Mantu’s take on the trends shaping the Future of Work
The fallout from the Covid19 pandemic has given businesses an opportunity to reflect and take stock. Accepted orthodoxies are being challenged every day by companies forging a path through the barriers a global event necessarily brings. However, what we’re seeing is merely the acceleration of a course already set, not a change of direction.
For businesses to make the most of this chance to change, they must first understand the trajectory their organization is on, and work to align this with the future of work. Firms who act today to get ahead of the megatrends already in motion will have the best chance of success in a post-Covid19 market.
Mantu’s practice in Future of Work was crafted in response to the shifts every market is experiencing right now; it is our belief that these fundamental changes will forever shape the world of business as we know it. The pillars upon which we have built companies in the post-industrial revolution era are collapsing, and businesses must transform accordingly.
In order to prepare and equip organizations with the tools, processes and culture they need to thrive in the near future, Mantu’s industry experts continually analyze the trends, forecasts and market data that provide a window into what your organization can expect in the coming years.
Here we provide explanations and analysis of just some of the core changes we’re seeing in the world of work. What impacts will they have on your business?
AUTHENTICITY & PURPOSE
We emerged from the financial crash of 2008 into a much more demanding world. People are now skeptical of corporate motivations and behaviors and expect a far more transparent approach than most companies are used to providing. It’s now imperative that companies’ actions match their rhetoric – in essence, they must now ‘walk the walk’, not just ‘talk the talk’.
Millennials, now the world’s most powerful consumers, came of age amongst the financial uncertainty and job insecurity the 2008 crash heralded, and so are particularly sensitive to brand authenticity and purpose. 64% of Millennial consumers believe that they can make a difference to the world through their choices, so it is natural that they align themselves with brands which embody their personal beliefs or values. Furthermore, 90% of Millennials say authenticity is important to them in deciding which brands to purchase.
Small brands leading the way
Smaller, independent brands were far quicker to adopt authentic, story-telling approaches, and they have reaped the rewards. Large corporates have been slow to react to this changing market, resulting in large brands in the US losing 3 percentage points of market share – equivalent to $22bn of sales – to smaller companies for the first time in over 50 years. Overall, brands who are seen as meaningful outperform the stock market by 134%.
Tellingly, consumers see 77% of brands as meaningless. In other words, these brands have failed to clearly define and communicate their purpose or what drives them. The question of ‘why’ has never been more important; companies must embody their founding purpose, or watch consumers turn away from them towards brands which stand for something meaningful.
You cannot stand for something if you believe in nothing, which is why purpose is the mother of authenticity. However, as today’s digital world means a brand’s authenticity can be tarnished from a simple Glassdoor or Facebook review, it is crucial that businesses accurately craft their purpose to reflect their beliefs or the halo of authenticity will be short-lived.
In order to help companies define and embed their ‘why’ into every aspect of their organization, we believe that the only way to establish a solid purpose which will stand the test of time is to co-construct these values with people from all hierarchical levels as well as external stakeholders. The CEO should have the same values in mind as the finance team, HR team, and so on; any disconnect between reality and perception will inevitably lead to a breakdown in authenticity.
Leadership teams must then remain the champions of their purpose and distill this vision throughout the organization – living values internally is equally as important as external perceptions, particularly in the age of social proof.
- 90% of Millennials say authenticity is important to them in deciding which brands to purchase.
- Smaller brands have been faster and more effective than large brands at embedding purpose and authenticity.
- Brands in general are performing poorly regarding purpose – consumers see 77% of brands as meaningless.
- Businesses must have a purpose that accurately reflects their reality. Disconnect leads to inauthenticity.
- Purpose should be co-constructed by people from all hierarchical levels if it is to be authentic and longstanding.
Climate concerns therefore pose a huge challenge for businesses. As well as complying with increasingly strict regulations, they must position themselves on the right side of history; consumers are turning away from companies with poor emissions standards or negative environmental impacts towards more sustainable options.
Younger generations championing sustainability
Young people are particularly sensitive to this threat; 81% of Generation Z (born 1997-2012) say business and governments share equal responsibility for developing clean technology and renewable energy, but 64% think that companies do the bare minimum to comply with environment regulations. 31% have boycotted companies because of non-sustainable practices.
These figures suggest a lack of trust in business to ‘do the right thing’ but also prove that consumers are ready to vote with their feet if a company no longer aligns with their views on sustainability.
