The future of work Peter Brown

The future of work

Peter Brown

www.pwc.co.uk

November 2016

PwC

Contents

1

The world is changing… 21

A journey to 2022 72

Three worlds of work 103

Unlocking the challenges with HR 154

Digitalisation 195

Epilogue 246

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The world ischanging…

The future of work2

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The megatrends

The future of work3

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Demographic shifts

The changing size, distribution and age profileof the world’s population.

Resource scarcity and climate change

Depleted fossil fuels, extreme weather, rising sealevels and water shortages.

Shifts in global economic power

Power shifting between developed anddeveloping countries.

Rapid urbanisation

Significant increase in the world’s populationmoving to live in cities.

PwC has identified 5 global megatrends that underpin thebusiness landscape of today and will impact the future of work.

Technological breakthroughsRapid advances in technological innovation.

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The megatrends – Ranked in order of impact by our global survey

The future of work4

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Note: PwC survey of 10,000 members of the general population in UK, US, Germany, China and India.

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Trends with profound future impact

1 James Canton, Chairman and CEO of the Institute of Global Futures.2 Study at McKinsey Global Institute (The Guardian).

What istrending?

Artificial intelligence

By 2025, robots could jeopardise between40m and 75m jobs worldwide.2

New structures

With changes in traditional roles, the whole structuralhierarchical system is going to disappear.1

Hypersonic travel

A 35-minute flight from London to New Yorkis a step closer to reality following the latestsuccessful test of hypersonic technology.

Information technology

“We will see another 1,000-fold increase in computer power,data transmission rate, at the same price we see today”.4

The end of retirement

A cliff-edge approach to retirement is probablygoing to be a thing of the past.3

Workplace monitoring

Sensors check employee location, performance andhealth. The monitoring may even stretch into their

private lives in an extension of today’s drug tests.

Breathalyser cars

The introduction of Driver Alcohol DetectionSystem for Safety (DADSS) will unobtrusively

measure blood alcohol levels in drivers andimmobilise the car if levels are too high.5

Constant change

There will be constant innovations and support ofentrepreneurial behaviours. Employers will be tapping into thephysical, emotional, intellectual, virtual, and aspirational facets

of how an employee is engaged in the workplace.

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3 Matt Flynn, the director of the Centre for Research into the Older Workforce at Newcastle University Business School.4 Ulrich Eberl, author of a 2011 book titled Life in 2050: How We Create the Future Today.5 Forbes

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Downfall of brands due to new technology

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Struggled tocompete in the

world of digitalcameras, Instagram

and smartphones

Crumbled in the faceof rivals and

competition fromAmazon and other

online retailers

Cisco had to shut downits Flip camcorderdivision, primarily

targeted by digital andtechnologicalinnovations

Failing to captureconsumers’

imagination andstruggling to match

pace with othersmartphoneinnovations

With the rise of videostreaming services like

Netflix and Lovefilm,Blockbuster’s downfall

came quickly

Caught out by otherpopular online

retailers

Kodak HMV Cisco

Nokia Blockbuster Woolworths

Source: Techworld

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A journeyto 2022

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The journey to 2022

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Launch ofTwitter

2006

Apple launchesthe iPhone

2007

LehmanBrothersfiles forbankruptcy

2008

Urbandwellersbecome amajority of theglobalpopulation forthe first time

2009 2010

Globalpopulationpasses 7 billion

2011Impact ofresource scarcitycomes into sharpfocus asprolongeddroughts threatenblackouts in Texas(power plants arethe largest usersof water in theUS)

2012

Number ofmobiledevices andConnectionssurpasses thenumber ofpeople onthe planet

2013

FacebookacquiredOculus VR,which makesvirtual realityheadsets forvideo gamedevelopers

2014

Chinaovertakes theUS as world’slargestmanufacturer

The averagetime a USconsumer

spendsusing their

smart phonea day

houses could almost bepowered every day with justthe energy burned by active

users of the Nike+ app

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The journey to 2022

The future of work9

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Only

0.5%of data is currently

analysed

2 out of 5People believe that

traditional employmentwon’t be around

in the future.

