There is no doubt the landscape of the world of work is changing. Globalisation, technological advances, shifting demographics and changing societal values are redefining work as we traditionally know it, creating new opportunities and challenges for businesses.
In such a period of rapid and dramatic change, it is more important than ever to keep a weather eye on the longer-term perspective, to ensure that business models and strategies are developed to survive and thrive in the future.
Over the coming weeks we will be publishing a series of articles, written for the Future of Work Hub by Lewis Silkin LLP, which will look at the impact of three megatrends - globalisation, technology and changing demographics - on the world of work and the key implications for business in the following areas:
- How to deal with an ageing workforce
- Harnessing flexibility
- Social media: benefits and dangers
- Embracing religious diversity
- Facilitating remote working
- Handling the stress epidemic
- Managing technology, personal data and privacy
- Working across borders
Each article will end with a checklist of actions for employment functions to consider implementing now, to put them in an optimum position to meet the significant challenges ahead.
To kick off this series, this first article will take a look at the three megatrends mentioned above and chart their current impact on the world of work.
Overview of megatrends
The past 40 years have seen radical shifts in government policies, in contast to the insular post-war years, including the dismantling of the Soviet Bloc and the relaxation of trade restrictions in traditionally isolationist economies such as China. The result has been enormous growth in emerging markets and profitable investment opportunities for the world's established economies.
The shift in consumer power towards the BRIC (Brazil, Russia, India and China) economies has driven increased global demand for new products and services, requiring businesses to turn their focus towards developing markets to harness consumer potential.
Many businesses have taken advantage of the exponential growth in international trade by "going global" - opening branches in new territories, courting international clients or setting up complex cross-border resource chains. Educational advances in emerging economies such as Africa, Asia, Eastern Europe and Latin America have created a progressively well-educated global talent market. This has given businesses the ability to recruit - increasingly via online platforms and crowdsourcing hubs fuelled by digital technology - from a global pool of highly skilled, competitive workers. It has also enabled businesses to look abroad for access to cheaper labour resources.
Globalisation has been a powerful driver of workplace change. Conventional "nuclear" businesses, operating from a single base with a traditional "9 to 5" workforce consisting of permanent employees, are increasingly less common with the rise of international collaboration. Many businesses have adopted more varied ways of working to stay competitive in the face of the ever more international and dynamic footprint of the world of work. At the same time, organisations are realising the strategic benefits that an agile workforce can offer. Forward-thinking organisations are creating competitive advantages by adopting digital innovations, trialling flexible working models and embracing global, blended workforces.
However, in the wake of the financial crisis and the recession, the populist view of globalisation is changing. Protectionist political landscapes developing in the US and some EU member states are reflecting this shift. In the UK, no-one knows what the longer-term shape of its relationship with the EU will be following Brexit, but there is no question the UK will need to establish a new position in the world. Migration will become increasingly controlled, reducing the ability of individuals to move freely in search of work and impacting on employers' ability to engage them. While there is currently little political appetite to change employment rights and protections radically following Brexit, the constraints on implementing future legislative reform will be significantly relaxed.
The ever-advancing capabilities of technology and the scale and speed at which it is disrupting the world of work pose both challenges and opportunities for businesses. The march of technology means that the "workplace" can now, for many people, exist anywhere or anytime. Smart devices are become ubiquitous, while the availability of high-speed broadband, remote access and digital platforms are increasingly widespread. These technological developments will continue to shape workplace relations and have a huge impact on how businesses organise themselves and the ways that employees work. The line between work and home life is, perhaps inevitably, becoming increasingly blurred.
Developments in automation, machine learning and artificial intelligence will transform businesses and redefine jobs in the future. Commentators suggest that jobs in which routine tasks can be replaced by technology will be the most vulnerable, although new jobs will emerge as well. For many people, innovation will transform the nature of the work they do and necessitate working ever more closely with technology. Increasing digitisation of the working environment, together with 24/7 connectivity, the pervasive take up of social media platforms and growing demands for personal freedom, are driving corporates to rethink their business models and how and where work can be done. Many are focusing on becoming less hierarchical and more collaborative. For example, a business might engage increasing numbers of temporary, part-time and freelance workers around permanent "core" staff, enabling it to respond swiftly to fluctuations in workload and evolving needs for particular skills.
This model presents opportunities for skilled workers willing to embrace a "portfolio" mode of working. People can harness social media and digital platforms to create value through collaboration, without the need for a traditional business enterprise. For some, this is leading to a rebalancing of power between work givers and providers. But for more vulnerable sections of the labour market, the model can be challenging - as recent debates around zero-hours contracts and "gig" economy working have highlighted.
Developments in technology over the past decade or so have made it possible for employers to track their employees even more closely than before - in particular, the advent of wearable technology and tracking apps, pervasive social media use and the dawn of the "internet of things". The types and quality of monitoring undertaken by employers are likely to become more complex and invasive. Effectively analysing "big data" will become increasingly important for organisations seeking to reduce risk and boost productivity, but this brings fresh challenges concerning employee privacy and data protection compliance.
Social values are evolving and the make-up of the global population is changing, with significant and direct impacts on the demographics of the workforce. In the UK, the population is set to age sharply. People are living and keeping fit for longer and outliving the estimations of pension schemes, meaning many must stay in work for longer. As a result, many workplaces have four (or even five) generations working side by side. These groups have grown and matured with different influences on their lives. As such, values, skills and attitudes to work can vary considerably across groups, creating challenges for employers. The past 70 years have also seen a dramatic increase in the participation of women in the labour market leading to increasing diversity in the workplace.
Working from home or from "anywhere" may be an attractive prospect for each of these workforce groups. For different reasons, they may have other commitments around which they need to structure their work and a desire to have more flexibility and control over where and when work is done. With an increasingly diverse labour market, providing alternative ways of working can deliver tangible advantages for employers.
At the same time, it can be challenging for businesses to support the contrasting health and wellbeing needs of a workplace staffed by different generations concurrently. Although research suggests that a person's state of health may be determined by lifestyle and environmental risk factors more than chronological age alone, older people are generally more prone to chronic conditions. It has also been found that health problems in older workers can be directly linked to the fact that they are more likely to feel the effects of stress in the workplace.
Yet stress is not just an issue for older workers in the current economic climate. With the labour market becoming increasingly flexible, many people are experiencing high levels of job insecurity. The pressure of beginning a career in challenging economic times is likely to take its toll on the "millennial" generation entering the workforce. The challenges of balancing work with caring responsibilities for those employees with young children or elderly relatives are also significantly contributors to stress.
The fast pace of globalisation is also changing the face of the workforce through greater cross-border collaboration, virtual team-working and distributed workforces. Businesses can gain competitive advantages from their ability to source talent from a wide talent pool, leading to increased engagement, innovation and productivity.
Workforce demographics at a local level are changing too. Global mobility over recent years has enabled businesses to engage migrant workers to augment the workforce and meet skills shortages. In the face of continuing de-industrialisation in the UK, businesses are continuing to look abroad to help tap into a global supply of labour - particularly for low-skilled jobs. There is no doubt that the terms of the UK's withdrawal from the EU will shape the face of the workforce and potentially impact on businesses' ability to access this wider labour market.
Keep an eye out for the next article in the series which will look at the key implications for business of an ageing workforce. If you would like an advance copy of all sections of the report "Future Proofing Your Business", click the button below to let us know.