Getting practical about the future of work


Here is an excerpt from an article written by Bryan Hancock, Kate Lazaroff-Puck, and Scott Rutherford for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.

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Adapting to a digital age will require organizations—and not just employees—to equip themselves with new capabilities.
What story will people tell about your organization over the next ten years? Will they celebrate an enthusiastic innovator that thrived by adapting workforce skills and ways of working to the demands of the new economy? Or will they blame poor financial or operational results, unhappy employees, and community disruption on a short-sighted or delayed talent strategy?
Our modeling shows that by 2030, up to 30 to 40 percent of all workers in developed countries may need to move into new occupations or at least upgrade their skill sets significantly. Research further suggests that skilled workers in short supply will become even scarcer. Some major organizations are already out front on this issue. Amazon recently pledged $700 million to retrain 100,000 employees for higher-skilled jobs in technology (for example, training warehouse employees to become basic data analysts). JPMorgan Chase made a five-year, $350 million commitment to develop technical skills in high demand—in part targeting its own workers. And Walmart has already invested more than $2 billion in wages and training programs, including Walmart Pathways, which educates entry-level employees about the company’s business model and helps workers develop valuable soft skills. 
Any company that doesn’t join the early adopters and address its underlying talent needs may fall short of its digital aspirations. Equally important, senior managers may miss opportunities to work collaboratively with employees to create a prosperous and fulfilling future for all stakeholders—the communities where the company operates, its workforce, and the wider society that ultimately sanctions its activities.

Why employers should lead the way

The pace and scale of technological disruption—with its risks of unemployment and growing income inequality—are as much a social and political challenge as a business one. Nonetheless, employers are best placed to be in the vanguard of change and make positive societal impact—for example, by upgrading the capabilities of their employees and equipping them with new skills. And employers themselves stand to reap the greatest benefit if they can successfully transform the workforce in this way. Many leading businesses are realizing that they cannot hire all the new skills they need. The better solution is to look internally and develop talent they already have, as this approach is often not only quicker and more financially prudent but also good for morale and the company’s long-term attractiveness to potential recruits.

We already know from our executive surveys that most leaders see talent as the largest barrier to the successful implementation of new strategies—notably, those driven by digitization and automation. Furthermore, 64 percent of executives in the United States, and more than 50 percent in the United States and Europe combined, agree that companies should take the lead in closing the global skill gap and preparing employees for the future of work.

Regrettably, the gap between the statements of these executives and the actions of their companies is stark. Only a third of global executives report that their organizations have launched any new reskilling programs, including small pilots. Yet digital skills are in short supply as incumbents in traditional industries actively recruit people who have them and as tech companies expand.

The good news, as we will explain, is that by taking concrete steps now to build an infrastructure that supports the future of work, companies can set themselves up for success in this new competitive era.

Rolling out the road map

Our work with some of the early movers has taught us that a successful transformation involves three broad phases (Exhibit 1). At first blush, they appear to be commonsensical, but each of them involves steps that are new to most organizations.

First comes an initial period of scouting. In this stage, the company develops a single vision of its digital and automation future and the total value of that future. It also identifies the most important skill gaps—looking at future needs, not just extrapolating from the past (the norm in much workforce planning). Then it assesses the organization’s readiness to deliver.

Second, there is a period of shaping, to redesign work for the demands of a more digital future and to create upskilling programs, often together with employees. This phase also involves developing the infrastructure of what we call a talent accelerator to facilitate the deployment of talent in the most important future roles.

The third phase requires shifting the organization’s suite of talent-related activities onto a bigger scale. This work constitutes an acknowledgment that institutional capabilities to help employees adapt to the future of work are just as important as near-term (and seemingly more urgent) talent priorities.

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Here is a direct link to the complete article.

Bryan Hancock is a partner in McKinsey’s Washington, DC, office, where Scott Rutherford is a senior partner; Kate Lazaroff-Puck is a practice manager in the Boston office.



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