Feature: The evolving workplace

An organisation’s people are its greatest assets. Domini Stuart highlights a range of trends and challenges that directors will have to consider to ensure that they have the right people for a very different future.

The way we work and do business is changing rapidly – and so is the workforce itself. Today’s boards must be sure that their organisations will be able to attract and retain the right people for a very different future.

“The workforce is being reshaped by demographics, technology and changing attitudes and expectations,” says Mark McCrindle, principal of McCrindle Research.

“It’s vital that boards keep management focused on the medium-term – they should feel confident that management knows about the shifts and trends and understands them well enough to anticipate and prepare for their impact.”

Trends and challenges
Globalisation

“The globalisation of most industries, coupled with rapid increases in online communications and mobility, means that we have a more international market for talent and capability than ever before,” says John Meacock FAICD, Deloitte managing partner New South Wales.

“This is creating both pressures and opportunities. For example, a number of roles and functions can now be sourced from low-cost jurisdictions and this has the potential to free onshore talent from lower-skilled tasks as it opens up a bigger pool of talent.

“But, as it gives local talent an opportunity to operate in a global market, it could also increase the cost of retaining talent.”

An ageing workforce

Alison Monroe MAICD, CEO of Sageco, a consultancy firm which provides mature age workforce solutions, describes the ageing workforce as an unprecedented global phenomenon.

“It’s the confluence of three significant factors,” she says.

“First, there is increasing longevity – we are living 20 years longer than we did eight decades ago. Second, we have decreasing fertility – women are having half the number of children that they did in the baby boom era. And, third, there’s the demographic tsunami of four-million-plus baby boomers in the Australian workforce who have reached, or are fast approaching, traditional retirement age.”

Currently, 16 per cent of the Australian workforce is in the over-55 age bracket and many have no intention of retiring soon.

“Last year’s Australia Bureau of Statistics Retirement Intentions Survey showed that 17 per cent of the Australian workforce intends to work beyond the age of 70,” says Monroe.

The rise of Generation Y

In addition, 6.1 million people in Australia fall into the cohort known as Generation Y.

“It has been predicted that by 2020, they will make up 42 per cent of the workforce,” says Jane McNeill, director of recruiting firm Hays in New South Wales.

“But they’re distinctive in their desires for a particular kind of working culture and, for many managers, this is a big change and a big challenge.”

A multigenerational workforce

“There have always been people of different ages in the workplace but, in the past, there was a hierarchy defined by age,” says McCrindle.

“Today, it’s quite likely that all ages will be interacting at the same level and younger people will often be managing older people. This presents more of a challenge.”

Cultural diversity

“Twenty seven per cent of all Australians were born overseas and 46 per cent of the population live in households where one or both parents were born overseas,” says McCrindle.

“We should be seeing that diversity mirrored in the workplace.”

Technology

Technology has already transformed the workplace.

“We can telecommute, work from a virtual office and do business around the world,” says Marjukka Mäki-Hokkonen, vice president, Australia and New Zealand of NGA Human Resources.

“Now we’re moving rapidly towards a time when technology infiltrates every aspect of every organisation.

“We can also expect much higher degrees of automation and the practical application of things that, until recently, were still in the realms of science fiction such as robotisation, 3D printing, self-driving vehicles and drones.”

Greater flexibility

Generation Y is very focused on work-life balance. Many baby boomers want to keep on working, but not necessarily in the same, highly-structured way. In the middle, Generation X is busy juggling work and family. All would welcome more flexible working hours and an opportunity to work from home, yet most organisations remain wedded to the nine to five, Monday to Friday structure that was established before World War II.

What boards need to promote
More diversity in the workplace

Society is becoming increasingly complex and diverse in terms of culture, language and socioeconomic status.

“The business case for a workplace that reflects diversity has been corroborated through both research and experience,” says McNeill.

“It leads to improved attraction and retention of employees, increased innovation, new approaches to doing business, improved productivity and improved financial performance. It reduces the risk of litigation and it’s also a better reflection of a company’s customer base.”

If you are not aware of how the demographic profiles of the workforce and customer base compare, ask management for a breakdown.

“Age and gender is a good place to start and the results can be surprising,” says Monroe.

“For example, a financial services company we were working with found that just six per cent of its workforce was over the age of 55 compared with 40 per cent of their customers. We are seeing a trend for call centres and customer service centres to be more age-diverse – and those that are tend to score higher in customer service surveys.”

A good board will also consider its own profile.

