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.

© 2007 PricewaterhouseCoopers LLP.All rights reserved.‘PricewaterhouseCoopers’ refers to PricewaterhouseCoopers LLP (alimited liability partnership in theUnited Kingdom) or, as the contextrequires, the PricewaterhouseCoopersglobal network or other member firmsof the network, each of which is aseparate and independent legal entity.

pwc.com

Managing tomorrow’s peopleHow the downturn will change the future of work

At the end of 2007, PricewaterhouseCoopers (PwC)* published its first report on the future of people management. We believed the growing talent crisis, demographic shifts, advances in technology and the rise of sustainability issues on the corporate agenda would dramatically change organisational models and the way in which companies manage their people.1

The report, Managing tomorrow’s people: the future of work to 2020, produced with the help of the James Martin Institute for Science and Civilisation at Said Business School, Oxford, explored three scenarios or ‘worlds’ which we believe will co-exist in 2020.

The report generated a high level of interest from business leaders, HR professionals, the media, academics and bloggers around the world. It is clear that the future of work is a hotly debated subject. This led us to produce a follow up study at the end of 2008 on the views of the new generation – Millennials at work: perspectives from a new generation. The report detailed insights from over 4,000 new graduates from 44 countries and was designed to help companies understand how millennial attitudes to work differ from previous generations.

This new report looks at the impact of the global economic downturn on people management. We explore how the actions of businesses as a result of the crisis determine their readiness for the upturn and their ability to compete in the second decade.

Quotes from CEOs featured in this report were taken from the PwC 12th annual global CEO survey.

About Managing tomorrow’s people

*PricewaterhouseCoopers’ refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.1 See Appendix 1: Global forces

01Contents

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Introduction 02

2020: where three worlds co-exist 05

The Green World: sustainable business is good business 06

The Blue World: corporate is still king 12

The Orange World: tribes thrive 18

Summary 25

Conclusion: is your people strategy fit for the future? 26

Some of the key decisions made by each company as a result of scenario planning 29

Appendix 1: global forces 30

Appendix 2: from scenarios to real options 31

Publications 36

Acknowledgements 37

Contacts 37

02

‘ To echo the recent words of our CEO, “the future is not cancelled”. While managing costs and capital closely, we still invest for future growth by continuing to hire graduates, run development programmes and target reward to our better performers. We do not want gaps in our future talent pipeline.’Carole Crossley, VP HR International Mobility, BP plc

The credit crisis and subsequent global recession has created the biggest challenge to economic prosperity since the 1930s. Focused on survival, many companies are slashing workforce headcount and drastically reducing their expenditure on people.

The economic crisis has raised fundamental questions about the institutions and practices of modern business life. Belief in a self-regulating financial system has been shaken, confidence in the foundations of business has been eroded and a new generation of workers are reassessing the relationship between employer and employee.

Here, as part of our Managing tomorrow’s people series, we explore the impact of the downturn on people management, the different options open to companies and the scenarios we believe will play out in this time of great change. As we head towards the upturn, we examine how the decisions companies make today will affect their ability to compete in the future.

We outline three possible worlds or business models which will co-exist in the future, illustrating three fictitious companies as they look back from 2020. Some common themes have emerged:

Demands for • greater transparency and social responsibility in business have been magnified by the crisis and combine with the call for environmental responsibility already present in the green agenda. This will impact many areas of people management, particularly in relation to how people are rewarded. This is expressed in our Green World scenario.

Increased • focus on hard people metrics to measure performance and productivity as companies look at a long-term reality of having to do more with less. Our Blue World scenario imagines the performance and efficiency culture necessary for global companies (some larger than many individual countries) to succeed within a new order of economic superpowers.

Introduction

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‘ The ability to attract people – to motivate them while they’re with you and motivate them to stay with you – is going to be the challenge. We’re in a period when the demand for people is going to be greater than it’s ever been before.’James E. Rogers, Chairman, President and CEO, Duke Energy Corporation, US

2 See Appendix 2: From scenarios to real options

Is your people strategy fit for the future? Do you think you can compete with the companies outlined in this report? One thing is certain, the decisions you are making today are already creating a legacy for the future and determining how successful you will be in 2020.

Michael Rendell Partner and leader of Human Resource Services PricewaterhouseCoopers LLP (UK)

The opportunity for • radical new ways of working will emerge in our Orange World scenario. We take the concept of outsourcing and globalisation of the workforce to an extreme portfolio working model where people organise their working lives like individual businesses in a highly networked world.

The global economic downturn has forced many companies to make important and difficult choices about how they manage and motivate people, with both immediate and long-term consequences.

As you read this document think about your people management strategy as a result of the downturn. What scenarios are plausible realities for your business in the decade ahead? And what practical steps do you need to take now2 to realise your vision and limit the possibility of long-term damage to your talent pipeline?

04

05

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2020: Where three worlds co-exist

The Orange WorldTribes thrive

In the Orange World businesses are fragmented, ‘companies’ are usually small, lean and nimble, relying on an extensive network of suppliers. They have multiple clients and contracts and access a globally diverse workforce of ‘team workers’ on a supply and demand basis. Communication networks are enabled by continual technological advancement and innovation. Loose collaborative ‘cloud’ networks come and go project by project. Employees in the Orange World are technology savvy and networked to communities of other employees with similar skills.

The Green WorldSustainable business is good business

Companies have a powerful social conscience intrinsic to the brand and ‘green’ sense of responsibility. The focus is on sustainable and ethical business practice and a strong drive to minimise and mitigate risky business practices. The responsibility ethos is enforced by governments and regulators and is more prevalent in certain industries such as energy, automotive and financial services. Green World employees engage with the company brand because it reflects their own values. They are recognised for good corporate behaviour, not just business results.

The Blue WorldCorporate is still king

In 2020, Blue World companies embody big company capitalism and individual preferences override belief in collective social responsibility. Blue World companies have invested in size, technology, the talent pipeline, strong leadership and sophisticated metrics. They have highly engaged and committed workforces who are well trained, skilled and operate globally. Work may be pressurised and fast-paced, but staff enjoy a wide range of benefits which help them run busy lifestyles and ‘lock’ them into the organisation. For those who perform well, the rewards can be very high.

06

G-Bank in 2020

G-Bank is a US based investment and commercial bank, in business since 1922. In a tough new regulatory environment G-Bank has provided shareholders with steady growth and solid (if modest) returns by managing risk within its workforce and business. Its behaviour is always geared toward the long term, to ensure both economic and environmental sustainability. It’s corporate responsibility values permeate throughout the organisation. G-Bank realises that failure to uphold these values could damage the brand with customers, and lead to penalties being enforced by governments or regulators.

Managing people in the Green World

G-Bank’s relatively conservative approach to lending meant it was able to weather the storm during the great credit crisis of 2008-10. G-Bank recognised that increased government scrutiny and the demands for more ethical business behaviour arising from the credit crisis would inject renewed vigour

into the environmental agenda. G-Bank’s strategy explicitly recognises the need for strong environmental credentials as an essential part of an ethical and sustainable business.

Employees are rewarded with a rich selection of benefits but the company rarely offers short-term incentives for performance. This is partly due to the rigorous US regulatory framework and partly that G-Bank’s business model is geared towards slow but sustainable growth.

G-Bank reports extensively on its people risk and reward performance as well as a host of other metrics around customer knowledge, ethical behaviour and supply chain efficiency. During recruitment, G-Bank assesses professional qualifications but also the contributions made to society and environment of the individual.

In G-Bank, as with many other Green World companies, people management focuses on achieving high levels of employee engagement. Pay is moderate compared to pre-crisis standards.

The Green World: sustainable business is good business

2009 2011 2015 2016 2018

G-Bank adopts new ‘principles for pay’ for its executive cadre; at least 60% of any individual’s pay must be based on group performance

G-Bank is first US bank to publish audited accounts of its environmental activity

G-Bank adds a permanent representative from an NGO to its board of directors

Announces early adoption of guidelines from Climate Change Act 2015 and Ecosystem Act 2016

G-Bank relocates HQ to new energy efficient eco building in the suburbs

Timeline of company

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This approach proved attractive to the millennial generation and placed G-Bank at the top of graduate ‘employer of the year’ lists in many countries. Other new people management strategies which gave G-Bank the edge over the competition during the upturn included:

Radical new benefits model – G-Bank recognised that the workforce was more diverse than it ever had been and that current flexible benefits programmes were out of touch with the millennial generation. They had to think creatively about other incentives to motivate and engage staff beyond salary. A benefit credits system was introduced which enabled employees to earn bonus credits (earned on an ongoing basis for good performance and demonstrating company values). These could be used for a whole range of options such as: secondment to an overseas office, government department, non-governmental organisation (NGO) or other socially responsible organisation; personal career/life coaching (various levels); learning a new vocation/language (not necessarily related to current job); subsidies/advice for green improvements on their homes and paid sabbaticals or extended maternity/paternity leave.

In G-Bank we trust – G-Bank wanted to change the corporate culture and reinforce new behaviours among its staff. Having been criticised for accepting a high-risk culture under the old regime, the bank was keen to refocus its brand as an honest,

Recognition is achieved through compensation being aligned to carefully regulated financial and non-financial KPIs. Engagement levels are not just influenced by pay, but the chance to work for a company with strong values, an ethical culture and behaviours aligned to its employees’ values.

How G-Bank emerged from the global crisis

Transparency became the key principle through which the bank maintained the trust of its customers. The bank began to disclose the positive and negative impacts of its portfolio of activities, so that customers could see exactly where their money was going.

The bank facilitated a ‘green new deal’, where environmentally friendly technologies led the recovery from the recession. The bank applied its long-term view on climate change and began to finance the adaptation of its customers to the impacts of global warming and insuring against the costs. Its early acceptance of climate change as a business driver gave it a leadership position relative to latecomers, particularly in the US with a new climate conscious government. G-Bank was the first to introduce carbon and sustainability related metrics to monitor and reward its employees and businesses.

‘ 86% of millennials would consider leaving an employer whose behaviour no longer met their corporate responsibility expectations.’ Millennials at Work

08

Figure 2

safe bank with a conscience. HR teams led an extensive cultural change programme internally to get staff to live by a new code of conduct. To help the company focus their minds from the boardroom down, they invited three of their key corporate sustainability (CS) partners to join the board as observers and influencers on the leadership.

