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Strategic Consulting Group

The Future of the Global Workplace

Dr Peter Saulwww.petersaul.com.au

Presentation to Diversity Council Australia’s

Annual Conference on Diversity22 November 2007

Melbourne


Overview

How can we most profitably think about the topic?

Work, workers and workplaces aren’t what they used to be or where they used to be.

… and things are still changing, so the future will be different again.

How might the HR function evolve in the light of all these changes?

What role will diversity play in successful organisations?


LOOKING AT THE BIG PICTURE:Probable shapers of the 10-20 year future

Polarised distribution of wealthPolarised distribution of wealth GlobalisationGlobalisation Diversity, complexityDiversity, complexity New technologies: e.g. genomics, nanotechnologyNew technologies: e.g. genomics, nanotechnology Information and communications technologyInformation and communications technology DisintermediationDisintermediation LegislationLegislation Corporate governance structuresCorporate governance structures Population demographics Population demographics Natural environment; e.g. climate changeNatural environment; e.g. climate change Risk, uncertainty, lack of meaningRisk, uncertainty, lack of meaning Pandemics; e.g. bird fluPandemics; e.g. bird flu Wars, terrorismWars, terrorism Search for simplicity, new values, meaning Search for simplicity, new values, meaning Growth in experience economyGrowth in experience economy Questioning of Western capitalism Questioning of Western capitalism TechnologyTechnology


10 Consumer Trends for 2006+

ANXIETY - expect a boom in escapism and fantasy CONNECTEDNESS - faster, smaller, more intelligent world where events will be

experienced by more people SPEEDING-UP - blurring of work and home; memory loss, increased stress and

mental illness MOBILITY - people want to access anything , any time, anywhere CONVERGENCE - blurring of whole industries, markets and brands PRIVACY - potentially a more truthful and trusting society OR people adopt

multiple personalities and fake IDs NOSTALGIA - escape to the past; increased desire for face-to-face contact LOCALISATION - more local trade alliances; the re-emergence of city states;

the Balkanisation of Europe AUTHENTICITY - growing interest in how things are made; search for real

products and experiences HAPPINESS - people increasingly value time, well-being and sustainability

ahead of more money and materialism

Source: www.nowandnext.com


Scanning the Environment for Patterns of Weak Signals

Sydney households have average net worth 37% higher than rest of Australia

Almost a billion new consumers

will enter markets in emerging economies

20% of Aust. adult population has downshifted in past 10 years

No developed country has fertility rate

above replacement

level

The 33 million university educated young professionals

in developing countries is twice that in developed

world

30% of net new jobs created

between 2005 and 2020 will be in

India; 14% in China

India’s population will grow by 260 million by

2025; 5 times the increase in the US; and twice that

in China

Global survey of consumer and retailing companies: greatest threats over next 15 years are low-cost

competition; decreasing customer loyalty

% Aust. population over age 65 will

increase from 13% in 2005 to 24% in

2025

In 2005, one in six countries in the world faced food

shortages because of severe droughts

due to global warming

65 per cent ofyoung

Australians will be overweight or

obese by 2020

Social

Technical

Economic

Political

Environmental

ABS predicts,childless couples

will outnumber those with

children by 2010


DIFFERENT FUTURE SCENARIOS REQUIRE DIFFERENT AUSTRALIAN WORKFORCES

“FIRST GLOBAL NATION”Australia capitalises on globalisation; promotes its internal diversity and ethnic tolerance; and boosts home-grown innovation and industry capability

“SOUND THE RETREAT!”Globalisation stalls as political and social structures are not ready; trade barriers and nationalism re-emerge; we depend on bilateral national and commercial relationships

“BRAVE OLD WORLD”Complacent, dependent on agriculture, tourism, “new” manufacturing and some biotech; clever people and companies move overseas

“GREEN IS GOLD”We emerge from the growing imperative to protect the natural environment as a leading innovator of global environmental management

Source: Australian Business Foundation “Alternative Futures: Scenarios for Business in Australia to the Year 2015” Sept 1999


Why care about the global workforce?