Sustainability & longevity
From a commercial standpoint, going green has never been more financially incentivized. In 2018, just 16% of products were marketed as sustainable, but they delivered over 50% of market growth. Sustainability-marketed products grew 5.6x faster than traditionally marketed products, and outperformed non-sustainable counterparts in 90% of product categories. Two-thirds of consumers are also willing to pay more for sustainable goods, rising to three-in-four amongst Millennial consumers.
Businesses’ long-term future could also be at stake if they fail to take climate change into account, as it poses a very real and immediate threat to supply chains. During the 2011 flooding in Thailand, for example, the supply chains of more than 14,500 businesses were disrupted, costing $15-20 billion in insured loses. Reducing long-term risk by protecting supply chains and distribution models from the effects of extreme weather events, shortages of raw materials, and disruption amongst local operations means embedding sustainability practices in every area of an organization, and taking care to ensure that business partners and suppliers do the same.
We believe that businesses should turn towards sustainability for more than just financial reasons, however. Striving to make a positive impact in the world fosters a sense of pride, community and belonging amongst both internal teams and consumers; 80% of Millennials and Gen Z would prefer to work for an employer that has proactive sustainability practices in place. Accessing the best global talent will soon be predicated upon a company’s ability to meet incoming generations’ expectations on making the world a better place.
- Modern consumer preference is turning towards sustainable brands at an increasing rate.
- Sustainable products are outperforming traditional counterparts.
- Climate change poses a physical risk to business operations.
- Accessing the best talent will be correlated with a business’ approach to sustainability.
TECHNOLOGY & AUTOMATION
The march of progress
Since the First Industrial Revolution, humans have been displaced by technology. The horse and cart owner was eventually replaced by the taxi driver, who may soon be competing with autonomous vehicles for customers. As one technology rises another becomes obsolete, but it is the responsibility of businesses to limit the adverse effects of the technology they adopt and implement.
Inefficiencies cost organizations as much as 20-30% of their revenue each year. Whether through wasteful processes, sub-optimal organization, or ineffective methods, the increasing availability of big data and analytics is empowering companies to examine their weaknesses and move to boost productivity and outputs by streamlining their operations on all levels.
Around 40% of human productivity is lost to multitasking and task-switching; successfully embedding automation and digitization means that data across apps can be streamlined, optimizing time by increasing visibility and centralizing work. Artificial intelligence alone is expected to have a $15.7 trillion economic impact by 2030.
The human impact
However, there are concerns from workers around job displacement – nearly a third worry that their job will no longer exist in five years’ time. Encouragingly, 70% of workers also believe that automation will offer them an opportunity to qualify for more highly skilled work.
Businesses must anticipate and plan for how automation and digitization will affect their workforce: the automation paradox contests that the more complex the automation, the more crucial human input becomes. Over half (57%) of companies say that the main goal of automation is the augmentation of worker performance and productivity, but a significant reskilling effort will be required to move workers away from soon-to-be-automated low-level, repetitive tasks and into higher-skilled functions.
The World Economic Forum estimates that by 2022, more than 54% of workers will require significant re-skilling or upskilling. Overall, they predict that although 75 million jobs will be lost to machines, around 133 million will be created, and that 65% of children entering primary school today will do jobs that don’t yet exist.
We believe that tomorrow is human. Our position on technology is that it exists to enhance human capabilities and should be a force for good; redefining human and machine collaboration is now a priority as more and more of our lives are encroached upon by technology. Almost three-quarters of workers agree that technology could never replace the human mind, but new paradigms must be established for the effective integration of the two.
Already, we have seen examples of what can happen when this integration fails: Boeing’s 737 Max aircraft was involved in fatalities due to assumptions and misunderstandings workers made about its automated flight systems – a single change to this system led directly to a series of design mistakes and regulatory oversights.
The number of operational industrial robot jobs is currently increasing at a rate of 14% each year. Training and supporting workforces today to administer and operate the increasingly complex automation of tomorrow will be a key challenge for businesses of all industries.
- Inefficiencies cost organizations as much as 20-30% of their revenue each year.
- Technology is likely to create as many jobs as it displaces.
- By 2022, more than half of workers will require significant re-skilling or upskilling.
- Ensuring effective integration of humans and technology will be a key challenge.
NEW WAYS OF WORKING
Out with the old
As with any systemic crisis, we have seen rapid changes to the status quo driven by necessity. Recent events have given us all pause to consider whether the old ways are worth returning to, and nowhere is this more obvious than traditional workspaces.
