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Slide 1: Managing tomorrow’s people* The future of work to 2020 *connectedthinking
Slide 2: Contents Introduction 2020: where three worlds co-exist Corporate is king: welcome to the Blue World The journey to Blue Life in the Blue World: the main themes Work in the Blue World: the people challenges The Blue HR business model 02 04 Small is beautiful: welcome to the Orange World The journey to Orange Life in the Orange World: the main themes 18 18 19 21 22 25 27 27 28 29 30 32 06 06 07 09 10 Work in the Orange World: the people challenges The Orange HR business model Are you ready for tomorrow’s world? Appendix Companies care: welcome to the Green World The journey to Green Life in the Green World: the main themes Work in the Green World: the people challenges The Green HR business model Definitions: Scenarios, Millenials 12 12 13 15 16 Our methodology Global forces PwC Graduate Survey findings Contacts
Slide 3: Foreword The journey to 2020 At the beginning of 2007, a team from PricewaterhouseCoopers gathered to explore the future of people management. Our thinking was sparked by the rising profile of people issues on the business agenda – the talent crisis, an ageing workforce in the western world, the increase in global worker mobility and the organisational and cultural issues emerging from the dramatic pace of business change in the past decade. We wanted to explore how these issues might evolve and how organisations need to adapt to stay successful. Many studies have attempted to capture a vision of the workplace of the future, but we set out to understand the people challenges that will impact organisations and consequently the implications this will have on the HR function as we know it. Few business thinkers have proposed that the marketing or finance functions might cease to exist in their present forms, but some are starting to say this about HR. With the help of the James Martin Institute for Science and Civilisation at the Said Business School in Oxford, we used ScenariosA1 to think about the future of people management. Our team has identified three possible ‘worlds’ – plausible futures to provide a context in which to examine the way organisations might operate in the future. In addition we surveyed almost 3,000 MillennialsA1 – new graduates from the US, China and the UK who represent a generation just joining the workforce, to test their views and expectations on the future of work. We hope you will help us to encourage debate around this critical topic. It is said that the future is not a place we go to, but one which we create. And while things happen that we cannot predict, we can still be prepared. 01 Michael Rendell Partner and leader of Human Resource Services PricewaterhouseCoopers LLP A1 – Appendix 1, see appendix page 27 Managing tomorrow’s people Foreword
Slide 4: 02 Introduction 2,739 When we started our research we had some preconceived ideas about tomorrow’s world. Many studies have been undertaken to explore the future of society, the environment, business and even the workplace. Our challenge was to focus explicitly on the business context and the impact on people and work. While we cannot claim to have identified all the possibilities, several strong themes have emerged: • large corporates turning into mini-states and taking on a prominent role in society • specialisation creating the rise of collaborative networks • the environmental agenda forcing fundamental changes to business strategy. In July 2007, 2,739 graduates from China, the US and the UK told us about their expectations of work. They had all been offered jobs with PwC but had yet to start. Some of the key findings are highlighted throughout this report While some of the findings seem to confirm current received thinking about the future of work, a number of themes defy conventional thinking. PwC is the biggest recruiter of graduates in the UK and a leading global recruiter of graduates. A3 2. People management will present one of the greatest business challenges Businesses currently grapple with the realities of skills shortages, managing people through change and creating an effective workforce. By 2020, the radical change in business models will mean companies facing issues such as: • the boundary between work and home life disappearing as companies assume greater responsibility for the social welfare of their employees 1. Business models will change dramatically The pace of change in the next decade will be even more fundamental. Technology, globalisation, demographics and other factors will influence organisational structures and cultures. Our scenarios outline three organisational models of the future: A3 – Appendix 3, see appendix for a full breakdown of the findings page 30
Slide 5: 03 3. The role of HR will undergo fundamental change HR has been perceived by many as a passive, service oriented function, but given the context of tomorrow’s workplace and business environment, we believe HR is at a crossroads and will go one of three ways: • with a proactive mindset and focused on business strategy, HR will become the heart of the organisation taking on a new wider people remit incorporating and influencing many other aspects of the business • the function will become the driver of the corporate social responsibility agenda within the organisation • the function will be seen as transactional and almost entirely outsourced. In this scenario, HR will exist in a new form outside the organisation and in house HR will be predominantly focused on people sourcing. Keith Murdoch, Remuneration and Benefits Manager, British American Tobacco • stringent people measurement techniques to control and monitor productivity and performance • the rise in importance of social capital and relationships as the drivers of business success. Managing tomorrow’s people Introduction “HR needs to ensure it is fit for purpose in order to be proactive and maintain or develop its influence in the future.”