Corporate responsibility is key. 88% of millennials would deliberately seek employers whose CR behaviours reflect their own values

Southand

CentralAmerica

All regions Asia0

20

40

60

80

10088 89

8189

82

94 90 93

%

Australasiaand

PacificIslands

Centraland

EasternEurope

WesternEurope

Middle Eastand Africa

NorthAmericaand the

Caribbean

Base: 3922 global respondents

Source: Millennials at work: perspectives from a new generation (PwC December 2008)

How green are you? – G-Bank recognised the growing strength of the environmental lobby and the need for companies to react quickly to consumer concerns about any aspect of their business deemed unethical. G-Bank introduced an audit process and quarterly company reporting that focused on measuring CS practices by detailing carbon emission ratings and carbon exchange activity as well as more traditional

‘ One of the things that the survey told us is that employees attach a great deal of importance to the bank’s proactive stance on issues of corporate responsibility. These issues resonate very strongly with our employee base. You see the same level of interest among the graduates we recruit.’continued on p09

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company valuations. This is an indication of the importance shareholders and investors began to place on these issues, and how they were reflected in the share price. Employees were also asked to complete annual ethical and environmental reviews as part of the compliance process.

Risk under the microscope – G-Bank was criticised (but not as much as some other financial institutions) for rewarding the previous management team, despite poor financial results during the downturn. New performance review metrics for staff included measurement of the level of risk taken by the individual as well as other key non-financial metrics. Employees could be penalised for excessive risk taking even if the outcome had been profitable. Performance reviews were linked directly to the benefit credits system and staff could see their credits removed as well as being rewarded.

New reward model – G-Bank was one of the pioneers of ‘new reward’ in financial services, introducing a radical shake up to the previous reward for individual performance model. It adopted ‘seven key principles of pay’ across the organisation from the top down. The model was praised by shareholders and regulators and was quickly copied by other companies (see Sustainable reward. G-Bank’s seven ‘principles of pay’ opposite). G-Bank also adopted innovative new approaches to retirement funding.

Sustainable reward: G-Bank’s seven ‘principles of pay’

1. Incentive payments should be based on performance measures that adequately account for the risk taken in producing profits

2. Bonus pools should not be struck below the level at which cost and risk can be allocated

3. Rewards should be aligned with the time profile of the risk borne by the firm

4. Deferrals should be linked to the realised profitability of the business on which the bonus was based

5. Managers should have a significant proportion of remuneration based on divisional or group-based bonuses

6. Compensation design should be considered a key business competence and resourced accordingly

7. Compensation should be viewed in conjunction with wider people management practices in order to support a consistent approach to achieving desired culture

continued from p08

‘ Taken as a whole, you can see that our commitment to corporate responsibility supports our sustainable employee engagement policy, which, in turn, is critical to the customer relationship that is the basis of our year-end results. It all hangs together.’Stephen Green, Group Chairman, HSBC Holdings plc, UK

10

Extract from operating review

G-Bank was one of the first organisations to disclose their environmental activity.

Future view

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 0.13

%19%59 a sa selbaweneR% of total energy consumption

CO2 emissions – properties8.120.12sennotolik – 2OC32.012.0ETF/sennot – 2OC

Business travelTotal travel-related CO2 – kilotonnes 1.0 1.9

20.010.0 2OC detaler-levarTper FTE – tonnes/FTE

‘ An employer’s policy on climate change and environment is important to 58% of millennials when choosing an employer. This rises to 82% of respondents in Central and South America.’ Millennials at Work

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How the downturn affects your ability to compete in the Green World

• Changing the compensation and benefits model. Some companies will consider radical changes to reward/bonus programmes and staff contracts because of the backlash against perceptions of excessive pay. New legislation may also trigger the need for a review, but purely reactive changes could result in first mover disadvantage if staff feel there has been a significant reduction in key benefits compared to other organisations.

New ‘zero tolerance/zero risk’ tactics.• Companies can achieve good short-term results by giving the market a signal that bad behaviour will be stamped out. However, the creation of a highly risk averse culture will hamper creativity, innovation and profitability over the long-term. A strong risk/compliance culture could also affect the speed of delivery to customers.

Companies in survival mode• often view the sustainability/green agenda as not being business critical and therefore put CS projects on the backburner. We would argue that ignoring these issues will negatively impact the brand and seriously impair an organisation’s future ability to engage with customers and staff.

Stripping back travel• to save costs. Many organisations that operate globally rely on ‘social capital’ – the ability of the global network to work across borders to support the business and deliver products and services to customers. By limiting face to face contact, companies risk the break down of many years’ investment in building social capital across the operation. If travel must be contained, then companies need to look at alternatives e.g. using technology to maintain networks.

The job for life concept disappears• as companies feel forced to make redundancies even two years after the low of the economic crisis. Research shows that unemployment follows the economic curve but lags by three years. Companies should consider alternatives to redundancy through careful workforce planning.

Disillusionment• with some industries, as a result of the downturn, may lead to talent turning its back on the corporate sector in favour of other sectors or NGOs.

To compete in the Green World, organisations must have a robust and transparent CS strategy. This should be clearly linked to the people strategy and, hence, actively engage employees.

12

Yao in 2020

Yao is a global pharmaceutical company. It was formed by the agreed takeover of Como by China’s state-owned Yao Generics in 2012. Como was originally founded in Treviso, Italy in 1913 as a soap manufacturer, later becoming a global leader in the branded pharmaceuticals market in the 1990s and 2000s.

Patent expiries, an insufficiently developed drug pipeline and increasing competition from generic producers left Como vulnerable after the global recession of 2008-10. Yao’s ‘Isis’ longevity range, its euthanasia product ‘Anubis’, and ‘Rise’, (its popular antidepressant) now make Yao the most profitable pharmaceutical company in the world.

Managing people in the Blue World

Yao has become synonymous with dynamic, innovative capitalism. Its reward structure favours innovation and entrepreneurial behaviour. Yao continues to reward risk taking – when it works. It is a highly profitable business and provides shareholders with enviable returns.

The company has performed the neat trick of creating elements of a small business culture within a global giant by rewarding entrepreneurial behaviour. Ironically, close management and measurement maintain this culture of healthy, competitive innovation and creative freedom. More measurement of performance and output happens at Yao than at almost any other company. The HR people say they know everything about their employees, ‘down to the colour of their eyes’.

The Blue World: corporate is still king

2010 2012 2013 2016 2017

Como introduces mass people measurement regimen across the organisation

Como bought by China’s Yao Generics and becomes Yao-Como. Other acquisitions follow

Yao-Como data theft scandal prompts ‘dark pool’ recruiting

Yao-Como’s ‘Resilience’ wellness at work programme is cited by the World Health Organisation as ‘best of breed’ model

New CEO Betty Chang moves the HQ from Rome to Shanghai (China remains its biggest market) and changes name to Yao

Timeline of company

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‘ 47% of millennials think China, Russia & India will have more economic influence than the US & Europe by 2020. Only 28% of US graduates disagreed.’ Millennials at Work

Rewards for performance are high and non-financial benefits (such as the employee health and wellness strategy) enhance the value of the overall remuneration package. With the company providing lifestyle services as part of the benefits package, employees are expected to use the resulting savings in net income to make their own arrangements for pensions and medical insurance during retirement. Yao’s strategy has incorporated the lessons learned from iconic employers that failed because of crippling worker healthcare and pension costs.

How Yao emerged from the crisis

The takeover of Como by Yao Generics acknowledged the shift in global economic power to the East, already underway in the mid-2000s, but accelerated by the global credit crisis of 2008-10.

Like other pharmaceutical companies at the time, Yao faced an ongoing challenge to maintain its drug pipeline, and viewed the ailing Como as a long-term investment which would bring new products, key talent and a strong foothold in the European and US drug market. Yao admired the people measurement and productivity monitoring pioneered by Como and also saw this as a key component of its strategy to become the dominant player in the industry. Yao focused on:

Yao’s search and selection activities are meticulous in the extreme. From the beginning of the recruitment process, candidates (at all levels) have to undergo an intensive process of medical, physical and psychological tests to ensure they have the stamina and desired attributes of a Yao employee.

Work at Yao is known to be pressurised and fast-paced, but there are benefits. Yao invests significantly in training and development across all levels. International assignments are common, especially for junior employees, but they do not often get to choose where to go. Yao helps workers manage their lives outside work and many see the company as an iconic employer and a breaking ground for tomorrow’s business leaders.

The company’s obsession with measurement is not just about performance and productivity, but enables it to keep its ‘core’ employees engaged through training and role rotation. The Chief People Officer (CPO) sits on the board and is highly influential. Yao was one of the first organisations to consciously capitalise on the link between employee engagement, productivity, retention and customer loyalty.

Yao is good at spotting underperformers and redeploying or exiting them – it is part of what makes Yao successful. There are quarterly performance reviews and staff work in a super-charged, competitive atmosphere.

14

‘ Over one third of millennials believe that by 2020 companies will be more influential than governments.’ Millennials at Work

Blurring the line between work and home – Yao recognised the desire by many employees for the company to take greater responsibility for their lives outside the workplace. Needs differed significantly by geography, but also by generation. For example, US workers wanted more flexible working arrangements and time off, whereas Chinese workers looked upon Yao as a place that could offer security, stability and the possibility of employment to other family members. Millennials wanted overseas working opportunities and lots of training, whereas retirement age workers in Europe were keen to work beyond retirement to supplement minimal or non-existent government funded pensions.

Fit workforce is a fit business – Both Como and Yao were strong advocates of promoting employee wellness, viewing regular health checks as part of ‘employee maintenance checking’. The development of the employee health and wellness strategy, had a dramatic impact on levels of absenteeism due to sickness which saw a fall by 60% in the first year of the programme.

Continued investment in training and development – Yao’s high performance culture is supported by strong training and development activity across the organisation at every level. Employees are encouraged to broaden their skills, and mobility of roles is the norm.

Making HR a hard discipline – the leadership of Como had pioneered a sophisticated people metrics regime across the organisation. In the downturn years this helped Como to strip costs out by ‘surgically’ removing poorly performing individuals or parts of the organisation. When the upturn came, Yao capitalised on the metrics programme to spot opportunities for growth and to nurture strong performers.

Introduction of private equity style structures in parts of the organisation enabled Yao to maintain an innovative edge in an industry where fortunes rest on a healthy pipeline of new products. This allowed individual divisions to share in the profits of successful new products they created and promoted a high performance culture internally.

Recruiting talent from ‘dark pools’ – Yao’s extensive customer and employee information database exposed them to e-espionage and cyber attacks. In response they recognised the need to recruit technology problem solvers with unconventional résumés who could protect, manipulate and manage data in better ways (see dark pools on page 16).

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Figure 3

Many millennials would be comfortable with an employer providing personal services such as housing/food/regular doctor and dentist appointments.

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All countries

66

Southand

CentralAmerica

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Asia

% who answered yes

61

Australasiaand

PacificIslands

68

Centraland

EasternEurope

65

WesternEurope

72

Middle Eastand Africa

61

NorthAmericaand the

Caribbean

Base: 3,884 global respondents

Source: Millennials at work (PwC December 2008)

Business passports

In certain parts of the world Yao has secured access to a number of ‘business passports’, issued to those highly skilled individuals constantly travelling between markets. This enables Yao to move some of its key employees more freely, in some cases negating the need for entry visas. It has worked particularly well for technical staff that need to be able to service and adapt the increasingly sophisticated technology infrastructure common to all large multinational organisations. Often this cannot be done remotely. The vetting procedures for these passports are tough and their future validity is not guaranteed. Any serious increase in international terrorism will likely see them revoked.

