The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...

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The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
The Deal in 2020
A Delphi study of the future of the employment relationship

Prepared by Wilson Wong and Jane Sullivan with Laura Blazey, Alexandra Albert,
Penny Tamkin and Gemma Pearson
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
Acknowledgements

      The authors would like to thank our Delphi experts (Appendix 2) who were so generous in
      contributing their time and their considered thoughts in an intense exchange over October and
      November 2009.

      Our thanks also to our Expert Challenge Group (Appendix 3), the delegates at the HRN Europe
      Conference 2010 in Vienna, the Non-executive Board and Executive Team at the Pensions,
      Disability and Carers Service (Department of Work and Pensions), and our programme
      sponsors for participating in the road-testing of the scenarios.

      Special thanks to colleagues who have contributed, shaped and supported this process,
      especially David Shoesmith for the proofing, Ian Brinkley, Sezis Okut and interns Divya
      Adusumilli and Justin Klug for Section 3, Ben Reid for his skilful turn of phrase and report
      roadmap, and Marianne Huggett for her insight and good humour.

2                                                                                        The Deal in 2020
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
Contents

          Foreword                                                                           5

          1. Executive summary                                                               6
              1.1 People management assumptions                                              6
              1.2 Drivers of change                                                          7
              1.3 Implications for people management                                         8

          2. Introduction                                                                   10
              2.1 Planning for the future or worrying about the present                     11
              2.2 Exploring future possibilities using the Delphi Technique and scenarios   14

          3. The future of work and the context for work                                    17
              3.1 The Delphi drivers                                                        17
              3.2 Other factors that will shape the future of work                          30

          4. Scenarios for the future                                                       40
              4.1 Scenario 1: Status Quo                                                    40
              4.2 Scenario 2: Globalisation                                                 42
              4.3 Scenario 3: Eco-centrism                                                  45
              4.4 Scenario 4: Tribalism                                                     47

          5. Implications for people management – early indicators                          51
              5.1 Reflections on the challenges for people management in the next decade    51
              5.2 People management implications of the scenarios                           62

          6. Challenges for HR                                                              74
              6.1 The first challenge                                                       74
              6.2 The second challenge                                                      74
              6.3 The third challenge                                                       75

          7. References                                                                     76

          Appendix 1. Delphi methodology                                                    81

          Appendix 2. Biographies of the Delphi expert panel                                84

          Appendix 3. The Future of HR programme Expert Challenge Group                     92

          Contact details                                                                   94

The Deal in 2020                                                                             3
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
Contents

      List of Figures

      Figure 1: The four scenarios                                                                     8

      Figure 2: Delphi 2020 report roadmap                                                            10

      Figure 3: Forecast claimant count for unemployment UK. Treasury vs. Independent analysts 22

      Figure 4: Economic growth forecasts UK. Treasury vs. Independent analysts                       22

      Figure 5: Immigration patterns into the UK                                                      30

      Figure 6: Projections regarding the ageing UK population                                        31

      Figure 7: Life expectancy at birth of males and females in the UK                               32

      Figure 8: Inflows of foreign workers into selected OECD countries 1998 and 2007                 33

      Figure 9: The four scenarios                                                                    40

      Figure 10: The antecedents, levels, conditions and consequences of employee engagement 59

      Figure 11: CEO remuneration vs median earnings (1999 = 100)                                     60

      Figure 12: A comparison of the growth of executive salaries in the public and private sectors

                1999 and 2008                                                                         61

      Figure 13: Scenario 2: Globalisation                                                            66

      Figure 14: Scenario 3: The rise of the green economy                                            70

      Figure 15: Scenario 4: The rise of tribalism                                                    73

4                                                                                      The Deal in 2020
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
Foreword

                            As for the future, your task is not to foresee it, but to enable it.
                                        Antoine de Saint-Exupery (1900-1944)

          Only time travellers can experience the future first-hand. For the rest of us, the future is
          constructed of one’s hopes and fears, expectations, speculations and dreams, the things that
          shape and lend meaning to life’s passage. The difference between foreseeing the future and
          enabling it lies in the power we have to act on those things over which we have control. That
          requires awareness of one’s direction of travel and potential impediments. Of course, there will
          always be discontinuities that shift the course of history. 9/11 was one such moment. We believe
          that there are clear benefits to imagining and acting on a future yet to be.

          Every decision we make is informed fundamentally by our time horizon (Zimbardo & Boyd,
          2008) and the manner decisions are framed in time (Wong, 2008). Offered £50 today or £100
          in a year, which would you choose? What if you’re offered £50 in five years and £100 in six?
          Imagine that taking hold of the future is like facing up to a climbing wall. Every spur, overhang,
          or buttress is a possible approach to success or an encumbrance. This report leads us away
          from the certainties of the here and now to a world of options and probabilities.

          We take an expedition to 2020 using a methodology named after the Delphic oracle at the
          Temple of Apollo that systematically identifies which drivers are likely to shape the employment
          relationship over the coming decade. By synthesising these drivers into four different but
          plausible futures, we present a scaffold, a climbing wall with trend data and expert opinion
          providing the holds and crevices to enable us to approach our future, and to inform our choices
          based on an extended time horizon.

          We have drawn on a luminous universe of thinkers to produce this report. We stand on the
          shoulders of giants, humbled and excited by the possible conversations we hope this report will
          encourage. Our thanks to everyone who has made this such a stimulating journey.

          We shall leave you with a final cautionary note from a much loved friend -

                           ‘Would you tell me, please, which way I ought to go from here?’
                               ‘That depends a good deal on where you want to get to.’
                                               ‘I don’t much care where –’
                                      ‘Then it doesn’t matter which way you go.’
                                          Lewis Carroll (Alice in Wonderland)

          Wilson Wong and Jane Sullivan
          23 June 2010

The Deal in 2020                                                                                               5
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
1. Executive summary

                                If you cannot accurately predict the future then you must flexibly
                                        be prepared to deal with various possible futures.
                                                          Edward de Bono

               This report, the third in a series examining the evolving employment relationship between
               employers and employees (what we call ‘the Deal’), sets out to expose the key drivers that
               are likely to influence the nature of the employment deal in 2020 and imagines three distinct
               scenarios that throw up a range of issues for people management.

