Five, 10, or 20 years ago, would we have been able to predict the work, worker and workplace we have today?
Were we even thinking or talking about big data a decade or two ago? Possibly so, but not necessarily in the context of how it pertains to the dramatic ways we can assess events and evolving trends that matter to workers and the workplace – both on a local and global scale.
Launched in 2013, SHRM Foundation’s strategic-thought-leadership initiative with The Economist Intelligence Unit endeavors to identify and analyze trends that may affect the workplace over the next 5-10 years. Through evidence-based research, these efforts are expected to present corresponding solutions to anticipated HR challenges yet to come. Thus far, the rigorous Global Trends Identification Process revealed and outlined the following three key themes:
1) Evolution of work and the worker
2) Engaging and integrating a global workforce
3) Use of talent analytics for competitive advantage
Ch, Ch, Changes
Today, we will explore the first of the three reports to capture some of the key points noted about the evolution of work and the worker. As you might imagine, change is the most prominent part of the past and plays a substantial role in predictions for the future.
Being that the complete report tackles a broad range of issues and provides in depth analysis of various micro- and macro-economic factors on the global stage, this article will only touch on limited pieces of the content followed by a brief segment about how I interpreted these issues affecting HR and actions that may alleviate some of the HR’s change management pain points.
A few initial areas looked at in the report were the changing nature of the worker, including: demographic shifts, education and skills, along with workforce motivations. The next batch examined was the changing nature of work, including: evolving industry make-up, technology penetration, and operating globally. The remaining area of change peered into conflicting expectations of workers and the workplace. Closing out the cumulative change collection is a conclusion of the challenges for HR according the research and report.
Demographics and Diversity
Despite that fact that humans have been ageing for as long as humans have existed, reports of this nature tend to treat that concept as if it’s breaking news. The main aspects of ageing expected to impact the future of the working population are tied to care for the elderly as life spans steadily increase, while pensions or retirement-related income either remain stagnant or decrease due to lingering economic slumps.
In the US, the security of Social Security has been in jeopardy for as long as many of us can remember. Yet, our political leaders and policy makers seem incapable of devising or agreeing upon workable solutions to that obvious dilemma.
Similar factors are already putting a strain on the old-age dependency ratio in a number of other developed nations, including Japan where the ratio of those aged 65+ to those aged 15-64 is likely to increase from 38% in 2012 to 47% by 2017. Due to China’s notorious one child rule, that nation’s old-age dependency ratio is projected to reach 42% by 2050. To counter this effect, many European countries continue to raise their pensionable age to keep workers active in the workforce longer.
Meanwhile, mass youth unemployment or underemployment has negatively, and perhaps permanently, derailed the labor force participation rate across the globe. A much more uncertain future for society as a whole could be in store if that trend continues.
With no signs of significant recovery or reversal in sight, we could witness an entire segment of the population engaged in social and political turmoil driven by lack of opportunities to contribute to a productive economy. Spain and Italy in particular estimate a “lost generation” due to almost one-quarter of 15-29 year olds not currently employed nor engaged in educational pursuits.
While in the US, the workforce is within a few percentage points of being evenly split between genders, much of the rest of the world only recently experienced an increase of female workers. US women also currently outnumber US men in college graduation rates.
Higher percentages of women entering the workforce and obtaining degrees translate to higher-skilled female workers both domestically and abroad. That phenomenon is predicted to continue to expand in developing countries and regions, bringing with it cultural nuances and leadership challenges.
What Do These Demographic and Diversity Trends Mean for HR?
Even if only operating locally, globalization adds an extra layer of complexity to the overall economic picture that we all need to keep in view. Coupling that with the above demographic and diversity observations creates opportunities for HR to proactively formulate and facilitate flexible age-/gender-inclusive workforce strategies to meet future cross-cultural needs of diverse workers and workplaces.
Education and Skills
Historically, completing college and university education was shown to provide workers with higher career earning potential than those with only high school or equivalent level of learning. In recent decades, there have been many high-profile college dropout success stores debunking that premise, at least anecdotally.
As the Great Recession raged on, and on, and on, the return on investment (ROI) of higher education came under considerable scrutiny. The combination of mass unemployment, underemployment and vast economic instability created a confidence gap between those struggling to pay off student loan debt while faced with scarce employment prospects. Likewise, employers remained critical of the employability of those poised to enter the workforce following their formal education.
On the one hand we see a potentially over-educated cohort of college graduates with few viable employment opportunities requiring more than a high school education. And, on the other hand we notice companies clamoring for degreed and skilled workers, but not finding new workforce entrants adequately prepared.
As in the past, science, technology, engineering and math (STEM) focused education programs to meet evolving demands will continue to gain momentum around the world. According to the report “… between 1998 and 2011, the number of graduates in science-related fields increased by 48 percent in the US, 60 percent in Australia and 145 percent in Germany.”
The report referenced the fact that international education standards and quality vary and could pose challenges in maintaining consistent in hiring criteria for organizations with global operations.
There is also a worker migration and immigration component to the education and skills category that could probably encompass an entire standalone report.
