25 Trends That Will Change the Way You Do Business

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This is a post that my colleague Graeme Codrington @workforcetrends wrote on our sister blog site in 2007. I was searching for some information and found this an interesting read. Even though it was written over three years ago and pre the credit crisis it is amazing how acurate the predictions are.

Well worth the read!

From e-mail to health care, and from artificial intelligence to the end of HR as we know it, here are forecasts of how different the world of workforce management will be 10 years from now.

Workforce-management decisions aren’t made with crystal balls. What they do demand is a clear sense of the landscape on the far horizon. As a human resources executive, you probably know what health care will cost your company next year.

But you’re far less certain whether or not legions of workers will be full-time telecommuters five years from now, or if defined benefits will even exist in 2013. Fortunately, there are forward-thinkers and trend-spotters out there who make it their business to suss out the future for us. Our visionaries don’t always agree with each other, as you’ll see. Still, their predictions of what factors will alter the world of workforce management are provocative, and may serve to inform and intrigue all of us who manage people.


1 E-Mail
It has taken less than a decade for electronic mail to emerge as the heart and soul of corporate communication. Yet while e-mail has made it faster and easier for people to swap words and data, it also has unleashed inbox overload and a seemingly endless stream of spam. Future e-mail systems will attempt to remedy today’s problems–but also add new capabilities. One possibility is that senders will have to match a predetermined list–either by name, company, or IP (Internet provider) address–or find themselves blocked. In addition, better anti-spam programs will help sift out the junk. Powerful information-management and collaboration tools are also likely to emerge. They will link associated messages and track message streams more efficiently. Internet pioneer Vinton Cerf predicts that automatic language translation will take hold. Finally, unified messaging will allow workers to check e-mail, voice mail, mobile messaging, and fax machine from a single inbox.

2 Organized Labor
Despite declining membership and overwhelming odds, labor unions aren’t in danger of dying any time soon. They do, however, face the future with these grim facts: Membership dropped from 20.1 percent of the labor force in 1983 to 13.2 percent in 2002. The decline in U.S. manufacturing cost union members 1.5 million jobs in the 1990s. The Bush administration has eliminated collective bargaining rights for large numbers of federal employees. Still, more than 500,000 workers formed new unions last year. Union members make on average $150 a week more than non-union workers. Pharmacists and physicians, faced with alarming shifts in the medical marketplace, will join unions in growing numbers in the coming years. But to retain their power, unions must reverse the shrinkage, experts say. “Unions have been doing a better job than ever,” says Kate Bronfenbrenner, director of Labor Education Research at Cornell University. “It’s just that the bar is a lot higher.”

3 Business Goes to Kindergarten
All signs indicate that corporate involvement in public schools–already redefining kindergarten-through-high-school education–will continue to increase over the next decade. Alarmed by under performing public schools and students poorly equipped for the job market, business is getting directly involved. Corporate sponsors are popping up on campuses from Washington, D.C., to Stockton, California, as a new generation of students prepares for college, and for jobs such as auto mechanics, Internet specialists, and hotel workers. School-to-business field trips start in kindergarten. Internships, meetings with
top executives in office settings, and even paychecks are available for older students. “We’re saying, ‘See, there is a reason to go to school,’” says Knute Momberg, director of Stockton’s Weber Institute of Applied Sciences and Technology. The school has more computers than students, and GM provided the new cars that teens take apart in squeaky-clean service bays.

4 Going Euro
In Europe, snooping at employees’ e-mail isn’t only considered bad form. It’s often flat-out illegal. And as American companies increasingly enjoy their reputations as global trendsetters in business practices, they may have to reverse some key employee policies, says Andy Boling, a partner and employment-law expert in the Chicago-based law firm Baker & McKenzie. One obvious area is workplace privacy, where U.S. companies may be compelled to reduce their monitoring of e-mail and Internet use. “Multinationals are finding that it’s too cumbersome to have one set of privacy policies for Europe, another for Hong Kong and Australia, and a third standard for the United States,” he says. With U.S.-based employees communicating increasingly via e-mail with their European counterparts, Americans also will begin to covet their liberal vacation policies and parental-leave benefits. “These things may not be implemented here to the extent of the privacy regulations,” Boling says, “but American workers and organized labor may increasingly look to Europe as the standard.”