               Trying to predict the future is an unenviable task. The mysterious unknown becomes the
               blindingly obvious through the course of time, yet it is usually hindsight not foresight that
               provides us with that clarity of vision. In the world of work some predictions (the demise of the
               job for life, the rise of the portfolio career) have stepped wide of the mark while others (the
               impact of technological advances on worker mobility) have struck gold. Even if predictions
               do not come to pass, anticipating the future helps us to plan for the changing expectations
               of employers and employees and the implications of change on the working world and wider
               society.

               This report demonstrates the value in reflecting on the future of people management. It
               aims to provide those responsible for people management, with a number of considerations
               that potentially could affect the nature of the employment relationship, and highlights their
               instrumental role in shaping and responding to these challenges.

         1.1   Any discourse about the future of people management lacks context without consideration
     People    of the changing nature of organisational context, employment models and the employment
management     relationship (‘the Deal’). That the future of HR literature tends to largely ignore the interplay
assumptions    between wider contextual factors and the future of the profession is of concern given that many
               commentators see a vital role for HR as the architects of the agility that will enable organisations
               to respond and adapt to these challenges. One only has to consider some of the changes
               that have taken place in the last 100 years to appreciate the need for organisations to ready
               themselves for further discontinuities.

               What is clearly missing from the literature is a breadth of vision that encompasses the external
               contextual factors that will shape organisations in the future and thus significantly impact
               the role, impact and capability requirements of HR and those broadly responsible for people
               management.

     6                                                                                               The Deal in 2020
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
Executive summary

            The future of work literature highlights a number of key drivers that will impact work in the
            future. Trend analysis emphasises the potential impact of changing demographics on the world
            of work – in particular, population growth, the ageing nature of the population, the patterns
            influencing the changing demographics in the workplace, the impact of migration; and the
            growth of new industries with a particular focus on the knowledge economy. The data suggests
            that organisations should be focusing on the impact of changing demographics on employee
            health and wellbeing; engagement; the advent of new business models that will embrace
            different forms of contractual flexibility and give rise to a more ‘hourglass’ shaped organisation
            characterised by the talented elite and the less skilled masses; the combined impact of
            changing demographics and technological advances on the potential and need for more flexible
            models of work; the potential demand for a more mobile workforce; and the role of workplace
            trust and control in a world where innovation and productivity will become even more central to
            organisational agility and success.

      1.2   In exploring the 2020 deal, The Work Foundation undertook a Delphi research exercise, inviting
  Drivers   a panel of experts from different disciplines to identify what they believed would be the key
of change   drivers for shaping the employment deal in the next ten years. The expert panel agreed that
            the following drivers will be the most significant: the growth of information and communications
            technology (ICT); globalisation; faster economic growth in developing economies offset by
            slower economic growth in developed countries, including the UK; social, economic and
            workplace inequality; education and skills; the environment/climate change; and the changing
            role of the State.

            These drivers, alongside the review of trend data, have been synthesised into four scenarios
            that could emerge over the next ten years. Scenarios 2, 3 and 4 deliberately assume
            discontinuities, yet each is plausible, and designed to open up a reflective space for potential
            future challenges to people management. Each scenario (2, 3, and 4) leads into a discussion of
            the implications for people management reflecting on the way the future of HR has been framed
            in the literature and whether the Delphi-led scenarios challenge those views. The report in no
            way prioritises any scenario as its preferred future.

            In the ‘baseline’ scenario, Status Quo, the Britain of 2020 is clearly recognisable – it represents
            a continued trajectory of the trends we see in 2010, with no major shocks along the way. In
            the second scenario, Globalisation, the market is deemed the most efficient distributor of
            resources, and the private sector the main source of wealth creation. Scenario Three, Eco-
            centrism, describes a world where the State, business and civil society are shaping the green
            revolution and there is a society-wide consensus that sustainability is core and the need to
            pass to the next generation a healthy planet paramount. The fourth scenario focused on the

  The Deal in 2020                                                                                               7
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
Executive summary

               Figure 1: The four scenarios

               No major shocks –
               continuation of the                                                        • Unbridled market liberalisation
               current state of play                                                      • Limited role of the State,
                                                                                            government abdicates to market
                                                                                          • Rise of civil activism – trade
                                                                                            unions and guilds; environmental
                                                                                            development, human rights and faith

                 • Environment and
                   resource constraints                                                        • Technology
                 • New technologies                                                            • Unequal access to health/wealth/
                 • Civil society                                                                 opportunity
                                                                                               • Small State
                                                                                               • Business ideology dominates
                                                                                               • Pay and reward
                                                                                               • Geography

               rise of Tribalism, fashioning a world where the market is inadequate to the task of distributing
               resources for the ‘good’ of all, inequalities are widening and the stratification of society is stark
               creating an increasingly fractured, tribal society.

         1.3   The report outlines some key challenges for people management in 2020 – some of which
Implications   are scenario dependent, and some which rely purely on the analysis of trend data. The core
  for people   implications are likely to strike a chord regardless of which scenario plays out; although the
management     size, scale and scope of the challenge might be intensified or reduced by the synthesis of the
               different drivers as predicted by our Delphi experts.

                    •   The war for talent is predicted to intensify.
                    •   The burden for skills will fall increasingly on employers who may shift the cost to
                        employees.
                    •   Organisations may see the rise of new business models and a new organisational
                        hierarchy where power and status is aligned with an individual’s market value as
                        opposed to role, creating new implications for the balance of power in the firm of 2020.
                    •   Organisations will move away from their current focus on generational diversity, and
                        Generation Y to an emphasis on managing life stage diversity.

