"Only the lucky few will do more than serve a machine" Isaac Asimov, 1964

24 October 2016

Authors: Lee Adendorff, Paul Cochrane, Wang Fangqing, Robert Jeffrey, Jens Kastner, Tom Maresca and Carolyn Hong


The future of work is...

Fortunately, the fabled sci-fi writer was wrong and the robots aren't in control. But what are the major challenges shaping the workplace of tomorrow? And how can HR professionals be part of the solution?

If you want to understand why a keen eye on the future direction of work - encompassing economic shifts, the development of tomorrow's skills and technological advances - is so crucial to being part of an organisation today, you could do worse than take a trip to your local branch of KPS Video Express...
 
Except you can't. Once Hong Kong's best-known video and DVD rental chain, with close to 100 stores and 1,000 employees, in 1997 the business announced plans to expand across Asia, with a particular focus on Singapore and Taiwan. But it had reckoned without disruptive technology that made copying of CDs and DVDs possible on a widespread scale, facilitating piracy that fatally undermined its business plan. Within a year, it was effectively bankrupt and its remaining assets were sold to global leader Blockbuster.
 
Even Blockbuster, however, couldn't stay in the game. By 2005, Netflix - a business which had only launched eight years earlier - was renting so many DVDs by mail that its rival's bricks and mortar offering was itself rendered obsolete. In 2013, Blockbuster went out of business, with Netflix having pioneered streaming technology that had rendered even the concept of owning a DVD pointless in many parts of the world.
 
History is littered with similar examples of businesses who didn't (or couldn't) react to change quickly enough. And their number only keeps growing as the wider business environment becomes more volatile.
 
In 1960, the average company in the S&P 500 - the benchmark of multinational fiscal health - stayed in the index for 55 years. Today, it is around 18 years. Only 12 per cent of Fortune 500 firms in 1955 were still listed 60 years later. This is partly due to technology making business models old before their time (a trend accelerated by the rise of Silicon Valley) and partly down to financial engineering. But it's also true that many businesses have sat back and watched as global demographics have completely shifted, and have failed to understand how the rise of a global middle class, or the availability of a mobile labour market, would turn how they operated upside down.
 
Across the world, businesses haven't examined the future from a broad enough perspective, preferring to interrogate only their own sector or specialism, argues Laura Harrison, people and strategy director at the CIPD. "Asian countries are interventionist at a political and governmental level rather than a business level," she says. "Governments think about the skills they need, and the investments they need to make. But the danger is the discussion takes place purely at a political level, with no profession responding to it."
 
Making work better - for individuals, organisations and society - is only possible if work itself becomes more human, and more attuned to human needs. That means jobs, and companies, that are designed with people in mind; where being flexible and catering for the expectations and needs of diversity, ages, cultures, backgrounds and commitments is the new normal.
 
So many of the questions about how business and society will operate in the future fall squarely in HR's in-tray. Will we treat people as disposable cogs in the machine or hand them autonomy and stability? Will we increase bureaucracy or move to a model (best articulated, aptly, by Netflix's visionary former chief talent officer, Patty McCord) where people are judged by their results, rather than a more traditional means of performance management? Will we allow the emergence of the 'gig economy' to make some people's lives more precarious, or will it mean flexibility and choice for all?
 
The answer, says Harrison, is partly about a better grasp of work itself: "HR's primary concern should be a thorough understanding of the work people do, and what enables them to do it - we need to reduce our focus on policies and processes and put the human back into job design."
 
Meanwhile, an understanding of behavioural science - how and why people do what they do, as individuals, teams or organisations - offers the opportunity to put the human into decision making and problem solving. Handily, these are also the exact sort of skills and knowledge that sets HR apart as a profession.
 
And because so much of the future is contingent on what people, employees and consumers will look like, HR professionals have a vital stake in the discussion - to ensure the strategic elements of HR (such as skills development or workforce planning) are informed by the facts, and to help governments and experts make decisions that affect the future supply of talent.
 
"HR should be absolutely central to discussions about the future of work," says Harrison. "It certainly shouldn't be over in the corner doing its admin. As an HR professional with an identity, you have to feel you have some stake in the future as it's being created - and that means thinking about the public good is more important than doing the most short-term, prosaic thing."
 
For HR to begin building on such thoughts, it must be willing to free itself from the purely operational and focus on the strategic. If you are spending a large part of every day dealing with immediate employee issues, are you able to think ahead, asks Harrison?
 
"It's important to ask whether the things you're doing day-to-day add value," she says. "Studies show HR is a devil for taking on new ideas and initiatives, but it can be harder to step back and ask what they are really achieving."
 