Slide 6: 04 2020: Where three worlds co-exist We believe it is possible that all three worlds will co-exist in some form, perhaps distinct by geographic region, or industry sector for example. We identified a number of global forces that will have significant influenceA2, and of those we felt that individualism versus collectivism and corporate integration versus fragmentation would be the most significant. From this axis we identified three worlds and business models for the future. (See figure 1 opposite.) We tried to capture the events and trends which draw a picture of life in tomorrow’s world and the people management challenges that might prevail. The forecasting timelines and world descriptions are not intended to be taken literally as complete visions of alternative futures. They are designed to present ideas and illustrate the more important points around the people management challenges. We believe it is likely that all three worlds will co-exist in some form, perhaps distinct by geographic region, or industry sector for example. As you read this document think about how your own organisation might be positioned within these scenarios and what implications this has upon your current people management strategy. A2 – Appendix 2, see appendix page 28
Slide 7: Figure 1 2020: three worlds 05 Managing tomorrow’s people Introduction
Slide 8: 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 expands dramatically as it goes through a new wave of cross-border acquisition sprees and becomes a global leader in several industry sectors 2012 World’s biggest search engine and largest technology company merge 2013 The brain-drain of Eastern European workers starts to reverse as workers return home to set up and lead corporates, building on expertise gained in several sectors 2014 A decade of M&A consolidation across industry sectors peaks 2020 Global warming changes the climate of Europe; as the snow on the Alps melts, skiers head to the US
Slide 9: 07 90% of Chinese respondents expect they will use a language at work other than their mother tongue Size matters The sheer size of corporations in 2020 means that a significant number now operate with annual turnovers that far exceed the GDP of many individual countries, particularly in the developing world. With echoes of the business models promoted by companies like General Motors in the middle of the last century, many companies now provide the equivalent of the welfare state for their employees to ensure they lock the best talent into their organisations. Internally managed service centres are sophisticated and highly efficient – using processes perfected by the outsourcers of the ‘nineties. People metrics become an essential part of everyday life to keep track of individual performance and productivity. Corporates divide the haves and have nots The power of corporations means that a much greater divide has opened up between those working for global corporations and those working in smaller enterprises. Employees of mega-corporations have everything they need laid on. Those working for smaller businesses remain at the whim of housing markets and basic statutory entitlements, needing to self-supplement educational support, health and insurance coverage, what remains of the public health system, and so on. Hanspeter Horsch Associate Director, Human Resources Samsung Semiconductor Europe GmbH Welcome to the technology age Technology is all pervasive, entire cities in the US, Japan and the UK operate with ubiquitous high-speed wireless networks that allow all commercial transactions, entertainment and communications to be handled by every individual on credit card-sized devices. Pinpointing exactly what you want and being shown where it is available from wherever you happen to be is now taken for granted, allowing businesses continuously to refine and individualise their relationships with consumers, employees and shareholders. Managing tomorrow’s people Blue World “Our search for talent is now a global search. The competition for talent will only increase further.”
Slide 10: 08 75% of respondents think that workplace flexibility will not exist; they believe they will be working formal office hours Corporates drive lifestyle choices Sophisticated measurement and segmentation strategies mean companies can target goods and services across their customer base and to employees. For example ‘green politics’ is seen as a lifestyle choice rather than a meaningful political movement. Corporations provide environmental products and services to those who express a preference. • Mass consolidation has had an impact on cultural issues. Leadership teams now have a high focus on the evolution of the corporate culture with rigorous recruitment processes to ensure new employees fit the corporate ideal. Existing staff are subject to compulsory corporate culture learning and development programmes. • Huge people costs drive the need for robust metrics and analysis. Employee engagement, performance and productivity are all measured systematically. Leadership can access people data on a daily basis. This also provides an early warning signal of non-corporate behaviour or below standard performance. • Technology pervades every realm of business and leisure activity. The line between inside work and outside work is often blurred by technology with employers providing the platform. This also provides employers with added insights to staff preferences. Managing people in the Blue World • Companies have become the key provider of services to employees. People management now encompasses many different aspects of employees lives’, often including housing, health and even education for their children. • This strategy has led to an increase in staff retention rates as people policies seek to lock in talent, but the top talent is still hard to attract and retain, many senior executives use personal agents to seek out the best deals.