     8                                                                                               The Deal in 2020
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
Executive summary

              •    The enabling power of technology combined with the environmental and fiscal need to
                   encourage greater flexible and remote ways of working will pose significant challenges
                   to leadership, virtual team dynamics, and remote people management.
              •    Predictions of greater globalisation and enhanced mobility of the workforce and rising
                   levels of structural unemployment may place pressure on organisations to shift to
                   models of increasing contractual flexibility.
              •    Employee engagement thinking should mature with recognition of engagement as
                   an attitude, shaped by core values, which then influences individual and collective
                   behaviour. Approaches to engagement will need to accommodate increasingly polarised
                   organisations that are less defined by place, and more defined by common purpose.
              •    How organisations engender voice and involvement in the organisation of the future
                   begs consideration but it seems likely that relentless change, increasing inequalities in
                   society and the workplace, widening pay differentials, and limited social mobility may
                   create more opportunities for workplace conflict.
              •    Pay will continue to be highly competitive as organisations compete for the best talent;
                   there is likely to be a fall out in terms of employee engagement should the gap in
                   pay continue to widen and reward systems will need to encourage, rather than stifle,
                   creativity and innovation.
              •    Productivity will be key requiring a radical step change in the skill and attitudes of
                   managers to enable greater autonomy and control in the workplace.

          The implications for people management are also considered in the light of each of the
          scenarios, placing emphasis on different factors contingent on the primacy of each of the drivers
          for change.

          This report does not intend to provide a blueprint for HR to respond to significant changes in
          the context. Instead, this report seeks to demonstrate that for HR to survive in an ever changing
          future environment, it is vital that the profession looks beyond internal structures and regularly,
          diligently surveys the road ahead. The future of HR lies in it being the architect of organisational
          agility and adaptability and whilst HR has traditionally relied on restructuring and streamlining
          to achieve its own agility, perhaps now is the time for the focus to shift externally if HR is to be
          relevant and impactful in 2020. The challenges are immense, some recognisable, others less
          so. What this calls for is a profession that is truly global in its perspective, business-aware, and
          proactive as it supports organisations to strategically anticipate, plan for and address these
          challenges to people management and organisational performance.

The Deal in 2020                                                                                                 9
The Deal in 2020 A Delphi study of the future of the employment relationship - Prepared by Wilson Wong and Jane Sullivan with Laura Blazey ...
2. Introduction

       This report contributes to the ongoing debate on the future of work, and in particular the
       future of the relationship between employers and their employees. There is no doubt that
       the employment relationship has changed dramatically in the 20th Century (Wong, et al.,
       2009, Chap. 3), and continues to evolve in the first decade of the new millennium. How HR
       as a profession can respond to these changes is an issue at the heart of the Future of HR
       programme of research. We begin this report by exploring the existing literature that envisions
       tomorrow’s HR, seeking to answer the question: how ‘future focused’ is the future of HR
       literature?

       Figure 2 below serves as a guide to the main report:

       Figure 2: Delphi 2020 report roadmap

10                                                                                        The Deal in 2020
Introduction

           2.1    In exploring the implications for a ‘future proof’ HR, most commentators start with an
  Planning for    assessment of the current impact and effectiveness of HR as it stands today. For over a decade
  the future or   the criticisms of the HR function have seemed eerily consistent, and cluster around the following
worrying about    issues: HR’s ability to think and act strategically (Tamkin, et al., 1997; Kujipers, 1995; Kuhns
   the present    & Amuso, 1993; Reilly, 2007); HR’s ability remain in touch with business priorities (Kujipers,
                  1995; Mirvis, 1993; Reilly, 2007); the extent to which HR add value to the business (Tamkin,
                  et al., 1997; Kujipers, 1995); HR’s relationship with management (Tyson & Fell, 1992; Skinner,
                  1981); and HR’s lack of clarity around its role or purpose (Tamkin, et al., 1997; Warnick, 1993).
                  While such consistency suggests that there is a clearly articulated view of where the sources of
                  ineffectiveness may lie, this alone does not clearly pave the way for the future of the profession
                  because of its focus on what HR currently does.

                  In moving beyond an assessment of current HR effectiveness, the future of HR literature turns
                  its focus towards those at the forefront of the profession, placing leadership at the centre of the
                  future of HR debate. The CIPD’s ‘Next Generation HR’ (Sears, 2009) emphasises the significant
                  role of HR leadership as the ticket to HR successfully securing its status as a strategic partner
                  in the future, and outlines that a new breed of HR leader is emerging – one with a real share
                  of voice and influence that acts as provocateur. This focus on HR leadership is also shared by
                  Strack, et al., (2008, p.3) who argue that ‘Excellence starts at the top…Ideally he or she (HRD)
                  should have the same status and power as the chief financial officer’.

                  The level of discourse about HR leadership in the literature suggests that there is something
                  of a perceived crisis in this area. These concerns about HR leadership are also reflected in
                  concerns about capability in HR more generally. There is a view that HR is suffering from a
                  dearth of appropriate and fit-for-purpose skills that enable it to add value today, let alone HR’s
                  relevance as it looks to the future, leading Reilly (2007) to question if HR is doing enough to
                  build future capability. Tamkin, et al., (2006) highlight that the dispersal of HR talent into distinct
                  populations (in-house and outsourced, generalist and specialist, administrative and strategic)
                  have left such communities isolated and separated in location, leadership, philosophy, aims
                  and stakeholder interactions. The fact that the skill requirements in each of these areas are also
                  different from each other makes the task of developing people into these roles all the harder.

                  The challenge of developing appropriate skills and capabilities in the future are, therefore, seen
                  as a consequence of the way in which the HR function’s teams are structured. Yet, restructuring
                  is, itself, one way that HR has attempted to ready itself for future challenges and bridge the gap
                  between current and desired effectiveness. In a survey for the Chartered Institute of Personnel
                  and Development, UK (CIPD), Reilly, Tamkin and Broughton (2007) found that 81 per cent of
                  organisations had restructured their HR function in the last five years, with 58 per cent fully or

       The Deal in 2020                                                                                                11
Introduction

        partially implementing the influential Ulrich model (1997). Although the debate continues with
        regards to whether this is the optimum HR structure, Reilly (2007) highlights that such debates
        about structure deflect from the important issues impacting the effectiveness of HR.

        As Lambert (2009) emphasises, HR should be thinking less about model and structure and
        more about need. Yet what appears to be lacking in the future of HR literature is an appreciation
        of how those needs may change. While the future of HR literature clearly articulates the
        challenges facing the function, it does so from a HR-centric perspective: examining its current
        impact, its make-up in terms of leadership, skills and capabilities, and the effectiveness of its
        current structure, and largely ignoring the wider contextual factors that have a significant impact
        on the future of HR.