On these pages, People Management delves into some of the most pressing areas that may affect businesses in the coming years, and asks experts how Asian governments and businesses in particular should react to them. After all, the line between KPS Video Express and Netflix is thinner than you imagine. As Harrison says: "The only thing certain is there will be more change."
 

The future of work is...

 
...all about who works for you - and why
Whether it's dealing with a surfeit of young people (the Middle East's Gulf states have a huge issue finding enough jobs for their youthful populations) or needing to support a burgeoning number of retirees, no country can say it has a workforce that exactly fits its economic ambitions.
 
Workforce demographics throw up a complicated set of challenges, both for society as a whole, and for employers. They include education and skills; workforce participation (as younger family members leave work to look after older ones); tax burdens; labour force under- and over-supply; and migration.
 
Over time, many of these issues will land at HR's door. "The workforce demographics of Malaysia, Indonesia and the Philippines are positive and offset the ageing workforce of Singapore, Hong Kong and China. The questions are: do they have the skills needed? Are they educated? Are these countries growing fast enough to be talent attractors in the same way Singapore was a talent hub?" asks Bob Aubrey, consultant and chairman of the HR committee of the European Chamber of Commerce in Singapore.
 
Hyperconnected Singapore is Asia's proverbial poster child. But it is already grappling with a particular set of challenges as it holds on to its coveted role as a hub economy. Singapore is trying to get more people over 65 back in the workplace, and last year 10,000 were employed, a not-insignificant number in a city of 5.5 million people.
 
In 2017, Singapore will raise the age at which people must be re-employed, if they wish to stay in work, to 67. China is also mulling raising its retirement age from 60 for men and 55 for women. Other countries will have to address such concerns further down the line, such as Indonesia - where demographers project the number of people aged 60-plus will treble by 2050.
 
"In Vietnam and Thailand, the population is younger than in Singapore," says Eric Tan, HR director Southeast Asia for automotive supplier Schaeffler. "This is normally portrayed as an asset, but the reverse is that most applicants were students not long ago. This means their CVs are short and their exposure to international company culture is limited. So you are limited to a small group of people in a large population. And typically, multinational companies seek people who speak English, which further limits this talent pool."
 
Part of the answer will be encouraging people to learn throughout their careers, so they develop and retain the skills that enable them to stay ahead of the changing world of work, rather than viewing education as a prelude to a career. But many countries will also need to think about how women, in particular, can take on more meaningful work and be supported in their own career choices.
 
"We'd like to see policies that support people to stay in work longer, creating multi-generational workforces that draw on the expertise of older workers," says Till Alexander Leopold, project lead for education, gender and work at the World Economic Forum (WEF). "We hope such policies are not forced on people, but are part of a mindset shift."
 
...but you'll have to think fast to survive
"I looked at the latest list of the 100 most innovative companies and I had never heard of 98 of them," the self-styled 'maverick' entrepreneur and CEO Ricardo Semler said recently. "They are emerging from all over the place, and they work in a different way."
 
Semler was describing the concept of agility - businesses that react to fast-shifting markets by adapting and reinventing themselves in double-quick time. And he knows what he's talking about: as a leader in Latin American companies in the 1980s and 1990s, Semler designed some of the most democratic and agile workplaces ever seen.
 
Not everything he did worked, as he would be the first to admit. But the ideas he introduced inspired a generation of Silicon Valley entrepreneurs to build organisations that look little like the multinationals of the past. Whether it's the 'holocracy' system of management that was all the rage last year, or the lattice-like accountability pioneered by Spotify (where people work in cross-functional teams but are managed according to their technical discipline), rigid structures and austere performance management practices just don't cut it any more.
 
For Foo Chek Wee, Singapore-based HR director of online fashion retailer Zalora, corporate agility is essential. "In view of the dynamism in an e-commerce company, agility is a must-have, not a good-to-have," he says. In Zalora's case, this means "rolling out agile programmes that are simple to execute, scalable across departments and geographies, and sustainable."
 
Specifically, employers are becoming more flexible over working hours - according to the Hays Asia Salary Guide for 2016, 52 per cent of 3,000 employers surveyed offered some form of flexible work practices and 71 per cent offered flexible hours. And they're keen on agile approaches to recruitment, which see project teams form and disband at will, supplemented by talent on demand from the 'gig economy'.
 