Slide 11: Who leads people strategy? • The Chief People Officer (CPO) is a powerful and influential figure, sometimes known as the ‘Head of People and Performance’ who sits on the leadership board. • Metrics and data are used to drive business performance through complex staff segmentation strategies which identify thousands of skills sets – creating precision around sourcing the right candidates for the right tasks as well as on the job performance measurement and assessment. • The science of human capital has developed to such a degree that the connection between people and performance is explicitly demonstrated by the CPO. • As organisations increase in size, their risk management systems are similarly extended. • The people risk agenda is one which is taken seriously by the board – as a result, the CPO and HR business partners become more influential. • Those responsible for people management increasingly need financial, analytical, marketing and risk management skills to measure the impact of the human capital in their organisation and to attract and retain the best talent. Organisational challenges • Quality assurance across the globe drives the need to create consistency across the organisational supply chain. • The challenges of size and scale mean that these organisations are at greater risk from external threats such as technology terrorism or meltdown and they find it difficult to effect change quickly. • As companies try to reinforce corporate values, these can often be at odds with cultural values and can present challenges. • Organisations must develop models and systems designed and run by HR professionals which enable individuals and their agents to negotiate the value of their human capital based on employees’ personal investment strategies. Employee profile 09 • People are graded and profiled at the age of 16 and categorised for work suitability both in terms of capability and individual preference. • The top talent is highly prized and fought over. In most cases people are linked to an organisation by the age of 18. • University education is managed by the company according to the organisational career path chosen by the individual. • At the top level, employees take far greater control of their careers; often senior executives have their own personal agents who represent them to find the best roles and deals. • Lower level employees are also taking active charge of their careers; they are aware of the value that their human capital represents and are demanding about the circumstances in which they will invest. • Those outside the corporate sphere find employment choices are limited to smaller companies that are unable to provide the same level of development and financial benefits. Managing tomorrow’s people Blue World
Slide 12: 10 A people management model for the Blue World In the Blue World where corporate is king, the people and performance model below is the closest to what many leading companies are aspiring to today – linking HR interventions to improvements in business performance and using more sophisticated human capital metrics to evaluate corporate activity. Under this scenario the management of people and performance becomes a hard business discipline, at least equal in standing to finance in the corporate hierarchy. Human resources: the current model People and performance: the 2020 model Figure 2
Slide 13: Future view Extract from a newspaper in 2016 People metrics are integral to analysts’ pricing strategies 11 WORLD FINANCIAL NEWS NEWS IN BRIEF 3rd April 2016 Italian pharmaceutical giant Como saw its shares climb higher yesterday in expectation of positive news in its quarterly results due next week. The company, now worth an estimated € 20bn has profited from the success of its new line of statins in Europe and America, but also in China, the fastest growing pharmaceutical market globally. The quarterly report will be looked at closely by companies inside the industry and beyond. Many credit Como’s unusually rapid rise and dominance of parts of the sector to the way CEO Mario Fabrizzi manages the organisation’s human capital, which the company also reports on in detail. Last year earnings per employee rose by 7% while costs per employee fell 5%, generating a much improved return on human capital. Mr Fabrizzi said, “You have to measure the things you attach value to. Measuring the performance of our people has allowed us to quickly make improvements to any underperforming part of the business, to make effective plans for succession and to return real value to our shareholders.” Managing tomorrow’s people Blue World
Slide 14: Companies care: the Green World Where consumers and employees force change In a nutshell: Companies develop a powerful social conscience and green sense of responsibility. Consumers demand ethics and environmental credentials as a top priority. Society and business see their agenda align. 2010 The UK launches the London Carbon Trading Exchange 2012 The US signs the Kyoto II agreement and becomes a leading advocate for actions to reduce the rate of global warming 2013 India becomes a key player in the corporate social responsibility agenda with a focus on preserving the Indian culture and heritage 2018 Hybrid or fully electric cars outnumber petrol-powered cars 2020 A group of scientists confirm that the rate of global warming is slowing