Education and Skills Implications for HR
From a practical standpoint, HR may wish to take cues from some well-known tech giants that transitioned away from requiring a college degree for jobs where no evidence exists to correlate academic achievement to on-the-job performance. Along with that, it might make sense to revamp the status quo practice of job postings with extensive education and experience requirement lists to reflect a more agile and realistic approach to talent acquisition and development. For example, developing attractive job opportunity ads based on work-related projects and business problems the hired employee will be engaged in and how that contributes to the success of the organization.
During lean times, employer provided training is one of the first programs to get eliminated. While that may produce a short-term hard cost savings, HR should conduct workforce planning and succession management assessments to ensure long-term talent development intangibles are not being sacrificed.
HR might also consider taking a more active role in partnerships with various education providers to ensure worker readiness for present and future business needs. In the event the current or next crop of graduates is ill-equipped to solve modern business problems, HR should step in to identify and clarify critical competencies needed rather than lamenting about the insidious skills gap.
If STEM workers are relevant to an HR practitioner’s organization, he/she should remain abreast of the latest innovations tied to niche industries and conduct corresponding workforce forecasts. Likewise, global immigration regulations could be an important category for HR to follow and understand.
As is the norm for any HR related report, the workforce motivation section paid tremendous attention to HR industry professionals’ habit of labeling workers based on their date of birth. The few nuggets that weren’t steeped in age-oriented stereotypes included points on attraction, development, retention and prioritizing individual performance and career goals of workers.
Dr. Richard Vosburgh, Sr. VP and CHRO at KEMET Electronics Corporation summed it up with: “Not enough compensation will de-motivate a person, but once they get above a certain point in perceived fair compensation, then worker motivation is far more related to non-cash rewards.” Vosburgh added: “If employees are valued and their voices are heard, then they will be much more willing to provide their full commitment and stay in the firm.”
Those are a couple of simple statements that likely apply to the majority of individuals regardless of when they were born or when they entered the workforce.
What Can HR Do to Cultivate Appropriate Workforce Motivations
First, HR should take steps to understand that each individual is exactly that, an individual. No matter how popular and prevalent the generational generalities appearing in practically all HR publications are, HR collectively needs to focus on universal themes of worker and workforce motivations versus the buzzwords associated with the end of the alphabet or nicknames assigned to an 18-20 year post-war span of booming birthrates.
Unless there is an official and objective need to target an under-represented segment of the population or remedy an unintentional disparate impact, HR should drive talent acquisition and talent management programs to be inclusive of all members of the workforce. Whether a person is nearing the end of his/her employment lifecycle or is a prospect for future employment candidacy, all individuals regardless of any observable demographic traits, deserve a fair and equal opportunity to become and remain a contributing member of the workforce.
It is worth noting that workers at different phases of their career and/or life stage may have different personal or professional priorities. Whether the workforce rapidly expands, contracts, evolves, changes or stays relatively stable throughout the future, HR will play a part in ensuring a pragmatic, common-sense, business-savvy support system exists to address the various iterations still to come.
Evolving Industry Make-up
In developing and developed nations service sectors that can’t be automated, such as healthcare and education, will continue to grow quickly. In some countries including China, Turkey, Philippines, Romania, Poland and Mexico, service sector employment has steadily climbed to replace agricultural work for the past couple of decades, and has become a large proportion of those economies’ gross domestic product (GDP).
Simultaneously, demand for service sector workers has caused wages to rise as well, which in turn created more completion and higher labor costs. As regional labor markets and costs continue to fluctuate, cost concerns related to automation, outsourcing and off-shoring remains a focus for industry competitiveness.
Global Technology Use and Penetration
Throughout history, inventions and innovations have advanced standards of living and eased reliance on manual labor and processes. Technology is a constant in our lives that has created new jobs and eliminated others, while continuously changing how we communicate, work and live.
Through technology, much work that once required human interaction can now be performed virtually. In many ways, employers are able to increase productivity while saving costs through implementation of various technology-based infrastructures and tools.
While in the US, personal computers (PC) are standard fixtures in many homes and offices, much of the developing world where PC use is not as prevalent, relies on broadband and mobile functionality to conduct technology based interactions and electronic business. Job creation, economic development, particularly in the developing world, has been directly impacted by the evolving role of technology.
Some trends and statistics provided by the International Finance Corporation (IFC): “… the IT industry will create around 4 million additional jobs directly by 2016, while indirectly creating as many as 12-16 million more in other sectors.” And, “In India already around 70 percent of IT-sector jobs are held by younger workers (aged 26-35), while, in the Philippines, 60 percent of the IT-based services workforce are women.”
According to an Ipsos survey, “almost two-thirds (65 percent) think that telecommuters are more productive because the flexibility allows them to work when they have the most focus, and/or because having maximum control over the work environment and schedule leads to job satisfaction and happiness.”
