green WorldIn the Green World where companies care, corporate responsibility (CR) is good. The CR agenda is fused withpeople management. As society becomes a convert to the sustainable living movement, the people managementfunction 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
HR business partners
Reward
Policy
Resourcing
HR shared services
Change agentsOrganisational development consulting
Learning and development
People engagement
Resourcing and careermanagement
Education
Communications
Society engagement
Network development
Community engagement
Communications
People shared servicesReward and benefits
SustainabilityProgrammes
Compliance
Risks
Specialist centres of excellence
Employment records
Figure 3
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G- BANK
G-BANK recognises its statutory responsibilities under theClimate Change Act 2015, Ecosystem Change Act 2016,and all other sustainability legislation. We have been activeparticipants in the International Business Panel on ClimateChange since it was established in 2010.
The group has adopted the EuropeanSustainable and ResponsibleCorporations guidance and hascomprehensive company-wide policieson sustainability, energy and climatechange, and responsible procurement.We require all suppliers to be certifiedas carbon balanced and eco-friendly.
During 2020 G-Bank made furtherchanges in its energy providers in 25countries, so that 95% of our totalenergy consumption now comes fromrenewable sources. Our extensive useof videophone technology and virtualmeeting software means that businesstravel has reduced by 75% over thepast five years.
In the last quarter of the year ourenvironmental auditors completed theirannual sustainability audit and issuedan unqualified opinion. This has
allowed G-Bank to retain its status asa AA+ company within the S&Psustainability index.
Key environmental data is providedbelow
G-BankSustainable business report
Key Environmental Statistics 2020 2019Energy use – propertiesTotal energy consumption – Gw 1,015 1,200Energy consumption/FTE – Kw 0.10 0.13Renewables as a 95% 91%% of total energy consumption
CO2 emissions – propertiesCO2 – kilotonnes 21.0 21.8CO2 – tonnes/FTE 0.21 0.23
Business travelTotal travel-related CO2 – kilotonnes 1.0 1.9Travel-related CO2 0.01 0.02per FTE – tonnes/FTE
Extract from operating review
In 2020, it is a legal requirementthat companies disclose theirenvironmental activity. This alsoacts as a key differentiator whenrecruiting and retaining talent.
Future view
Small is beautiful: the Orange World
Where big is bad, for business, for people and for theenvironment
In a nutshell:
Global businesses fragment, localism prevails, technology empowers a low impact, high-tech business model. Networks prosper while largecompanies fall.
2009
Facebook globalmembershipreaches 1 billionpeople
2010
Skill shortagespush up wages inChina, switchingthe balance ofpower to theindividual awayfrom the collective
2012
Record number of corporatedemergers and spin-offs
2014
71% of Europeansshop at localfarmers markets,popularity ofsupermarkets insteep decline
2020
The CaliforniaGaming Guildachieves recordpay deal for its 7 Star ratedcontractors
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0.6%
Only 0.6% of UK respondents thinkthat they will mainly work fromhome
A free economy
Trade barriers come down creating a truly freemarket economy and countries such as Chinaquickly realise that without embracing full free-market forces they will be unable to compete.
Networks are key
The dream of a single global village has beenreplaced by a global network of linked, but separateand much smaller communities. The exponential risein the efficiency of online systems for buying, sellingand trading services and skills has debunkedcompletely the old orthodoxy that economies arisefrom scale. Businesses are much smaller and rolesare more fluid.
Complex supply chains
Supply chains are built from complex, organicassociations of specialist providers, varying greatlyfrom region to region and market to market. Thesolution is now not to outsource, but to fragment.Looser, less tightly regulated clusters of companiesare seen to work more effectively. Often functions are picked up on a task by task basis by ‘garage’operations, with each transaction bought and sold bythe second on one of a number of electronic tradingplatforms, with local and global exchanges.
Millennials drive technology use
The millennial generation, comfortable withtechnology, is driving the usage of technology as theinteraction with services, government and work, withan emphasis on choice and anti-monopoly thinkingencouraging innovations in this area.
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“Diversity is ahuge challenge,but also a greatopportunity.Getting diversityright will be acritical futuresuccess factor for us.”
Peter JohannDirector Global HRManagementBASF
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Labour market enters the guild era
In a tightening labour market individuals developportfolio careers, working on a short-term,contractual basis. They join craft guilds whichmanage career opportunities, provide training anddevelopment opportunities.