“The working age population [in Australia] currently grows by 170,000 people a year. But trends already in place will see the working age population grow by just 125,000 for the entire decade of the 2020s…”

“Population Ageing and the Economy” by Access Economics, Jan 2001, p.3


Overview of Supply and Demand Factors Shaping the Future Global Workforce

FutureWorkforce

Industry Structure

Govt.Policies

PopulationDemographics

SocialValues

ConsumerPreferences

Types ofOrganisation


The Future Global Workforce: A Function of Supply and Demand

SUPPLY FORCES Population demographics Government policies influencing fertility rates Education and health policies and infrastructure Immigration flows Climate change

DEMAND FORCES Social/consumer values Rate and nature of economic development Income levels (purchasing power) Technology Nature of work organisation


Identifying The Relevant Global Workforce

Global population of working age

Those with desired skills and attributes

Those attracted to your industry, organisation, location

Those able to move (in time)

Those reached by recruitment process


The BRICs are Changing Everything

The entry of Brazil, Russia, India and China into the global market economy has doubled the size of the global workforce and dramatically changed its demographic profile (many more younger workers).

The halving of the capital/labour ratio increased the power of capital as many more workers competed to work with the world’s capital.

The level of wealth inequality in these countries has increased dramatically.

As BRIC firms move up the value chain they will require more highly skilled workers and will become global competitors for the West’s best knowledge workers. Their improving social infrastructure will add to their competitiveness. Their huge foreign reserves will also enable them to acquire skills through corporate acquisitions.


Big picture demographics: Global population (millions)

1520

2367

1301

1437

1087

1628

885

1941

728668

549

778

326457

0

500

1000

1500

2000

2500

Asia &Oceania

China India Africa Europe LatinAmerica

NorthAmerica

■ 2004 ■ 2050

Source: Population Reference Bureau, 2004


Global population by age (%)

17

15

33

5

0

5

10

15

20

25

30

35

More developedcountries

Less developedcountries

■ under age 15

■ age 65 and over

About 90% of the growth in world population to 2050 will occur in developing countries in Africa and Asia (including China and India)

N.B. Data are for 2004


Global population aged 65 and over (%)

16

21

28

12

18

21

10

15

19

6

10

19

6

10

18

34

7

0

5

10

15

20

25

30

Europe NorthAmerica

Oceania LatinAmerica

Asia Africa

■ 2007 ■ 2025 ■ 2050



Population aged 65 and over



Australia’s ageing population (%)

21

18

16

12

20

24

0

5

10

15

20

25

Aged under 15 Aged 65 and over

■ 2000 ■ 2025 ■ 2050

United Nations “World Population Prospects” (2006) http://esa.un.org/unpp


How to Make Sense of the Changing Workplace?

New Retirement

Options

New Retirement

OptionsTwo Speed Economy

Two Speed Economy

Employability vs. Job Security

Employability vs. Job Security

Multiple, Self-Directed

Careers

Multiple, Self-Directed

CareersDistributed Leadership

Distributed Leadership

Changing IR Legislation

Changing IR Legislation

Distance

CollaborationDistance

Collaboration

24/7/365 Anytime, anywhere

24/7/365 Anytime, anywhere

New Technology, New Energy

New Technology, New Energy

Work/Life Balance

Work/Life Balance

Diversity in the

Workforce

Diversity in the

Workforce

Collaborative Decision Making

Collaborative Decision Making

Multiple,

Overlapping

Networks

Multiple,

Overlapping

Networks

Knowledge Workers Valued

Knowledge Workers Valued

Information

OverloadInformation

Overload

Skills

ShortagesSkills

Shortages

Youth WorkersYouth

Workers

Employee Engagement

Employee Engagement

Leveraging

Intellectual

Property

Leveraging

Intellectual

Property

Corporate Social

Responsibility

Corporate Social

Responsibility

Global Competition + China, India

Global Competition + China, India

OutsourcingOutsourcing

Changing Expectations:Gen X, Y, 60+

Changing Expectations:Gen X, Y, 60+

SustainabilitySustainability

Physical & Data

Security

Physical & Data

Security


Shifts That Are Re-shaping Organisations and Work

FROMLocal markets, operations

Manufacturing, clerical work

Hierarchy

Intermediaries; face-to-face

Obedience to formal authority

Stability, efficiency, control

Full time job

Shareholder value

Work done by employees

Fixed work location

Management prerogative

Loyal service

White, young workforce

Financial performance

“Get a job”