This doesn't work for all stakeholders. Being employed on a less formal basis can lead to higher rates of churn, says Jason Shaw, chair professor and director of the Centre for Leadership and Innovation at Hong Kong Polytechnic University. "Turnover rates have negative effects on company performance, with evidence pointing to a lack of loyalty. So while there is more freedom from the employee's perspective, for the organisation it suggests more churn" he says.
 
But regardless of the downside, it seems lean is here to stay - and that may mean the traditional nine-to-five office job looks increasingly anachronistic.
 
...and love the numbers
We know more now about our employees than ever before. But what do we do with this explosion of information? Does it have a role in predicting recruitment issues - whether recruiting the right staff, or predicting who might leave? And can it help guide discussions about future skills, remuneration and organisational structures?
 
Broadly speaking, big data involves digitally collecting and analysing information from millions of data points, to draw out trends and derive insight. In HR terms, that could mean demographic information, performance management and employee survey results come together to create a 'dashboard' of information that powers decisions.
 
This is, by some measure, the holy grail of HR, where the function can influence strategy. But Rhonda Brighton-Hall, a board member of the Australian Human Resources Institute, warns that an insular approach will lead to limited insight. "Rather than data for a single organisation," she says, "we need to look at 'whole economy' or even global data. Demographic and workforce planning data is only useful when you look at your own - and required - workforce relative to the labour market from which you garner skills."
 
At its most flexible, analytics can enable scenario modelling that shows what happens to diversity, skills and salary levels if you close a particular operation, or channel investment in an unexpected direction. But does HR have the skills to understand the quality of the data it handles, and have organisations thought through their reasons for embracing big data, beyond feeling it's a bandwagon they ought to board?
 
...in an increasingly global marketplace
In any discussion of globalisation, one word looms large: China. The country's ascension to second largest global economy has gone hand in hand with the transfer of labour-intensive manufacturing from developed to emerging markets. China's rise as a manufacturing hub has encouraged businesses to offshore production and introduced huge competition into previously slow-moving sectors, while the rise of its consumer class has created vast opportunities for multinationals (in 2014, for example, China overtook the US as the number one target for foreign direct investment, attracting US$128bn in funding).
 
But, just as China's own growth is stalling - and hourly manufacturing wages there have risen by an average of 12 per cent a year since 2001, according to The Economist Intelligence Unit - there are signs that globalisation has peaked, and may even be slipping into reverse. The Peterson Institute for International Economics argues that ratios of world trade to output have been flat since the global financial crisis in 2008. Global Trade Alert calculates the volume of world trade has been static between January 2015 and March 2016.
 
Protectionist sentiment has increased. The EU is stuck between a rock and a hard place, and the US-EU Transatlantic Trade and Investment Partnership is going nowhere fast. The Doha talks on multilateral trade have stalled. Apple and General Electric are among companies that have opened manufacturing facilities in the US as they begin to 'reshore' jobs, a phenomenon that has hit the Indian business process outsourcing (BPO) sector hard.
 
Of course, globalisation isn't over, and there are signs investment is shifting from the likes of China to even lower cost economies. Africa has huge untapped potential as an employee base and a consumer market, and may be the story of the coming decades. But there is an increasing focus on regional trade, embodied by the ASEAN economic agreement.
 
This means a big change. Most Asian countries will have to leapfrog their current basic level of industrialisation (with sectors such as clothing and textiles predominating) to what is being called the 'industrial revolution 4.0' focused on automation and data exchange, while the likes of Singapore, Hong Kong and Shanghai will have to become 'smart cities' to remain as regional and global hubs.
 
...where the robots (and software) might take over
The robots are coming. Fifty-six per cent of all jobs in Cambodia, Indonesia, the Philippines, Thailand and Vietnam - which comprise nearly 80 per cent of ASEAN's workforce - are at risk over the next two decades from new technology, according to a July 2016 International Labour Organisation (ILO) report on the impact of automation.
 
The worry for these countries is that the capacity for automation is higher in the very jobs they want to take from China. Half a million sewing machine operators in Cambodia could be outsourced to a machine, according to the ILO report, while less educated, lower wage earners face a higher risk of joblessness because of automation.
 
Of course, this isn't just about androids of the kind Chinese manufacturer Foxconn wants to introduce to its workforce in the millions. It's about the ability of software and machines - particularly those that can "learn" tasks - to take over all kinds of routinised work over time, from payroll processing to receptionists via basic medical diagnosis.
 
"There needs to be a sense of urgency. It may seem futuristic, but according to experts, this labour market is five years away, so now is the time to realise that and get ready," says Leopold.
 
The question mark here is over whether automation will render huge swathes of the human population redundant, or in fact follow the path of the first industrial revolution, where the onset of better machines moved people into more valuable, less dangerous roles.
 