        Furthermore, if and when the literature does look to the future, there appears to be a basic
        assumption that the external environment outside the sector will remain the same. This glossing
        over of the importance of the interplay between wider contextual factors and the future of HR is
        of concern when attempting to ensure that HR is in some way future proofed. One only has to
        consider some of the changes that have taken place in the last century to realise the potential
        need for organisations to ready themselves for discontinuities.

        According to McKinsey, the average organisational life span is falling, reduced from 45 years
        in 1955 to a mere 11 years in 2010, resulting in a greater need for mobility across occupations
        and industry. There has been a broad shift in the UK’s economic base from manufacturing to
        service and knowledge based industries. The decline of trade unions, the increased numbers
        of women entering the labour market, outsourcing, globalisation, mergers, and downsizing
        have all impacted the employment relationship (Taylor, 2001). And let’s not ignore the rise in
        workplace focus on engagement and corporate citizenship, health and wellbeing, equality and
        diversity, and workplace flexibility. The impact of technology on the changing face of work and
        the employment relationship has been immense and will continue to be a key driver of change
        over the next ten years.

        Yet, the ESRC Working in Britain in 2000 survey (Taylor, 2002b) highlighted that many of the
        commonly held assumptions about the changing world of work need to be questioned regularly.
        Whilst work is changing, in the early part of the new millennium it was clear that there was a
        wide gulf between the hyperbole and rhetoric of work in the UK, and the day to day realities.
        The evidence stubbornly failed to support the widely held view, for example, that the UK was
        witnessing the emergence of a new kind of employee relations, the death of the job for life,
        and the much hyped shift away from permanent and full time work to a portfolio of short term
        contracts and part time work.

12                                                                                          The Deal in 2020
Introduction

          The employment relationship has changed dramatically in the 20th Century (Wong, et al., 2009).
          Donkin (2010) asserts we should not ignore the extent to which our social attitudes and value
          systems are integral to our relationship with our work, and as they continue to evolve over the
          next ten years, employers will need to embrace and understand this to build businesses that
          are embodied by the people who work for them. However, factors such as the global economy,
          the environment, advancements in technology and the changing demographic have and will
          continue to impact on how we work, the shape and nature of organisations, and state of our
          employment relationship. Any discourse about the future of people management lacks context
          without consideration of the changing nature of organisational context, employment models and
          the employment relationship (‘the Deal’).

          In setting out a blueprint for the future of the HR profession for the CIPD, Sears (2009)
          outlines three key elements to HR’s role in future – as the designer of future-proof cultures, as
          organisation guardians and commentators, and in the development of future fit leaders. Yet in
          promoting the concept of organisational equity as the focus for sustainable performance, there
          is a continued focus on HR to be more strategic and to take a longer term view, but without
          consideration of what the wider contextual factors affecting the future needs of organisations
          might be.

          There is broad consensus that in future HR needs to be more sophisticated, strategic, and
          focused on need. These arguments are not new. There are other challenging perspectives out
          there – talent management and pipelines may look different (Sparrow, et al., 2008; PWC, 2009).
          Wellness, diversity, workforce planning, and ethics may become core areas for HR (Lambert,
          2009). Donkin (2010) focuses on the critical nature of performance management, the need
          to establish diverse employment pools, and the challenges in managing diverse contractual
          arrangements. The literature generally concurs that the engagement of employees will continue
          to be a key priority for organisations and a core specialism for HR in the future, yet as stated
          by Balain and Sparrow (2009, p.23) ‘Employers need to better understand the individual and
          collective factors that are associated with, shape and explain the employee’s relationship with
          the organisation’.

          While these examples represent an acknowledgment of the changing future context, PWC’s
          Managing Tomorrow’s People project provides a challenge to the bulk of the literature that
          is steeped in the status quo. It takes a tentative step into the future, exploring the possible
          organisational and employment models and the potential role for HR, by creating three artificial
          but feasible future ‘worlds’, as a starting point for understanding the possibilities and challenges
          for people management in the future.

The Deal in 2020                                                                                             13
Introduction

                     There is a plethora of literature focusing on the future of HR, but little acknowledgment of the
                     trends and potential discontinuities likely to affect people management in the future. As outlined
                     above, much of this literature is relatively short term in its focus, and much of it castigates HR
                     as a floundering function that needs to sharpen its game to ‘survive and prosper’ or bemoans
                     the ‘bad press’ that HR is afforded. This discourse has unquestionably absorbed an immense
                     amount of time, energy and resource, but few clear prescriptions for success have emerged.
                     What emerges from the literature is a remarkably inward focus on the profession – few
                     commentators are looking at or even considering the very real possibility that the employment
                     relationship and business models might change, beyond a consideration of the next generation
                     entering the workplace. Those papers that do cast into the future are inevitably doing so on the
                     assumption that the societal and organisational context and the employment relationship will
                     see little change. Similar to a doctor discussing the future of the medical profession without due
                     consideration to the advent of new treatment technologies or diseases, it is vital to consider the
                     broader societal, organisational and economic contextual factors in any discussion of the future
                     of HR.

                     The purpose of this report is therefore to use a specific methodology, the Delphi Technique
                     (see Appendix 1), to explore the wider contextual factors that may affect the future of people
                     management and to provide a platform for the HR function to begin to consider some of the
                     potential future challenges they may face.

               2.2   Futurology is peppered with difficulties and some would argue a futile game. However,
Exploring future     successful organisations are those that are thinking strategically, anticipating future changes,
    possibilities    and then building the flexibility and agility to navigate those changes successfully. Future
using the Delphi     methodologies are now regularly deployed by organisations for strategic planning, risk
 Technique and       management, leadership away days and so on. It is a way of focusing management beyond
      scenarios      their day to day imperatives. Back-casting is one familiar technique where planners work
                     backwards from a specific future date in order to identify what needs to be done to achieve a
                     specific desired end state, and also to assess if the end state is at all attainable within the time
                     and resources available. This is similar to road mapping which is used in central planning. A few
                     more examples of how the future can be discussed in the present are:

                         •    Cost-benefit analysis of possible future circumstances;
                         •    Decision modelling (weighting anticipated choices and consequent decisions);
                         •    Econometric modelling;
                         •    Focus groups;
                         •    Forecasting using estimates of the probability of certain things happening;

          14                                                                                              The Deal in 2020
Introduction

              •    Horizon scanning of what is already ‘on the horizon’ and likely to happen relatively
                   soon;
              •    Scenarios (Internally consistent alternative takes on – usually – a particular point in the
                   future);
              •    Trend analysis (analysing and projecting past trends into anticipated futures);
              •    Visioning (developing a compelling but descriptive vision of a desired future harnessed
                   usually by those in leadership in order to rouse people to action).

