Managing tomorrow’s people*The future of work to 2020

*connectedthinking

Contents

Introduction 02

2020: where three worlds co-exist 04

Corporate is king:welcome to the Blue World 06

The journey to Blue 06

Life in the Blue World: the main themes 07

Work in the Blue World: the people challenges 09

The Blue HR business model 10

Companies care: welcome to the Green World 12

The journey to Green 12

Life in the Green World: the main themes 13

Work in the Green World: the people challenges 15

The Green HR business model 16

Small is beautiful:welcome to the Orange World 18

The journey to Orange 18

Life in the Orange World: the main themes 19

Work in the Orange World: the people challenges 21

The Orange HR business model 22

Are you ready for tomorrow’s world? 25

Appendix 27

Definitions: Scenarios, Millenials 27

Our methodology 28

Global forces 29

PwC Graduate Survey findings 30

Contacts 32

The journey to 2020

At the beginning of 2007, a team fromPricewaterhouseCoopers gathered to explore thefuture of people management. Our thinking wassparked by the rising profile of people issues on the business agenda – the talent crisis, an ageingworkforce in the western world, the increase inglobal worker mobility and the organisational andcultural issues emerging from the dramatic pace ofbusiness change in the past decade. We wanted to explore how these issues might evolve and howorganisations need to adapt to stay successful.Many studies have attempted to capture a vision of the workplace of the future, but we set out tounderstand the people challenges that will impactorganisations and consequently the implicationsthis will have on the HR function as we know it.Few business thinkers have proposed that themarketing or finance functions might cease to existin their present forms, but some are starting to saythis about HR.

With the help of the James Martin Institute forScience and Civilisation at the Said BusinessSchool in Oxford, we used ScenariosA1 to think

about the future of peoplemanagement. Our team hasidentified three possible ‘worlds’– plausible futures to provide acontext in which to examine theway organisations might operate

in the future. In addition we surveyed almost 3,000MillennialsA1 – new graduates from the US, Chinaand the UK who represent a generation just joiningthe workforce, to test their views and expectationson the future of work.

We hope you will help us to encourage debatearound this critical topic. It is said that the future isnot a place we go to, but one which we create. Andwhile things happen that we cannot predict, we canstill be prepared.

Michael RendellPartner and leader of Human Resource ServicesPricewaterhouseCoopers LLP

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Foreword 01

A1 – Appendix 1, see appendix page 27

2,739In July 2007, 2,739 graduates

from China, the US and the UKtold us about their

expectations of work. They hadall been offered jobs with PwC

but had yet to start. Some ofthe key findings are highlighted

throughout this report

While some of the findingsseem to confirm current

received thinking about thefuture of work, a number of

themes defy conventionalthinking.

PwC is the biggest recruiter of graduates in the UK and

a leading global recruiter of graduates. A3

Introduction

When we started our research we had somepreconceived ideas about tomorrow’s world. Manystudies have been undertaken to explore the futureof society, the environment, business and even theworkplace. Our challenge was to focus explicitly on the business context and the impact on peopleand work.

While we cannot claim to have identified all thepossibilities, several strong themes have emerged:

1. Business models will changedramatically

The pace of change in the next decade will be even more fundamental. Technology, globalisation,demographics and other factors will influenceorganisational structures and cultures. Ourscenarios outline three organisational models of thefuture:

• large corporates turning into mini-states andtaking on a prominent role in society

• specialisation creating the rise of collaborativenetworks

• the environmental agenda forcing fundamentalchanges to business strategy.

2. People management will present oneof the greatest business challenges

Businesses currently grapple with the realities ofskills shortages, managing people through changeand creating an effective workforce. By 2020, theradical change in business models will meancompanies facing issues such as:

• the boundary between work and home lifedisappearing as companies assume greaterresponsibility for the social welfare of theiremployees

02

A3 – Appendix 3, see appendix for a full breakdown of the findings page 30

• stringent people measurement techniques tocontrol and monitor productivity andperformance

• the rise in importance of social capital andrelationships as the drivers of business success.

3. The role of HR will undergofundamental change

HR has been perceived by many as a passive,service oriented function, but given the context oftomorrow’s workplace and business environment,we believe HR is at a crossroads and will go one ofthree ways:

• with a proactive mindset and focused onbusiness strategy, HR will become the heart ofthe organisation taking on a new wider peopleremit incorporating and influencing many otheraspects of the business

• the function will become the driver of thecorporate social responsibility agenda within theorganisation

• the function will be seen as transactional andalmost entirely outsourced. In this scenario, HRwill exist in a new form outside the organisationand in house HR will be predominantly focusedon people sourcing.