Slide 15: 13 94% of respondents believe they will work across geographic borders more than their parents did. Consumers drive corporate behaviour The environmental lobby is so pervasive that companies must be quick to react to consumer concerns about any aspect of their business which could be deemed unethical. Clear communication and clarity about products and services is essential. components of the supply chain through vertical integration. Rigid contractual obligations are in place covering every eventuality. How green are you? The audit process and quarterly company reports are characterised by a focus on measuring greenness detailing carbon emissions ratings, and carbon exchange activity, as well as the more traditional company valuations. This is an indication of the importance shareholders and investors place on these issues which are reflected in the share price. Supply chain control Companies have strong control over their supplier networks to ensure that corporate ethical values are upheld across the supply chain, and be able to troubleshoot when things go wrong. This has led to many organisations taking greater ownership of key Big corporate fines In the business world ethical behaviour is the most important attribute to attain and preserve. Brands can rise and fall on the basis of perceived green credentials, with government imposed corporate fines for bad behaviour in this highly regulated world. Corporate responsibility is not an altruistic nice to have, but a business imperative. Hughes Fourault, Global Head of Compensation, Benefits and International Mobility, Société Général Managing tomorrow’s people Green World “We are developing an employer brand reflecting our identity as an employer and promoting our long term commitment with our employees.”
Slide 16: 14 90% of US respondents will actively seek out employers whose corporate responsibility behaviour reflects their own. Managing people in the Green World • New graduates look for employers with strong environmental and social credentials; in response HR departments play a key role in developing the corporate social responsibility programme. • Employees are expected to uphold corporate values and targets around the green agenda. Most are given carbon credit tokens which are used like ration books to be cashed in for printing documents in hard copy, company travel and other anti-societal activities. • The HR function is renamed ‘People and Society’, the leader being a senior member of the company’s executive team. • The need to travel to meet clients and colleagues is replaced with technological solutions which reduce the need for face-time. Air travel in particular is only permitted in exceptional circumstances and is expensive. Working across teams in different locations therefore presents enormous challenges to global businesses, and the HR function dedicates significant energy to generating virtual social networks across the operation and the client base. • Most companies provide staff with corporate transportation options between work and home to minimise the need for car use. This has led to many companies choosing to relocate parts of their operation to where people are based and out of big cities.
Slide 17: Who leads people strategy? • The CEO drives the people strategy for the organisation, believing that the people in the organisation and their behaviours and role in society have a direct link to the organisation’s success or failure. • The CEO works closely with the Head of People and Society (HPS) who, with a team comprising a mix of HR, marketing, corporate social responsibility and data specialists, drives the social responsibility programme. • Employment law drives responsible employer behaviour and forces the HPS to develop innovative solutions in times of downturn – such as sending employees on secondments to other organisations where they can develop their skills and contribute to the wider society, bringing employees back in when the economic environment improves. The HPS is therefore a well-networked individual. Organisational challenges • Quality assurance and vigilance to minimise risk is paramount. • The greatest threat to businesses in this scenario is the possibility of non-socially responsible behaviour either within the organisation or in any part of its supply chain. • Organisations operate in a highly regulated world, where employment law makes it difficult to lay people off in line with market fluctuations. They struggle to monitor everything across the operation to be compliant with the ethical ideal for which they strive. But being compliant is not enough: organisations are under pressure to raise the bar and establish policies and practices which go beyond regulatory requirements. The danger in such a regulated world is that companies are so preoccupied with compliance policies that the ability to be flexible and explore new opportunities is hampered. Employee profile 15 • Because organisations adopt a more holistic approach to developing their people, including personal development 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. Managing tomorrow’s people Green World • The common belief is that employees choose employers who appear to match their beliefs and values. The reality is that the talent pool for the brightest and best remains competitive, and whilst CSR rankings are a factor, the overall incentive package remains all important. Incentives however are not just reward-related; for example, they include paid secondments to work for social projects and needy causes – a popular trend post-2010.