5 Companies Won’t Sleep
In a quest to reach new customers in foreign time zones and to speed up production and services, more and more companies in the future will be open for business around the clock, seven days a week. Already about 24 million Americans work in the 24/7 culture, according to Circadian Technologies, a Massachusetts-based consulting firm. While the 24/7 worker used to be an assembly-line worker, today he or she may well be a college-educated computer-tech-support specialist working nights in San Francisco, providing Japanese-language advice to a customer who calls from Tokyo during his lunch hour. The migration to a 24/7 workplace will make human resources managers’ jobs far more complex, says David Mitchell, Circadian’s director of publications. “You may have to offer nighttime child-care providers, who watch kids while they sleep,” he says. “And you may have to be much more creative in terms of scheduling–for example, if you’re running a call center for a retailer, you may have to have more staff
on hand right after the 2:30 a.m. infomercial.” Employers also will have a trickier time dealing with disability claims, since some mental health conditions may be exacerbated by a shift to nighttime work.

6 Artificial Intelligence
Making computers think more like people is an idea that persists. In the workplace, software already predicts customer behavior and machine failures on the factory floor. These capabilities will continue to evolve. As the Web and data warehouses grow, artificial intelligence will solve problems that are beyond the reach of the human brain. AI’s strength is that it can uncover patterns and spot problems amid a mountain of data. That might translate into detecting financial fraud by examining billions of transactions, says Pepperdine University business professor Owen P. Hall Jr. Meanwhile, agents and bots–tiny pieces of software–will use real-time data to make decisions about how to maximize the efficiency of trucking fleets, machinery, and network resources. “AI will bring advances but also usher in ethical concerns,” Hall says.

7 The Simmering Malaise
For several years, employees have had a very tough time. They’ve lived with the fear of downsizing. They’ve watched benefits and retirement savings shrink. And they’ve been forced to work harder and longer, with fewer opportunities for promotions or raises. Even when the economy eventually recovers, experts say, pervasive dissatisfaction and anger aren’t likely to evaporate. Only 25 percent of workers feel a strong attachment to their employers, and 4 in 10 feel trapped in their jobs, according to Walker Information, an Indianapolis-based research firm. Walker vice president Marc Drizin says employee loyalty was on the decline even before the economy stalled, and that pattern is likely to continue. “I think most organizations still don’t understand why you need to be good to your workers,” he says. Employers who ignore workplace discontent run the risk of periodic productivity slumps as skilled staffers depart for higher-paying positions whenever the labor market surges. Smart companies that make employees feel valued will gain a crucial competitive edge.

8 Office Design
In the coming years, most cubicle-dwelling employees probably won’t have a room–or a door–of their own. There is an office movement toward more shared work space coupled with private desk areas, especially in creative industries, says Gervais Tompkin, a lead designer with the San Francisco-based Workplace Practices Group at Gensler Architecture, Design and Planning Worldwide. What’s more, workforce managers will play a key role in office design, serving as a critical link between the personal and professional needs of workers and the vision of architects, he says. “When we analyze what makes our best designs successful and keeps those clients coming back to us, it is the active involvement of human resources managers early on in the process,” Tompkin says. He isn’t prepared to predict the demise of doorless cubicle kingdoms, but says that he is seeing changes. “I personally could never operate with a closed door because people need to interrupt me at will since our work is so collaborative. Lawyers, on the other hand, will always need a way to shut out the world because their work is by nature mostly one-on-one.”