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03

“HR needs toensure it is fit forpurpose in orderto be proactiveand maintain ordevelop itsinfluence in thefuture.”

Keith Murdoch,Remuneration andBenefits Manager,British American Tobacco

We identified a number of global forces that will have significant influenceA2, and of those we felt that individualism versus collectivism and corporateintegration versus fragmentation would be the mostsignificant. From this axis we identified three worldsand business models for the future. (See figure 1 opposite.)

We tried to capture the events and trends whichdraw a picture of life in tomorrow’s world and thepeople management challenges that might prevail.The forecasting timelines and world descriptionsare not intended to be taken literally as completevisions of alternative futures. They are designed topresent ideas and illustrate the more importantpoints around the people management challenges.We believe it is likely that all three worlds will co-exist in some form, perhaps distinct bygeographic region, or industry sector for example.As you read this document think about how yourown organisation might be positioned within thesescenarios and what implications this has upon yourcurrent people management strategy.

04

We believe it is possible that all

three worlds willco-exist in some

form, perhapsdistinct by

geographic region,or industry sector

for example.

2020: Where three worlds co-exist

A2 – Appendix 2, see appendix page 28

052020: three worlds

Figure 1

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Corporate is king: the Blue world

Where big company capitalism reigns supreme

In a nutshell:

The globalisers take centre stage, consumer preference dominates, a corporate career separates the haves from the have nots.

2011

The Indian economy expandsdramatically as it goes through a new wave of cross-borderacquisition spreesand becomes aglobal leader inseveral industrysectors

2012

World’s biggestsearch engine andlargest technologycompany merge

2013

The brain-drain ofEastern Europeanworkers starts toreverse as workersreturn home to set up and lead corporates,building onexpertise gained in several sectors

2014

A decade of M&Aconsolidationacross industrysectors peaks

2020

Global warmingchanges theclimate of Europe;as the snow on theAlps melts, skiershead to the US

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90%

of Chinese respondents expect they will use a language at workother than their mother tongue

Size matters

The sheer size of corporations in 2020 means that a significant number now operate with annualturnovers that far exceed the GDP of manyindividual countries, particularly in the developingworld. With echoes of the business modelspromoted by companies like General Motors in themiddle of the last century, many companies nowprovide the equivalent of the welfare state for theiremployees to ensure they lock the best talent intotheir organisations. Internally managed servicecentres are sophisticated and highly efficient –using processes perfected by the outsourcers ofthe ‘nineties. People metrics become an essentialpart of everyday life to keep track of individualperformance and productivity.

Corporates divide the haves and have nots

The power of corporations means that a muchgreater divide has opened up between thoseworking for global corporations and those working in smaller enterprises. Employees of mega-corporations have everything they need laidon. Those working for smaller businesses remain atthe whim of housing markets and basic statutoryentitlements, needing to self-supplementeducational support, health and insurancecoverage, what remains of the public healthsystem, and so on.

Welcome to the technology age

Technology is all pervasive, entire cities in the US, Japan and the UK operate with ubiquitoushigh-speed wireless networks that allow allcommercial transactions, entertainment andcommunications to be handled by every individualon credit card-sized devices. Pinpointing exactlywhat you want and being shown where it isavailable from wherever you happen to be is nowtaken for granted, allowing businesses continuouslyto refine and individualise their relationships withconsumers, employees and shareholders.

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“Our search fortalent is now aglobal search.The competitionfor talent will onlyincrease further.”

Hanspeter HorschAssociate Director, Human Resources Samsung SemiconductorEurope GmbH

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Corporates drive lifestyle choices

Sophisticated measurement and segmentationstrategies mean companies can target goods andservices across their customer base and toemployees. For example ‘green politics’ is seen asa lifestyle choice rather than a meaningful politicalmovement. Corporations provide environmentalproducts and services to those who express apreference.

Managing people in the Blue World

• Companies have become the key provider ofservices to employees. People managementnow encompasses many different aspects ofemployees lives’, often including housing, healthand even education for their children.

• This strategy has led to an increase in staffretention rates as people policies seek to lock intalent, but the top talent is still hard to attractand retain, many senior executives use personalagents to seek out the best deals.