Slide 18: 16 A people management model for the Green World In the Green World where companies care, corporate responsibility (CR) is good. The CR agenda is fused with people management. As society becomes a convert to the sustainable living movement, the people management function is forced to embrace sustainability as part of its people engagement and talent management agendas. Under this scenario successful companies must engage with society across a broader footprint. Communities, customers and contractors all become equal stakeholders along with employees and shareholders. Human resources: the current model People and society: the 2020 model Figure 3
Slide 19: Future view Extract from operating review In 2020, it is a legal requirement that companies disclose their environmental activity. This also acts as a key differentiator when recruiting and retaining talent. 17 G-Bank Sustainable business report G- BANK The group has adopted the European Sustainable and Responsible Corporations guidance and has comprehensive company-wide policies on sustainability, energy and climate change, and responsible procurement. We require all suppliers to be certified as carbon balanced and eco-friendly. During 2020 G-Bank made further changes in its energy providers in 25 countries, so that 95% of our total energy consumption now comes from renewable sources. Our extensive use of videophone technology and virtual meeting software means that business travel has reduced by 75% over the past five years. In the last quarter of the year our environmental auditors completed their annual sustainability audit and issued an unqualified opinion. This has allowed G-Bank to retain its status as a AA+ company within the S&P sustainability index. Key environmental data is provided below Key Environmental Statistics Energy use – properties Total energy consumption – Gw Energy consumption/FTE – Kw Renewables as a % of total energy consumption 2020 2019 1,015 0.10 95% 1,200 0.13 91% CO2 emissions – properties CO2 – kilotonnes CO2 – tonnes/FTE 21.0 0.21 21.8 0.23 Business travel Total travel-related CO2 – kilotonnes Travel-related CO2 per FTE – tonnes/FTE 1.0 0.01 1.9 0.02 Managing tomorrow’s people Green World G-BANK recognises its statutory responsibilities under the Climate Change Act 2015, Ecosystem Change Act 2016, and all other sustainability legislation. We have been active participants in the International Business Panel on Climate Change since it was established in 2010.
Slide 20: Small is beautiful: the Orange World Where big is bad, for business, for people and for the environment In a nutshell: Global businesses fragment, localism prevails, technology empowers a low impact, high-tech business model. Networks prosper while large companies fall. 2009 Facebook global membership reaches 1 billion people 2010 Skill shortages push up wages in China, switching the balance of power to the individual away from the collective 2012 Record number of corporate demergers and spin-offs 2014 71% of Europeans shop at local farmers markets, popularity of supermarkets in steep decline 2020 The California Gaming Guild achieves record pay deal for its 7 Star rated contractors
Slide 21: 19 0.6% Only 0.6% of UK respondents think that they will mainly work from home A free economy Trade barriers come down creating a truly free market economy and countries such as China quickly realise that without embracing full free-market forces they will be unable to compete. Complex supply chains Supply chains are built from complex, organic associations of specialist providers, varying greatly from region to region and market to market. The solution is now not to outsource, but to fragment. Looser, less tightly regulated clusters of companies are seen to work more effectively. Often functions are picked up on a task by task basis by ‘garage’ operations, with each transaction bought and sold by the second on one of a number of electronic trading platforms, with local and global exchanges. Millennials drive technology use Networks are key The dream of a single global village has been replaced by a global network of linked, but separate and much smaller communities. The exponential rise in the efficiency of online systems for buying, selling and trading services and skills has debunked completely the old orthodoxy that economies arise from scale. Businesses are much smaller and roles are more fluid. The millennial generation, comfortable with technology, is driving the usage of technology as the interaction with services, government and work, with an emphasis on choice and anti-monopoly thinking encouraging innovations in this area. Peter Johann Director Global HR Management BASF Managing tomorrow’s people Orange World “Diversity is a huge challenge, but also a great opportunity. Getting diversity right will be a critical future success factor for us.”