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‘ We see many enterprises around the world cutting jobs because of the financial crisis, and we work with leading human resource consultancies to recruit more Western professionals.’REN Jianxin, President, China National Chemical Corporation (ChemChina), China

Dark pool talent

Data, intellectual property and intangible assets became an increasingly core part of many business models. Some companies relied heavily on banks of customer data (some of it updated in real time) to intelligently target bespoke products and services through the consumer’s life span and changing circumstances. Performance management within organisations increasingly focused on capturing, monitoring and manipulating a vast range of employee metrics. Data and communications networks (including mobile phones and hand-held devices) were increasingly vulnerable to e-espionage, cyber attacks and theft by organised criminals who were then able to compromise a business and blackmail its employees.

Companies needed to find a way of countering these threats. They started to fish in ‘dark pools’ for the talent they needed to create a protective shield. This new wave of corporate employee included those previously involved in covert government operations, the military, technological innovators (often under twenty years old) and ex-criminals.

A recruitment gap was identified: companies needed complex puzzle solvers who happened to use technology, not just technology experts. Initially, there was a trend for companies to go looking for dark pool talent directly. The recruitment industry eventually caught up and began to test routinely for problem solving abilities.

Although small in number, some of these employees assumed positions of great power quickly and had a significant impact on the work culture within organisations. The influx of dark pool talent provided challenges for managers and for leadership teams who understood the need for, but not the nature of, the work these employees undertook. Some were unconventional and eccentric characters with values and life experiences very different from traditional candidates. Care needed to be taken to manage and incentivise these people through their time at a company and especially during their exit. Many of them carried knowledge that could be used to compromise, even destroy operations.

Future view

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Employees committing fraud• in the workplace increases during a downturn. Companies need to ensure they have the right processes in place to minimise the possibility of fraud being committed. Employee fraud can be large or small scale and can damage both the reputation and the profitability of the business. This kind of fraud is usually borne out of low employee morale, individuals feeling personal financial pressure and an increased ability to justify the crime to themselves.

Not having the right data.• Although most organisations would lay claim to using some employee measurement techniques, many organisations struggle with what to measure and then how to interpret the data. In Yao’s world, HR has become a hard discipline with people measurement at the heart of financial reporting. The danger in a downturn is that companies make cuts based on inappropriate data which damages the business in the long term.

To complete in the Blue World, organisations must become more focused on measurement and making HR a hard discipline. The ability to invest in a talent pipeline for the future is critical.

How the downturn affects your ability to compete in the Blue World

For most companies, people costs represent the largest business cost – up to 70% in some organisations. During a downturn, spend on people is usually the first area to be scrutinised and cut. In the Blue World, long-term investment in the ‘talent pipeline’ is critical for businesses to remain competitive. Some of the ways companies could be affected by the downturn include:

Reducing graduate intake numbers• for a couple of years will seriously affect the talent pipeline and limit the number of options for leadership succession planning in the long term.

Training and development• budgets are often cut when companies are in difficulty. As well as a potential negative impact on customer service or product quality, cutting investment would mean the company lacks the right skills to compete when the upturn comes, incurring the higher cost and delays of hiring in people.

‘ Generation Y is much more focussed on work life balance. They want to get recognition much more quickly. The idea of being mentored by a senior manager is very attractive. But there’s less of the ‘time served’ mentality before they expect to see reward.’Vivien Broughton, Career Development Manager, Europe & African Unit, Transocean

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Data Honey

Data Honey was established by Sven Norstaad and Petr Burgin in 1999. By 2020 it was a business of around 100 core employees, but using a network of contractors or ‘team workers’ of 1,500+. Data Honey is a highly successful market research and consumer communications agency based on the outskirts of Oslo, Norway. Almost half its permanent staff work remotely from around the world. Despite its relatively small employee population, Data Honey’s 2019 turnover was over €4bn. Fragmenting global structures and the growth of new, dynamic local markets helped Data Honey thrive.

Managing people in the Orange World

Data Honey has managed to align its workforce size and capacity to its workload through clever use of collaborative tie-ins, international networks and its relationship with the technology guilds which have established themselves and flourished over recent years.

Data Honey uses many contractors, known as ‘team workers’. Both permanent and temporary employees are encouraged to join the appropriate global guilds for everything from training and development to retirement, insurance and healthcare needs. HR as we knew it at the start of the century is almost non-existent. All that remains in-house is a talent sourcing role, which has been expanded to include management of internal

The Orange World: tribes thrive

2010 2012 2016 2017 2019

Data Honey helps to establish the first global guild – The Guild of Web Designers

Data Honey creates Head of Talent Sourcing role

Workbook takes care of 95% of Data Honey’s team worker recruitment needs. All team workers belong to guilds

Workbook now has three seri-ous rivals and introduces the Universal Employee Rating to regain its market lead

Guild of Web Designers successfully sued by ex-Data Honey employee for unfair employee rating

Timeline of company

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‘ 85% of millennials are members of online social networks.’ Millennials at Work

Technology developers now leverage the power of the guilds and application marketplaces to sell these products direct to enterprise. The former barriers to entry – high capital costs for product testing as well as the fast burn rate of marketing and advertising expenditure – are borne by the guilds and the platform providers in exchange for a share in the upside. Data Honey benefits from being able to either buy talent or buy products depending on a particular need.

communications. Most recruitment is run through Workbook, the universal recruitment podium (see page 23).

Mobility is high. Data Honey believes that most people lose their creativity if they stay too long in the same role. Many people leave to go and work for Data Honey’s clients and end up returning a few years later. A lot of the management is remote, which has involved specialised training for some of the senior managers and a constant investment in communication technologies.

In the Orange World, individuals providing professional services (such as programming expertise) now market themselves more like companies than freelancers. Some will offer a specific skill set to a prospective employer such as capability with a particular portfolio of software. Others have changed their value proposition by offering ‘microproducts’ or highly specialised applications which they have developed themselves.

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‘ I think the first thing is having clarity about who the top talent is, and second, ensuring that you reward them both financially and with expanding opportunity as well as with personal acknowledgement. At the same time, it’s counterproductive to lavish acknowledgement on your top talent if it’s done at the expense of everyone else in your company.’John Donahoe, President and CEO, eBay Inc., US

Early adopters of Workbook – when Workbook came on the scene in late 2010, Data Honey encouraged its social networking group to support the site. The reason Workbook succeeded where other large recruitment firms failed, was the pricing model. Candidates posted their information for a small fee and employers were charged a commission fee commensurate with the project length or level of expertise needed. As overheads were lower, the commission fees were far less than fees charged by the traditional recruitment firms.

Having a talent pipeline for the upturn – when the upturn came, Data Honey’s competitors were still struggling with the old model of hiring talent back into their organisations for permanent positions. Data Honey developed a market leading reputation for being able to cherry pick the best people from a global talent pool for its clients – if necessary, within a matter of hours.

How Data Honey emerged from the crisis

When many people (particularly in the technology, advertising and marketing sectors) lost their jobs in 2008-10, Data Honey realised there was a lot of good talent looking for work. They invested in creating social networks and support services for redundant workers as a way to make connections with new talent. In the short term, there was no real gain for Data Honey (although, reputationally, they became known as a forward thinking, good company to work for). But when the upturn came and demand for these services increased again, Data Honey was in the enviable position of having access to some of the best talent around the world. This gave them huge advantages over the bigger, more traditional players and they stole market share.

Creating social networks – the HR chief at Data Honey began to track layoffs at big competitor companies during the downturn. Data Honey created a number of social networking sites for jobless talent where they could find advice, share experiences and, in some cases, find new job opportunities. In fact, Data Honey was able to offer a number of short-term contracts to members of this network to support its client needs.

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‘ 40% of Millennials would be prepared to give employers greater access to personal information, only 35% disagreed.’ Millennials at Work

in an age of complete adoption of social media, networks have become so large that they are pervasive and self-validating. The transparency of online profiles allows prospective employers to check potentially inflated credential claims, which led to the requirement by professional services companies – now adopted in other industries – that all employees maintain available online profiles.

Setting up the guild model – Data Honey quickly spotted the trend for freelancers to act and market themselves as companies, rather than merely self-employed contractors, and supported this trend by helping to set up the first guilds (see Global guilds page 22).

Universal employee ratings – early adopters of Workbook and the Universal Employee Rating, Data Honey recognised that

Most millennials have at least one email account, 44% have at least 3 or more

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80

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Southand

CentralAmerica

All countries

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51

48

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39

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WesternEurope

Middle Eastand Africa

NorthAmericaand the

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2

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Source: Millennials at work (PwC December 2008)

Figure 4

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Global guilds

The global guilds are professional bodies for the technology and related industries. They were established by groups of successful professionals (with some international development and industry funding) from each of the represented disciplines. In just a few years, they have grown to a combined global membership of over five million professionals, all of whom pay an annual membership subscription and additional fees depending on their use of guild services. Most of the technology guilds were established in India from 2010-15.

The latent demand for guilds was obvious from the outset. The dot com crash of 2000-02 and global recession of 2008-10 created a highly successful, mobile and qualified group of technology freelancers. These technology tribes include information architects, web designers, game engine developers, technology consultants, search optimisers, online marketers, software engineers and systems testers. The freelancers that form them thrive on the variety of contacts, employers, sectors and locations they experience. Their membership of a still fairly new peer group provided them with a professional identity, not their employment in a

particular company. Many of these individuals, however, were not experts at completing tax returns, sending invoices or planning their own training programmes.

The global guilds have stepped in to provide these services, which has also made life easier for employers. The guilds can manage payroll, tax, global resource mobility and training, as well as legal representation for individuals and small companies. Their association and collaboration with universal employee podiums (notably Workbook) has enabled small but growing companies like Data Honey to effectively outsource most of their HR activities. The guilds’ standards and codes of practice mean they can ‘vet’ Workbook’s members and, to some extent, carry the risk through its disciplinary procedures and membership criteria.

The guilds’ adoption of Workbook’s Universal Employee Rating (UER) has helped employers and employees navigate the recruitment terrain, although this has not been without obstacles as the UER has now acquired a quasi-legal status and can be challenged in court.

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‘ The shortage of talented people in many of the markets where we are is going to be a huge concern just for sheer demographics. That’s why the investment in technology is going to be even more critical, so people have the tools to be able to provide more sales per employee with the same amount of demand on hours as they have today.’Group Chief Executive, FTSE100 global company

Extract from employment networking site in 2020

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

Future view

Chin Han’sUniversalEmployee Rating

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How the downturn affects your ability to compete in the Orange World

During a downturn, many organisations switch to survival mode, cut costs and take cover until the storm blows over. Data Honey remained focused on the future and the belief that they could capitalise on the changing world more quickly than their competitors. Its flexibility and entrepreneurial approach helped to create a completely new way of working for an entire industry.

