The Workplace 2025 VISION: Doom, or Boom?

By Lee Penning, CIO, Collabworks

Lee Penning, CIO, Collabworks

Our whole economy, our very lives, depends on work. It is essential and constantly changing. One hundred years ago you were told what to do. There was no HR and for most, no safety net. Over time we began to understand people had choices and the successful organizations paid attention to employee needs. Thus, the era of the golden handcuffs and gold watch.

Since then, work complexity has grown and technology has evolved. By the year 2000, employers were increasing their share prices by cost cutting, using outsourcing to take advantage of lower wage markets. The old perks were gone, replaced by MBA-driven models of cost-based efficiency.

“Win-Lose headcount/cost exchanges will eventually die. Our challenge is to find the best ways to apply these market rules to the Work Marketplace”

In came “lean”, agile, Kanban, and design thinking methods that advocate applying a customer orientation to work and value. Additionally, millennials have grown in stature, and have different expectations about flexibility, ongoing learning and work-life balance.

The hidden 80/20 rule of value delivered from high value performers has become more visible. Studies at GE and elsewhere confirm that top talent drives value. It’s no surprise that a shortage of high performers combined with the generational shift is changing work and how the workforce is managed.

Big data and work platforms are also disrupting traditional staffing models leading to a more commoditized view of work where mechanical and human ‘robots’ are working side by side to support a few bright creators. This darker “doom” view of the future workforce, which is getting more attention in the media, creates an ugly picture where there are fewer and fewer good jobs and more marginal low paying part time tasks.

Technology, which supports this transformation, is ‘bad’ in this model.

Still, there is growing evidence that service and speed outweigh cost - that highly adaptive service-oriented organizations will be the winners. They will need creative and innovative leadership at all levels. They will win by offering value over cost. Value driven organizations will thrive on adaptability. Our thesis is that the value model will cross the tipping point before 2025 and create the next “boom” economy.

Our thinking is driven by the world we see around us and the observations of today’s workforce:

• The percentage of contingent workers in the workforce is increasing steadily
• Millions of buyers and sellers engage today on over 300 work platforms
• There is an increasing demand for work-life balance and flexibility options
• Technology is:
• Improving matching capabilities of worker supply and demand
• Advancing the ability to break jobs into tasks that can be parsed out
• Easing the use of on-demand talent while maintaining governance

Many available studies discuss the shifts and impacts of workforce demographics, changing employee needs and trends. Earlier this year the firm Penn Schoen Berland completed a survey of 800 employers, and concluded both employer and employees are seeing advantages in combining contingent workers with employees in staffing solutions, including 35 percent who plan to use on-demand talent. Still, most organizations plan to retain the traditional employee/job model.

By 2025 millennials will dominate the workforce

By 2025 we imagine a new and exciting Work Marketplace will have emerged – one in which there are clearly proven benefits to both organizations (buyers) and individuals (sellers).

Currently changes in the way talent is managed are hindered because the basic allocation of human resources within organizations has not changed since the earliest theorizations of HR practices. Both large organizational inefficiencies and shifting needs of top performers are creating a huge organizational performance opportunity.

The Work Market place sustainability must be based on a fair exchange of value, where both the buyer and the seller benefit from the exchange in a Win-Win proposition. Our vision is predicated on a tipping point occurring in the next five years, where the adaptability/value model of work distribution will clearly outperform the traditional headcount/cost model. Early adopters will win; laggards will lose.

In our 2025 vision, we predict the following:

• All work will be managed as services where providers serve customers and exchange value.
• Both the organizations (buyers) and the individuals (sellers) will have found clear, proven benefits in the new value exchange.
• 80 percent of the Fortune 500 will have adopted a Work Marketplace model
• Early adopters will have achieved a sustainable competitive advantage
• The shared workforce (all forms of workers) will be the norm
• The effective use of talent will be a strategic imperative

An enduring model

Sustainable marketplaces where both the buyer and seller benefit from the exchange are quite plentiful. Consumer transactions take place in these marketplaces where both the buyer and seller are seeking an exchange of value. Sustainability is dependent on maintaining a perceived Win-Win value exchange. Win-Lose headcount/cost exchanges will eventually die. Our challenge is to find the best ways to apply these market rules to the Work Marketplace.

There are strong forces shaping this marketplace.

• 80 percent of workforce value is produced by 20 percent of the workers (top performers)
• The greater and more effective top performers, the greater the organization’s value
• Top performers want and have choice
• The workforce is the source of an organization’s value and typically the largest cost
• Organizations are significantly inefficient, yet little is known about their value

The “cost model” for allocating human resources will eventually fail.

The workforce size and composition is commonly driven by attributes of financial models and budget. It starts early in the process, investors and the Board want to see a 5-year plan and this year’s operating budget, which consistently prioritize cost reductions. Managers compete for and are rewarded by minimizing headcount and labor cost. Talent is defined by job descriptions, often inflexible, not current, or unrealistic. Contingent workers come out of a separate contractor/consulting budget that may be controlled as non-headcount expenses. The value contribution delivered by these resources is not defined as such current financial / budget models.

Why is this model so prevalent? Because cost, not value, is being measured.

What disruptions will disrupt the disruptors? We think it is the workforce itself.