          The Work Foundation has chosen the Delphi Technique to explore the future drivers of the
          employment relationship because Delphi provides a methodology to project how the current
          state of the employment relationship might change in a manner that requires fresh capabilities
          and thinking for management. The Delphi Technique is an established, accepted method for
          achieving a broad convergence of opinion from a diverse group of subject specialists who
          are posed questions on a certain topic area. Developed at the Rand Corporation in the 1950s
          (Dalkey & Helmer, 1963), the method involves a structured discussion on a specific area with
          the purpose of guiding the discussion towards a broad consensus. The method seeks to move
          beyond the limitations of ‘what is’ to begin a conversation of ‘what could/should be’ (Miller,
          2006).

          The methodology was also determined by the area of inquiry. The Delphi method was chosen
          because expert judgment rather than statistical method was appropriate (Jolson & Rossow,
          1971). Rowe and Wright (2001) reviewed studies contrasting Delphi against using individual
          experts, against traditional group consultations and against statistical analysis of survey
          consultation and concluded that the Delphi results, when properly administered, were five times
          more accurate than traditional groups and 12 times better than statistical surveys. The core
          features of the Delphi approach are:

              •    Iteration – to try to build a consensus among the experts;
              •    Controlled feedback – where only information and opinions relevant to the question is
                   fed back to the panellists;
              •    Some form of statistical aggregation of their responses – using frequencies rather than
                   probabilities; and,
              •    Anonymity – to control for the halo effect due to the differing areas of expertise.

          The key drivers of change, as prioritised by the experts from the Delphi methodology, and from
          the literature review, have been combined to create four scenarios for 2020, including one that
          assumes a continuation of current trends, and three that mark a significant departure from the

The Deal in 2020                                                                                            15
Introduction

        current path. Since the drivers stand somewhat in isolation, it was necessary to synthetically
        aggregate them into scenarios so as to create a space in which to explore possible futures
        and people management implications. These scenarios provide the ‘big picture’ context and
        are designed to enable the reader to consider the possible implications of the interactions of
        several key drivers of change. From there we can then start to reflect on some of the people
        management implications for the future.

        It must be emphasised that the scenarios are not the product of a scenario planning process.
        The scenarios are synthetically devised in order to provide the platform from which interested
        readers can explore from a future space, the employment relationship in 2020. These scenarios
        were, however, road-tested with diverse executive groups, our sponsors, our expert challenge
        group, the Delphi experts and with Work Foundation colleagues for internal consistency. The
        scenarios are described at a level of detail to generate discussion on people management
        in 2020 without providing an overload of information. The people management implications
        emerged from consultations with a large number of people on the drivers and the scenarios.
        The discussions on people management owe their focus to the Delphi drivers but were not part
        of any of the rounds during the Delphi exercise.

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3. The future of work and the context for work

               The Work Foundation’s Delphi research (Appendix 1), combined with a scan of the ‘futures’
               literature highlights a convergence of opinion regarding the trends that are most likely to shape
               the employment relationship over the next ten years. Our Delphi experts focused on seven
               key drivers: globalisation, ICT, the environment, slower economic growth in the developed
               economies vs. strong growth in parts of the developing world; a smaller role for the State;
               social inequality; and education and skills. The futures literature also identified some of these
               factors – particularly information and communications technology (ICT), the environment
               and globalisation – in addition to focusing on the ongoing pressure to improve productivity
               and performance, increasing flexibility in when, where and how we work; the impact of new
               economies (eg low carbon and knowledge); and the imminent demographic changes, especially
               the emphasis on generational differences and the ageing population.

               Some of the ‘futures’ papers, for example the ESRC series, were written well before the onset
               of the 2008 recession and so their predictions are largely based on a cycle of continuous
               growth whereas the present study was conducted during the recession. Both are clearly works
               in progress subject to regular review but provide a shape to the future to make longer-term
               strategic thinking possible. The employment relationship over the next decade will inevitably be
               shaped by the choices made by governments, businesses and consumers in response to their
               estimation of the future. For example, public services across many developed countries will face
               cuts in the next few years. Then as now the shape of the public sector deal will impact the way
               it attracts, retains, and engages high quality recruits. The enormous challenge over the next
               decade is how to do this when public resources are severely constrained.

               This section explores the views of our Delphi experts, our review of the trend data that supports
               these drivers, and reviews the existing literature on the future world of work to develop a rich,
               and broad picture of the elements shaping the future of work.

       3.1     The Delphi exercise identified seven key drivers that our expert panel broadly agreed will shape
The Delphi     the future of work and potentially impact on the shape of the employment relationship in 2020.
   drivers
             3.1.1 The growth/ubiquity of information and communications technology (ICT)
               There was a clear consensus amongst the Delphi experts that the future of work will be shaped
               by ICT. At work, ICT will facilitate greater flexible working and global networking. Individuals
               may find themselves working simultaneously for multiple employers engaged in a variety of
               tasks linked virtually to each using a plethora of devices, networks and intermediaries. ICT may
               also be deployed for work standardisation, surveillance and be more invasive of private spaces
               although somewhat mitigated by the benefits of socialisation. Private and work time will become
               increasingly permeable as the worker-consumer internalises a culture of 24/7 responsiveness

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The future of work and the context for work

        as a norm. Gaps in employment may become the custom and the subject of personal
        choice and/or market conditions. There will be styles of work that potentially circumvent
        present employment regulation. The emergence of live language translation, large consumer
        databases, and profiling of customers will change the relationship between consumer-citizen
        and businesses/the State. It will enable the mass personalisation of services and encourage
        innovation in services delivery, creating new business models, and further globalisation.