Representing the latter view are the likes of US academic and technologist Erik Brynjolfsson, who says many fears over technology are overstated. And Aubrey points to the ability of technology platforms to help create new employment opportunities, citing Indonesian high-tech 'unicorn' Go-Jek, an app for motorcycle taxis and delivery services that is valued at more than US$1bn and has 300,000 online employees. It formalises work that was formerly off the grid: cash-in-hand, no taxes, and no data. "Go-Jek provides work in a more formal way in the informal economy, for drivers that never had a smartphone or a credit card, so in a sense this use of tech is a sort of leapfrog," says Aubrey.
 
The alternative view is that we simply will not need people when machines can take on their tasks and governments may need to introduce guarantees such as a universal basic income, as part of a radical reshaping of how the economy works. HR may have a key role in countering such pessimism by emphasising the value of the human dimension of the workforce.
 
...and you have to walk the walk on CSR (not just talk the talk)
It is generally a given that companies can no longer put the pursuit of profit above all other goals. Social media means transparency is everything, and companies that do wrong - or don't actively seek to do good - have few places to hide. At the same time, consumers expect high standards from the people they buy from, and millennials increasingly seek out employers who aspire to a higher purpose.
 
Welcome to the modern-day version of corporate social responsibility (CSR). And since employee engagement is a critical side of the coin, it's an area where HR is involved. "Every respectable company today has some form of employer branding," says Foo Chek Wee. "To stand out from the marketplace, progressive companies are working towards driving authenticity and purpose in their employer branding activities."
 
That means broad activities that demonstrate concern for wider society, and the notion of being a good 'corporate citizen'. It can be seen in consumer goods giant Unilever's 'Sustainable Living Plan' that sets ambitious targets for environmental impact in its manufacturing processes (it now sends no waste to landfill from 600 different factories).
 
But getting it right won't be easy. Companies have to move beyond the traditional concept of CSR, which involved old-fashioned philanthropy and initiatives that were often more PR-oriented than societal. "CSR in the old way is no longer enough. What we are seeing is a new world of work where skill requirements change and millions of jobs will be automated away in a few years, so what this means for companies is that they should act in their own enlightened self-interest," says Leopold.
 
For Brighton-Hall, there's no doubt the bar for CSR has risen considerably. "We're [looking to companies] for social responsibility and positive impact on the local and global community to be part of their DNA. We also expect that every employee can participate." It's a tough ask - but there may be little choice but for even the hardest-headed corporation to take a stake in the future.
 
"Employees don't just want money; they want a life experience too"
Pavel Liser, research and talent manager for Shanghai-based consultants Grow HR
 
As Chinese businesses embrace automation, how will companies' recruiting strategies be affected?
In the short term, automation is going to introduce sudden shocks to companies and the workforce, such as job losses and workflow changes. But in the longer term, there will be benefits for workers and employers. For example, in a highly automated plant, a worker will have to learn new skills through training - overseas, if they are employed by a foreign company. That means better career development options, and the chance to become a value-added asset to the company. With automation, hiring strategy really goes from quantity to quality.
 
Does globalisation mean companies in China will hire more foreign talent?
From our perspective, yes. Foreign companies in China prefer local Chinese talent as they have the local resources and extensive knowledge of the market. But Chinese companies - especially those who plan to develop overseas - would like to add a few foreigners to bring in global thinking and new business ideas, as well as adding more dynamism.
 
Dealing with millennials is a challenge for employers. What's it like in China?
Companies are still working on it. One approach is to inspire them by giving them a sense of ownership of their work and a visionary-driven career path, which can lead to a leadership position. Although many companies are still looking for the perfect mix, I think it's the right direction.
 
Are companies doing the right thing to keep talent?
Overall, they are working hard, but turnover is still high. I think the key is the strength of the brand, which should be part of the identity of their employee. People are no longer looking for a high salary only. They expect an experience. Employer branding is big in China. There is training to be done about how to create a better image to attract talent, and how to develop a deeper relationship with staff.
 
"Automation is so monumental that we often avoid the debate"
Australian Human Resources Institute board member Rhonda Brighton-Hall
 
How is the 'gig economy' influencing how businesses approach talent?
Many large-scale businesses have a toe in the water of the 'gig' economy, particularly in the technology space where skills are scarce and employees control the market - but as yet, these are rarely at scale. The gig economy is currently best used by start-up businesses. Their mindset suits this way of working, and they are building future-facing businesses that utilise this potential of a free-flowing workforce.
 