Being innovative and taking risks• . During tough times, companies often shift focus to the short term. Companies need to continue to innovate, and anticipate or create their own futures.

Cost cutting• can lead to reducing numbers of external contractors and bringing a number of areas back in house. This might seem like a good short-term strategy to save costs, but may not be the best model for the supply chain over the long term.

Technology investment• is another area likely to be hit during a downturn. Spend on technology enhancements can seem like luxuries when there are more pressing issues, but companies need a competitive and relevant technology platform to support the business when growth returns.

Networking sites• – companies need to embrace the new currency of social networking sites and see them as a tool for developing contacts, new clients and promoting services. On the flip side, disgruntled employees can vent their frustrations on these sites and irreparably damage a brand within a short space of time.

Millennial employees• have different needs and expectations from previous generations. This tech-savvy generation expect employers to embrace technology and the flexibility it brings to their working lives.

To complete in the Orange World, organisations need to continue encouraging innovation and exploring new ways of doing things. The fast rate of technological advances cannot be ignored.

‘ The key for HR in these times is to focus on being more engaged in the business, Attracting talent is going to be challenging when companies are cutting back. Trying to make sure that we keep that influx of new talent coming into the organisation will be critical.’ Barise Hatfield, Global Mobility Advisor, Huntsman International LLC

25Summary

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Green World Blue World Orange World

Workplace cultureFocus on socially and environmentally responsible business practices

Fast-paced, global operator, with high performance culture

Flexible and highly networked with a focus on the short term

Employee profile‘Your corporate values match mine – I belong here.’

‘Only the best work here – I am the best.’

‘I will work with you because it suits me right now.’

People management styleCoaching and nurturing to promote the right behaviours

HR is a hard discipline, very metrics focused with rigorous recruitment processes

Emphasis on global talent sourcing, global guilds replace the HR function

Key themesCS and transparency underpin everything to drive moderate but steady growth

Controlling talent is key, the line between home and work is blurred

Small means agile, innovative and able to adapt to change quickly

Corporate ethosSustainable business for a better society

Perform well all of the time and everybody wins

Networks make the world go round

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3 Extract from the full interview with Alf Göransson which can be found on pwc.com/ceosurvey

‘ As an employer with 250,000 employees, we are also dependent upon access to manpower, particularly since there is a high turnover of personnel in the security industry... In the long term, however, demographic development is a risk factor. Europe is expected to undergo a population decline to an extent that has not been seen since the Black Death.’3 Alf Göransson, President and CEO, Securitas, Sweden

Of course we cannot be certain about the future, but we know that talent will be as critical tomorrow as it is in today’s world. 97% of CEOs in PwC’s 12th annual global CEO survey said that having access to talent and key skills was the most critical factor for their long-term business strategy.

We can also draw some conclusions from the case studies presented in each of our worlds where each company embedded best practice, but at the same time was not afraid to take on board fresh ideas.

It is clear that the • millennial generation have different expectations of work and career. Businesses will need to think carefully about how they engage with employees of different generations.

Corporate sustainability and climate change issues •have gathered momentum. Perhaps dependent on location or industry, companies will be forced to make significant changes as a result of new regulation, but also to remain competitive and sustainable in the eyes of customers, shareholders and employees. The debate will move on beyond carbon to other issues such as water scarcity.

Employees, business leaders and governments have •had to weather the economic crisis together. Some businesses will come out better than others, but we are likely to see renewed efforts to restore trust. This will come in the guise of new regulation or tighter controls to manage risk. The ‘once in a lifetime’ shift in our notion of performance related pay will change our outlook on company reward and retirement arrangements.

The importance of hard measurement of people has •never been more crucial. HR can no longer be a ‘soft’ discipline. Today’s people cost cutting has been likened to conducting surgery by candlelight, but tomorrow’s competitive world will demand much greater precision.

The • health and wellbeing of the workforce will be a key focus in tomorrow’s metrics oriented world. Sick, unhealthy or unhappy employees = reduced productivity and absenteeism.

Companies slashing training and development budgets •will regret it. In the rush to reload the talent supply when the upturn comes, these companies will be left behind. We also know that training and development is the most important benefit in the eyes of millennials.

Is your people strategy fit for the future?

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finance or marketing functions take over HR? Whatever the outcome companies need to ask: is the HR function fit for the future?

We believe that all companies should be thinking about scenarios for their own organisations. They need to examine how macro trends (demographics, globalisation, technology, climate change, etc.) will impact their business or industry, and how these might play out into future scenarios. Thinking through what these scenarios would mean for an organisation and what decisions or options need to be considered, will help to prepare for the future.

For employees, the future is likely to be a world where many different ways of working are on offer. The opportunity to experience multiple cycles of experience either in one or many organisations will exist. Employees will align themselves with organisations that fit their priorities and ideals more than in the current world, whether that be in relation to financial gain, social and environmentally responsible practices, aligning with personal beliefs, the opportunity to work overseas or being self employed.

The impact of the economic crisis was felt everywhere and •even emerging markets were not ‘decoupled’ from the crisis as some had predicted. Global mobility of talent will be essential to manage operations, optimise success in key markets and to maintain the talent supply in the organisation.

Companies need to accept the implications of social •networking and use it to target new customers, attract talent and manage customer relationships. Companies that innovate in this area will succeed.

Having the right technology platforms to run the •business will be vital to compete. Businesses might struggle to keep up with technological advances and the inevitable cost of change, but customers and employees will demand it.

And finally, how is the Human Resource function positioned •for tomorrow’s world? HR decision making will be key to the organisation’s cultural evolution and change. Is the era of ‘business partners’ coming to an end? Could we end up outsourcing everything to global guilds? Might the

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For employers the challenge will be much harder. The competition for talent will continue to be intensely fought. Employee expectations will be far greater, and organisations will face these challenges against an even more competitive global market.

This report has outlined three very different business models co-existing in tomorrow’s world. Each organisation faced different challenges and tackled the downturn in unique ways. As companies contemplate the next decade, many will consider rethinking and reshaping their strategy. In these three diverse worlds one common theme is that G-Bank, Yao and Data Honey invested in their own scenario planning process to identify opportunities to innovate, increase competitiveness, and identify real options to mitigate risks. This strategy helped each company to become the dominant players in their industries.

What should you do now?

Determine how future proof your business and people strategy is against the global drivers that will impact in the coming decade

Develop scenarios appropriate for your company, ▼

industry or geography

Understand how your business fits into these ▼

scenarios and how well prepared you are to meet tomorrow’s challenges

Drill down into specifics on people management; ▼

for example, your reward strategy, retirement plans, recruitment policies – are they future-proof?

Consider what ‘real options’ or actions you might take ▼

now to mitigate any risks and capitalise on opportunities to put yourself in a competitive position for the future

Challenge the HR function to be more externally ▼

focused on customers, markets and trends – HR needs to harden up

Recognise that the future is not a place you go to, but one which you create

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2019 Number of staff is still maintained at a minimal level of 108 but at the annual general team meeting there are 120,000 online participating team members

2010 Introduction of mass people measurement

2012 Employee engagement/productivity measurements detect some serious absence issues in one of the research facilities in Italy

2014 Wellness programme is awarded best of breed model by the WHO

2017 New CEO moves the HQ from Rome to Shanghai

2018 Yao participated in the Pharma CEO awards and was recognised for outstanding achievement in people and metrics

2019 Yao sets up a People and Metrics credential programme open to external applicants

2010 The recruitment team launches new CS requirements e.g. an NGO reference for each applicant

2011 Publish audited accounts of environmental activities and introduced carbon metrics

2012 Head of HR takes over responsibility for the corporate CS agenda

2015 Three key CS partners appointed to Board of Directors

2017 Relocation to a number of new ecologically sustainable complexes,

all equipped with virtual meeting rooms and an auditorium for annual events

2020 – G-Bank

2008-10 Economic crisis

2020 – Yao

2020 – Data Honey

2016 HR function is closed down and Head of Talent Sourcing role moves into Procurement, managing outsourcing arrangements with various guilds

2015 Workbook becomes the preferred sourcing provider and manages 95% of Data Honey’s team worker recruitment

2012 Creates Head of Talent Sourcing role with sole responsibility for contractor arrangements, including sourcing and payment

2011 Data Honey agrees outsource arrangements for recruitment and training with two guilds; one in San Francisco and one in the Philippines

2010 Data Honey helps to establish the first global guild

Some of the key decisions made by each company as a result of scenario planning

30Appendix 1: global forces

Business fragmentation:the potential break-up of large

businesses and the rise of collaborative networks

Global forces

Technology controls me:allowing technology into almost

every part of a person’s life

Collectivism:the common good prevails over

personal preference, e.g. collective responsibility for the environment

over individual interest

Reverse globalisation:protectionist policies begin to

rebuild barriers to free movement of people and goods

Globalisation:the free-market trend prevails

as trade barriers disappear

Individualism:focus on individual wants;

a response to the infinite choices available to consumers

I control technology:a yearning for the human touch minimises the personal impactof technology on consumers

Corporate integration:big business rules all

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During periods of economic upheaval and increased uncertainty, the difficulties of plotting the future course of a business are brought more sharply into focus. Successful companies are those which, rather than reacting to unfolding events, take a proactive stance and incorporate the possibility of change into their business strategy.

Two very different historical examples graphically illustrate how specific action based on foresight and planning can turn adverse economic circumstances into competitive advantage.

In the early 1970s, with crude oil in plentiful supply, high •demand for shipping capacity meant that oil companies were obliged to charter tanker space far in advance to ensure they could ship their product. When OPEC announced in October 1973 that they would no longer supply oil to nations supporting Israel in the Yom Kippur war, many companies were left with excess tanker capacity, at considerable expense. But one oil major anticipated the possibility of a global oil crisis and, at only modest additional cost, built options into its tanker contracts, allowing the company to decline shipping capacity in excess of its requirements.

In the recession of the early 1990s many professional •services firms slashed their graduate recruitment budgets. This short-term approach damaged their brands among the student population and, five years later when the markets had recovered, left them desperately short of experienced staff. One consulting company took a different approach. At the low point of the cycle in 1991-92, rather than cutting numbers and withdrawing offers like their competitors, they offered candidates the opportunity to defer entry for a year or two along with a modest travel bursary. Job candidates loved the idea and many accepted the offer willingly. The company’s reputation among the student population was greatly enhanced and the firm saved costs in the short term while guaranteeing its supply of labour in the long term.

Appendix 2: from scenarios to real options

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Building the bigger picture

Before specific real options can be incorporated into the business strategy, the broader economic backdrop and the ways in which it might change must be examined.

The process begins with the development of big picture or ‘first level’ scenarios, which are deliberately painted on a broad canvas. This process is about building strategies by imagining plausible futures, being creative and using inductive logic. Planners think about global macroeconomic trends, geo-politics, changes in society – including individual values and consumer preferences – industry trends, environmental changes and technological innovations.