TOGlobal markets, operations

Service, knowledge work

Networks

Direct access,virtual relationship

Questioning of formal authority

Change, creativity, flexibility, order

Part-time and project work

Stakeholder value

Work done by many contributors

Diverse work locations

Social licence

Marketable knowledge, skills

Diverse, ageing workforce

Multiple bottom lines

“Get a life”


The changing locus of employment in Australia

Business Size No. of Businesses(excl. Govt &

Finance/Insurance)

Employment

(end June)

Industry Value Added ($m)

Small

(1-19 persons) 773,953 2,341,180 169,805

Medium

(20-199) 37,202 1,780,984 126,732

Large

(200 and over) 2,945 2,626,428 237,462

Non-employing 1,551,112 1,360,922 62,705

TOTAL 2,365,213 8,109,513 596,704

Source: ABS 8155.0, Section 2.1, Data for 2004-05


Emerging Organisational Paradigms on “the Edge”

STAKEHOLDER BASED CORPORATE GOVERNANCE PROCESSES

TERRORIST ORGANISATIONS SUCH AS AL-QAEDA

MULTI-AGENCY NETWORKS EMERGING TO FIGHT GLOBAL HEALTH THREATS SUCH AS SARS

SELF-ORGANISING COMMUNITIES CREATING OPEN SOURCE SOFTWARE SUCH AS LINUX; AND DATABASES SUCH AS WIKIPEDIA

GOVERNMENT POLICY MAKING AND DELIVERY IN A WORLD OF INCREASING DEMANDS AND SHRINKING RESOURCES

IN THE EMERGING “KNOWLEDGE ECONOMY”

N.B. The network is the central organisational form in all of these emerging arenas of activity


MIT Scenarios Forecast Emergence of Networks in 21st Century

MIT Initiative on Inventing the Organizations of the 21st Century (January 1997) facilitated by Peter Schwartz of the Global Business Network:-

http://ccs.mit.edu/21c/21CWP001.html

The scenarios were developed during 1994-1997 by MIT academic and research staff in discussions with hundreds of executives at various MIT Symposia, executive education programs, etc.


FUTURE OF ORGANISATIONS: Scenario 1

VIRTUAL COUNTRIES Keiretsu-like alliances with operating companies in every country Minimal national allegiance - primary loyalty is to the corporation Traditional hierarchy or decentralised divisional structure Company is the focus for individual identity Company meets employees’ needs from cradle to grave Employees own the firm and have right to elect the Board and

management Open book accounting informs management elections Specialist “organisational designers” travel through firm brokering

partnerships and fostering cross boundary communication

Role of governments, industry unions is significantly reduced

Examples: Asea Brown Boveri; GE; Johnson & Johnson


Virtual Country HR

HR almost replaces social welfare, education systems and provides financial management and estate planning services, etc

Corporate (strategic) HR sets standards and monitors the corporate culture helps Marketing build the corporate brand

Divisional (operational) HR total care of employees so they are free to focus on performance

Actively involved in local communities to reinforce the company culture and image

Selection emphasises fit with corporate values Performance management focuses on results achieved the

“XYZ way” and on being a company ambassador in all areas of life Reward is via promotion, enhanced status, rights, benefits - and pay Development is via corporate colleges and universities in partnership

with the world’s best educational institutions Innovation is through internal R&D and improvement programs with

heavy emphasis on protecting corporate intellectual property


FUTURE OF ORGANISATIONS: Scenario 2

SMALL COMPANIES, LARGE NETWORKS Autonomous teams of 1-10 people Temporary - task or project based Linked by high bandwidth, electronic network Venture capital infrastructure identifies promising teams and

provides financing

Independent organisations emerge for social networking, recreation, learning, reputation building and income smoothing evolved from professional associations, unions, clubs,

university alumnis, neighbourhoods, families, churches they are home for our identity as projects come and go

Examples: Film industry; Prato Mills (Italy); Nike; Nokia PC Display Division


Your Organisation is the Network

Employees

Suppliers,Contractors

Unions, Associations

Business Partners Community

Shareholders, Investors

Govt Agencies


Small Company, Large Network HR

Very specific in scope as far as the project organisation is concerned (e.g. talent scouting/selection, pay, health & safety)

Outsourced agents, brokers, specialist providers contract staff organisations handle the HR for their talent as

part of their brand and competitive strategy Individuals rely on professional associations, “guilds”,

managers/agents Mutual employment obligations spelled out in project contracts Project Manager’s reputation depends on his/her people skills and

hence there is a reluctance to delegate to HR specialists Selection is via networks, personal references, reputation Performance management is via peer pressure and industry/

professional standards Rewards are contractual or entrepreneurial (equity based) Development is via doing leading edge projects Innovation is via brokers, deal makers, agents, sponsors


How are Networks Different?