• Mass consolidation has had an impact oncultural issues. Leadership teams now have ahigh focus on the evolution of the corporateculture with rigorous recruitment processes toensure new employees fit the corporate ideal.Existing staff are subject to compulsorycorporate culture learning and developmentprogrammes.

• Huge people costs drive the need for robustmetrics and analysis. Employee engagement,performance and productivity are all measuredsystematically. Leadership can access peopledata on a daily basis. This also provides an earlywarning signal of non-corporate behaviour orbelow standard performance.

• Technology pervades every realm of businessand leisure activity. The line between insidework and outside work is often blurred bytechnology with employers providing theplatform. This also provides employers withadded insights to staff preferences.

75%

of respondents think that workplace

flexibility will not exist; they believe

they will be workingformal office hours

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Who leads peoplestrategy?

• The Chief People Officer (CPO) is a powerfuland influential figure, sometimes known asthe ‘Head of People and Performance’ whosits on the leadership board.

• Metrics and data are used to drive businessperformance through complex staffsegmentation strategies which identifythousands of skills sets – creating precisionaround sourcing the right candidates for theright tasks as well as on the job performancemeasurement and assessment.

• The science of human capital has developedto such a degree that the connectionbetween people and performance isexplicitly demonstrated by the CPO.

• As organisations increase in size, their riskmanagement systems are similarly extended.

• The people risk agenda is one which is takenseriously by the board – as a result, the CPOand HR business partners become moreinfluential.

• Those responsible for people managementincreasingly need financial, analytical,marketing and risk management skills tomeasure the impact of the human capital intheir organisation and to attract and retainthe best talent.

Organisationalchallenges

• Quality assurance across the globe drivesthe need to create consistency across theorganisational supply chain.

• The challenges of size and scale mean thatthese organisations are at greater risk fromexternal threats such as technologyterrorism or meltdown and they find itdifficult to effect change quickly.

• As companies try to reinforce corporatevalues, these can often be at odds withcultural values and can present challenges.

• Organisations must develop models andsystems designed and run by HRprofessionals which enable individuals andtheir agents to negotiate the value of theirhuman capital based on employees’personal investment strategies.

Employee profile

• People are graded and profiled at the age of16 and categorised for work suitability bothin terms of capability and individualpreference.

• The top talent is highly prized and foughtover. In most cases people are linked to anorganisation by the age of 18.

• University education is managed by thecompany according to the organisationalcareer path chosen by the individual.

• At the top level, employees take far greatercontrol of their careers; often seniorexecutives have their own personal agentswho represent them to find the best rolesand deals.

• Lower level employees are also takingactive charge of their careers; they areaware of the value that their human capitalrepresents and are demanding about thecircumstances in which they will invest.

• Those outside the corporate sphere findemployment choices are limited to smallercompanies that are unable to provide thesame level of development and financialbenefits.

10 A people management model for the Blue WorldIn the Blue World where corporate is king, the people and performance model below is the closest to whatmany leading companies are aspiring to today – linking HR interventions to improvements in businessperformance and using more sophisticated human capital metrics to evaluate corporate activity. Under thisscenario the management of people and performance becomes a hard business discipline, at least equal instanding to finance in the corporate hierarchy.

Human resources: the current model People and performance: the 2020 model

Figure 2

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Extract from a newspaper in 2016

People metrics are integral toanalysts’ pricing strategies

Future view

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Italian pharmaceuticalgiant Como saw itsshares climb higheryesterday inexpectation of positivenews in its quarterlyresults due next week.The company, nowworth an estimated € 20bn has profitedfrom the success of itsnew line of statins inEurope and America,but also in China, thefastest growingpharmaceutical marketglobally.

The quarterly reportwill be looked atclosely by companiesinside the industry andbeyond. Many creditComo’s unusuallyrapid rise anddominance of parts ofthe sector to the wayCEO Mario Fabrizzimanages theorganisation’s humancapital, which thecompany also reportson in detail. Last yearearnings per employeerose by 7% while costsper employee fell 5%,

generating a muchimproved return onhuman capital.

Mr Fabrizzi said, “Youhave to measure thethings you attach valueto. Measuring theperformance of ourpeople has allowed us to quickly makeimprovements to anyunderperforming partof the business, tomake effective plansfor succession and toreturn real value to ourshareholders.”

WORLD FINANCIAL NEWS 3rd April 2016

NEWS IN BRIEF

Companies care: the Green World

Where consumers and employees force change

In a nutshell:

Companies develop a powerful social conscience and green sense ofresponsibility. Consumers demand ethics and environmental credentialsas a top priority. Society and business see their agenda align.