        Through an explosion of connectivity devices the individual will discover new ways of
        association, possess multiple identities, participate in temporary communities of interests and
        use virtual self-promotion professionally and at leisure. Those with ICT skills that add value
        to business processes will be in demand, ensuring a competitive advantage for the most ICT
        literate – there may be some generational advantages here. With the ubiquity of ICT set to
        intensify, there will be concerns regarding personal privacy and possible State intrusion/control.

        The Delphi emphasis on ICT is supported by the broader literature. Bradshaw, et al., (2009)
        illustrate the extent to which new technologies have changed how we live and work in the last
        decade. One quarter of the population now uses the Internet. In 2008, the amount of time spent
        on the Internet for business and leisure by the average person in the UK had more than doubled
        since 2004. The average online spend per UK Internet user almost tripled between 2003 and
        2007. Ten years ago Internet banking barely existed, yet today 22 million adults use the Internet
        for their banking and this is set to increase. In 2009, 65 per cent of UK households were set up
        with broadband, an increase of 7 percentage points on the previous year. In 2002, there were
        one billion mobile phone subscriptions; this had increased to four billion by 2009.

        Bradshaw, et al., (2009) predict a range of technological developments over the next decade
        that will impact on how we work including personalised web based applications, cloud
        computing, real time interaction, always-on web features. In the next three years it is anticipated
        that 50,000 professional service robots will be installed worldwide, and that nearly 12 million
        service robots for personal use will be sold. They predict a continuation and intensification
        of global wind energy and biodiesel capacity. They also anticipate the rise of shared local
        suburban ‘work hubs’ as ICT enables more flexible ways of working.

     3.1.2 Globalisation
        The Delphi experts were evenly divided as to whether the next decade will be dominated by
        a deepening of the globalisation project (possibly at regional level) or if the intensification of
        global interconnectedness will provoke robust resistance at local level leading to localisation of
        some markets and the beginnings of a protectionist backlash. Indeed there was a compelling

18                                                                                            The Deal in 2020
The future of work and the context for work

          argument by a minority of the Delphi experts that triggers for one direction or another could
          subsist simultaneously within and between regions.

          About half of the experts felt that labour standards would continue to be led by the developed
          countries. The remaining half argued that perhaps there would be a disconnect between the
          developed countries and the fast emerging developing economic powers.

          The OECD (2005) describes the term ‘globalisation’ as, ‘a dynamic and multidimensional
          process of economic integration whereby national resources become more and more
          internationally mobile while national economies become increasingly interdependent. The
          dynamics of globalisation is necessarily pervasive and encompasses, inter alia, the political,
          economic, legal and technological’ (p11). Driven by the certain increase in trade in goods and
          services, deepening of cross-border capital flows, and combined with the development and
          spread of technologies, labour markets will become more integrated in 2020. The World Bank
          forecasts a threefold rise for global trade in goods and services to $27 trillion by 2030 (World
          Bank Institute, 2007).

          The Delphi experts believe that globalisation will be most keenly felt by the workers in the
          relentless pursuit of cost efficiencies, shorter product cycles, greater service innovation, and the
          anticipation of (unpredictable) consumer behaviour. Although there is a traditional preference for
          hiring locally (Rudiger, 2008), global cost arbitrage will encroach into jobs traditionally regarded
          as knowledge-based. The Tomorrow Project (2007) argues that globalisation will contribute to
          further off-shoring of the ‘middling’ white collar jobs that can be done cheaper and competently
          in the developing economies. There will be increased standardisation and intensification of work
          as jobs become more mobile. The global labour pool will far exceed the available jobs. Far from
          moving away from Fordism, technology will allow for new permutations enabling standardisation
          of work while allowing increasing personalisation of the customer experience. The consensus
          is that there will be a fault line between the full worker-citizen and the rest; this pattern of elites,
          worker-citizens and the work-disenfranchised can be seen within and between cities, countries,
          regions and sectors.

          The literature indicates that one of the key factors contributing to accelerated globalisation has
          been the rise of the middle class consumers in the BRIC economies – Brazil, India, China,
          Russia and similar growth economies – creating a larger, global demand for new products
          and services. As a consequence, new formidable transnational companies originating from
          developing countries will thrive. Just as the consumers in developed countries benefited
          from trade liberalisation in the twentieth century, so too will the consumers from fast-growing
          economies.

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The future of work and the context for work

        It is widely believed that the interconnection between globalisation, migration and skills will
        increase in the next decade (Brinkley, 2009b; Deloitte, 2006; Lambert, 2009). To date, the
        integration of emerging economies into global markets has underpinned a fourfold increase
        in the effective global supply of labour, particularly in the form of low-skilled workers. This
        trend is expected to continue (see World Bank, 2006) – China and India alone are expected to
        add over 300 million workers to the global labour pool by 2030. For the foreseeable future at
        least, the comparative advantage of these developing economies will remain in low to medium
        skill activities (BIS, 2009). This will increase the competitive pressures on UK firms in these
        sectors. There is a narrowing of the divide in the research capabilities of the developed and fast
        developing countries facilitated by the mobility of highly skilled brains through collaborations,
        trans-national corporations and migration.

        However increased globalisation also raises tensions. Donkin (2010) argues that national
        variations in labour legislation have generally hampered attempts to create greater
        harmonisation of labour practices across European States. In particular, different regulations
        exist with regard to the hiring/firing and the contracting of temporary and agency workers. In
        today’s expanded European Union, including some former Soviet bloc countries, the labour
        markets of the individual states are at different levels of maturity bolstering the argument for
        different standards. Also the issue of sustainability will be important to many TNCs. As they
        (re)locate to new places, the welfare of both their employees as well as the communities they
        impact will be of direct concern. Corporate social responsibility will be a core business activity.

