2018 – The year of action for organisational change

No doubt you’ve heard by now that organisations need to become agile. And also that managers need to drive rapid change, employees want more flexible arrangements, work is expected to be meaningful and technology is disrupting, well, just about everything.

But how exactly is all that playing out in the real world? Drawing on Mercer’s Global Talent Trends Study 2018, Ephraim Patrick, a Partner and Practice Leader at Mercer, and Dr Avantika Tomar, a Mercer Principal and UNSW Lecturer, recently detailed how five intertwined trends are transforming workplaces and work practices at a HR Leaders Forum.

The Mercer study showed 96 per cent of surveyed executives were planning structural changes this year, leading Patrick to label 2018 “a year of action”. In the hope of improving efficiency, reducing costs and increasing agility and customer intimacy, C-suites are decentralising authority, flattening org structures and eliminating redundant roles, functions and departments. Having surveyed 7648 people, in 44 nations across 21 industries, here is what Mercer has discovered about how organisational restructuring is actually taking place,

1) Change@speed

Now change is occurring, it’s become apparent the ‘We’re all going to be replaced with robots’ thesis is overblown.

The Mercer study reveals C-Suites are proceeding on the assumption that only around 20 per cent of roles will be automated out of existence in the next five years. (Unfortunately, nobody is certain which 20 per cent of roles it will be.) Tomar notes, “There are some human skills – innovation, digital competence, a global mindset – that will continue to be important… because they can’t be automated.”

The issue confronting organisations is making sure their workforces have the digital competence required in the digital age. Education systems haven’t been producing enough graduates with the skills most in demand in the modern economy. As a result, one out of three companies surveyed were looking to upskill their existing workers. This is typically being done through increasing access to online learning, deploying rapid internal skills training and stepping up career coaching.

2) Working with purpose

Employers and employees used to have a simple ‘loyalty contract’. The worker provided labour, their employer provided a pay cheque. An ‘engagement contract’ has now become more common, whereby employees expect to derive a sense of achievement from their work and employers expect employees to be highly engaged. Many organisations are transitioning to a ‘thrive contract’. Employees now want their work to have purpose, meaning and impact while employers expect employees to be value creators.

Tomar makes two observations about the ‘thrive contract’.

First, meaningful work is not just a Millennial aspiration. “The study showed this permeated across generations and across the board at organisations,” she says. “Employees, the C-Suite, HR executives – everyone is looking for meaning. People are no longer just talking about their job security and career progression. They are saying to employers, ‘Give me more meaning, give me the right kind of career experiences’.”

Second, while employees crave a sense of purpose, they still expect competitive pay.

“You have to move up the pyramid,” Tomar cautions. “The foundation of the pyramid is getting the compensation and benefits right. There’s no point trying to provide jobs that offer purpose if you haven’t got the base right.”

3) Permanent flexibility

Most organisations continue to take an old-fashioned when-where (i.e. ‘Employee X can work from home on Fridays’) approach to flexibility. In a world where talent is scarce and expects unprecedented amounts of autonomy, organisations need to transition to a five-dimensional ‘when/where/what/how/who’ approach. This may mean, for example, Employee X isn’t an employee at all but rather a contractor. Furthermore, what work they undertake and how intensely they undertake it, may vary significantly from project to project.

Again, Tomar makes two observations.

First, even by the old-school standard, organisations are struggling. The Mercer study found only three per cent of organisations perceived themselves to be ‘flex leaders’. Thirty-six per cent of employees surveyed said they had a request for more flexible arrangements refused. Also, 41 per cent of employees surveyed feared asking to work flexibly could be a career-limiting move.

Second, 94 per cent of HR staff had concerns about flexible arrangements. “Those concerns aren’t going to be news to anyone, but they are still around,” Tomar says. “How can flexibility be offered to all employees fairly? What impact do these arrangements have on teamwork and collaboration? And how do you measure and reward the contribution of someone working flexibly?”

4) Platform for talent

Platforms have transformed the way people date, shop, travel and consume entertainment. They will inevitably change the way talent is managed. It’s unclear how this will play out but Tomar predicts the “pre-occupation with getting headcounts right within organisations” will be replaced with a platform-enabled ‘partnership model’. Platforms will allow organisations to better leverage the talent ecosystem, making use of staff and contractors, as well as crowd-sourced talent and even those who work for competitors.

The partnership model will expand organisations’ access to people with the skills they need. Organisations will also have vastly more data about the supply of available labour, as well as more precise and timely feedback after matching jobs (or projects or tasks) to particular individuals.

5) Digital from the inside out

Increasingly, digital won’t be an add-on, it will be part of the DNA of organisations. No matter how old, organisations will start to resemble new-economy players such as Netflix and Spotify. Those businesses generate oceans of data and countless insights about their customers’ journeys. Likewise, organisations that wish to remain competitive will need deeply understand their employees’ journeys.

Organisations will also need to embrace technology that facilitates agility, allows non-meaningful tasks to be automated, enables employees (or contractors) to work flexibly and provides a seamless connection to available talent pools.

Everyone is making it up as they go along

If you’re feeling overwhelmed at this point, rest assured you’re not alone. Both the Mercer study and more informal polls of the HR leaders listening to Patrick and Tomar’s presentation revealed few, if any, companies and government departments had “fully implemented the agile work model throughout the organisation”. Or satisfactorily resolved complex equity and remuneration issues relating to flexible work practices. The good news, as Patrick observes, is that most organisations believe they have moved past the inflection point and are optimistic about what the future holds.

What organisational changes will you be making this year, and how will you be measuring the outcomes?