Managing people in the Orange World
• Organisations recognise that their employees andthe relationships they have across their networksare the foundation of company success.Companies seek to promote and sustain peoplenetworks. This is achieved through incentivisingemployees around achieving connectivity goalsand collaborative behaviours.
• As guilds become more important, they take onmany of the responsibilities previously assumedby employers including sourcing talent, medicalinsurance and pensions, development andtraining.
• Employees are usually aligned to guilds andaccess opportunities through professional portalsprovided by guild networks – work can bebought, sold and traded in this way. Employmentcontracts are flexible to accommodate staff churnand a rapid turnaround.
• Workers are categorised and rewarded for havingspecialist expertise; this has created increaseddemand for workers to have a personal stake inthe organisation’s success with direct ownershipshare schemes and project delivery-relatedbonuses becoming the norm.
• Recruitment has become largely a sourcingfunction and has been merged with themanagement of the huge number of contractsand price agreements required for eachcompany’s network of partner organisations.
11.5%
of Chinese femalerespondents expect
to have more than ten employers during
their career
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Who leads peoplestrategy?
• People strategy is replaced withsourcing strategy, as maintaining theoptimum supply chain of people is keyto this networked world.
• The People Sourcing Director liaiseswith expertise networks and guilds toattract what they need for the bestprice.
Organisationalchallenges
• Organisations are heavily reliant ontheir external networks to deliver whatthey need, and a combination ofwatertight contractual agreementscombined with a healthy degree ofbusiness trust is imperative.
• When a part of the network breaksdown, the smaller size of organisationsmeans they are able to flex and adaptquickly to change. But the flip side ofthis means that the lack of companyinfrastructure and resources to dealwith sudden problems can be achallenge
• There is also a strong emphasis ontechnology to support the supply chainand to develop social capital andcollaboration.
Employee profile
• The responsibility for skillsdevelopment shifts wholesale toindividuals.
• People are more likely to seethemselves as members of a particularskill or professional network than as anemployee of a particular company.
• Employees rely on achieving highscoring ‘eBay’ style ratings of past jobperformance to land the next contract.
• Specialisation is highly prized andworkers seek to develop the mostsought after specialist skills tocommand the biggest reward package.
22 A people management model for the Orange WorldOur third world is in many ways the most radical. In this world, economies are comprised primarily of a vibrantmiddle market, full of small companies, contractors and portfolio workers. People management is about ensuringthese small companies have the people resources they need to function competitively. This allows an importantrole 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 managedexternally by guilds.
Current model Operational model in 2020
Outsourced operations
Business operations Corporate centreFinance
HR
Marketing
Outsourced activities
Strategy
Supply chain and resourcing (including people)
Customer relationships and marketing
Core operations
Flexible workforce
Shared services
Outsourced services
Figure 4
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Extract from employment networking sitein 2020
In the Orange World, Workbook, an employment networking site, is used as a key route for people to find jobs, host their workexperience and join networks
Future view
A summary of the people
managementcharacteristics
in 2020
24
ResourcingandSuccession
Long careers and careerplanning. Succession plans forkey performers.
Holistic whole companyapproach to manpower planning.
Short-term careers. Lots ofcontracting. HR strongly focusedon filling fixed-term vacancies.
TalentManagement
Strong performance focusacross all levels. Top talent havepersonal agents.
Broad definition of talent.Competencies focus.
Minimal – key players in thecentral ‘core’ only, but liaisonwith external agents crucial
EmployeeEngagement
Engagement aroundperformance and performancemetrics. Heavy promotion ofcorporate culture attributes andbehaviours.
Engagement around work-lifebalance and social responsibility.
Short-term engagement aroundprojects.
Reward andPerformance
Strongly performance-related.Pay for performance. Highlystructured according to rolesegmentation.
Focus on total reward overcareer life-time.
Contract based-pay for projects.Individual stake in projects asincentive for contractors.
Learning andDevelopment
Begins at school. Focus on skillsfor the job – metrics driven.
Holistic approach to learning – much provided in-house. But secondments and paidsabbaticals for worthy causesare common
Minimal provision in house. Skillstraining via new crafts guilds.
Summary
Table 1
Blue World Green World Orange World
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25Are you ready for tomorrow’s world?