9 Defined Benefit Plans
Attracting the best and brightest employees in the future will become nearly impossible without a defined benefit plan. Stewart Lawrence, a senior vice president of The Segal Company in New York, predicts that companies without retirement plans that provide guaranteed benefits will be passed over for employers that do. “Employees now understand the volatility of defined contribution plans and are looking for a balanced program with both the upside potential of a defined contribution plan and the mitigation of downside risk of a defined benefit plan,” he says. Major employers such as Microsoft, Wal-Mart, and Cisco Systems currently don’t offer defined benefit plans because they have been able in recent years to recruit effectively without them. This will no longer be true. As the workforce
ages and labor shortages increase, Lawrence says, companies will have to offer retirement plans that provide a floor level of retirement income.

10 Telework Has a Part-Time Future
By the year 2010, more than half of American wage earners will spend more than two days a week working outside the office, reports the Sulzer Infrastructure Services firm in London. Today, 28 million people “telework” under formal company policies–a leap from 4 million in 1990–and millions more work informally out of the office one or more days a week. As inexpensive broadband Internet access and mobile technologies take hold, the number will increase, says Toni Kistner, managing editor of Net.Worker, a division of Network World magazine. “The technology has steamrolled ahead, making it
cheaper and easier to work from anywhere.” It will be rare even 10 years from now, however, to find people in any profession who telework five days a week. When teleworking took off in the 1990s, people talked about how the workforce would be dispersed and offices would shut down. That hasn’t happened, Kistner says. As the economy improves, companies may reduce their real estate, encouraging employees to share offices. That will create open work spaces that accommodate a flexible part-time telework environment. But there will always be a central location where people come to work, she says. “Some people need to come to the office to stay connected.” In professional jobs, teleworking is already common. With technological upgrades and guidance, the trend soon will take hold in fields such as nursing
and call-center management. New kinds of work that combine technology and service also will be more feasible as technology improves, says Sirkka Heinonen, senior research scientist at VTT Communities, the biggest technological research center of the Finnish government. As the number of senior citizens in the industrial world rises, for example, many will want to live at home as long as they can. “Some kind of telework service providers to monitor these people at home will likely grow up around this need,” she predicts. “These won’t be traditional nurses, who are always on-site, but they will be telepresent and will probably visit [patients] physically from time to time.”

11 Consumer-Driven Health Care Reigns
Despite exploratory moves toward consumer-driven health care, most American companies aren’t exactly blasting into this new benefit area–not quite yet. Ten years from now, however, the notion of health-care dollars that employees can spend as they see fit will be routine, say benefits experts. Consumer-driven plans take many forms. All are designed to make employees more aware of, and responsible for, the cost consequences of their health-care choices. Roger Vaughn, president of Aon Consulting U.S., says that employees will benefit from the hard bargains that employers drive with health-care providers, so they won’t have to bear the expense of buying health care on the open market. And thanks to the Internet and a push for greater openness about corporate finances, employees will be able to see exactly what health care will cost them, and they’ll also be able to make comparisons to other plans, Vaughn says. The other critical pieces for the success of consumer-driven programs are “education, advocacy, and assistance,” says Richard A. Travers, CEO of Travers, O’keefe, a New York-based benefits consulting and brokerage firm. Those elements aren’t entirely present yet, but five years from now they will be, and “we’ll be well on our way,” he says.

12 Child Care
Child care is and will continue to be a major, often heartrending subject for working parents. As the national workforce ages and the number of women of childbearing age levels off in the next five years, the demand for child care may lessen. But access to quality child care will continue to be a major issue for working moms and their employers. Susan Seitel, president of Work & Family Connection, Inc., a Minnesota-based consulting firm, says one of the major problems for working parents is what to do when the babysitter is sick or doesn’t show up, or the regular preschool is closed for a holiday or vacation break. She expects that an increasing number of companies will offer backup-care arrangements that employees can use in the event of emergencies. “Employees often are willing to
pay a fee for the care, so all the company may have to provide is the space,” Seitel says. A related trend may be the rise of contractors that provide innovative activities for company-sponsored day care, such as theater classes for kids, she says.