2010

The UK launchesthe LondonCarbon TradingExchange

2012

The US signs theKyoto II agreementand becomes aleading advocatefor actions toreduce the rate ofglobal warming

2013

India becomes akey player in thecorporate socialresponsibilityagenda with afocus onpreserving theIndian culture andheritage

2018

Hybrid or fullyelectric cars outnumber petrol-poweredcars

2020

A group ofscientists confirmthat the rate ofglobal warming is slowing

94%

of respondents believe they willwork across geographic bordersmore than their parents did.

Consumers drive corporate behaviour

The environmental lobby is so pervasive thatcompanies must be quick to react to consumerconcerns about any aspect of their business whichcould be deemed unethical. Clear communicationand clarity about products and services is essential.

Supply chain control

Companies have strong control over their suppliernetworks to ensure that corporate ethical values are upheld across the supply chain, and be able totroubleshoot when things go wrong. This has led tomany organisations taking greater ownership of key

components of the supply chain through verticalintegration. Rigid contractual obligations are inplace covering every eventuality.

How green are you?

The audit process and quarterly company reportsare characterised by a focus on measuringgreenness detailing carbon emissions ratings, andcarbon exchange activity, as well as the moretraditional company valuations. This is an indicationof the importance shareholders and investors placeon these issues which are reflected in the shareprice.

Big corporate fines

In the business world ethical behaviour is the mostimportant attribute to attain and preserve. Brandscan rise and fall on the basis of perceived greencredentials, with government imposed corporatefines for bad behaviour in this highly regulatedworld. Corporate responsibility is not an altruisticnice to have, but a business imperative.

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“We aredeveloping anemployer brandreflecting ouridentity as anemployer andpromoting ourlong termcommitment with ouremployees.”

Hughes Fourault, Global Head ofCompensation, Benefits and International Mobility, Société Général

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Managing people in the Green World

• New graduates look for employers with strongenvironmental and social credentials; inresponse HR departments play a key role indeveloping the corporate social responsibilityprogramme.

• Employees are expected to uphold corporatevalues and targets around the green agenda.Most are given carbon credit tokens which areused like ration books to be cashed in forprinting documents in hard copy, companytravel and other anti-societal activities.

• The HR function is renamed ‘People andSociety’, the leader being a senior member ofthe company’s executive team.

• The need to travel to meet clients andcolleagues is replaced with technologicalsolutions which reduce the need for face-time.Air travel in particular is only permitted inexceptional circumstances and is expensive.

Working across teams in different locationstherefore presents enormous challenges toglobal businesses, and the HR functiondedicates significant energy to generating virtualsocial networks across the operation and theclient base.

• Most companies provide staff with corporatetransportation options between work and hometo minimise the need for car use. This has led tomany companies choosing to relocate parts oftheir operation to where people are based andout of big cities.

90%

of US respondentswill actively seek out

employers whosecorporate

responsibilitybehaviour reflects

their own.

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Who leads peoplestrategy?

• The CEO drives the people strategyfor the organisation, believing that thepeople in the organisation and theirbehaviours and role in society have adirect link to the organisation’ssuccess or failure.

• The CEO works closely with the Headof People and Society (HPS) who,with a team comprising a mix of HR,marketing, corporate socialresponsibility and data specialists,drives the social responsibilityprogramme.

• Employment law drives responsibleemployer behaviour and forces theHPS to develop innovative solutions intimes of downturn – such as sendingemployees on secondments to otherorganisations where they can developtheir skills and contribute to the widersociety, bringing employees back inwhen the economic environmentimproves. The HPS is therefore a well-networked individual.

Organisationalchallenges

• Quality assurance and vigilance tominimise risk is paramount.

• The greatest threat to businesses inthis scenario is the possibility of non-socially responsible behavioureither within the organisation or in anypart of its supply chain.

• Organisations operate in a highlyregulated world, where employmentlaw makes it difficult to lay people offin line with market fluctuations. Theystruggle to monitor everything acrossthe operation to be compliant with theethical ideal for which they strive. Butbeing compliant is not enough:organisations are under pressure toraise the bar and establish policiesand practices which go beyondregulatory requirements. The dangerin such a regulated world is thatcompanies are so preoccupied withcompliance policies that the ability tobe flexible and explore newopportunities is hampered.