The flexibility provided by alternative and remote working arrangements means that companies reduce risk to their operations by building a remote infrastructure; whatever the next crisis may be, having the ability to quickly distribute a workforce if needed provides a safety net.
Productivity & culture gains
The move away from the ubiquitous open plan office is good news for businesses’ productivity – studies have shown that per employee, around 86 minutes every day are lost to noise, and around 50% of open plan workers have experienced noise issues. What’s more, 65% prefer to work in silence.
However, although 98% of workers would like to work remotely at least some of the time for the rest of their professional lives, the happiest workers overall are those who have the flexibility to spend one or two days of their week in a physical work environment. Empowering talent to work in the way which best suits them is the obvious solution, which also leads to an uptick in workforce morale and loyalty.
We believe that having the right management model in place to facilitate remote working is the first step in embracing the future of work; having the right technology for hybrid working is the second. The reality is that many workspaces are irrevocably changed, but business leadership should take this opportunity to adapt and optimize their approach as well as their environment, whether digital or physical, to improve agility and reinforce their company culture.
Rise of the freelancers
The rise of the freelance economy and non-traditional contracts should also be considered in businesses’ future of work planning. Gone are the days of a job for life – 91% of traditionally-employed Millennials plan on staying for no more than two years in their current role and 96% of freelancers have additional income streams, demonstrating that a modern ‘career’ consists of far more than one job with one company.
Using freelance talent allows companies to be agile and control workforce costs on an ‘as-and-when’ basis, but retain access to specific and specialized skill sets; a number of Fortune 500 companies are now embracing freelancers as part of their larger workforce. A leaner, more agile workforce also has added benefits for productivity and resource planning.
As well as increased use of freelancers, we foresee a corresponding decrease in full-time employees on traditional contracts. The gig economy is predicted to affect about 43% of the workforce by the end of 2020 and is being driven by worker preference; just 34% of freelancers surveyed said they resorted to gig work through necessity. The trend is set to continue, with the number of freelancers in Europe and North America having roughly doubled between 2000 and 2014.
Businesses must accept that the traditional ways of attracting and employing talent will no longer hold. Already we have seen that high-skill workers in talent-scarce industries are beginning to embrace the freedom to choose their own projects and clients, rather than opting for a traditional employment arrangement with a single company.
Contractualization models will become far less prevalent as the job market adapts to this fundamental shift in the way society sees employment. Companies will refocus on intellectual property and sovereign functions rather than their permanent workforce, but competition for talent is likely to become even stiffer. Talent, and access to a skilled talent pool, is becoming a strategic asset. Organizations must therefore be prepared to adapt to the terms of employment this talent demands.
We expect that the knock-on effect of this patchwork approach to work to be a recalibration in our understanding of ‘careers’. Younger generations are now creating their own career ladders, and we believe that professional lives will soon be built around learning rather than jobs.
Keeping skills up to date, relevant and marketable will soon become much more important than securing a better job title, particularly as most freelancers currently find their work opportunities from multiple online marketplace platforms – 70% use four or more sites. Cloud-based Freelance Management Systems are also being used more frequently by employers, with a 26% rise in the technology’s use amongst Fortune 500 firms. A project-based approach to work means that titles and traditional hierarchies become redundant – skills and abilities are more important in a project-by-project work approach.
- Remote and hybrid working will become the new normal.
- The right culture and technology are essential for effective remote/flexible working.
- The traditional notion of careers no longer holds; workers will build their own career paths.
- Freelance and gig work will become even more prevalent.
- Companies will reduce their full-time permanent workforce.
- Careers will be focused on skills and learning instead of jobs and hierarchies.
Businesses must contend with several tectonic shifts under their foundations, all happening at once. For those companies which embrace the future of work today, the benefits will be numerous; enhanced productivity, talent loyalty, increasing efficiencies and longevity, to name but a few.
Those which fall behind across one or more of these megatrends may experience a sharp downturn in their fortunes, for neither consumers, talent, nor society will accept the status quo for long.
Mantu stands beside businesses to bolster their growth, enable their development, and support their transformation towards the future of work. We believe that tomorrow is human and welcome the advancement of human-machine collaboration in driving the world forward.
Whichever aspect of the future of work your organization needs support in, our expert consultants are on hand to assist. View Mantu’s Future of Work practice here.