Traditional Organisation Formal authority Rigid structure - power

concentrated at “top” Clear boundaries Leadership responsible for

control Focus on contracted

performance outputs Money, status hold people in the

system Growth by expansion,

acquisition Scale gives economic power Success measured in financial

terms Threatened by complexity,

change

Network Organisation Expert, relationship, symbolic

power Fluid structure - distributed power Fuzzy boundaries Leadership promotes order,

linkages, emergent properties Focus on commitment,

psychological contract Members held by values, synergy,

higher order goals Growth by cell replication and

linkages to new cells Power derives from symbols,

stories, relationships Success is resilience, impact,

quality of relations Nourished by complexity, change


Networks in the Knowledge Economy


The Leadership Challenge

The vast majority of the leadership and management literature presumes large, hierarchical organisational structures. Consequently, we know very little about how to lead and manage networks - and yet these are likely to proliferate in the future as large hierarchies consolidate, die out or are transformed.


FUTURE WORKER 2015: A “maverick” scenario

Extreme individualisation of work

Multiple expectations of work (e.g. Gen X, Gen Y, Baby Boomers, Migrants)

Global village with virtual teams

Inventiveness spreads into developing countries

More than 60 percent of jobs will be unique to a company

More collaboration, less alone time

Source: Gartner Research paper “Future Worker 2015: Extreme Individualization” 27 March 2006


Future Worker 2015

Key Conclusions

Future successful companies will have a symbiotic relationship with the future individualized workers, as opposed to an authoritarian relationship.

Companies that operate as if they own and control people will become obsolete.

No company will build or sustain a competitive advantage unless it capitalizes on the combined power of individualized workers and social dynamics.

Source: Gartner Research paper “Future Worker 2015: Extreme Individualization” 27 March 2006


Predictions of the Impact of Changes by 2015

High Probability Low Probability

Companies will have to completely revise their hiring and benefits practices.

The average tenure at one job for skilled workers will be 18 months. Skilled workers will drive 80 percent of the technology acquisition

decisions for their workplace. In highly developed countries, employees will see their managers face-to-

face three times on average. A new breed of universities will perfect the concept of agile curriculum

development. Seventy-five percent of corporate IT workers will be focused on supporting

and enhancing cross-business processes. A new international legal definition of a business entity will include virtual

employees, capital and a structure of accountability to replace a board of directors.

Source: Gartner (March 2006)


The Changing Worker

Past Future???


The drivers of increasing workforce diversity

Several generations at work as workforce age span increases

Increasing cultural and ethnic diversity as immigration fills skill gaps; and knowledge workers chase global opportunities

Attitudes of Gen Y and the retiring baby boomers – they both want work that fits their chosen lifestyles; and because of skill shortages they have market power

Companies must foster innovation to compete – and innovation is nurtured by diversity of ideas, knowledge, professional networks, perceptual and learning styles, problem solving styles, etc

But research highlights the critical moderating role of leadership, organisational culture and HR policies


The moderating role of leadership and culture

Diversity X Leadership X Org. Culture = Performance

The leader must:

Allocate diverse team members appropriately

Educate the team about the important roles to be played by different skills, attitudes, knowledge, etc

Develop processes for positively managing tensions

And organisational culture and HR policies must:

Recruit, train and reward diversity

Develop leaders who manage diversity constructively


In Summary: A Possible Network Future

Most organisations produce or compete on the basis of knowledge and services (not things).

Most “organisations” are networks of teams and/or SMEs and encompass the entire community of stakeholders.

People skills, innovation and knowledge management skills are taught at schools and universities (these are taken for granted in the workplace).

People management systems become necessary (and invisible) organisational infrastructure; e.g. learning, change/transition management and diversity management become “real work”.

Leaders nurture networks and foster emergent order throughout the system (this is created by bottom-up action). Leader as ecologist vs. engineer or combat commander.

Work teams, informal self-help networks and formal professional associations take over much of the old HR role (e.g. in finding jobs; sharing knowledge; recognising success).

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