What will the world look like in 2020 – Blue, Green,Orange or something else entirely? We believe it ishighly plausible that all three organisational modelsdescribed in this report will feature in tomorrow’sworld, sometime or somewhere and to some extent.We already see some multinationals heading in thedirection of the Blue World business model. Theenergy industry has been demonstrating elements ofthe Green World for some time. We firmly believethat, as the CSR and sustainability agenda growsmany other industries (and geographies) will take oncharacteristics of the green business model, forexample the retail and manufacturing sectors.Consumer preference will have a huge impact whenit comes to the green agenda.
The Orange World in some ways represents the most radical departure. Will big business find itself outflanked by a vibrant, innovative andentrepreneurial middle market? Will the workexpectations of the millenials be such that portfoliolives will become far more pervasive? Will somelarger organisations introduce internal markets andformal networks in place of old style hierarchies tocreate structures where agility, speed and flexibilityare key to success?
The world of work is going to become even morecomplex. Our message is: take a long hard look at your organisation models and current peoplemanagement strategies; how are you addressingreward, international mobility, employee engagement,development and learning? Think about how thesemight change in the future and whether or not thestrategy you currently have in place is future proof, issustainable, sufficient and relevant for the plausibleworlds of tomorrow.
The survey we conducted is clearly representative ofonly a part of the millennial generation. But what trulysurprised us is the desire in this group for stabilityand regularity in a changing world. Many people saidthey expect to work regular hours, from the office oron location, and would have only between two and
“HR will continueto increase itsalignment to the business, with greateraccountability fordelivering specificcorporateobjectives. Thiswill result in agreater need forHR to quantifyitself in respect ofhow we deliveragainst thebottom line. ...
26
Figure 5
five employers in a lifetime. But equally let’s notignore the Chinese women in our sample whoexpected far more flexibility and to have at least tenemployers in a lifetime – perhaps these might beworkers for the Orange World of the future.
Our final message is to the HR function itself. Webelieve there is a significant opportunity for the HRfunction to really own the people managementagenda within organisations, to truly drive strategyand have the tools and information to become one of the most powerful and influential parts of thebusiness operation. But – and yes there is a but – wecan also see that complacency and a failure by HRto take the lead could result in the function beingoutsourced almost entirely, or absorbed by linemanagers or into other functions such as finance ormarketing. The fate of HR as a function hangs in thebalance. The challenge for HR is to figure out how tomake itself relevant for tomorrow’s world.
How can organisations plan for the futureof people management?
...We will also need toprepare ourselves for
a new generationentering the market
place. A significantlymore mobile
generation withdiffering expectations
from an employer,and we will need to
adapt to reflect this.”
Michael Poulten Personnel Manager
Reward and Benefits Tesco Stores
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A1 Definition
Scenarios
We worked with the James Martin Institute forScience and Civilisation at the Said Business Schoolin Oxford to think about the factors that currentlyaffect business and those which we believe will growin importance in the future. We mapped these arounda matrix and developed a number of scenarios:plausible futures around each. The result was thethree worlds which we describe in this report. Shellfamously used scenarios to help them to predict theMiddle East oil crisis in 1973. The process can helporganisations think differently about the future andplan for the inevitable surprises.
Millenials
Wikipedia says ‘The Millenials’ are also known as:‘Generation Y – a term used to describe someoneborn immediately after Generation X…one of severalterms (also including The Internet Generation) usedto identify the same group. There is much dispute asto the exact range of birth years that constitutesGeneration Y and the Millennials and whether theseterms are specific to North America, the Anglophoneworld, or people worldwide.’
For the purposes of this document, we refer to‘Millennials’ as those who entered the workforce after1 July 2000.
27Appendix
We started our research by examining the forces thatcurrently affect global business and are likely to havesignificant impact on the future. Clearly there aremany social, environmental, religious anddemographic factors that will have significantinfluence but we felt that some of these issues havebeen tackled extensively in other studies. We choseto focus on a number of potentially conflicting factorswhich we feel have the greatest impact on oursubject matter – people management. Initially weexplored the following eight forces: (see diagramopposite).
Scenarios
Our scenario planning exercise revealed thatindividualism, collectivism, corporate integration andbusiness fragmentation would be the most significantfactors affecting global business for the purposes ofour study. We aligned these along two axes, aroundwhich we developed our scenarios further. We callthese ‘worlds’. We began with four worlds: yellow,red, blue and green, with the yellow and red worldsstraddling the top half of the quadrant. In thesefragmented worlds we discovered through ouranalysis that the differences across individualism andcollectivism were hard to define in the fragmentedworld. Both of these worlds relied upon networks tosurvive, were, small, nimble and adaptable. Themotivations were the only variant factor where thered world was more self-serving than the collectivealtruism of the yellow world. We decided therefore tocombine these themes to create a single orangeworld which represented the fragmented businessmodel.