Slide 22: 20 11.5% of Chinese female respondents expect to have more than ten employers during their career Labour market enters the guild era In a tightening labour market individuals develop portfolio careers, working on a short-term, contractual basis. They join craft guilds which manage career opportunities, provide training and development opportunities. • Employees are usually aligned to guilds and access opportunities through professional portals provided by guild networks – work can be bought, sold and traded in this way. Employment contracts are flexible to accommodate staff churn and a rapid turnaround. • Workers are categorised and rewarded for having specialist expertise; this has created increased demand for workers to have a personal stake in the organisation’s success with direct ownership share schemes and project delivery-related bonuses becoming the norm. • Recruitment has become largely a sourcing function and has been merged with the management of the huge number of contracts and price agreements required for each company’s network of partner organisations. Managing people in the Orange World • Organisations recognise that their employees and the relationships they have across their networks are the foundation of company success. Companies seek to promote and sustain people networks. This is achieved through incentivising employees around achieving connectivity goals and collaborative behaviours. • As guilds become more important, they take on many of the responsibilities previously assumed by employers including sourcing talent, medical insurance and pensions, development and training.
Slide 23: Who leads people strategy? • People strategy is replaced with sourcing strategy, as maintaining the optimum supply chain of people is key to this networked world. • The People Sourcing Director liaises with expertise networks and guilds to attract what they need for the best price. Organisational challenges • Organisations are heavily reliant on their external networks to deliver what they need, and a combination of watertight contractual agreements combined with a healthy degree of business trust is imperative. • When a part of the network breaks down, the smaller size of organisations means they are able to flex and adapt quickly to change. But the flip side of this means that the lack of company infrastructure and resources to deal with sudden problems can be a challenge • There is also a strong emphasis on technology to support the supply chain and to develop social capital and collaboration. Employee profile 21 • The responsibility for skills development shifts wholesale to individuals. • People are more likely to see themselves as members of a particular skill or professional network than as an employee of a particular company. • Employees rely on achieving high scoring ‘eBay’ style ratings of past job performance to land the next contract. • Specialisation is highly prized and workers seek to develop the most sought after specialist skills to command the biggest reward package. Managing tomorrow’s people Orange World
Slide 24: 22 A people management model for the Orange World Our third world is in many ways the most radical. In this world, economies are comprised primarily of a vibrant 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 critical component of the business and is strategically led by the HR function. But the flip side is that this could also see in-house HR becoming a sourcing or procurement function, with the high-end people development aspects of HR being managed externally by guilds. Current model Operational model in 2020 Figure 4
Slide 25: Future view 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 23 Managing tomorrow’s people Orange World
Slide 26: 24 Summary A summary of the people management characteristics in 2020 Blue World Resourcing and Succession Talent Management Long careers and career planning. Succession plans for key performers. Strong performance focus across all levels. Top talent have personal agents. Engagement around performance and performance metrics. Heavy promotion of corporate culture attributes and behaviours. Strongly performance-related. Pay for performance. Highly structured according to role segmentation. Begins at school. Focus on skills for the job – metrics driven. Green World Holistic whole company approach to manpower planning. Orange World Short-term careers. Lots of contracting. HR strongly focused on filling fixed-term vacancies. Minimal – key players in the central ‘core’ only, but liaison with external agents crucial Short-term engagement around projects. Broad definition of talent. Competencies focus. Employee Engagement Engagement around work-life balance and social responsibility. Reward and Performance Focus on total reward over career life-time. Contract based-pay for projects. Individual stake in projects as incentive for contractors. Learning and Development Holistic approach to learning – much provided in-house. But secondments and paid sabbaticals for worthy causes are common Minimal provision in house. Skills training via new crafts guilds. Table 1
