Over the past decade, executives have witnessed a significant transformation of their companies. Firms have embraced the Internet for both commerce and communication. Globalisation, increasing economic interdependence between nations and a financial crisis have forced management to act—and workers to adapt—quickly. Considering the speed of change over the last ten years, what will the typical company look like in 2020? And what can corporate leaders do to prepare the workforce for change?
Over the next decade, changes in the way companies operate will not be revolutionary or disruptive; they will be an extension of the evolution already visible at many firms today. According to research conducted by the Economist Intelligence Unit, companies will become larger and more global in the next ten years, handling operations in more countries than they do today. Despite rapid expansion, they will also be more globally integrated, with better information flow and collaboration across borders.
They will be less centralised, but will not be fully decentralised. Local operations will be free to move on opportunities that further the global organisation while headquarters will continue to play an important role in setting the tone and values of the company. Companies will also be flatter. Employees will be given greater decision-making responsibility, often at an earlier stage in their careers. Companies will favour a more fluctuating workforce, to better match shifting talent needs across global operations. But this will have a cost: the average worker will feel reduced loyalty to the organisation, which may lead to greater employee churn.
The rise of emerging markets, the global financial crisis and demographic pressures are among the forces driving companies to expand overseas. As they do so, they will:
Take on more contingent workers. The proportion of contingent to permanent workers will shift in favour of the former. The workforce will be larger and spread over more countries, making crossborder communication more important—and more challenging. Seventy-five percent of survey respondents expect their company to enter or compete in more foreign markets over the coming ten years (only 16% do not expect to; the remainder are unsure). Yet most survey respondents see significant cultural and linguistic barriers to hiring globally, and most do not believe their company excels at collaboration.
Localise management. Companies will continue to localise the management of overseas operations to leverage native managers’ keener cultural understanding of customers and employees. But in a world where cross-border interaction is expected to become more intense, a global outlook will be just as important as local knowledge. Managers with high potential will still take on overseas assignments to broaden their experience. The difference, say interviewees for this report, will be that these moves will tend to be short-term, and managers will move from emerging markets to developed markets rather than merely the other way around.
Fifty-four percent of survey respondents expect management to be more international in composition; 39% expect managers to better represent the countries where the company does business; and 32% expect managers to travel more frequently among overseas offices. These expectations are much more striking among the interviewees, who place local knowledge and a global perspective as two of the most important qualities of a modern manager. They see localisation, coupled with short-term international movement, as critical to establishing an integrated global culture. Taken alone, neither localisation of overseas management nor the placement of expatriate managers from headquarters into overseas operations builds a common culture. And it is this unified culture that will define successful global companies.
Workers, who will increasingly be sourced from foreign markets, will be hired and trained to fit into the global organisation. Among the changes to the workforce that are expected to materialise:
Increasing workforce flux. More roles will be automated or outsourced, and more workers will be contingent (contract-based), mobile or work flexible hours: 67% of respondents expect a growing proportion of roles to be automated (7% expect a growing proportion to be staffed); 62% expect a growing proportion of workers to be contract-based (12% expect a growing proportion to be permanent staff); and 61% expect a growing proportion of functions to be outsourced (13% expect a growing proportion to be brought in-house). This may allow companies to leverage global resources more efficiently, but it will also increase the complexity of management’s role.
More diversity. Workers will come from a greater range of backgrounds; those with local knowledge of an emerging market, a global outlook and an intuitive sense of the corporate culture will be particularly valued. Fifty-eight percent of respondents expect workers to have more diverse backgrounds and experience; 48% believe the workforce will become more international in composition; and 44% say it will become more ethnically diverse. To build on this, many companies will send employees overseas more frequently, often for short periods, on project-based assignments or to take part in training.
Interviewees are more definitive in their belief that overseas assignments are critical for employee development and to entrench the corporate culture into the global organisation. They believe talented young people will more frequently choose their employer based, at least in part, on international opportunities.
Ascendance of soft skills. Companies will focus on building communication skills, cultural awareness and corporate values through international assignments and by bringing together groups of workers from different countries and functions into training sessions. Technical skills, while mandatory, are seen by interviewees as less defining of the successful manager than the ability to work across cultures and build relationships with many different constituents. People who have local knowledge, a global outlook and an intuitive sense of the corporate culture will have the best leadership potential.
Survey takers rate problem-solving, project-management and interpersonal skills ahead of technical competence as the most important skills for their organisation’s success over the next decade, ahead of technical and function-specific skills.
Changes to the organisational structure and workforce will spell new challenges for managers. Among them are:
Understanding the worker. While a majority of respondents expect job satisfaction to improve (39%) or remain the same (17%) over the next decade, the survey reveals a disconnect between what companies offer to employees and what respondents say their direct reports actually value. For example, 78% of respondents say decision-making responsibility would be a key factor in deciding to join a company, yet only 40% believe their own company encourages employees to make decisions.
Respondents say that workers want opportunities for continued learning; performance-related bonuses; opportunities to work internationally; flexibility to work on different teams; and career planning. Yet these are all benefits that most feel their own company is negligent in providing. The benefits that companies are most likely to provide, such as home-working privileges and a casual dress code, are the benefits that survey respondents value least.
Tapping into the multicultural workforce. Twenty-eight percent of survey respondents say their company will use IT and social networking tools to tap into the global talent pool over the coming decade, but it is likely they are underestimating how quickly HR will recognise collaborative technology as a key component of a global hiring strategy. Interviewee companies are already leveraging social networking sites, researching which sites are most effective in each market.
Meanwhile, to broaden the talent pipeline and develop new skill sets, some companies are partnering with schools to develop curricula—both technical and managerial—that prepare students for work in a multinational, multicultural company.