Employee profile

• The common belief is that employeeschoose employers who appear tomatch their beliefs and values. Thereality is that the talent pool for thebrightest and best remainscompetitive, and whilst CSR rankingsare a factor, the overall incentivepackage remains all important.Incentives however are not justreward-related; for example, theyinclude paid secondments to work for social projects and needy causes – a popular trend post-2010.

• Because organisations adopt a moreholistic approach to developing their people, including personaldevelopment and measuring the impact they have on the wider world,employees are more engaged and as a result are often likely to have a job for life.

16 A people management model for the Green WorldIn the Green World where companies care, corporate responsibility (CR) is good. The CR agenda is fusedwith people management. As society becomes a convert to the sustainable living movement, the peoplemanagement function is forced to embrace sustainability as part of its people engagement and talentmanagement agendas. Under this scenario successful companies must engage with society across abroader footprint. Communities, customers and contractors all become equal stakeholders along withemployees and shareholders.

Human resources: the current model People and society: the 2020 model

Figure 3

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G- BANK

G-BANK recognises its statutory responsibilities under theClimate Change Act 2015, Ecosystem Change Act 2016,and all other sustainability legislation. We have been activeparticipants in the International Business Panel on ClimateChange since it was established in 2010.

The group has adopted the EuropeanSustainable and ResponsibleCorporations guidance and hascomprehensive company-wide policieson sustainability, energy and climatechange, and responsible procurement.We require all suppliers to be certifiedas carbon balanced and eco-friendly.

During 2020 G-Bank made furtherchanges in its energy providers in 25countries, so that 95% of our totalenergy consumption now comes fromrenewable sources. Our extensive useof videophone technology and virtualmeeting software means that businesstravel has reduced by 75% over thepast five years.

In the last quarter of the year ourenvironmental auditors completed theirannual sustainability audit and issuedan unqualified opinion. This has

allowed G-Bank to retain its status asa AA+ company within the S&Psustainability index.

Key environmental data is providedbelow

G-BankSustainable business report

Key Environmental Statistics 2020 2019Energy use – propertiesTotal energy consumption – Gw 1,015 1,200Energy consumption/FTE – Kw 0.10 0.13Renewables as a 95% 91%% of total energy consumption

CO2 emissions – propertiesCO2 – kilotonnes 21.0 21.8CO2 – tonnes/FTE 0.21 0.23

Business travelTotal travel-related CO2 – kilotonnes 1.0 1.9Travel-related CO2 0.01 0.02per FTE – tonnes/FTE

Extract from operating review

In 2020, it is a legal requirementthat companies disclose theirenvironmental activity. This alsoacts as a key differentiator whenrecruiting and retaining talent.

Future view

Small is beautiful: the Orange World

Where big is bad, for business, for people and for theenvironment

In a nutshell:

Global businesses fragment, localism prevails, technology empowers a low impact, high-tech business model. Networks prosper while largecompanies fall.

2009

Facebook globalmembershipreaches 1 billionpeople

2010

Skill shortagespush up wages inChina, switchingthe balance ofpower to theindividual awayfrom the collective

2012

Record number of corporatedemergers and spin-offs

2014

71% of Europeansshop at localfarmers markets,popularity ofsupermarkets insteep decline

2020

The CaliforniaGaming Guildachieves recordpay deal for its 7 Star ratedcontractors

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0.6%

Only 0.6% of UK respondentsthink that they will mainly workfrom home

A free economy

Trade barriers come down creating a truly freemarket economy and countries such as Chinaquickly realise that without embracing full free-market forces they will be unable to compete.

Networks are key

The dream of a single global village has beenreplaced by a global network of linked, butseparate and much smaller communities. Theexponential rise in the efficiency of online systemsfor buying, selling and trading services and skillshas debunked completely the old orthodoxy thateconomies arise from scale. Businesses are muchsmaller and roles are more fluid.

Complex supply chains

Supply chains are built from complex, organicassociations of specialist providers, varying greatlyfrom region to region and market to market. Thesolution is now not to outsource, but to fragment.Looser, less tightly regulated clusters of companiesare seen to work more effectively. Often functionsare picked up on a task by task basis by ‘garage’operations, with each transaction bought and soldby the second on one of a number of electronictrading platforms, with local and global exchanges.

Millennials drive technology use

The millennial generation, comfortable withtechnology, is driving the usage of technology asthe interaction with services, government and work,with an emphasis on choice and anti-monopolythinking encouraging innovations in this area.