Slide 27: Are you ready for tomorrow’s world? What will the world look like in 2020 – Blue, Green, Orange or something else entirely? We believe it is highly plausible that all three organisational models described in this report will feature in tomorrow’s world, sometime or somewhere and to some extent. We already see some multinationals heading in the direction of the Blue World business model. The energy industry has been demonstrating elements of the Green World for some time. We firmly believe that, as the CSR and sustainability agenda grows many other industries (and geographies) will take on characteristics of the green business model, for example the retail and manufacturing sectors. Consumer preference will have a huge impact when it comes to the green agenda. The Orange World in some ways represents the most radical departure. Will big business find itself outflanked by a vibrant, innovative and entrepreneurial middle market? Will the work expectations of the millenials be such that portfolio lives will become far more pervasive? Will some larger organisations introduce internal markets and formal networks in place of old style hierarchies to create structures where agility, speed and flexibility are key to success? 25 The world of work is going to become even more complex. Our message is: take a long hard look at your organisation models and current people management strategies; how are you addressing reward, international mobility, employee engagement, development and learning? Think about how these might change in the future and whether or not the strategy you currently have in place is future proof, is sustainable, sufficient and relevant for the plausible worlds of tomorrow. The survey we conducted is clearly representative of only a part of the millennial generation. But what truly surprised us is the desire in this group for stability and regularity in a changing world. Many people said they expect to work regular hours, from the office or on location, and would have only “HR will continue to increase its alignment to the business, with greater accountability for delivering specific corporate objectives. This will result in a greater need for HR to quantify itself in respect of how we deliver against the bottom line. ... Managing tomorrow’s people Are you ready for tomorrow’s world
Slide 28: 26 ...We will also need to prepare ourselves for a new generation entering the market place. A significantly more mobile generation with differing expectations from an employer, and we will need to adapt to reflect this.” Michael Poulten Personnel Manager Reward and Benefits Tesco Stores between two and five employers in a lifetime. But equally let’s not ignore the Chinese women in our sample who expected far more flexibility and to have at least ten employers in a lifetime – perhaps these might be workers for the Orange World of the future. Our final message is to the HR function itself. We believe there is a significant opportunity for the HR function to really own the people management agenda within organisations, to truly drive strategy and have the tools and information to become one of the most powerful and influential parts of the business operation. But – and yes there is a but – we can also see that complacency and a failure by HR to take the lead could result in the function being outsourced almost entirely, or absorbed by line managers or into other functions such as finance or marketing. The fate of HR as a function hangs in the balance. The challenge for HR is to figure out how to make itself relevant for tomorrow’s world. How can organisations plan for the future of people management? Figure 5
Slide 29: Appendix A1 Definition Scenarios We worked with the James Martin Institute for Science and Civilisation at the Said Business School in Oxford to think about the factors that currently affect business and those which we believe will grow in importance in the future. We mapped these around a matrix and developed a number of scenarios: plausible futures around each. The result was the three worlds which we describe in this report. Shell famously used scenarios to help them to predict the Middle East oil crisis in 1973. The process can help organisations think differently about the future and plan for the inevitable surprises. 27 Millenials Wikipedia says ‘The Millenials’ 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 constitutes Generation Y and the Millennials and whether these terms are specific to North America, the Anglophone world, or people worldwide.’ For the purposes of this document, we refer to ‘Millennials’ as those who entered the workforce after 1 July 2000. Managing tomorrow’s people Appendix
Slide 30: 28 A2 2020: our methodology Scenarios Our scenario planning exercise revealed that individualism, collectivism, corporate integration and business fragmentation would be the most significant factors affecting global business for the purposes of our study. We aligned these along two axes, around which we developed our scenarios further. We call these ‘worlds’. We began with four worlds: yellow, red, blue and green, with the yellow and red worlds straddling the top half of the quadrant. In these fragmented worlds we discovered through our analysis that the differences across individualism and collectivism were hard to define in the fragmented world. Both of these worlds relied upon networks to survive, were, small, nimble and adaptable. The motivations were the only variant factor where the red world was more self-serving than the collective altruism of the yellow world. We decided therefore to combine these themes to create a single orange world which represented the fragmented business model. We started our research by examining the forces that currently affect global business and are likely to have significant impact on the future. Clearly there are many social, environmental, religious and demographic factors that will have significant influence but we felt that some of these issues have been tackled extensively in other studies. We chose to focus on a number of potentially conflicting factors which we feel have the greatest impact on our subject matter – people management. Initially we explored the following eight forces: (see diagram opposite).