“A call for greater diversity in the workplace will carry a lot more weight if you’re modelling that from the top,” says McCrindle.

A different approach to employment

Both employees and employers are driving the trend towards a more contingent workforce.

“These days, few younger people want to work in a single company for their entire careers and a contract arrangement can satisfy their desires for interest and variety,” says Mäki-Hokkonen.

“At the same time, that contingent, or contract, work can be a flexible and cost-effective option for employees and bring enormous benefits if managed correctly.

“We are also seeing a great deal of discussion around what constitutes core and non-core business functions and which can be kept in-house or conversely outsourced to specialists who would then manage compliance and any other business systems and processes.”

As Meacock points out, a strategic and systematic approach to managing a workforce that may no longer be majority “owned” will become increasingly important. And, creating an environment where workers can change careers without changing organisation is paramount to building loyalty and long-term commitment.

A different management style

There may be many benefits associated with an intergenerational and culturally-diverse workplace, but they are unlikely to appear spontaneously.

“Humans are naturally drawn to ‘like’ – it’s up to leaders to encourage and facilitate interaction between the various groups,” says McCrindle.

“The aim is to have people with different experiences and skills drawn together by a common vision and working towards a common goal and you’re not likely to achieve that if you stick to the old model of ‘command and control’.

“Diversity demands a collaborative style of leadership. Managers must be able to connect with people rather than simply manage tasks – to interact rather than direct.”

Social media has helped to create a more democratic workforce.

“The younger generation is looking for organisations that focus on social responsibility and the emphasis of meaning and purpose, not just profit,” says Meacock.

“Leadership that inspires is an increasingly important aspect of retention.”

The exchange of skills

A generation that has grown up with technology is bound to be more tech savvy than their older colleagues, just as people who have spent decades in the workplace are bound to have more knowledge and wisdom.

“Given the opportunity, younger people can teach digital skills and computer literacy as they learn from the experience of their older colleagues,” says Monroe.

“Managers should be creating those opportunities for a two-way exchange. They should also ensure that relevant training and professional development is accessible to an older age group.

“There’s a myth that older workers are unwilling or unable to keep up with rapid change, but this is often because training is directed almost exclusively towards younger workers.”

Retention of older workers

Australians aged 65 and over are expected to constitute one quarter of the population by 2042 and this poses a serious threat to economic growth.

“Encouraging older employees to continue working is no longer optional, but key to maintaining the country’s economic vitality,” says McNeill.

“A proportionately high number of mature workers are found in sectors such as manufacturing, transport, healthcare and education, and the Australian economy will face significant skills shortages when these professionals retire.”

Another myth is that keeping older workers in the workplace will create a bottleneck – that high-potential talent will look elsewhere if they foresee a long wait for promotion. But Monroe dismisses the idea of the “either/or”.

“If you encourage good communication and are prepared to do things differently, there’s no reason you can’t have an ‘and’,” she says.

“For example, if you’re having the right conversations, you might well find that your more mature workers have no desire to keep on managing a big team and a multi-million dollar budget. They might prefer to focus on key relationships, key projects or coaching and mentoring, leaving plenty of room for their younger and more ambitious colleagues to progress through the ranks.”

The right environment to attract top talent

In the past, ambitious young people dreamt of working for a big corporation.

“Big companies used to have a strategic advantage in terms of employing top talent because they could pay more and offer better career opportunities,” says McCrindle.

“Today’s young people are drawn to innovation, broader job descriptions, flexibility and growth, so they’re often drawn to smaller businesses where they believe they can exert some influence and perhaps move into a leadership role more quickly.

“That means larger organisations need to work harder. They need to demonstrate that they’re innovative and can offer things like job mobility, flexibility and work-life balance along with traditional strengths such as job security.”

A wider perspective

All boards need to monitor rapidly-changing business models and the skills and capabilities that will be required for the future.

“A workforce strategy is an imperative and boards should be reviewing this against the corporate strategy to ensure that organisational capabilities are, and will be, in place,” says Meacock.

“Part of this is the identification of critical roles and skills and ensuring that there is an appropriate development pipeline in place, both within the organisation and externally.”

McCrindle also recommends that boards spend more time looking outside the organisation.

“Major disruptors such as the global financial crisis, emerging technologies, the attitudes and expectations of new generations, population growth and our relationship with Asia are all beyond their immediate control,” he says.

“If boards are going to help shape an effective and relevant workforce they need to be looking outwards as well as forwards.”