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“Diversity is ahuge challenge,but also a greatopportunity.Getting diversityright will be acritical futuresuccess factor for us.”

Peter JohannDirector Global HRManagementBASF

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Labour market enters the guild era

In a tightening labour market individuals developportfolio careers, working on a short-term,contractual basis. They join craft guilds whichmanage career opportunities, provide training anddevelopment opportunities.

Managing people in the Orange World

• Organisations recognise that their employeesand the relationships they have across theirnetworks are the foundation of companysuccess. Companies seek to promote andsustain people networks. This is achievedthrough incentivising employees aroundachieving connectivity goals and collaborativebehaviours.

• As guilds become more important, they take onmany of the responsibilities previously assumedby employers including sourcing talent, medicalinsurance and pensions, development andtraining.

• Employees are usually aligned to guilds andaccess opportunities through professionalportals provided by guild networks – work can be bought, sold and traded in this way.Employment contracts are flexible toaccommodate staff churn and a rapidturnaround.

• Workers are categorised and rewarded forhaving specialist expertise; this has createdincreased demand for workers to have apersonal stake in the organisation’s successwith direct ownership share schemes andproject delivery-related bonuses becoming the norm.

• Recruitment has become largely a sourcingfunction and has been merged with themanagement of the huge number of contractsand price agreements required for eachcompany’s network of partner organisations.

11.5%

of Chinese femalerespondents expect

to have more than ten employers during

their career

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Who leads peoplestrategy?

• People strategy is replaced withsourcing strategy, as maintaining theoptimum supply chain of people iskey to this networked world.

• The People Sourcing Director liaiseswith expertise networks and guilds toattract what they need for the bestprice.

Organisationalchallenges

• Organisations are heavily reliant ontheir external networks to deliver whatthey need, and a combination ofwatertight contractual agreementscombined with a healthy degree ofbusiness trust is imperative.

• When a part of the network breaksdown, the smaller size oforganisations means they are able toflex and adapt quickly to change. Butthe flip side of this means that thelack of company infrastructure andresources to deal with suddenproblems can be a challenge

• There is also a strong emphasis ontechnology to support the supplychain and to develop social capitaland collaboration.

Employee profile

• The responsibility for skillsdevelopment shifts wholesale toindividuals.

• People are more likely to seethemselves as members of aparticular skill or professional networkthan as an employee of a particularcompany.

• Employees rely on achieving highscoring ‘eBay’ style ratings of past jobperformance to land the nextcontract.

• Specialisation is highly prized andworkers seek to develop the mostsought after specialist skills tocommand the biggest rewardpackage.

22 A people management model for the Orange WorldOur third world is in many ways the most radical. In this world, economies are comprised primarily of avibrant middle market, full of small companies, contractors and portfolio workers. People management is about ensuring these small companies have the people resources they need to function competitively.This allows an important role to be carved out for HR, one where the people supply chain is a criticalcomponent of the business and is strategically led by the HR function. But the flip side is that this couldalso see in-house HR becoming a sourcing or procurement function, with the high-end peopledevelopment aspects of HR being managed externally by guilds.

Current model Operational model in 2020

Figure 4

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Extract from employment networkingsite in 2020

In the Orange World, Workbook, an employment networking site, is used as a key route for people to find jobs, host their workexperience and join networks

Future view

A summary of the people

managementcharacteristics

in 2020

24

ResourcingandSuccession

Long careers and careerplanning. Succession plans forkey performers.

Holistic whole companyapproach to manpower planning.

Short-term careers. Lots ofcontracting. HR strongly focusedon filling fixed-term vacancies.

TalentManagement

Strong performance focusacross all levels. Top talent havepersonal agents.

Broad definition of talent.Competencies focus.

Minimal – key players in thecentral ‘core’ only, but liaisonwith external agents crucial

EmployeeEngagement

Engagement aroundperformance and performancemetrics. Heavy promotion ofcorporate culture attributes andbehaviours.

Engagement around work-lifebalance and social responsibility.

Short-term engagement aroundprojects.

Reward andPerformance

Strongly performance-related.Pay for performance. Highlystructured according to rolesegmentation.

Focus on total reward overcareer life-time.

Contract based-pay for projects.Individual stake in projects asincentive for contractors.

Learning andDevelopment

Begins at school. Focus on skillsfor the job – metrics driven.

Holistic approach to learning – much provided in-house. But secondments and paidsabbaticals for worthy causesare common

Minimal provision in house. Skillstraining via new crafts guilds.