While current trends will inform this thinking, scenario builders need to consider the possibility of major discontinuities – events like the September 11 terrorist attacks on New York or the sub-prime loan crisis, which can have dramatic effects on business and society.

From macro to micro

Using the first-level scenarios as the starting point, more detailed company specific or ‘decision’ scenarios can then be developed. These examine the implications of the big picture scenarios on the company, its competitors and the industry in which it operates. The scenario builders will think about the response of individuals, organisations and governments. What will be the effect of changes in the environment on consumer preferences and government regulations? How will the company itself react, taking into account its know-how, the competencies of its people and its financial resources?

Of course, while there are many possible scenarios, a company can only execute one corporate strategy at any time. The challenge is to move from a number of different plausible views of the future, with different consequences and requiring different responses, to one set of actionable plans. This is where the corporate planning technique called ‘real options’ comes into play.

Figure 1: From scenarios to real options

First-level scenarios High level, descriptive, creative, inductive, general, a basis for strategic discussions

Decision scenarios More detailed, deductive, company-specific, a basis for strategic planning

Real options Very detailed, a basis for decisions

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Timing is everything: real options should be bought or constructed when the cost of doing so is cheap, creating competitive advantage if an option comes to be exercised and minimising cost in the event that the option turns out to be unnecessary.

Real options come in many forms. They may be rights to buy or to sell, opportunities to switch between different internal business processes or external suppliers, or toe holds in different markets. Options may be acquired on the external market, created internally, or they may already exist within an organisation.

A longer list of different types of option is shown in figure 2 below.

Real options

Both case studies above are examples of ‘real options’. They are ‘real’ in the sense that they relate to something tangible – in these instances tanker capacity and people.

A real option gives management a right, but not an obligation, to utilise an asset in pursuance of the strategic goals of the organisation. Real options create flexibility in an uncertain world. They buy time to think, to allow managers to watch trends and look for early warning signs, to experiment without making irrevocable commitments.

Figure 2: Types of real options

Inherent options Already exist for free, simply need to be identified

Created options Need to be consciously constructed or acquired, possibly at a price

Switching options Give the possibility of switching between products, processes, inputs or business activities

Modification options Create additional possibilities by modifying products, processes, infrastructure

Platform options Investment in new infrastructure or capabilities to give new business opportunities

Capability options Development of distinct competencies – human resources, brands, reputation, culture, knowledge, processes

Portfolio options Development of new markets, channels to market, products, pricing strategies

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Incorporating multiple possible outcomes

When a set of decisions work well in all imagined scenarios, the appropriate course of action is clear. Conversely, for decisions that would not work in any possible scenario, it is equally clear that the course of action should not be taken. The real world, however, is rarely so straightforward.

Consider the four key decisions and three possible scenarios shown in figure 3. In the third case the decision works well in scenarios B and C but not in the case of scenario A.

In the fourth case the decision works well in scenario C but not in the other two. Unfortunately, the categories of decision represented by questions 3 and 4 are more common than clear-cut decisions like 1 and 2.

This is where real options come into play. Rather than gamble, management should try to identify real options which cover the implications of a ‘yes’ decision to question 3 if scenario A comes about, and of a ‘no’ decision to question 4 if scenario C turns out to be the case. These options can then be incorporated into a single business strategy.

Fig 3: Linking scenarios and real options

Scenario A Scenario B Scenario C

Decision 1 Positive outcome Positive outcome Positive outcome

Decision 2 Negative outcome Negative outcome Negative outcome

Decision 3 Negative outcome Positive outcome Positive outcome

Decision 4 Negative outcome Negative outcome Positive outcome

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Real options in managing people – examples:

Building research centres in different geographical locations •around the world solely with the aim of accessing wider talent pools.

Recruiting people with an unusual mix of experience and •qualifications in order to broaden a company’s capabilities.

Increasing workforce flexibility by using a mix of different •types of employment arrangement – fixed term as well as permanent contracts.

Maintaining networks of self-employed contractors •to supplement full-time staff.

Using internships and bursaries to build relationships •with universities to access knowledge and as a source of graduate recruits.

Experimenting with different learning strategies, including •computer-based training.

Incorporating greater flexibility into reward arrangements. •

Running some HR systems in-house while outsourcing others.•

If you would like more information about scenario planning or real options, contact Jon Andrews, jon.andrews@uk.pwc.com

36Publications

PricewaterhouseCoopers 12th Annual Global CEO Survey: Redefining successViews from 1,124 CEOs from more than 50 countries, the report discusses the impact of the downturn, biggest threats to business growth and the talent management challenges facing businesses across the world.

www.pwc.com/ceosurvey

Millennials at work: Perspectives from a new generationOver 4,000 new graduates from 44 countries were interviewed to explore their hopes and expectations as they enter the workforce for the first time.

www.pwc.com/managingpeople2020

Managing tomorrow’s people: The future of work to 2020The first report in our tomorrow’s people series, uses scenario planning to envisage three business models or ‘worlds’ which we believe will co-exist in 2020.

www.pwc.com/managingpeople2020

Fool proof plans

Futureproofplans

12th Annual Global CEO SurveyRedefining success

Managing tomorrow’s peopleMillennials at work: Perspectives from a new generation

Contents Next

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

*connectedthinking

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Contacts

Acknowledgements

There have been many people from within and outside PricewaterhouseCoopers who have been involved in the development of these ideas. Our particular thanks to Alexander Pepper at the London School of Economics and to all the companies who shared their views and insights.

Our thanks to the PwC project team which involved many dozens of subject matter experts from across our network of firms. In particular our thanks to the core editorial team: Jon Andrews, Cecilia Ford, Andrew Smith and Leyla Yildirim.

Michael RendellPartner and leader, Human Resource Services PricewaterhouseCoopers LLP (UK) +44 (0) 20 7212 4945 michael.g.rendell@uk.pwc.com

Leyla YildirimMarketing, Human Resource Services PricewaterhouseCoopers LLP (CI) +44 (0) 1481 752039 leyla.yildirim@uk.pwc.com

US

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

John CaplanPartner and leader, Human Resource Services PricewaterhouseCoopers LLP (US) +1 (646) 471 3646 john.caplan@us.pwc.com

Europe

Henk van CappellePartner PricewaterhouseCoopers (Netherlands) +31 20 568 6210 henk.van.cappelle@nl.pwc.com

Asia

Ron CollardPartner PricewaterhouseCoopers LLP (Singapore) +65 6236 7278 ron.pa.collard@sg.pwc.com

Mandy KwokPartner PricewaterhouseCoopers (Hong Kong) +852 2289 3900 mandy.kwok@hk.pwc.com

Visit our Managing tomorrow’s people site at: www.pwc.com/managingpeople2020

www.pwc.com/managingpeople2020This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2009 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

Designed by studioec4 19905 (08/09)

Managing tomorrow’s peopleMillennials at work: Perspectives from a new generation

2Contents

2

3

Managing tomorrow’s people In late 2007 PricewaterhouseCoopers1 (PwC) released a report on the future of people management: Managing tomorrow’s people – the future of work to 2020, which outlined a series of possible scenarios, depicting how businesses would operate in tomorrow’s world. The report specifically focused on the people impact of new business models, and the ramifications for people management and the HR function. We identified three scenarios defined as blue, green and orange worlds which we believe will co‑exist in 2020.

The blue world – the big company model rules as organisations continue to grow bigger and the divide •between work and home begins to blur.

The green world – social responsibility dominates the corporate agenda with concerns about demographic •changes, climate and sustainability becoming the main business drivers.

The orange world – companies begin to break down into collaborative networks of smaller organisations; •specialisation is key.

Our follow‑up report looks at real options for business in light of tomorrow’s trends and challenges. What do businesses need to do now in order to be successful in 2020? The first part of this analysis has been to examine a new generation of workers, the millennials, which is explored in this publication.

For more information about our 2020 worlds and to view all our latest analysis and reports on this theme, please visit our website: www.pwc.com/managingpeople2020

MillennialsWikipedia says ‘the millennials’ are also known as: ‘Generation Y – a term used to describe someone born immediately after Generation X… one of several terms (also including The Internet Generation) used to identify the same group. There is much dispute as to the exact range of birth years that constitute Generation Y and The Millennials and whether these terms are specific to North America, the Anglophone world or people worldwide.’

For the purposes of our Managing tomorrow’s people series, we refer to millennials as those who entered the workforce after 1 July 2000.

The results of this survey (conducted during September 2008) are the views of recent university graduates who were due to begin working for or were already working for PwC. Of the 4,271 graduates we surveyed, a small proportion were non‑PwC graduates. Although the results give us a good insight into the views of new graduates from around the world, they are clearly not a proxy for the entire millennial group.

We also conducted a similar survey on a smaller scale in 2007 with new graduates from the US, China and the UK.

1 ’PricewaterhouseCoopers’ refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

4Introduction

Much has been written about millennials, but how much do we really understand about their expectations of work? Demographic shifts show the steady creep upwards of life expectancy in many parts of the world, whilst at the same time birth‑rates are in rapid decline in most of the old economies. Even Latin America, the US and Asia are heading towards a ‘greying’ of the population. These dramatic shifts will lead to an unprecedented shortage of younger workers and the need to keep employees working until well past current retirement ages. The idea that companies would source talent needs from an unlimited supply of workers from emerging markets has not materialised. Talent shortages are just as critical in China, India, Eastern Europe and parts of South America.As a consequence of these factors, fewer younger people will be working to support a significantly larger older generation in the future. Even if we assume that older generations stay in work for longer, it is clear that the millennials will have a significant role to play in driving businesses forward. The race to capture the best has always been challenging, but with even less talent available in tomorrow’s world, we can expect a talent crunch which will have a significant impact on the world of work. Business success is driven by having the right people to deliver the strategy and create growth. By 2020 we believe people supply will be the most critical driving factor for business success. Companies may go to extreme lengths in their search for talent, and once they have it, they will take measures to keep people ‘locked in’ to their organisations. Without this talent, they will be unable to compete.

Talent crunchThe consequences of these changes could mean that millennials will be a powerful generation of workers. It is likely that those with the right skills and abilities will be in high demand. They may be able to command not only creative reward packages by today’s standards, but also influence the way they work and where and how they operate in the workplace. The employer brand and the ability to engage will be key as employees identify by their own measures which organisations are desirable and which are not. The internet generation with their social networking sites and technological savvy will lead to companies using technology innovatively to attract and engage with employees. We could see the employer/employee dynamic shift dramatically – the employee may call the shots in tomorrow’s world.

But do we understand what drives this new generation, their priorities and expectations of employers and the world of work? Are they really so different from previous generations? By better understanding what motivates employees and potential recruits, organisations will be in the best position to develop strategies to attract and keep young talent and nurture tomorrow’s leaders.