The gig economy has two significant restrictions: it breaks the traditional employment relationships most corporations are built on, and can further marginalise people who are outside highly sought-after skillsets. Technology workers may be in a perfect position to manage a 'portfolio' or 'gig-based' career, but someone who works in manual labour, or who has a disability, may not be so well placed.
 
Are companies making the most of data on workforce analytics and mobility?
For more sophisticated workforce planning, we need to look at 'whole economy' (or even global) data, rather than a single organisation. Demographic and workforce planning data is only useful when you can look at your own workforce (and required workforce) relative to the labour market from which you can garner skills. By looking at capability across an economy or region, organisations are better placed to predict skill shortfalls. Better still, and more likely as the capabilities required are changing so rapidly, we could seek 'potential' in candidates and employees rather than fixed capabilities.
 
Asia is well placed on this agenda. We can go back as far as the 2007 White Paper, Skills Development Policies and International Cooperation in East and South East Asia [published by the Switzerland-based NORRAG's Working Group for International Co-operation in Skills Development], to see that the potential of 'above the brand' data for recruitment and workforce agility has been well understood for some time. In practice, sadly, most companies are simply looking at internal data sets to lock down expectations (such as planning leave well in advance), instead of ways to increase agility.
 
How are companies approaching the issue of ageing workforces?
This is a challenge for governments and policymakers. The financial challenge is obvious, and the impact of not addressing it can be seen in some European countries. Potential solutions (particularly in democracies elected over short terms) can be unpopular. Who wants to be told they must work longer?
 
There are a range of ideas in trial. Perhaps the most established government policy in the region is that of Singapore, where a wage subsidy for older workers has been in place since 2015. The feedback is that it is welcome, and is one of the factors assisting businesses to employ older workers.
 
How important is it for a company to walk the talk on CSR?
There is no question social media, and the transparency it brings, has fundamentally changed our expectations of businesses. In the past, we expected 'good' companies to be socially responsible. We listened for the examples and news stories about programmatic work and its impact on the broader community. Today, we assume 'good' companies are doing the right thing in everything they do. We're not looking for a single news story. We're looking for social responsibility and a positive impact on the (local and global) community to be part of their DNA. We also expect that every employee can participate. The next generation see this as a baseline when they're choosing a company to join.
 
"Performance feedback will be the key differentiator"
Foo Chek Wee, HR director for online fashion retailer Zalora
 
Across developed economies, the population and workforce is ageing. How are HR departments coping?
The change in demographics requires a paradigm shift, and companies that respond swiftly gain a competitive advantage. Progressive HR departments are enabling their businesses in two ways: first, by leveraging the use of data, enabling leaders to understand the realities of this trend objectively. And secondly, they are rolling out agile programmes that are simple to scale across departments and geographies, and sustainable over time.
 
Globalisation essentially brings in the world's best to compete with local companies. In hiring, businesses have to think outside the box about talent acquisition. For example, they can explore talent from other industries with transferrable skills, or use different types of employment arrangements (such as part-time or flexible working). They also ought to think outside the box about talent development. For instance, they can enable people to build their skillsets and experiences faster by rotating employees to different roles, getting them to teach or train colleagues in a particular technique, or sending them on overseas assignments to gain exposure.
 
What are the trends that are affecting your people strategy at Zalora?
There are three main areas. First, the world is noisier. With technological advances and the exponential growth of social media, every respectable company has some form of employer branding presence. To truly stand out from the noisy marketplace, progressive companies are working towards driving authenticity and purpose in their employer branding activities.
 
Second, smaller is better. As we further globalise how business is conducted, there is a trend towards work specialisation that cuts across geographies. HR functions will need to set up agile programmes that are able to cater to different workforce types and needs, from permanent employees to contingent workforces, to consultancy services and freelance services.
 
Finally, performance feedback is paramount. HR functions will need to continue to ensure managers and employees engage in regular and meaningful performance feedback sessions. How well this is done across the company, at all levels, is the key differentiator to sustainable competitive advantage.
 
The long-term view
 
In October 2015, the CIPD published a major piece of research highlighting the gap between ambition and practice when it comes to ethical decision-making in business. The results were based on a survey of more than 10,000 HR practitioners and business leaders.
 
9 in 10 said that long-term goals were more important than short-term gains but, in practice, only 1 in 4 were actually prepared to make short-term sacrifices for long-term gains
 
1 in 3 reported they had to compromise their principles to meet current business needs
 
  • Find out more about the CIPD's 'Profession for the Future', which helps HR meet the needs of a changing world of work, by visiting bit.ly/ProfFuture