Summary

Table 1

Blue World Green World Orange World

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25Are you ready for tomorrow’s world?

What will the world look like in 2020 – Blue, Green,Orange or something else entirely? We believe it ishighly plausible that all three organisational modelsdescribed in this report will feature in tomorrow’sworld, sometime or somewhere and to someextent. We already see some multinationals headingin the direction of the Blue World business model.The energy industry has been demonstratingelements of the Green World for some time. Wefirmly believe that, as the CSR and sustainabilityagenda grows many other industries (andgeographies) will take on characteristics of thegreen business model, for example the retail andmanufacturing sectors. Consumer preference willhave a huge impact when it comes to the greenagenda.

The Orange World in some ways represents themost radical departure. Will big business find itself outflanked by a vibrant, innovative andentrepreneurial middle market? Will the workexpectations of the millenials be such that portfoliolives will become far more pervasive? Will somelarger organisations introduce internal markets andformal networks in place of old style hierarchies tocreate structures where agility, speed and flexibilityare key to success?

The world of work is going to become even morecomplex. Our message is: take a long hard look at your organisation models and current peoplemanagement strategies; how are you addressingreward, international mobility, employeeengagement, development and learning? Thinkabout how these might change in the future andwhether or not the strategy you currently have inplace is future proof, is sustainable, sufficient andrelevant for the plausible worlds of tomorrow.

The survey we conducted is clearly representativeof only a part of the millennial generation. But whattruly surprised us is the desire in this group forstability and regularity in a changing world. Manypeople said they expect to work regular hours, fromthe office or on location, and would have only

“HR will continueto increase itsalignment to the business, with greateraccountability fordelivering specificcorporateobjectives. Thiswill result in agreater need forHR to quantifyitself in respect ofhow we deliveragainst thebottom line. ...

26

Figure 5

between two and five employers in a lifetime. Butequally let’s not ignore the Chinese women in oursample who expected far more flexibility and tohave at least ten employers in a lifetime – perhapsthese might be workers for the Orange World of thefuture.

Our final message is to the HR function itself. Webelieve there is a significant opportunity for the HRfunction to really own the people managementagenda within organisations, to truly drive strategyand have the tools and information to become oneof the most powerful and influential parts of thebusiness operation. But – and yes there is a but –we can also see that complacency and a failure byHR to take the lead could result in the functionbeing outsourced almost entirely, or absorbed byline managers or into other functions such asfinance or marketing. The fate of HR as a functionhangs in the balance. The challenge for HR is tofigure out how to make itself relevant fortomorrow’s world.

How can organisations plan for thefuture of people management?

...We will also needto prepare ourselvesfor a new generationentering the market

place. A significantlymore mobile

generation withdiffering expectations

from an employer,and we will need to

adapt to reflect this.”

Michael Poulten Personnel Manager

Reward and Benefits Tesco Stores

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A1 Definition

Scenarios

We worked with the James Martin Institute forScience and Civilisation at the Said BusinessSchool in Oxford to think about the factors thatcurrently affect business and those which webelieve will grow in importance in the future. Wemapped these around a matrix and developed anumber of scenarios: plausible futures around each.The result was the three worlds which we describein this report. Shell famously used scenarios to helpthem to predict the Middle East oil crisis in 1973.The process can help organisations think differentlyabout the future and plan for the inevitablesurprises.

Millenials

Wikipedia says ‘The Millenials’ are also known as:‘Generation Y – a term used to describe someoneborn immediately after Generation X…one ofseveral terms (also including The InternetGeneration) used to identify the same group. Thereis much dispute as to the exact range of birth yearsthat constitutes Generation Y and the Millennialsand whether these terms are specific to NorthAmerica, the Anglophone world, or peopleworldwide.’

For the purposes of this document, we refer to‘Millennials’ as those who entered the workforceafter 1 July 2000.

27Appendix

We started our research by examining the forcesthat currently affect global business and are likelyto have significant impact on the future. Clearlythere are many social, environmental, religious anddemographic factors that will have significantinfluence but we felt that some of these issues havebeen tackled extensively in other studies. We choseto focus on a number of potentially conflictingfactors which we feel have the greatest impact onour subject matter – people management. Initiallywe explored the following eight forces: (seediagram opposite).