     3.1.3 Economic growth in developing economies/slower economic growth in developed
     countries, including the UK
        The experts overwhelmingly subscribed to the view that growth in the developed countries
        would be constrained in the coming decade with the risk of stagnation/sluggish growth.
        According to Mokyr (1990) the three main sources of economic growth are growth in market
        size, investment in physical and human capital and technological change. The experts were
        evenly divided as to whether the developed economies would benefit equally from the robust
        growth in BRICs and other fast growing economies. All were agreed that a main driver for
        growth will be innovation, both in the developed and developing economies, and that the former
        will maintain the advantage in the coming decade. A concern is the inability to address the
        widening socio-economic inequalities especially in economies where structural unemployment
        is persistently high. There was no agreement as to the level of State intervention to redress this,
        if at all. There was also no agreement on whether the State would be more interventionist in
        economic planning by actively backing emerging sectors (eg green technology).

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The future of work and the context for work

          The trend data suggests that the UK’s nominal Gross Domestic Product will grow modestly
          from US$2546 billion to US$3101 billion by 2020 (Wilson & Stupnyteska, 2007). This reflects a
          common pattern across most of the developed economies for slower or even sluggish growth in
          the decade from 2011 to 2020, relative to faster growth in the BRICs.

          The UK labour force is projected to continue growing over the coming decade, although at a
          slower rate than in noughties. The number of economically active people is expected to reach
          32.1 million in 2020, equivalent to an increase of 6.7 per cent from 2005. The economic activity
          rate of people aged 16 and over is projected to fall to 61.7 per cent in 2020, while the activity
          rate of people of working age (16-59/64) is projected to rise to 79.8 per cent in 2020.

          Unemployment is forecast by the Treasury to be in the region of 1 million by 2014-2015
          assuming growth averaging about 3 per cent in the intervening period (see Figures 3 and 4
          on the next page). This forecast has been reduced to an average of below 2.5 per cent over
          the same period in the pre-budget report (OBR, 2010). Unemployment trends are probably
          too optimistic given that the biggest source of new jobs has been in the public sector (Brinkley,
          2009b). Cuts and constraints will limit jobs growth funded by the public purse (Brinkley, 2009b).
          Sectors on which the UK has relied, the financial sector, private consumption, manufacturing,
          property and extraction (oil and gas) are likely to be more modest contributors to the country’s
          GDP in the decade to 2020. More positive job growth is predicted to be found in the creative
          industries, manu-services (where manufacturers derive higher value added from knowledge
          services than from the manufactured product), green technologies and services linked to the
          new economy.

          In February 2010, Credit Action reported that personal debt stood at £1.464 billion, 0.9 higher
          than a year earlier. This translates to every UK adult holding an average debt of £30,328
          (including mortgage debt) (Credit Action, 2010). It is anticipated that private debt, originally
          fuelled by a property boom and access to cheap credit, will constrain private consumption in the
          developed world.

          In the next decade, the BRIC economies will be economic and political powers as a result
          of their sustained high economic growth, their expanding defence capability, and their large
          populations. Research by Goldman Sachs predicts the BRICs could become as big as the G7
          by 2032, about seven years earlier than originally anticipated, with a possibility that China could
          become as big as the US by 2027 (O’Neill & Stupnytska, 2009; see also Wilson & Stupnytska,
          2007). Between 2000 and 2008, the BRICs contributed almost 30 per cent to global growth in
          US dollar terms, compared with around 16 per cent in the previous decade. Since the start of
          the financial crisis in 2007, some 45 per cent of global growth has come from the BRICs, up

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The future of work and the context for work

           Figure 3: Forecast claimant count for unemployment UK. Treasury vs. Independent
           analysts
                                 2
                                                      1.8 1.8                1.8                                  HMT (March)
                                1.8
                                                                                                                  Indept (April/Feb)
                                                                                            1.6
                                1.6     1.5 1.5                        1.5                                  1.5                1.5
                                1.4
        Millions of claimants

                                                                                      1.3             1.3
                                1.2
                                                                                                                         1.0
                                 1

                                0.8

                                0.6

                                0.4

                                0.2

                                 0
                                          2009         2010             2011            2012           2013               2014

                                                             Source: HMT 2010 Budget; Forecasts for the UK economy, HMT April 2010

                 Notes: All figures claimant count. HMT is forecast to 2012; assumed claimant level for public finance planning purposes
                 for 2013 and 2014. ‘Independent’ is an April average forecast to 2011, February average forecast for 2012 to 2014

           Figure 4: Economic growth forecasts UK. Treasury vs. Independent analysts

                                4%                                                  3.5%
                                                                    3.3%                            3.3%               3.3%
                                3%                                                                      2.6%                2.5%
                                                                                         2.3%
                                                                         2.0%
                                2%
                                                        1.3%
                                                    1.0%
                                1%

                                0%
                                        2009          2010             2011           2012            2013               2014
                                -1%

                                -2%

                                -3%                                                                         HMT (March)
                                                                                                            Indept (April/Feb)
                                -4%

                                -5%
                                      -5.0% -5.0%
                                -6%
                                                             Source: HMT 2010 Budget; Forecasts for the UK economy, HMT April 2010

                Notes: All figures GDP growth. HMT is forecast to 2012; assumed growth rate for public finance planning purposes for
                FYs 2013-2014 and 2014-2015. ‘Independent’ is an April average forecast to 2011, February average forecast for 2012
                to 2014

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The future of work and the context for work

          from 24 per cent in the first six years of the decade. Long-term projections suggest that the
          BRICs could account for almost 50 per cent of global equity markets by 2050. BRIC economies
          will likely account for more than 70 per cent of global car sales growth in the next decade, with
          China expected to account for almost 42 per cent of this increase (O’Neill & Stupnytska, 2009).

          Examining the impact of the recession on the wider developing world, the World Bank (2010)
          cautioned that scarcer credit and more expensive financing, coupled with severe limits to
          transfers of grant aid from the developed countries would dampen growth. This reflects
          increased risk aversion, a more prudent regulatory stance and the processes introduced to curb
          the exuberance during the noughties. Unsurprisingly, there will be wide disparities in economic
          growth within and between developing countries. Global GDP growth is forecast by the World
          Bank at a very modest 2.7 per cent in 2010 (World Bank, 2010, p. 2).