13 Help Wanted: Ten Million Workers
The convergence of several trends–declining births, retiring baby boomers, and expected business growth–will create more jobs than there will be workers to fill them by 2010, experts predict. The math is relatively simple. The civilian labor force will increase by 17 million, reaching 158 million in 2010, reports the Bureau of Labor Statistics. But by then, the BLS says, the number of jobs will reach 168 million. Roger Herman, a futurist specializing in workplace issues, says pressure on baby boomers wanting to retire will be so great that they will be pulled back into the labor market. Even so, he says, older workers won’t show up in large enough numbers to fill the millions of jobs available. Herman says the problem will be aggravated by the shortage of skilled, educated workers already occurring in manufacturing, health care, and various technical fields.

14 Outsourcing
Outsourcing is to in-house human resources what Pac-Man is to dots. Double-digit growth is expected in the multibillion-dollar outsourcing market, dramatically gobbling up traditional human resources tasks and significantly altering people management. Companies spent $61.2 billion worldwide in 2002 on human resources management outsourcing, an amount expected to jump 11 percent annually, to $103.3 billion by 2007. Growing even faster will be in the one-stop shopping market, where companies bundle different human resources management services into one large contract rather than serving it up piecemeal. Industry analyst Marc Pramuk of IDC in Framingham, Massachusetts, says U.S. companies packaging end-to-end services did $6 billion of business in 2002. That business will more than double in five years, to $15.4 billion, a 21 percent annual growth rate, he says. Newer companies like Exult, a late-1990s start-up that is enjoying phenomenal growth, will battle it out for this business with older, established companies like Fidelity Investments, which has gone beyond its mutual fund and 401(k) business into human resources administration. A sample of things to come: Part of a broad deal with IBM called for the transfer of 700 IBM human resources employees into a Fidelity employer-services company.

15 Recruiting Older Workers
With the graying of the workforce, American business is going to have to pay attention to what older workers want and how to recruit them, says Deborah Russell, manager of Economic Security and Work at the American Association of Retired Persons. “Terms such as ‘fast-paced,’ ‘high-energy,’ ‘young,’ and ‘vital’ are often signals to older workers that they need not apply,” she says. AARP encourages companies to use terminology that better reflects age diversity such as “experienced workers” and “age-diverse.”

A recent AARP-sponsored study, using a nationally representative sample of 1,500 workers age 45 to 74, shows that 69 percent plan to work in some capacity during their retirement years. They work not only for money but also for intangible benefits such as enjoyment and a sense of purpose. Poll participants focused on “soft benefits” such as adequate time off and flexible schedules as well as “hard benefits,” including health-care benefits and insurance and good pension benefits as “absolutely essential parts of their ideal jobs.”

16 Mergers
Mergers and acquisitions are like courtships and marriages, says Ira Wolfe, a Leola, Pennsylvania, workforce consultant. Like human couples, companies “fall in love, and then later decide they can’t live with the other.” In the coming years, people management will play a far more pivotal role in corporate mergers. Wolfe estimates that company purchases conducted for the purpose of buying another company’s people could represent as many as half of all acquisitions. Now, he estimates, only about 15 to 20 percent of acquisitions are completed because one organization wants another company’s workforce. One of the principal reasons why mergers and acquisitions have failed in the past is that workforce management isn’t brought into negotiations until the deal is consummated. No one studies the compatibility of the two cultures. Worse yet, the buyer often tries to change its partner, rather than adopting the ways of working that made the acquiree attractive in the first place.