Scenarios

Our scenario planning exercise revealed thatindividualism, collectivism, corporate integrationand business fragmentation would be the mostsignificant factors affecting global business for thepurposes of our study. We aligned these along twoaxes, around which we developed our scenariosfurther. We call these ‘worlds’. We began with fourworlds: yellow, red, blue and green, with the yellowand red worlds straddling the top half of thequadrant. In these fragmented worlds wediscovered through our analysis that the differencesacross individualism and collectivism were hard todefine in the fragmented world. Both of theseworlds relied upon networks to survive, were, small,nimble and adaptable. The motivations were theonly variant factor where the red world was moreself-serving than the collective altruism of theyellow world. We decided therefore to combinethese themes to create a single orange world whichrepresented the fragmented business model.

28 A2 2020: our methodology

29Global forces

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Figure 6

In July 2007, 2,739graduates from

China, the UK andthe US were polled

about theirexpectations of

work. They had allbeen offered jobs

at PwC but had yetto start.

30 A3 PwC graduate survey findings

Total China US UK

Do you believe you will work acrossgeographic borders more than yourparents did?

Yes 93.9% 97.2% 92.1% 92.9%

No 6.1% 2.8% 7.9% 7.1%

Do you envisage using a language otherthan your first language at work?

Yes 52.7% 89.4% 32% 35.3%

No 47.2% 10.4% 68% 64.7%

Will you deliberately seek to work foremployers whose corporate responsibilitybehaviour reflects your own values?

Yes 86.9% 87.2% 90.2% 71.2%

No 13% 12.6% 9.6% 28.8%

Do you think you’ll work...?A mix oflocations

74% 75.7% 71.8% 79%

Mainly fromhome

4.6 7.4% 3.8% 0.6%

Mainly in anoffice

21.2% 16.7% 24.3% 20.4%

Not answered 0.1% 0.1% 0% 0%

31

Total China US UK

Do you think your office hours willbe…?

Mainly flexiblehours

13.9% 17.6% 12.9% 7.4%

Mainly regularoffice hours

11% 7.1% 14.0% 10.0%

Regular officehours

75% 75.1% 73.1% 82.5%

Not answered 0.1% 0.2% 0.1% 0%

How many employers do you thinkyou will have in your career?

1 8% 9% 8% 7.4%

2-5 78.4% 74.4% 80.4% 79.6%

6-9 7.9% 6.3% 8.5% 9.7%

10+ 5.5% 10.3% 3.2% 2.6%

Not answered 0.1% 0.0% 0.1% 0.6%

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There were numerous people involved in thisproject both within and outsidePricewaterhouseCoopers. Our particular thanks toAngela Wilkinson and team at the James MartinInstitute and to all the companies who shared theirviews and insights.

Our thanks to the core project team: Sandy Pepper,Cecilia Nordqvist, Matthew Blakstad, Leyla Yildirim,Rachael Davison, Andrew Smith, Jackie Gittins,Sonja Jones and the rest of the team who took partin the scenarios workshop. We would also like tothank Sivaramakrishnan Balasubramanian, IndraniRana (India), Svetlana Kruglova (Russia), ShinyaYamamoto (Japan), Steve Rimmer (US) and manyother contributors from across our global network of PricewaterhouseCoopers firms. Our finalacknowledgement goes to our internal humancapital teams around the world who helped us toconduct the graduate survey.

Michael RendellPartner and leader of Human Resource ServicesPricewaterhouseCoopers LLP (UK)+44 (0) 20 721 24945michael.g.rendell@uk.pwc.com

Sandy PepperPartner/Project leader Human Resource ServicesPricewaterhouseCoopers LLP (UK)+44 (0) 20 721 34948sandy.a.pepper@uk.pwc.com

Karen Vander LindeLeader, People and Change PricewaterhouseCoopers LLP (US)+1 (703) 918 3271karen.m.vanderlinde@us.pwc.com

Leyla YildirimMarketing Human Resource ServicesPricewaterhouseCoopers LLP (CI)+44 (0) 1481 75 2039leyla.yildirim@uk.pwc.com

32Acknowledgements Contact

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This publication has been prepared for general guidance on matters ofinterest only, and does not constituteprofessional advice. You should notact upon the information contained in this publication without obtainingspecific professional advice. Norepresentation or warranty (express or implied) is given as to the accuracyor completeness of the informationcontained in this publication, and, to the extent permitted by law,PricewaterhouseCoopers LLP, itsmembers, employees and agentsaccept no liability, and disclaim allresponsibility, for the consequences ofyou or anyone else acting, or refrainingto act, in reliance on the informationcontained in this publication or for anydecision based on it.

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