Worker inGermanysays the ‘best isyet to come’aftercelebrating 75years’ servicewith thesame firm

2015

$10 tabletcomputercomes on to themarket

2016

Assemblyworkers infactory inHanoi startwearingsensors togaugeconcentration,work rateand mood

2017Analysts attendpresentation byFortune 500ChiefPerformanceOfficer, whoheadsa combinedFinanceand HRfunction

2018

Doctor inChina carriesout ‘remote’surgery onpatient inGhana

2019

Rioting sweepsacrossuniversitycampuses asstudents losepatience withlack of jobopportunities

2020

Licencesgranted fordriverless cars

2021

World’s firstfullyautomated androbot-servedhotel opens

2022

1.7 billionpeople are expected

to download mobile healthapps

by 2017

Around half of US jobsare at risk of being

computerised over thenext two decades

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Three worldsof work

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Corporate is king

Big companycapitalism rules asorganisationscontinue to growbigger andindividualpreferences trumpbeliefs about socialresponsibility

Companies care

Social responsibilitydominates thecorporate agendawith concerns aboutchanges in climateand demographics,and embeddingsustainabilitybecoming the keydrives of business

Small is beautiful

Companies begin tobreak down intocollaborationnetworks of smallerorganisations;specialisationdominates the worldeconomy

What does the future workplace look like?

PwC research ‘The future of work: Ajourney into 2022’ presents various scenarioson how we see the expectations of organisationsand the aspirations of the people who want towork for them diverging in over the next fewyears.

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03

The future of work

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So what does the future hold for HR?

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Global forces that havegreatest impact onpeople management

November 2016The future of work

In the Blue World, it will be at thecentre of a hugely influential metric-driven strategy and performancefunction.

In the Orange World, it is set tohave a much narrower recruitmentand tendering role, with many otheraspects of the function outsourced.

In the Green World, HR’s role couldbe much more diffused, helpingemployees to shape their work aroundtheir values and outside lives.

The potential break-up oflarge businesses and the

risk of collaborationnetworks

The free-market trendprevails as trade

barriers disappear

Focus on individualwants; a response to

the infinite choicesavailable to consumers

A yearning for thehuman touch minimisesthe personal impact of

technology onconsumers

Big business rules all

Protectionist policiesbegin to rebuildbarriers to free

movement of peopleand goods

The common goodprevails over personal

preference, e.g.collective responsibility

for the environmentover individual interest

Allowing technologyinto almost every part

of a personal life

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What does the future HR function look like?

Given the demands of tomorrow’s workplace and business environment, HR is at a crossroads and will go one of three ways:


November 2016

1 Human Capital Magazine Online

The function will be seen astransactional and almostentirely outsourced.

The BlueWorld

Aldi outsources their entire HR function to reduce costs. A‘personnel committee’, attended by representatives from all businessareas, makes all decisions related to people. External agencies areused to deliver low-cost HR solutions as and when required.

ALDI

HR will take on a new widerpeople remit incorporatingand influencing many otheraspects of the business.

The OrangeWorld

Airbnb have removed their HR function and have createdan ‘employee experience’ function. It encompasses compensationand benefits, learning and organisational development, facilities,safety and security, and their food programme. The company hopes toinstil a sense of belonging among his staff by creating an ‘inside outstrategy’ – Mark Levy, Global Head of Employee Experience.1

Airbnb

The function will become thedriver of the corporate socialresponsibility agenda withinthe organisation.

The GreenWorld

UPS combines its HR and sustainability efforts – Providingsustainability training to all employees, driving sustainableinitiatives such as recycling and energy efficiency, distributingcommunications on goals and progress, organising sustainablevolunteering and reducing paper waste in talent acquisition process.

UPS

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Evolving priorities

There will be a radical change in businessmodels and there will be a need to createever more sophisticated peoplemeasurement techniques to monitor andcontrol performance and productivity.

Changing role of HR

The emergence of these three worlds isgoing to create fresh challenges for HR. Witha proactive mindset and focused on businessstrategy, HR will take on a new wider peopleremit incorporating and influencing manyother aspects of the business. The functionwill be seen as transactional and almostentirely outsourced.

Competitive forces

Most organisations are likely to be a mix ofall three worlds of work. It’s thereforeuseful to think about where yourorganisation might be positioned withinthese scenarios, the trade-offs this entailsand what implications this has for yourpeople management strategy.

Will the organisations be prepared?