28 A2 2020: our methodology
Global forces
Technology controls me:allowing technology into almostevery part of a personí s life
Globalisation:the free-market trend prevailsas trade barriers disappear
Reverse globalisation:protectionist policies begin to rebuild barriers to free movement of people and goods
I control technology:a yearning for the human touchminimises the personal impact oftechnology on consumers
Collectivism: the common good prevails over personalpreference, e.g. collective responsibility for the environment over individual interest
Business fragmentation:the potential break-up of large businesses and the rise ofcollaborative networks
Individualism:focus on individual wants; aresponse to the infinite choicesavailable to consumers
Corporate integration:big business rules all
29Global forces
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Figure 6
In July 2007, 2,739graduates from
China, the UK andthe US were polled
about theirexpectations of work.
They had all beenoffered jobs at PwCbut had yet to start.
30 A3 PwC graduate survey findings
Total China US UK
Do you believe you will work acrossgeographic borders more than your parentsdid?
Yes 93.9% 97.2% 92.1% 92.9%
No 6.1% 2.8% 7.9% 7.1%
Do you envisage using a language otherthan your first language at work?
Yes 52.7% 89.4% 32% 35.3%
No 47.2% 10.4% 68% 64.7%
Will you deliberately seek to work foremployers whose corporate responsibilitybehaviour reflects your own values?
Yes 86.9% 87.2% 90.2% 71.2%
No 13% 12.6% 9.6% 28.8%
Do you think you’ll work...? A mix of locations 74% 75.7% 71.8% 79%
Mainly from home 4.6 7.4% 3.8% 0.6%
Mainly in anoffice
21.2% 16.7% 24.3% 20.4%
Not answered 0.1% 0.1% 0% 0%
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Total China US UK
Do you think your office hours will be…?Mainly flexiblehours
13.9% 17.6% 12.9% 7.4%
Mainly regularoffice hours
11% 7.1% 14.0% 10.0%
Regular officehours
75% 75.1% 73.1% 82.5%
Not answered 0.1% 0.2% 0.1% 0%
How many employers do you think you willhave in your career?
1 8% 9% 8% 7.4%
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%
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There were numerous people involved in this projectboth within and outside PricewaterhouseCoopers.Our particular thanks to Angela Wilkinson and teamat the James Martin Institute and to all thecompanies who shared their views and insights.
Our thanks to the core project team: Sandy Pepper,Cecilia Nordqvist, Matthew Blakstad, Leyla Yildirim,Rachael Davison, Andrew Smith, Jackie Gittins,Sonja Jones and the rest of the team who took partin the scenarios workshop. We would also like tothank Sivaramakrishnan Balasubramanian, IndraniRana (India), Svetlana Kruglova (Russia), ShinyaYamamoto (Japan), Steve Rimmer (US) and manyother contributors from across our global network of PricewaterhouseCoopers firms. Our finalacknowledgement goes to our internal human capitalteams around the world who helped us to conductthe graduate survey.
Michael RendellPartner and leader of Human Resource ServicesPricewaterhouseCoopers LLP (UK)+44 (0) 20 721 [email protected]
Sandy PepperPartner/Project leader Human Resource ServicesPricewaterhouseCoopers LLP (UK)+44 (0) 20 721 [email protected]
Karen Vander LindeLeader, People and Change PricewaterhouseCoopers LLP (US)+1 (703) 981 [email protected]
Leyla YildirimMarketing Human Resource ServicesPricewaterhouseCoopers LLP (CI)+44 (0) 1481 75 [email protected]
32Acknowledgements Contact
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This publication has been prepared for general guidance on matters ofinterest only, and does not constituteprofessional advice. You should notact upon the information contained in this publication without obtainingspecific professional advice. Norepresentation or warranty (express or implied) is given as to the accuracyor completeness of the informationcontained in this publication, and, to the extent permitted by law,PricewaterhouseCoopers LLP, itsmembers, employees and agentsaccept no liability, and disclaim allresponsibility, for the consequences ofyou or anyone else acting, or refrainingto act, in reliance on the informationcontained in this publication or for anydecision based on it.
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