Our survey aims to provide some insight into the minds of new graduates from around the world entering the workforce for the first time. As they begin their working lives, what are the hopes and expectations of these millennials? And most importantly do business leaders and HR teams need to revise their current strategies to accommodate these factors?

“Future generations will continue to be

significantly different and firms and institutions

who adapt fastest will capture the highest quality employees.”

Quotes from millennials who participated

in the survey are included throughout this publication

5

Report highlightsMany of the key findings reflect the changing mindset of the new generation. We noticed only nominal differences between this survey and our previous study in 20072, suggesting a consistency of views both pre and post‑credit crunch. Although we do not have comparative generational data to examine trends, we think many of these issues would have been viewed very differently even a decade ago:

2 Managing tomorrow’s people – the future of work to 2020 (published by PwC in October 2007)

Millennials expect job mobility and want the •opportunity to experience overseas assignments – 80% would like to work abroad and 70% expect to use other languages during their career.

Corporate responsibility is critical – 88% of •millennials said they will choose employers who have corporate social responsibility (CSR) values that reflect their own and 86% would consider leaving an employer if CSR values no longer matched their expectations.

The theory that future generations will reject •traditional work practices is debunked. The majority expect some element of office based work and only 3% expect to work mainly at home/ other locations. Most expect to be working mainly regular office hours with only 18% expecting mainly flexible hours.

The notion of portfolio careers is not likely to •become a reality for this group – 75% of whom believe they will have between two and five employers in a lifetime.

Training and development is the most highly •valued employee benefit. The number choosing training and development as their first choice of benefit is three times higher than those who chose cash bonuses. 98% believe working with strong coaches and mentors is an important part of their development.

Only 7% of the sample said time off to do •community/charity work would be one of the top three benefits they would value over the next five years.

Over half the sample believes they will personally •fund their retirement with only 5% believing their retirement would be funded by the government/state and 17% by their employer.

Our millennials envision a 2020 world where •China, India and Russia will have more economic influence than the US and Europe (47%). Only 30% of US respondents disagreed. And over a third of respondents believe that companies will be more influential than governments by 2020.

6

About the surveyPricewaterhouseCoopers surveyed a total of 4,271 graduates about their expectations of work.

Graduates from 44 countries took part in the research in September 2008. The regional breakdown included: 1,004 in North America and the Caribbean, 943 in Asia, 759 in Western Europe, 481 in Central and Eastern Europe, 215 in South and Central America, 139 in Australasia and the Pacific Islands, 67 in Middle East and Africa.

The majority of respondents were new graduates who were due to start work for PwC. Respondents were encouraged to forward the survey on to their graduating peers and we received 144 completed responses from non‑PwC graduates. Respondents from Ireland (38) had been working with PwC for the longest period (one year) and this should be considered when interpreting the results.

Direct quotes from the graduates on how they view the world of work changing between now and 2020 have also been used throughout this report.

The findings and conclusions from this survey are combined with insights from our previous analysis on the future of work and other data sources.

As we endure the ramifications of a global economic downturn, some might ask why we need to be concerned about what millennials think. Many companies are looking to cut back the workforce and reduce people spend to cut cost. Some may be reducing their graduate intake or introducing a total hiring freeze. But in order to achieve long‑term growth objectives, it is critical that organisations have the right talent to help them navigate the challenges of a downturn and see them through to the other side. Businesses which cut back now might find that when the economic environment rebounds, they do not have enough of the right people to be in the best position for the upturn and to remain competitive.

Balancing short‑term pressures with long‑term business objectives is not easy. The businesses which get the balance right and invest in understanding and nurturing the millennial generation will be best positioned in the future. The success stories of tomorrow are companies that address their long‑term skills needs both creatively and holistically, today.

7

We expect global mobility in our jobs, and we want to experience opportunities to work overseasAlmost everyone believes they will work across geographic borders more than their parents did with 94% of the sample agreeing. The graduates seem very open to the idea of an overseas assignment with 80% wanting to work overseas during their career. The country difference is interesting with 93% of Indian millennials wishing to work overseas compared to 62% of those from the Netherlands (see figure 1).

Interest in working outside home country in career – by country

Q: Would you like to work outside your home country in your career?(% who agreed)

Base: 4140 global respondents

93%92%90%89%89%88%86%85%85%85%85%84%84%82%81%80%77%74%70%69%69%65%62%

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Figure 1 Figure 2

Key findings

Preferred destination of those who would like to work outside their home country in their career

Q: Would you like to work outside your home country in your career? If yes, where would be your preferred destination?

Base: 3043 global graduates

Preferred country – Top 5

26%

19%

10%

4%

4%

USA

United Kingdom

Australia

France

China

The most desired location is the US, followed by the UK and Australia, (see figure 2) but overall Western Europe was the most desired with 31%.

“International experience is an essential requirement for future leaders and as such should be cultivated from the very beginning of a graduate’s career.”

Preferred destination of those who would like to work outside their home country in their career

Q: Would you like to work outside your home country in your career? If yes, where would be your preferred destination?

Base: 3043 global graduates

Preferred country – Top 5

26%

19%

10%

4%

4%

USA

United Kingdom

Australia

France

China

8

70% of our millennials expect to use another language at work. This is higher understandably in countries where English is not the main language. But even in countries where English is the main language, there is an expectation that another language will be needed at work, for example in the US 34% agreed (see figure 3).

Whilst only 38% of the sample cited English as their first language, 83% expect to use English at work. French and Spanish were the next most likely with 19% and 14% respectively.

The apparent willingness of this generation to travel should be a positive message to businesses. Globalisation has led to an increase in demand for more mobile workers3, yet companies often struggle to incentivise more senior workers to take on overseas assignments. Might there be a case for encouraging more global mobility at junior levels? This would give employees valuable experience early in their careers and potentially alleviate the financial burden of many costly overseas assignments for businesses.

Expect to use a language other than first language at work – By country

Q: Do you envisage using a language other than your first language at work?(% who agreed)

Base: 4084 global respondents

70%

99%99%99%97%97%97%95%95%95%93%91%91%90%90%90%84%80%

59%59%

46%38%34%

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Figure 3

Our employer must have a strong stance on sustainability and climate changeCorporate social responsibility (CSR) is very important to millennials with 88% stating that they seek employers with social responsibility values that reflect their own, suggesting perhaps the growing importance of the issue. What is interesting, is the very high number (86%) who say they would consider leaving an employer whose social responsibility values no longer reflected their own (see figure 4).

Respondents from Argentina (94%), the US and Brazil (both at 92%) were the most likely to leave whilst Indian respondents were the least (66%).

Percentage who would consider leaving an employer whose behaviourno longer met corporate responsibility expectations – By region

Q: Would you consider leaving an employer whose behaviour no longer meets your corporate responsibility expectations?(% who agreed)

Base: 3906 global respondents

86% 84% 82% 82% 82% 85%91% 91%

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Figure 4

3 Managing Mobility Matters: A European Perspective (PwC published December 2006)

9

“I hope that people are more aware of the environmental and social impact of companies. I do not think people should work for a company with whom their values do not align.”

“Sustainability in the workplace will be key as this is how a company’s image will be seen in an ever increasing view of the current climate changes and their impact.”

An employer’s policy on climate change is also seen as important to 58% of respondents. The contrasting views between countries is interesting as those in Brazil (86%) felt this was an important issue compared to only 40% of US and Belgian respondents (see figure 5).

This may reflect the higher profile of environmental issues in certain parts of the world – the concerns over the Brazilian rainforest being a good example.

CSR and climate change are clearly topics of the moment and there may be a degree to which millennials want to be seen to be saying the right things about these issues. Instinctively they feel it is an issue they should be supporting. Nevertheless the high response rate coupled with the verbatim comments we received on this topic support the idea that corporate responsibility and climate change are important issues for millennials and employers need to take note.

Percentage who state employer’s policy on climate change and the environment is important in deciding whether or not to work for company – by country

Q: How important is an employer's policy on climate change and the environment in deciding whether or not you should work for them?

Base: 3924 global respondents

58%

86%81%

77%76% 73% 73% 70% 70% 68% 67%65% 62% 61%58% 55%53% 53% 52%51%

46% 43%40%

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Figure 5

10

We use technology to enhance our ability to networkMuch has been written about the technical savvy of the internet generation. Our survey findings confirm that millennials see technology as a key device for social and networking purposes. 85% of respondents belong to a social networking site such as Facebook (see figure 6).

Almost everyone owns a mobile phone and 86% own an iPod or MP3 player. A lesser number have access to handheld computers, but we would expect this number to increase over the next few years as technological advances make these items more accessible to all.

The millennials seem to believe very strongly that technology will play a critical role in tomorrow’s workplace and emphasised the need for companies to keep apace with technology advancements.

The desire of millennials to want to share knowledge can bring benefits to a business in terms of sharing best practice and for employee engagement. But this open and instant style of knowledge share could also present significant risk. Companies who may have rejected a candidate, or created delays during the recruitment process for example, could find a disgruntled candidate making public criticisms on the internet which could be viewed by thousands of people across the world instantaneously. This could have damaging consequences for the employer brand.

Percentage who are a member of an online social network – by country

Q: Are you a member of an on-line social network (e.g. Facebook, Bebo, MySpace etc)?

Base: 3822 global respondents

85%

97%96%95%94%93%93%92%90%90%89%88%87%87%84%83%81%75%74%73%

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Figure 6

“Technology will be at the centre of everything we

do, in ways that may now be unimaginable.”

“Technology advances will change the way we work. All peripherals used now

would probably no longer be used in the future.

Everyone has to keep up the pace with the change

in modern technology.”

11

Expectations of office hours – by country

Q: Do you think your office hours will be mainly flexible hours/ mainly regular office hours / regular office hours with some flexible working?

Base: 4142 global respondents

66%78% 76% 76% 75% 71% 71% 69% 69% 69% 68% 68% 66% 64% 63% 60% 60% 56% 53%

47% 47% 45% 44%35%

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Regular office hours with some flexible working Mainly flexbile hours Mainly regular office hours

Figure 7

“Employees may have more flexibility in choosing where to work, when to work, how to work.”

“I think that people will be able to work more from their homes, but I wouldn’t like that there would not be interaction with team mates.”

We do not expect work flexibility The theory that future generations will reject traditional work practices is debunked. The majority expect some element of office based working and only 3% expect to work mainly at home/other locations. Australasia and the Pacific Islands had the highest percentage who thought they would be working mainly in an office (41%) compared with only 9% in the Middle East and Africa.

Respondents also expect to be working regular office hours with some flexible working (66%). There are some exceptions however, in Germany (54%), Turkey (59%) and France (50%) the majority expect to be working mainly flexible hours. This is contrasted with Ireland where 53% expect to be working mainly regular office hours (see figure 7).

