Here is an excerpt from an article featured in The McKinsey Quarterly, published by McKinsey & Company, in which Susan Lund, James Manyika, and Sree Ramaswamy explain how and why global competition, emerging skill shortages, and changing demographics will soon force companies to use their most highly paid talent more effectively. To read the complete article, check out other resources, sign up for email alerts, and learn more about the firm, please click here.

Source: McKinsey Global Institute

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Implications for senior executives

Savvy senior executives will recognize that managing the shift currently under way is analogous to leading a major change-management program and that managers, at all levels, will be the ones most keenly affected. The first priority for executives seeking to lead their organizations into the new world of work should be helping their management teams improve—or in some cases develop—abilities such as these:

• Coordinate and sequence

Managing diverse groups of on-site and remote employees will be challenging in a world where the composition of teams changes rapidly as project-based contractors and temporary staff come and go. Managers must become nimble coordinators and better coaches to ensure that all tasks, wherever they occur, mesh smoothly and that information is shared effectively among colleagues. Group interactions, in particular, will require more careful planning and structuring.

• (Over)communicate

Some companies require offsite workers to be available for a certain period each day to handle team catch-ups and check-ins with colleagues; other companies set aside regular times for in-person meetings. “You really have to over-communicate to make sure everyone understands their roles and when work will be handed off,” said one manager we spoke with.

• Observe and listen

While some employees thrive in independent, remote work environments, others wither in the absence of daily contact with coworkers or the camaraderie of working in a traditional team. Likewise, some managers worry that remote workers will identify less fully with their companies. “You save money, but you lose control,” warned one executive. “We’re worried about loyalty, about identification with the company. If they work from home anyway, will they go to a competitor for just a small bump up in salary?” The best managers will vigilantly observe how their people adjust and respond accordingly.

• Let go.

Some managers already struggle when they evaluate the performance of knowledge workers. It’s a perennial challenge to judge employees on outcomes, not hours, since defining clear goals and determining reasonable time lines are difficult. Yet in an environment where some employees work in a central office and others are time zones away, managers have no choice but to define goals and step back. “Bosses need to just relax,” observes JetBlue’s Bonny Simi. “They don’t have to see the employee for the work to get done. That’s the hardest shift in mind-set for some managers.”

As with all change programs, the role of senior management will include communicating a clear rationale for any moves and creating a compelling vision of how they will help the company reach its goals. Managers must be convinced of the benefits—higher performance for their teams—if they are to become enthusiastic leaders of change. Above all, senior executives should encourage managers to think big: the new world of work opens up new possibilities for how companies define their boundaries and organize work. Distinctions among employers, employees, and customers are blurring. Innovation happens and tasks get done in new ways. Companies that take advantage of these trends—and indeed pioneer them—can lower their costs while significantly enhancing their value proposition to employees.

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To read the complete article, please click here.

Susan Lund is director of research at the McKinsey Global Institute (MGI) and a principal in McKinsey’s Washington, DC, office; Sree Ramaswamy is an MGI fellow and a consultant in the Washington, DC, office; James Manyika is a director of MGI and a director in the San Francisco office.