The nature of the workforce is changing fast, and it is connected to the world’s most potent change agent: technology such as artificial intelligence (AI) and robotics. While the discussion in popular media around this topic focuses mostly on the displacement of jobs, we believe that in the short to medium terms, only a minority of jobs will be completely automated. Most of the jobs, however, will be transformed, with technology-enabled automation taking over structured and predictable tasks, while human workers will be required to take on higher value-add tasks that the machines cannot perform. New technologies will also create jobs that require new skills and involve new tasks. A study by consulting firm PwC estimates that 30 percent of jobs across all countries and industries are likely to be automated by the mid-2030s.
For those reasons and others, the workforce of tomorrow will be very different from that of yesterday. It will be connected, mobile, and intensely diverse—intergenerational, cross-cultures and genders. Historically, when there have been profound advances in technology, such as the invention of steam engine, the electric light bulb or conveyor belt production, those advances influenced the workforce for roughly the next 30 years. After World War II, technological development took off, and that acceleration, plus widespread social change, reduced the span of generational clusters to closer to 15 years.
In 2019, we see for the first time that four relatively different generational groups (baby boomers, Generation X and Gen Y or millennials, as well as older traditionalists) are operating across workplaces together. And another generation, Gen Z, which has had internet connectivity since birth, is approaching the workplaces during the coming decade.
While these groups have much in common, their differences can be significant. We see some trouble ahead with leadership teams that are not actively scanning for or addressing talent and diversity options in their strategic agendas. One problem will emerge as baby boomers, compelled to remain in the workforce by inadequate retirement funds, good health and greater life expectancy, try to hang on to senior roles that are coveted by younger workers. After all, it’s not that unusual these days for startups to be run by 23-year-old CEOs. Nor is it unusual for those young digital natives to do their jobs very well. Many also do their jobs differently than they were done a generation ago. Instead of following a designated career track that might lead to a corner office, they collaborate and iterate. Accustomed to 24/7 connectedness and aided by applications like Slack or Zoom, they work in teams aimed more at advancing a product or idea than an individual career.
Academic research identifies six areas where intergenerational differences are likely to influence the future workplace:
- communication and technology,
- work motivators or preferred job characteristics,
- work values,
- work attitudes,
- workplace/career behaviors, and
- leadership preferences or behaviors.
Other research notes intergenerational differences in the areas including personal values, psychological/personality traits, turnover intentions and organizational commitment.
We believe that, going forward, greater flexibility will be the key to the successful workplace, and we see changes that will require such flexibility coming faster than ever. Those changes will affect how talent is attracted and acquired; how it is developed, motivated and rewarded; and how it is retained.
Even changes to the modality of working are increasing. Those include the growing use of telecommuting (the proportion of people in the US regularly telecommuting grew 115 percent in the decade to 2017, and that excludes the self-employed); the increasing movement of people between profit and social enterprises (global recruiter Michael Page found that their Gen Y candidates were more likely to take a job with lower pay if they believed it was meaningful); and the popularity of new kinds of office space where co-working is undertaken.
Talent Solution Agendas
Below are four areas of discussion that should be a part of your strategic leadership debate today and must be considered in developing your options:
Career pathways and organizational structure adaptation. Historically, businesses have focused teams on a project basis, but looking ahead, we see lateral, matrix-based teaming as part of the general organizational design. This facilitates learning, as mentoring is now a two-way street: reverse mentoring of senior employees by juniors is becoming commonplace. Millennial mentorship or reverse mentoring could be considered a formalized, mildly absurdist version of the advice juniors give to their older colleagues on new technologies, emerging markets and development of new products. And it works; companies clearly benefit from millennial mentoring.
Talent and skills challenges await both legacy and disruptive firms. At the end of the day, companies still need the technical skills to do things like chemical engineering, mechanical engineering and actuarial studies, even if they are aided by new technologies such as AI. There are, however, fewer millennials coming along with such skills. Also, there seem to be a few sophisticated soft skills gaps, usually skills built from extended work experience. Surprisingly, a study from the Educational Training Service in 2016 found that U.S. millennials “consistently score below many of their international peers in literacy, numeracy and problem-solving in technology-rich environments. Equally troubling is that these findings represent a decrease in literacy and numeracy skills when compared to results from previous years of U.S. adult surveys.”
Looking at this from the 50,000-foot level, a traditional company planning to digitize would need to become the employer of choice in any traditional skills-based area, adjusted for younger generational different styles of working, because the pool of younger people with these skills is likely to be smaller, and the number of firms competing for these people will be greater. If you are a Gen Y or Gen Z with a traditional set of skills, you will have a broad set of choices, not just the entrepreneurial choices. Organizations whose HR is anticipating a talent war as opposed to developing talent solutions that engage across the generations are going to face serious talent acquisition and retention issues, as well as costs.
The skills and competencies for the jobs of the future will be very different, and the modes of employee engagement are changing. This paradigm shift will challenge not only recruitment and retention policies and procedures but also ongoing learning, development and training. A 2017 McKinsey survey of young people and employers in nine countries found that educational systems have not kept pace with the changing nature of work, and many employers say they cannot find enough workers with the skills they need. Forty percent of employers said lack of skills was the main reason for entry-level job vacancies, and 60 percent said new graduates were not adequately prepared for the world of work.
Another important trend is the increasing growth of online platform-based employment and freelancing, as noted by the World Economic Forum. Their work suggests that by 2025, more than half a billion people will benefit from digitally connected employment, and that close to 60 million Americans were engaged in freelancing in 2018.
Watch out for generational squeeze and stress. Gen X, which is much smaller in numbers than millennials and baby boomers, has both ambition and digital skills and is knocking on the door of baby boomers who hold senior jobs. We also see only very limited planning of how best to integrate new Gen Z workers, who started to arrive in tertiary education and workplaces from 2015 and will arrive in force by 2025. One 2018 survey showed that “77 percent of Generation Z say having a millennial manager is their preference over Generation X or Baby Boomers.”
Excerpt from The Phoenix Encounter Method: Lead Like Your Business is On Fire by Ian C. Woodward, V. “Paddy” Padmanabhan, Sameer Hasija, Ram Charan, p. 207-211 (McGraw Hill, October 2020).