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A B C

“Lots of companies don’t succeed over time. Whatdo they fundamentally do wrong? They usuallymiss the future.”

– Larry Page, Google Inc. CEO

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Unlocking thechallengeswith HR


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How can HR adapt to the new world of work?

Three key areas of change where HR can focus in order to remain agile and continue to meet demands of the business.


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• The HRBP role is changing

• HR operating models are evolving

• HR sourcing is changing

People capability

• Movement towards the cloud

• Mobile and social technology isevolving

• Big data is trending

Technology

• Data is everywhere

• HR functions acknowledge theyneed to utilise their data

• Using analytics to supportdecision-making

Analytics

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HR operating models are evolving

Globalisation and changes in consumer demands throughout the 1990s and 2000s has driven organisations to reconsider their HR function.

Many organisations today outsource various HR activities. As a result, firms are now looking at evolving their HR model to focus on managingthese external relationships and ensuring they are continuing to deliver efficient services and sustained value to the business.


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1990s 20202000s

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HR trends in sourcing continue to change

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Digitalisation


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Implications of digitalisation


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1 2 3

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Implications of digitalisation


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4 5

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• Look beyond basicdemographic groupsand fully embracepersonalisation ofthe workforce.

• Use technology to its fulladvantage in personalisingyour business fromcommunications toreward packages.

• Define a future technologyroadmap that takes intoaccount innovations inautomations suchas robotics.

• Decide how you willmotivate and rewardteams of people androbots alike.

• Ensure your company’sculture and structuresupport idea creationand sharing.

• Equip your leaders withthe tools and mindset tobecome truly open-source.

• Capture and use accuratedata to inform keystrategic reward, mobilityand engagement decisions.

• Up-skill your workforce tobecome digitally savvy andmaintain through trainingand frequent digitaldiscussions.

• Assess your policy forcloud and personal data,ensuring it is right foryour organisation.

• Have your leaders readyto build trust in the worldwhere the truth can’tbe hidden.

Ten actions to succeed in digital age

‘The current complex and increasingly digital business environment requires people who can think and work indifferent ways. How can you attract such talent and retain them within your organisation? And how can analyticshelp you achieve this?’


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What could the future hold?


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1 2

4 3

• Sustainable architecture andgreen energy?

• Innovative building designs

that can monitor

activity?

• Will robots be a sizable

component of the workforce?

• Could robot economy lead

to a cashless and joblesssociety?

• What would be the role of HR?

• Will the different functionsamalgamate into each other

to make one overarching

function?

• How would companiesneed to change –

Resourcing, talentmanagement, L&D, what

else?

Location Workforce

Function Company

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Epilogue


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Questions to consider

What are thebig changesthat are goingto affect yourbusinessand industry?

What are thepeopleimplicationsof these?

How are youplanning forthe issuesarisingtoday?

What arewe youdoing todevelopfutureleadership?

What areyou doingto planfor whatliesahead?

25November 2016The future of work

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“Plan for thechallenges

ahead”

Businesses are adapting to volatility and uncertainty as a way of life.

‘Managing complexity as well as ambiguity [will have the single biggest impact onthe way we work over the next 10 years]’ - Head of HR. Energy, Utilities andMining, India

At the beginning of the century, Ray Kurzweil, Futurist and Chief Engineer atGoogle, predicted that ‘20,000 years of progress would be crammed intothe next 1001’. If anything, progress and change have accelerated even fasterthan that. Tremendous forces are radically reshaping the world of work as weknow it.

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1 The Law of Accelerating Returns, Ray Kurzweil, 07.03.01 (http://www.kurzweilai.net/the-law-of-accelerating-returns)

This is a proposal document and does not constitute a contract of engagement with PricewaterhouseCoopers LLP. The information set out in it is an indication of the terms on which we proposeto carry out support for the improvement of our HR solution for you but the proposal is subject to the terms of any subsequent engagement contract that may be entered in to between us. In theevent that our proposal to you is successful, our acceptance of the engagement will be contingent upon the completion of all our internal engagement acceptance procedures.

© 2016 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is aseparate legal entity. Please see www.pwc.com/structure for further details.

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Peter Brown

Partner

P: +44(0)20 7804 7007

E: [email protected]

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The future of work Peter Brown

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