          The BRICs and their globalised firms will be hungry for production cost advantages,
          opportunities to expand their consumer base, and a global supply chain of natural resources
          and producers. What is less clear is how these countries will exercise their growing power in
          relation to established international powers in shaping the rules of engagement.

      3.1.4 Social, economic and workplace inequality
          There was a broad consensus amongst the Delphi experts that income and wealth disparities
          are widening in developed economies while opportunities for social mobility are limited. It
          was commented by one expert that the traditional paradigm of wealth-through-work will be
          challenged by very low economic growth in the developed countries.

          What is less clear is how these inequalities will be addressed. The panel was divided between
          society accepting sporadic civil unrest from those unable to find a route out of (relative) poverty
          as an acceptable consequence of the widening inequalities; aggressive policy intervention by
          the State to redistribute wealth (to limited effect); an acceptance that inequality and limited
          social mobility is the status quo or possibly all three. Many workers will struggle to maintain
          ‘good’ work and some foresee that autonomous groups of workers will fight to control the means
          of production (brain cartels). A number of the Delphi experts predict that many knowledge
          workers will tolerate higher job insecurity in exchange for better work. The global socio-political
          landscape is likely to be varied, possibly with the return of autocratic rulers and the rise of
          extreme socialism.

          Legal immigration into developed economies will be more restricted through tighter numerical
          limits and tougher conditions in the developed economies. Migration patterns will flow from the
          economically poorer countries to the relatively wealthier ones, underpinning the global nature of

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The future of work and the context for work

        the labour markets. The question is whether border controls will be any more effective for illegal
        migrants.

        Research from Clarke and Lord (2010a) and The Tomorrow Project (2007) also anticipate that
        the widening gap between the skilled and the unskilled is likely to give rise to the polarisation
        of jobs, and an hour glass structure in organisations that reflect a new society – an intellectual,
        knowledge based elite, a thinning out of the ‘middle jobs’ and a broad base of low skilled, low
        value jobs. Such a trend could be detrimental to social mobility, making it harder for people to
        ‘climb’ the ladder from the low paid to better paid work as the gap between the high value and
        the low skilled work widens.

        The Future Foundation (Clarke & Lord, 2010a) research found that a sense of inertia already
        exists amongst those who are likely to be in the bottom rung who are less likely to proactively
        keep their skills up to date, compared with those are likely to be in the elite group, who are
        currently focusing on their skills. However, this study agrees that outsourcing of mechanical
        and monotonous tasks is likely to continue, and that globalisation will contribute to the bulk of
        the ‘tedious’ and middling ‘white collar’ jobs being pushed off-shore leaving the UK as home to
        new, interesting, high value work. Although this echoes some of the sentiments of Brinkley’s
        (2009b) vision for the UK’s knowledge economy in 2020, perhaps the view put forward by the
        Future Foundation is a little optimistic ignoring the social impact of a large swathe of people who
        will be economically displaced by job standardisation, off-shoring and the decline of presently
        significant economic sectors.

        There is some disagreement about the extent to which low value and dehumanising work will be
        automated or off-shored by 2020. Whilst The Future Foundation predicts that the most excluded
        group in the future will be largely male, research by Toynbee in 2003 (cited in Donkin, 2010)
        found that some 80 per cent of the lowest paid occupations are undertaken by women. Although
        the current recession has hit ‘male’ jobs the hardest, the gender pay balance has not shifted –
        women continue to have lower status and lower pay.

        Estimates from the Annual Survey of Hours and Earnings (ONS, 2009b) estimated that nearly
        1 per cent of jobs in the labour market are paid below the national minimum wage. People in
        part-time work were more than twice as likely as people in full-time work to be paid less than
        minimum wage, with 1.5 per cent of part-time jobs and 0.7 per cent of full-time jobs falling below
        the minimum wage. Jobs held by women were more likely to fall below the minimum wage than
        jobs held by men (1.1 per cent compared with 0.8 per cent). This was due to the greater number
        of women in part-time jobs.

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The future of work and the context for work

          These figures do not measure non-compliance with the national minimum wage legislation as
          the survey did not distinguish between categories that might include those exempted under
          the law like trainees or apprentices. In the baseline scenario, this situation is unlikely to be
          addressed in any significant way and those at the bottom of the work pile are likely to even
          increase beyond 1 per cent. The studies suggest strongly that in the decade to come, poor
          quality jobs will constitute a significant portion of available employment.

          The issue of (relative) income and wealth inequalities should not, however, be conflated
          with social mobility. Saunders (2010) argued Britain was not significantly different from other
          equivalent European economies and that policies directed at narrowing social inequalities were
          largely ill-conceived.

      3.1.5 Education and skills (The skills gap)
          Although education is a global industry, the Delphi experts talked about this driver from a UK
          perspective. They agreed that employees and leaders in successful organisations would be
          agile learners, able to innovate and thrive in fast, competitive environments. They felt that
          employers expected the State to deliver higher educational standards and ‘creative, disciplined,
          respectful’ workers for the knowledge economy. Meanwhile businesses also appear to drive
          skills development despite some fear of staff being poached. ICT will enable intuitive e-learning
          tools and new ways for learners to access education. Although the State will continue to accept
          responsibility for education, public spending constraints will fuel increasing marketisation
          of education, which might preclude a linear education pathway due to choice and cost. The
          education sector will need to evolve to meet the needs of lifelong entry and re-training.

          With greater structural unemployment, there will be greater emphasis on individuals taking
          ownership of their skills with the State maintaining policies that encourage lifelong learning.
          There is a concern that even if knowledge workers accepted that they had to invest in keeping
          their skills current, lifelong education may be prohibitive for many.

          There is a rich literature focusing on the future prospects for skills and education in the UK. The
          current skills gap is predicted to get worse (Brinkley, 2009b; Bradshaw, et al., 2009), such that
          the competition for talent will continue and be evidenced on a global scale (Deloitte, 2006). The
          ESRC Future of Work series (Taylor, 2003) highlighted the importance of skills as key to closing
          the productivity gap between the UK and other developed economies, and to the UK being able
          to compete effectively in markets where high value/high quality goods are demanded.

          The UK has made progress in closing the productivity gap with its main European competitors
          (namely France and Germany) in recent years. Further progress is still to be made particularly

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