17 Freelancers and Consultants
Today, some 30 million Americans are self-employed, and with companies increasingly enamored of outsourcing as a way to control costs and increase flexibility, the use of freelance contractors and consultants is likely to grow. Dan Pink, author of the 2001 book Free Agent Nation, predicts that corporate
workplaces will evolve into a continually shifting mix of employees and freelancers, “to the point where it will become difficult to distinguish one from the other.” That may lead to profound changes. Company health plans may begin to disappear, as workers on the move opt for their own portable health coverage, possibly subsidized by an employer. “Companies may not be hiring people for jobs,” Pink says.
“Instead, they may be saying, ‘We definitely want this person around for 10 years to accomplish these particular tasks, and after that, we’ll see.’” The concepts of retention and career development, he says, may be supplanted by an emphasis on maintaining long-term connections to workers who manage their own rise, moving in and out of corporate positions with increased freedom.

18 Pay for Wellness Performance
Instead of waiting to pay for the treatment of sick employees, some employers will soon turn to the concept of wellness management–with a twist. They’ll give employees a concrete financial incentive to participate, says Tom Lerche, senior vice president of Aon Consulting. The process, which is handled through an outside organization to preserve privacy and HIPAA compliance, begins by having employees and their covered spouses take a voluntary health-risk appraisal each year. These questionnaires identify factors that lead to such chronic diseases as asthma, heart disease, and diabetes, which can account for 20 to 35 percent of a company’s medical expenses, Lerche says. If the appraisal identifies two or more risk factors that point to a potential health problem, the employee or spouse is a candidate for health coaching with a nurse, health educator, dietitian, or exercise physiologist. The coach sets up a plan for the health risk and keeps track of the employee’s progress via weekly phone calls. The incentive for the employee is a reduction in insurance premium payments–$55 instead of $75 per month, for instance, Lerche says. And if the employee stops participating, the insurance
discount can be suspended until he gets back on track. “Too much of what we do is a short-term approach,” he says. “Fifty percent of disease is ultimately preventable,” and this approach can head off
many major health problems. “It’s for the employer that has low turnover, wants to invest in employees, and wants to see to it that they’re productive and in good health” in the working years ahead, Lerche says.

19 Spirituality at Work
Americans eat too much. They spend too much money. They are obese and in debt and worried about personal safety and job security–especially since 9/11 and the economic downturn, says Harriet Hankin, president of CGI Consulting in Malvern, Pennsylvania. And those are some of the reasons they’re increasingly looking for spiritual comfort, she says. “The biggest change in the workplace is the interest in spirituality. It’s about doing the right thing. It’s not about religion. It’s about job satisfaction. Jobs in the future will have to be more meaningful. Pay won’t be as important as a good job.” Referring to the rising number of books on spirituality and business and in subjects such as work/life balance, Jeffrey Pfeffer, professor of organizational behavior at the Graduate School of Business at Stanford University, says he’d agree that spirituality in the workplace is a noteworthy trend. Workers are looking for meaning and purpose, he says. “The word ‘spirit’ comes from the word ‘to breathe.’”

20 Women at Work
With steeply mounting numbers of educated women, glass ceilings are going to shatter in the coming years, says John A. Challenger, CEO of international outplacement firm Challenger, Gray & Christmas, Inc. Between 1979 and 1999, the number of women earning four-year college degrees jumped 44 percent, from 444,000 to 640,000, he says. At the same time, the number of men receiving four-year degrees is declining–from 532,000 in 1993 to about half a million in 1999. As women earn more college degrees and ascend more corporate ladders, Challenger says, they “will make further inroads into management and exec ranks, and the workforce will have to create an environment where a balance between work and home life is more valued. Temporary and part-time work and job sharing will be more common.” There also will be more re-entry opportunities for women who leave the workplace for a few years and then return. At the same time, more men will be moving into “women’s jobs” like nursing and teaching, Challenger adds. The result won’t be that women are crowded out of the job market. “The major change will be this: The line between men’s and women’s work will blur and fade.”

