Research and Insight

How the down turn changed the working environment

The global economic downturn has already eroded the relationship between some employers and their employees. Pay and promotion freezes, changes to pension schemes, cuts in recruitment and diminishing training budgets combined with poor communication channels have severed the bonds of trust between the two parties.

However, other organisations have performed exceptionally well at doing more with less by developing their existing employees with fewer resources in an unstable employment landscape, in which many employees view their career prospects as stagnant or diminishing.

In the recent Price Waterhouse Coopers (PWC) report, Managing tomorrow’s people: How the downturn will change the future of work, insights from over 4 000 new graduates in 44 countries were collected and analysed specifically to assist companies in understanding how millennial attitudes towards work differ from those of previous generations.

Pamela Maharaj, Director: People and Change Solutions at PWC says, “The world is changing at a rapid rate and the need to address possible future scenarios is pivotal to securing the future of business. In less than a decade, companies will find up to four different generations in the workplace and this is where the achievement or breakdown of people strategies will have a decisive impact on the level of success enjoyed by a company.”

The report outlines three possible business models which could co-exist in the future and uses three fictitious companies to illustrate the differences as they look back from 2020. It is clear that the international fiscal slump has forced many companies to make important and difficult choices about how they manage and motivate people, with both immediate and long-term effects.

The report puts forward three future scenarios:

1. The current crisis has magnified demands for greater transparency and social responsibility in business. This, combined with the call for environmental responsibility, will impact many areas of people management, particularly in relation to remuneration.
2. An increased focus on hard people metrics is used to measure performance and productivity while considering the long-term reality of having to do more with less. This scenario outlines how a culture of performance and efficiency can be geared to succeed within a new order of economic superpowers.
3. The opportunity for radical new ways of working. The concept of outsourcing and globalisation is implemented in an extreme portfolio working model in which people organise their working lives to suit a highly networked world.

The report considers the rapidly changing and increasingly complex nature of the workplace and predicts a diverse employment landscape in which employers search for specialist talent, issue business passports for highly-mobile executives and in which workers with technical skills behave like individual companies outsourcing their administration and billing needs to international trade guilds. It also considers proposals for how employee and executive reward can be reformed.

Maharaj continues, “Employees are increasingly selecting employment opportunities that suit their own priorities, ideals and lifestyles. Businesses need to consider this as it will have a significant impact on their ability to achieve success and position themselves positively in future.”

It is vital that companies consider these scenarios in their own organisations and the decisions that need to be taken into consideration to ensure the company’s success. As companies contemplate the next decade, many will need to drastically change and rethink their strategies. Within the three diverse future settings, there is one common denominator and that is that each company has invested in their own scenario planning process to identify opportunities that would innovate, increase competitiveness and identify real options to mitigate risks.

Before specific real options can be incorporated into business strategy, the broader economic backdrop and the ways in which it might change must be examined thoroughly. The challenge is to move forward after considering a number of different plausible views of the future in which the company will operate.

This PWC report gives businesses the opportunity to develop a corporate planning technique called ‘real options’ where different consequences require different responses. In conclusions Maharaj states, “Real options come in many different forms and create flexibility in an uncertain world. They buy organisations sufficient time to think and allow managers to watch for trends and identify early warning signs”.

It is clear that the future of business will be focussed on recruiting quality people and nurturing relationships in order to see the company succeed. The importance of the hard measurement of people has never been more critical. Companies will need to turn their focus onto the health and well-being of their workforces to become exceptionally successful.