Exploring New Regions
China is becoming a less obvious outsourcing destination due to ongoing wage increases. Per the report: “Average inflation-adjusted wages will have risen by 5 percent in the US between 2005 and 2018; however in China, they will have risen by a forecast of 213 percent.” A Boston Consulting Group study suggests US companies will be prompted to move manufacturing operations to countries such as Vietnam, Indonesia, Mexico, or even back onshore, due to China’s increasing labor costs.
Central and Eastern Europe is becoming more attractive for outsourcing for highly skilled research and development (R&D) work or information technology (IT). Compared to other European Union (EU) nations, Bulgaria and Romania could provide strategic advantage with wages that are as much as 90 percent lower. The region also provides other financial, cultural and geographic benefits in contrast to the some corruption experienced in BRIC countries (Brazil, Russia, India and China).
Industry, Technology and Regional Considerations for HR
As we continue to experience global shifts in industries and business sectors, HR will need to remain vigilant about the long-term ramifications labor availability, wages, international employment laws and norms, in addition to how and where work will be performed. With technological advances, the need for talented workers with advanced skills will be elevated, especially in the case of information security, intellectual property protection and privacy.
The global business landscape is becoming more complex, competitive and costly. HR’s need to shape and support an organization’s long-term viability will be immensely magnified going forward.
Pressure to Lower Costs and Meet the Bottom Line
There’s nothing new about cost containment and emphasis on maximum contribution to the bottom line. But for the past few decades, wages have not kept up with productivity. Short-term shareholder value and record profits have taken priority over prosperity for the workforce.
Wage stagnation affects economic growth, household purchasing power and consumer consumption. Lower wages also limits individuals’ ability to invest in education and may prolong youth and elderly dependence on the income earning segment of the family structure and society at large.
It’s Just Temporary, Isn’t It?
Along with the pressures to lower costs, businesses are electing to employ more temporary or part-time workers. In fact the prevailing belief, not just from this report but also public sentiment, is that all work is now or will be in temporary in the future.
In Japan, 36.4% of the entire workforce in June 2013 was temporary and part-time. Since reaching the 20% peak during the US financial crisis, The Federal Reserve Bank in San Francisco states that “while involuntary part-time employment has a cyclical component, it’s persistence is atypical.”
Some online work sites have contributed to the “commodification” of work through bidding processes for project type jobs that essentially push some worker’s earnings below legal minimum wage.
The Missing Middle
Academics and policy makers have taken a deep interest in the trend of evaporating middle-tier jobs. The Associated Press (AP) research revealed, “half of the7.5 million jobs lost during the recession of 2008 in the US were in middle-class jobs whose pay ranges from US$38,000 to US$68,000. However, only 2 percent of the 3.5 million jobs gained since the recession is said to have ended (in June 2009) have been in these jobs.”
These middle-wage worker declines are quite staggering in countries using the Euro as currency. For example, since mid-2009 there are almost 3.4 million more low-pay jobs, yet the mid-pay job loss has not stopped. From January 2008 through Jun 2012, 7.6 million mid-pay jobs vanished.
There is a certain education and skill component linked to the shrinking middle. Intervention programs in Austria, Denmark, Germany and Switzerland include a “dual system” combining school-based training with in-company training.
In some low income countries, a text messaging technology platform called SoukTel, helps match workers with jobs. It operates in 20 markets including parts of North Africa and Latin America. SoukTel reportedly matched 20,000 skilled people with jobs since launching in Palestine in 2006.
The gap between wage increases on the lower end and higher end of the US labor pool tend to reflect levels of educational attainment as a key factor. Still, many debate the attractiveness and competiveness of obtaining a university degree versus a less expensive trade or vocational option.
The US Bureau of Labor Statistics (BLS) predicts occupations where automation is less of a factor, such as healthcare, construction and STEM categories, will experience the most growth. Middle-skilled jobs of a routine or repetitive production nature are at the most risk of downward decline due to automation and off-shoring.
Challenges Abound – Where Does HR Go From Here?
As I’ve interspersed a few thoughts throughout each section, the remaining points will re-cap some potential areas to watch HR shine.
People management is cited by a 2013 SHRM Foundation sponsored survey of 636 C-level executives as the most important challenge facing companies over the next five to ten years. That encompasses everything touched on here and then some – right in HR’s territory!
“Strategic vision and the ability to handle complexity were cited as the most difficult skills to find among senior executives.” As global business complexity is a way of life and work, HR professionals should be at the forefront, anticipating changes, complications and challenges and proactively offering strategic vision and solutions.
There are plenty more chunks of big and small data in the report. Have a look and leave your comments here about “what’s next” for you as you support the evolution of work and the worker.
About the Author: Leveraging her unique perspective as a progressive thinker with a well-rounded background from diverse corporate settings, Kelly Blokdijk advises members of the business community on targeted human resource, recruiting and organization development initiatives to enhance talent management, talent acquisition, corporate communications and employee engagement programs.
Kelly is an active HR and recruiting industry blogger and regular contributor on RecruitingBlogs.com. She also candidly shares opinions, observations and ideas as a member of RecruitingBlogs’ Editorial Advisory Board.
Weekly news and industry insights delivered straight to your inbox.