Although the millennials seem to indicate flexibility is not expected, we did however receive many comments about wanting more flexibility. Perhaps the millennials do not feel that total flexibility is a realistic possibility, even though it is something they might desire. We also believe that their expectations may change as they get older and the need for greater flexibility for example to look after family members may become more of a priority.

12

We are open to sharing personal information with employers – the lines between work and home are blurring Millennials have split views about giving employers greater access to their personal information in the interests of personal and business security. 40% were comfortable with the idea, while 36% were unwilling and 24% did not know (see figure 8).

Certain parts of the world seem more inclined to share personal information than others with the Netherlands and Slovakia being the most willing (49%). We wonder if it might be the case that millennials, more used to posting personal information on social networking sites, are becoming far more relaxed about giving access to employers than previous generations may have done. Perhaps they have faith in data protection legislation to safeguard their personal data. But given the number of high profile accidental losses/leakages of personal data by governments and companies in recent years, millennials may need to be more cautious.

Two thirds of the sample are comfortable with the idea of employers providing more personal services to workers such as housing, food, regular doctor and dentist appointments. Most of our verbatim comments seemed to support the idea of the employer having more influence over employees’ lives in this way. These views might be at odds with older workers who could be less comfortable about opening up access to their home/personal lives.

“It is very likely that the employer will

intervene more directly in the personal life of

the employee.”

Willingness to give employer greater access to personal information in the interest of personal and business security – By region

Q: In the interests of personal and business security would you be prepared to give your employer greater access to personal information?

Base: 3884 global respondents

40% 44% 40% 39% 38% 40% 38%47%

36% 30% 40% 38% 42% 42%34%

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Don't know /Don'tunderstand

No

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Figure 8

13

The concept of portfolio careers in the future is not a reality for usAnother theory apparently turned on its head is the idea of working for multiple employers over a career lifetime. The vast majority of respondents believe they will have between two and five employers (75%). Only 7% believe they will have ten or more employers. By region, Middle East and Africa respondents were the most likely to think they would have more than ten employers (11%). Only 10% of North Americans think they will have more than six employers. By country, Spain and Turkey seem the most inclined to portfolio working (see figure 9).

But millennials do expect a certain degree of job mobility with 30% saying they would like to stay within the same organisation, but in a variety of different roles and fields. Only 17% of the sample expected to remain within the same organisation and in the same field (see figure 10).Number of employers expect to have in career – by country

Q: How many employers do you think you will have in your career?

Base: 4065 global respondents

8%17%

4% 10% 11% 12%7% 5% 6% 2% 8% 8% 12%

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Gre

ece

Aus

tral

ia

US

A

Po

land UK

Ind

ia

Irel

and

1 2-5 6-9 10+

Figure 9

Career path most likely to follow – by country

Q: Please tell us which of the following best describes the career path you hope to follow.

Base: 4039 global respondents

19%

14%

17%

30%

12%

8% Experience a number of different roles/ fieldsin a variety of organisations

Progress within the field I have been recruitedto in a variety of organisations

Progress within the field I have been recruitedto within the same organisation

Progress within the same organisation but in avariety of roles/ fields

Take the path that permits me the fastestprogression

Don't know

Figure 10

Almost half of the respondents in South Africa (48%) expect to have multiple roles in multiple organisations. Brazilian respondents seem the most committed to the employer with almost one third expecting to stay in the same field in the same organisation.

These findings seem to dispel the idea of employees job hopping in a portfolio working arrangement. This was an idea much touted in the early 1990s as the future of work. But clearly this audience does not think it will happen, and may therefore not be attuned to cope if it does.

14

“I believe that employees who are not happy with their employers will be more inclined to look for another job with another employer.”

We are loyal to our employers... for as long as it suits usOver 90% of respondents expressed loyalty to the organisation they worked for. We varied the loyalty statements (see figure 11) to ascertain exactly how deep the loyalty was. Australia, Germany and Turkey had the highest agreement that they are loyal to the organisation they work for. Regionally, Australasia showed the highest degree of loyalty, whereas respondents in the Middle East and Africa (38%) and South and Central America (43%) were the most likely to put self‑interest first (see figure 12).

German respondents were the least likely to agree with the third statement regarding career objectives taking priority over the employer – only 15% of them agreed with this statement.

We feel that graduates are more likely to aspire to being loyal employees at the start of their careers, so in that sense the findings are not a surprise. However there is clearly an element of self‑preservation in the findings, by hinting that they were not willing to commit to blind loyalty. We mentioned at the start of this report our belief that millennials will be a generation in high demand. We feel that this group will put more pressure on employers to have clear employer brand values against which they can be evaluated. If employers do not live up to employee expectations, millennials may be more likely to look elsewhere.

Loyalty to organisation

Q: Please tell us how much you agree or disagree with the following statements.

Base: 3915 global respondents

49%

23%

8%

42%

35%

22%

8%

20%

34%

16%

27%

5%

8%

1%

1%

1%

I will be loyal to theorganisation I work for

I will only be loyal to theorganisation I work for as

long as I fulfilled in my role

My loyalty is to myself andmy career objectives

rather than my employer

Strongly agree Agree Neutral Disagree Strongly disagree Don't know

Figure 11

Loyalty to organisation – by region

Q: Please tell us how much you agree or disagree with the following statements

Base: 3915 global respondents

91% 92% 95%88% 89%

85%92%

86%

55%59%66%63%

59%54%55%

68%

43%

28%38%

31%30% 27%32% 30%

0%10%20%30%40%50%60%70%80%90%

100%

All regions Asia Australasia andPacific Islands

Central andEastern Europe

Western Europe Middle East andAfrica

North Americaand the

Caribbean

South andCentral America

I will be loyal to the organisation I work forI will only be loyal to the organisation I work for as long as I feel fulfilled in my roleMy loyalty is to myself and my career objectives rather than my employer

Figure 12

“Gen Y will continue to look for employers who embrace their desire for challenging work, amazing development and training opportunities, and travel possibilities.”

15

We prefer development opportunities to cash bonusesWe were surprised by the results of this part of the survey. When we asked what benefits they would value most over the next five years, the most important benefits for our millennials are related to training and development activity (see figure 13).

Almost one third of respondents chose training and development as their first choice benefit other than salary. This was three times higher than those who chose cash bonuses as their first choice benefit.

Only 7% cited time off for doing charity or community work as a top three benefit. Yet we saw how important corporate responsibility values were to millennials in our earlier questions on the subject. Perhaps they see this as more of the employer’s responsibility than a personal one?

In terms of development 98% of the sample stated working with strong coaches and mentors was important to their personal development. All aspects of personal development scored very highly in the survey (see figure 14).

The least important was e‑learning, but even e‑learning was cited to be very important or quite important by 62% of the sample.

We would challenge whether business leaders are attuned to the importance of development opportunities to this group. In fact, our experience is that in many sectors training and development budgets are usually the first to be hit when the business or market is doing badly.

The very high results for advocating coaches and mentors are also a key issue for businesses to take away from this study. Most employers only provide coaches and mentors to more senior individuals in the organisation. Younger workers are usually given more vocational/educational training opportunities. The context of the question asked for views on their preferences over the next five years. So we feel there is a gap between the personal development aspirations of millennials and where companies typically invest their training and development budgets particularly in a one‑to‑one coaching context.

Importance of development opportunities – by Region

Q: Please tell us how much you value the following development opportunities.

Base: 3907 global respondents

94%91%

96%92%

97%94% 94%

97%

62%67%

62%59%

64%

43%

59%65%

98% 97% 100% 97% 96% 96%99% 97%

85% 85%89%

83%85% 85% 84%

88%91% 92%

94%

85%90%

94%91%

98%

0%

20%

40%

60%

80%

100%

Allcountries

Asia Australasiaand Pacific

Islands

Central andEasternEurope

WesternEurope

MiddleEast and

Africa

NorthAmericaand the

Caribbean

South andCentralAmerica

Formal face-to-face learning

E-learning

Working withstrong coachesand mentors

Rotationalassignments

Support forfurther academictraining“Personally I find it very important that personal

coaching is present.”

Top 3 benefi ts respondents would most value over the next 5 years other than salary

1st choice 2nd choice 3rd choice

All respondents Training and Development (53%)

Cash bonuses (41%)

Flexible working hours (41%)

Asia Training and Development (64%)

Financial assistance with housing (46%)

Cash bonuses (39%)

Australasia and Pacifi c Islands

Training and development (58%)

Flexible working hours (45%)

Cash bonuses (42%)

Central and Eastern Europe

Training and development (61%)

Cash bonuses (40%)

Flexible working hours (32%)

Western Europe Training and development (57%)

Flexible working hours (38%)

Cash bonuses (36%)

Middle East and Africa

Flexible working hours (55%)

Training and development (46%)

Cash bonuses (42%)

North America and the Caribbean

Flexible working hours (53%)

Cash bonuses (43%) Free private healthcare (38%)

South and Central America

Training and development (73%)

Cash bonuses (45%) Flexible working hours (41%)

Q: Please select the benefi ts you would value most over the next 5 years other than your salary?

Base: 3953 global respondents Figure 13

Figure 14

16

I will have to take personal responsibility for funding my retirementMillennials have accepted the idea that neither the state nor their employer will fund their retirement, with over half (57%) saying they expected to fund their own retirement through personal investments and saving plans (see figure 15).

Australasia has the highest percentage which expect their retirement to be funded personally (76%), Asia has the lowest (38%) with over a quarter of Asian respondents expecting their employer’s retirement scheme to meet their needs. Germans have the highest percentage who expect their retirement to be funded personally (90%), the Netherlands had the lowest (27%). 41% of respondents from the Netherlands expect their retirement to be funded by their employer’s retirement scheme (highest percentage across all the countries), compared with 0% of those in Germany (see figure 16).

The high profile in recent years of company pension deficits in defined benefit schemes, may have led our millennials to conclude that they need to fund their own retirement. This may be particularly true of Germany for example where companies have suffered crippling pension deficits for the last decade. And in the US, until recent events, there was a belief that very low (or negative) savings rates would not ultimately affect the economy, as Baby Boomers could retire on their asset price and housing price growth without saving out of earnings. During the 2000s, Americans have reduced the amount of disposable income being saved to just about 0%.4 We believe that these factors compounded by the global financial crisis may have influenced the millennials’ resignation to self‑funding their retirement.

“I think that it is extremely important to have a good pension scheme, as the governments scheme fails to keep up with the cost of living. Therefore, as I get older, this will be one of my main criteria when picking who to work for.”

Q: Do you expect your retirement will be …?

Base: 3898 global respondents

Expectations for retirement

57%

17%

16%

5%

3%

0%

3%

Funded by myself e.g. throughinvestments and saving plans

Funded by my employer's retirementscheme

Haven't thought about it yet

Funded by the government/ state

Non-existent. I will continue working afterretirement age

My children will support me financiallywhen I retire

Don't know

Figure 15

Expectations for retirement – By region

Q: Do you expect your retirement will be...?