21 Skills Shortage
A job-skills shortage is already reality in the manufacturing industry, and is likely to spread to other industries over the next 10 to 15 years as baby boomers retire. Despite a recession that cost 2 million manufacturing jobs, a recent study by the National Association of Manufacturers warns that “manufacturing could experience a shift from merely having a talent shortage to facing a serious labor crisis.” That’s just manufacturing. Warnings also are forecast about the need for savvy, well-trained workers in job categories such as information technology and the global-energy and electrical-utility industries. Shortages are expected in the global competition for managers, engineers, technicians, skilled craftspeople, and front-line workers, mostly jobs requiring a college degree or technical education. Experts say changes must come on a broad front, from better technology and skills training in secondary schools to aggressive recruitment to a coordinated national workforce policy.

22 Security vs Privacy
As technology becomes more sophisticated, the ability of those who administer company–and government–computer networks to monitor the comings and goings of workers will grow exponentially. While privacy experts shudder, cameras, keystroke logging, biometric devices, and network monitoring are becoming de rigueur within many organizations. In the future, the cat-and-mouse war between businesses and crooks will lead to more sophisticated surveillance, the standard use of data encryption, and sophisticated data-mining techniques that spot potential problems and risks by analyzing patterns. “Increasingly, companies are realizing that security is not an option, it’s a basic requirement,” says Alan Brill, senior managing director at security consulting firm Kroll Inc., New York. Not surprisingly, the threat of terrorism is raising the stakes. For example, the U.S. government’s Terrorist Information Awareness program proposes to sift through vast quantities of business and government data to detect suspicious activity. “The dangers are greater than ever,” Brill says. “It’s clear we’re living in a new era.”

23 Accounting for People
Let’s say you took up the hobby of collecting every annual report from public companies over the last 40 years. You’d be shocked at how little you’d learn about what organizations often say are their “most important assets”–their people. A few–like the Atlanta Braves, EDS, and Deutsche Bank–have gone out of their way to tell people what their workforces are worth or how much value their training will bring in the long run. In the years to come, however, human resources executives will start to see many more statistics on turnover, absenteeism, and revenue per employee in corporate publications.
“What’s the basis for competition in the 21st century?” asks Thomas P. Flannery, the director of Ernst & Young’s human capital practice. “It’s your ability to think through complex problems, serve the customers better, and be more creative.” All these qualities come down to the capabilities of human beings, he says. Wall Street analysts will want to see what corporations know about the people who are winning patents for the company and closing big deals. And when companies show what people are worth, it also reminds shareholders how vulnerable those “important assets” are. Machines stay put, but as Flannery says, “People can walk at any time.”

24 Universal Health Care
As costs soar and the number of uninsured Americans–both employed and unemployed–rapidly expands, there are about as many predictions about where health care is headed as Carter’s little pills. Employers are paying an increasingly large share of the cost–and so are employees. And almost everyone acknowledges that some dramatic change in health care is likely, perhaps even inevitable, in the next decade. The country is indeed moving toward some form of universal health care system, says Jeffrey Pfeffer, professor of organizational behavior in the Graduate School of Business at Stanford University. He points out that the United States is the only industrialized country where access to health care is dependent on employment. Says Pfeffer, “In other countries, access to health care is a fundamental human right.”

25 The End of HR As We Know It
Conventional wisdom says that human resources finally has achieved its sought-after seat at the table. But the ability of human resources to add value at a strategic level “is currently more promise
than reality.” That’s the sobering finding of Creating a Strategic Human Resources Organization (Stanford Business Books, 2003), a long-term study of human resources by Edward E. Lawler III and Susan Albers Mohrman. The authors found that today’s people managers still are most comfortable with traditional human resources activities. “If they want to be effective business partners, they need to change their skill set,” Lawler and Mohrman say. Almost 30 percent of the companies in the study promote human resources executives who come from the business side, not human resources. “In essence, some companies may have decided that the HR strategic-partner role is too important to leave to someone with an HR background.” The study’s conclusion: Human resources must reinvent itself. “The old approaches and models simply are not good enough.”

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