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  • 04.29.11

Organization Next: Planning For HR Under Uncertainty

The future of organizations is not just dependent on their own designs and intent, it is profoundly affected by the context in which those organizations find themselves. When it comes to planning the human resources function, some of the uncertainties organizations need to plan for, through and around include: economic growth, wellness, how the generations get along, shortages of talent, uncertain competencies, which work relationships will prevail and how performance is measured.

I have been involved with Cisco and the Human Capital Institute over the last couple of weeks thinking about the future of the organization. As we explore scenarios, I want reinforce that the starting point for scenarios are the major forces and uncertainties in play that will affect industries, businesses and functions. Scenarios, however, can also be used to first name, then explore, uncertainties through the lens of a particular business function.

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Here are some thoughts on uncertainties related to human resources.

Where will economic growth come from?

Where economic growth will originate is perhaps the biggest
uncertainty when it comes to the future of work, and it can be examined from
many angles. First is the question of what type of work? Many governments see
the transition from fossil fuels as being a primary growth mechanism, but
others point out that with continued access to oil and relatively low prices,
the alternative energy market may not be positioned to take off for decades.
And even if it does take off, it raises the second general question: which
facet of alternative energy will create jobs (a topic that bears on the skills
uncertainty discussed later in this paper)? This aspect of the question can be
applied to all future work because it is impossible to tell with any certainty
what new markets will emerge, where in the world those markets will take hold,
where the supply chains for those markets will center themselves, and how
extensive the effect of those markets will be in terms of growth and
penetration (including global adoption and the duration of the market). It is
important that organizations monitor economic developments, scientific
breakthroughs, and market adoptions closely in order to better anticipate how,
when, and where these developments will transition from speculation to reality.

How far can organizations take wellness?

In many presumptions about the future, organizations faced
with increasing health care costs may believe that intervening with employees to
help them stay in shape and curtail life-threatening activities such as smoking,
drinking, and driving recklessly is inevitable.
With information systems and easy-to-administer tests (not to mention
embeddable sensors), wellness monitoring will become easy. Insurance firms may even
extend such interventions to the self-employed. In a recent interview, a
management consultant shared that she was placed into a nurse-practitioner
program through her health care plan to help her manage multiple conditions,
such as diabetes and blood pressure. She described the dialog with the
representative as pedantic. The insured professional realized that this treatment
was not about her health, but about compliance and keeping the health care
provider’s costs down. Until she was seen as compliant, she would not be
relieved of these weekly calls. In the end, she answered “yes” regularly to
everything. She stopped reporting anomalies and was signed out of the program.
The debate over health care costs remains virulent, and the approaches to
intervention and monitoring experimental. In some futures, consumers may well
push back against personal health care interventions. The sheer amount of
information available about people may make insurance companies obsolete as
risk pools shrink because so much is known about potential future diseases in
individuals based on a combination of lifestyle analysis and genetic testing,
forcing the governments into extended health care entitlements. In health care, too much information becomes as
useless as no information, because it becomes clear that everyone is at risk of
something, and therefore the idea of risk becomes meaningless.

How will the generations get along?

The generations already exist together at work, and for many
this question has already been answered. But the relationship is still one of
Baby Boom power and Generation X and Millennial subservience. As that scale
tips, new dynamics will evolve. Will the Baby Boomers attempt to hold on to
managerial and executive control of their organizations into their 70s, 80s, and
even 90s, leaving Generation X and the Millennials in second-class positions
well into the 2030s? Or will the Millennials find ways to undermine and
circumvent traditional organizations by creating new businesses, making them less
and less available for the transfer of knowledge and operational
responsibility, leaving large companies vulnerable to continuity threats? Generation
X becomes a wildcard in either event, partnering with the Boomers as well-paid
accomplices in retaining power, or with the Millennials in accelerating the
creative destruction.

Will there be a talent shortage?

If the world is global, and talent can be sourced from
anywhere, there will probably not be a net talent shortage; however, access to
talent that can meet specific local markets needs may prove problematic. If
nationalistic tendencies prevail, then the outcomes of individual education
systems, public and private, and training programs provided by firms and
immigration policy will combine to determine the available talent pools. Local
mismatches are likely to occur between needs and skills–and depending on the
nature of the need, remote talent may not be an option. And because future
skills anticipation is relatively poor, governments and businesses are likely
to recognize the need too late to create supply. If, however, technology is
used and collaborative monitoring through the human-sensor network is sufficiently
applied, business and science research could be monitored to reveal future
potential for new industries, and imagination could be applied to anticipate
the jobs required to support those industries. It may not prove 100-percent accurate,
but an investment in foresight is better than a loss in hindsight.

What competencies will the organization need?

The ability to anticipate future jobs will also help define the
competencies people will need. Robust implications across the scenarios suggest
that a handful of competencies designed to help people adapt to change should
be precursors to any more tangible skills. Consider the value of these skills: change
management; creating and maintaining social networks; building and
understanding models; scenario planning, horizon scanning, and foresight; negotiating
boundaries; and innovation, creativity, and cognition. If people learn how to
think–how to embrace change–then when change of industries or skills occurs,
they will be accepted as challenges rather than obstacles. This reality does not
imply that organizations should not continue to monitor and responsibly
anticipate future skills and technologies and turn them to advantage before the
competition. Another Jack Welch quote is apropos here: “Change before you have
to.” (Straight from the Gut)

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What work relationships will prevail?

Over the last several years, new work relationships have
emerged. It is estimated that a small percentage of people work as temporary or
contingent staff, but the Great Recession and the problems faced by employers
and employees involved in layoffs and other reductions in force may make
temporary and contingent staffing more common. These are not the only emerging
models. Outsourcing is well-established, but because outsourced staffs work for
another company, they are not counted as contingent staff. In some futures, freelance workers dominate
the scenarios, whereas in others traditional employment remains dominant. The
actual future may be a common ground between these extremes, but one that is
very different from traditional employee-employer models.

How will performance be measured?

The people who run an economic system determine the measures
of performance. In a consumer-directed economy, gross domestic product (GDP);
housing statistics; employment; consumer confidence; salary increases; and
other competitive, comparative measures predominate. In a more individual-directed
economy, still consumer-directed GDP may remain important, but individual
contracts, contract duration, contract value, and social network reach may be
more important. In more state-oriented economies, achievements of economic plan
goals predominate. And in sustainable economies feedback loops and trade-offs
are likely to dominate the measures. Consider the idea of quadruple-profitability
accounting where each firm must report its revenue, its sustainability index,
its human capital investments, and its citizenship quotient. A firm that is
overinvested in older employees may look like a good short-term financial bet,
but the details of its human capital investments clearly identify a long-term
risk. Ultimately, how people measure their success at work is directly tied to
what governments and businesses–and the world at large–consider important.

When focusing on the functional view it is important to continue to account for higher level uncertainties that influence the functional uncertainties. How performance is measured may well be within the purview of human resources and management, but the context for measurement needs to align with the economic model in which people work. Being out of sync with the context can result in either innovation or failure, and not much in between.

For more information visit Organization Next.

About the author

Daniel W. Rasmus, the author of Listening to the Future, is a strategist who helps clients put their future in context.

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