Base: 3898 global respondents

5% 10% 1% 5% 5% 3% 1% 2%

57%38%

76%58% 53%

73% 72% 64%

17%

27%

6%

10% 16%

16%15%

13%3%

1%

4% 1%

2%1%

7%16% 20%

14%21% 21%

6%8% 10%

3% 2% 1% 3% 5% 3% 4%

0%

20%

40%

60%

80%

100%

Allcountries

Asia Australasiaand Pacific

Islands

Central andEasternEurope

WesternEurope

MiddleEast and

Africa

NorthAmericaand the

Caribbean

South andCentralAmerica

Don't know

Haven't thoughtabout it yet

Non-existent. I willcontinue workingafter retirement age

My children willsupport mefinancially when Iretire

Funded by myemployer'sretirement scheme

Funded by myselfe.g. throughinvestments andsaving plans

Funded by thegovernment/ state

4%

Figure 164 Bureau of Economic Analysis, Economic Intelligence Unit, PwC Analysis

17

We presented a series of statements to the sample relating to the world in 2020.

By 2020 some believe that companies will run their own universities to have the right skills to fulfil their needs (30%). Response was highest in Asia 44% and Central and Eastern Europe (40%). This reinforces again the point that millennials believe development is important, so much so that some companies will even have their own universities in tomorrow’s world.

Over one third of the sample believes that companies will be more influential than governments by 2020 (36%). Almost half of South and Central Americans agreed (see figure 17).

57% of respondents do not believe that DNA profiling will be part of the graduate recruitment process. Only 15% felt that DNA profiling would be a feature, although this rises to 30% of Middle Eastern and African respondents.

Almost half of the respondents believe that China, Russia and India will have more economic influence than the US and Europe by 2020. Perhaps unsurprisingly the highest rate of agreement to this question came from the emerging markets cited in the statement. However only 30% of US respondents disagreed with the statement (see figure 18).

“China will be more and more influential in the following years, and will be one of the most important markets of all enterprises from many countries.”

By 2020 companies will be more influential than governments… – By region

Q: By 2020 companies will be more influential than governments

Base: 3862 global respondents

8% 9% 5% 12% 7% 10% 6% 12%

28% 22% 35%35%

30%37%

25%

37%

31% 38%29%

29%

27%

27%

29%

23%

29% 29% 25%21%

32%24%

33%24%

5% 3% 7% 3% 5% 2% 7% 3%

0%

20%

40%

60%

80%

100%

Allcountries

Asia Australasiaand Pacific

Islands

Centraland

EasternEurope

WesternEurope

MiddleEast and

Africa

NorthAmericaand the

Caribbean

South andCentralAmerica

Stronglydisagree

Disagree

Neutral

Agree

Stronglyagree

Figure 17

By 2020 China, Russia and India will have more economic influence than the US and Europe… – by country

Q: By 2020 China, Russia and India will have more economic influence than the US and Europe

Base: 3866 global respondents

15%

36%29% 29% 28% 27% 27%

20% 18% 17% 17% 16% 15% 14% 12% 12% 12% 10% 8% 8% 7% 3% 3%

32%

33% 50%

32%

48% 47%37%

25% 26%

40% 36%29%

37% 40%34%

41%34% 35% 33%

30%36% 37%

38%43%

31%

7%

17%

13%

17% 18%

16%

36% 41%

30%29%

30%

32%20% 32%

31%

24%31%

46%

32%26% 24%

38% 27%

19% 24%

4%

26%

7% 7%

16% 15% 13% 11% 17%20%

14%26% 17%

16%

27%21%

10%

25% 25% 25%14%

16%

4% 3% 3% 2% 3% 2% 5% 2% 5% 3% 3% 5% 5% 7% 8% 11%

0%

20%

40%

60%

80%

100%

All

coun

trie

sH

unga

ry

Hon

g K

ong

Gre

ece

Rus

sia

Ind

ia

Tur

key

Chi

na

Fra

nce

Aus

tral

iaS

outh

Afri

ca UK

Can

ada

Slo

vaki

a

Chi

le

Bel

gium

Ger

man

y

Sp

ain

Arg

entin

a

US

A

Bra

zil

Pol

and

Net

herla

nds

Irela

nd

Stronglydisagree

Disagree

Neutral

Agree

Stronglyagree

11%

Figure 18

Thoughts on 2020

18

Although the PwC survey does not claim to represent the entire millennial generation, we do believe a number of indicative themes have emerged. We were struck by the similarity of responses across the globe to a number of these issues. Should organisations tear up their people strategy and start again? Not necessarily. But do companies need to review what they are doing in light of some of these findings? Almost certainly. We believe that many organisations are not fully tuned into the millennial mindset.

Message to the CEOIn the PwC 12th annual CEO survey5, 61% of CEOs say they have challenges recruiting and integrating younger employees. When we asked CEOs what are the key components of their talent strategy, the majority sampled believe that flexible working arrangements are one of the most critical components to their ability to attract and retain talent. Yet it seems, the millennials do not expect flexibility and value other benefits more highly. Perhaps their views will change as their life priorities change. 62% of CEOs say providing opportunities for employees to get involved in socially responsible activities is key. Yet only 7% of our millennials would choose to have time off for doing social or charity work as one of their top three benefits.

Perhaps CEOs and business leaders need to consider whether their strategies are valid for all generations of workers. For example, do they need greater flexibility in terms of how they incentivise different segments of the workforce? Could we see more emphasis on worker profiling in the future to help companies better understand their staff diversity and what drives employee loyalty and behaviours? If CEOs really want to get better at attracting and integrating younger workers as the CEO survey suggests, then they need

to place more emphasis on what millennials value most e.g. personal development opportunities, and working with coaches and mentors.

Market challengesThe pressures of economic downturn are likely to remain a global issue affecting businesses for some time. We may see higher unemployment affecting many parts of the world, and it is likely that business leaders will find it difficult to justify investing in people programmes, while they work through these challenging conditions. But investing in talent is exactly what organisations need to do, to be certain of having a strong footing when the market recovers.

Employers must look for ways to manage costs whilst remaining focused on long‑term strategy. Past recessions have seen companies use innovative ideas to meet short‑term challenges. One organisation deferred its graduate intake for 12 months and offered said graduates a lump sum to spend on travelling during the enforced gap year. The uptake for the scheme was very high – the graduates were grateful for the opportunity to explore the world and return when things had picked up. The employer was able to reduce the cost burden of a large number of graduates which it had no work for, whilst retaining their loyalty and commitment to start the following year.

As many parts of the world grapple with uncertainty, companies need to explore innovative ways to meet both short and long‑term demands.

A connected worldThe demand for global worker mobility has increased dramatically in the last decade with the emergence of new markets and the globalisation of many industries.

So what do these findings mean for companies in their search for talent?

5 PwC 12th annual CEO survey published January 2009

19

“Employers need to recognise that young joiners today and in the future will have different demands and aspirations to those generations that have preceded us.”

6PwC Measuring the value of international assignments [2006]

Companies struggle to get people to work overseas and the average cost of an assignee can be three to four times higher than a local hire. The return on investment of international assignments is often very poor, with up to 40% of assignees leaving the organisation within 12 months of returning to their host country.6 Our millennials survey suggests we have a generation who are enthusiastic about working overseas. How can companies capitalise on this to meet their needs?

Our millennials are at ease with technology which permeates many facets of their lives, but are companies keeping up? There will likely be an expectation that companies are at least apace with technological advancements. For example, we are all used to using search engines to find exactly what we need on the internet, but is it as easy to find knowledge and connect people in large companies? Today, some large companies do not even know on a given day, their total number of employees.

Smart companies are already ahead of the game, replicating the likes of Facebook networking sites internally. Other organisations are making foreign assignments part of the promotion criteria. Many organisations are taking people metrics to a highly sophisticated level, way beyond the staff satisfaction survey which has become the norm.

And what about Generation X and the Baby Boomers?Our survey suggests a number of similarities between millennials and previous generations. The new generation want stability, security and variety in their working environment. They want to be loyal to an organisation that they are proud to work for and reflects their own values. Are these aspirations so

different to what previous generations have wanted? We do not think so. But it is the greater ability of this new generation to mobilise themselves quickly and easily into employment elsewhere that CEOs need to worry about. The survey responses to the CSR issues and the questions on loyalty indicated that if millennials do not get what they want with their current employer, they will go elsewhere.

Companies in 2020 will find that they are dealing with a complex workforce of different generational expectations and needs. At one end of the spectrum workers could continue working until well past retirement age – what impact will this have on pension planning, health and wellness and how they interact with younger workers in the organisation? The millenials will be in their 30s and 40s by then. How will they have shaped the workplace of tomorrow with their advanced technological savvy, social responsibility values and global outlook? Organisations need to work through the complexity of having such diversity in the workforce. Many organisations today use customer segmentation strategies to understand the orientations of their customer base. We believe companies need to look at using similar methodologies to understand the segmentation and orientation of their workforce. Having the flexibility to provide tiered offerings to suit employees at different stages of their life‑cycle as well as from different generations will be key to drive maximum value and loyalty from employees.

All organisations and their Human Resource teams need to look seriously at the millennial generation if they want to be able to compete in tomorrow’s world. One thing we can be absolutely certain of – good people will continue to be incredibly hard to find and difficult to keep.

20

Managing millennialsUse metrics and benchmarking to segment your workforce in order to understand what millennials want and how these 1.

desires might differ from older workers.

Think creatively about reward strategies and what motivates millennials? For example, is it time to shift focus from 2.

cash bonuses and company cars to other things?

Consider global working opportunities – how might this enthusiastic generation support your global mobility needs?3.

Continue to invest in personal development and training – explore expanding coaching/mentoring programmes 4.

to younger workers.

Articulate your employer brand – communicate internally and externally what it means to work for your organisation.5.

Have a clear statement about corporate responsibility – make this part of your employer brand and be committed to 6.

deliver the promise.

Think creatively about how technology can be used to engage this audience e.g. avatars, internal networking sites etc.7.

Provide variety and fresh challenges – consider promoting cycles of experience in other parts of the organisation.8.

Our thanks to all the graduates who participated in this survey, and to the PricewaterhouseCoopers human capital teams around the world.

21

Key contacts

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

Karen Vander Linde Partner and leader of People and Change PricewaterhouseCoopers LLP (US) + 1 (703) 918 3271 karen.m.vanderlinde@us.pwc.com

Leyla Yildirim Marketing Human Resource Services PricewaterhouseCoopers LLP (CI) +44 (0) 1481 75 2039 leyla.yildirim@uk.pwc.com

Visit our Managing tomorrow’s people site at: www.pwc.com/managingpeople2020

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

PricewaterhouseCoopers provides industry‑focused assurance, tax, and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

© 2008 PricewaterhouseCoopers. All rights reserved. ‘PricewaterhouseCoopers’ refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.Ref 2008BHM22013.

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