Slide 31: Figure 6 Global forces 29 Managing tomorrow’s people Appendix
Slide 32: 30 A3 PwC graduate survey findings In July 2007, 2,739 graduates from China, the UK and the US were polled about their expectations of work. They had all been offered jobs at PwC but had yet to start. Total Do you believe you will work across geographic borders more than your parents did? Yes No Yes No Will you deliberately seek to work for employers whose corporate responsibility behaviour reflects your own values? Yes No A mix of locations Mainly from home Mainly in an office Not answered 93.9% 6.1% 52.7% 47.2% 86.9% 13% China 97.2% 2.8% 89.4% 10.4% 87.2% 12.6% US 92.1% 7.9% 32% 68% 90.2% 9.6% UK 92.9% 7.1% 35.3% 64.7% 71.2% 28.8% Do you envisage using a language other than your first language at work? Do you think you’ll work...? 74% 4.6 21.2% 0.1% 75.7% 7.4% 16.7% 0.1% 71.8% 3.8% 24.3% 0% 79% 0.6% 20.4% 0%
Slide 33: 31 Total Do you think your office hours will be…? Mainly flexible hours Mainly regular office hours Regular office hours Not answered How many employers do you think you will have in your career? 1 2-5 6-9 10+ Not answered 13.9% 11% 75% 0.1% 8% 78.4% 7.9% 5.5% 0.1% China 17.6% 7.1% 75.1% 0.2% 9% 74.4% 6.3% 10.3% 0.0% US 12.9% 14.0% 73.1% 0.1% 8% 80.4% 8.5% 3.2% 0.1% UK 7.4% 10.0% 82.5% 0% 7.4% 79.6% 9.7% 2.6% 0.6% Managing tomorrow’s people Appendix
Slide 34: 32 Acknowledgements There were numerous people involved in this project both within and outside PricewaterhouseCoopers. Our particular thanks to Angela Wilkinson and team at the James Martin Institute and to all the companies who shared their views 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 part in the scenarios workshop. We would also like to thank Sivaramakrishnan Balasubramanian, Indrani Rana (India), Svetlana Kruglova (Russia), Shinya Yamamoto (Japan), Steve Rimmer (US) and many other contributors from across our global network of PricewaterhouseCoopers firms. Our final acknowledgement goes to our internal human capital teams around the world who helped us to conduct the graduate survey. Contact Michael Rendell Partner and leader of Human Resource Services PricewaterhouseCoopers LLP (UK) +44 (0) 20 721 24945 michael.g.rendell@uk.pwc.com Sandy Pepper Partner/Project leader Human Resource Services PricewaterhouseCoopers LLP (UK) +44 (0) 20 721 34948 sandy.a.pepper@uk.pwc.com Karen Vander Linde Leader, 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
Slide 35: 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 LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the 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. © 2007 PricewaterhouseCoopers LLP. All rights reserved. ‘PricewaterhouseCoopers’ refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. Managing tomorrow’s people
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Slide 37: Managing tomorrow’s people How the downturn will change the future of work
Slide 38: About Managing tomorrow’s people 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. *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
Slide 39: Contents 01 Introduction 2020: where three worlds co-exist The Green World: sustainable business is good business The Blue World: corporate is still king The Orange World: tribes thrive Summary Conclusion: is your people strategy fit for the future? Some of the key decisions made by each company as a result of scenario planning Appendix 1: global forces Appendix 2: from scenarios to real options Publications Acknowledgements Contacts 02 05 06 12 18 25 26 29 30 31 36 37 37 Managing tomorrow’s people Contents
Slide 40: 02 Introduction ‘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.
Slide 41: 03 • 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? 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 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 Managing tomorrow’s people Introduction
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Slide 43: 2020: Where three worlds co-exist 05 The Orange World Tribes 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. Managing tomorrow’s people 2020: Where three worlds co-exist The Green World Sustainable 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 World Corporate 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. Figure 1
Slide 44: 06 The Green World: sustainable business is good business 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. 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. 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 Timeline of company 2009 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 2011 G-Bank is first US bank to publish audited accounts of its environmental activity 2015 G-Bank adds a permanent representative from an NGO to its board of directors 2016 Announces early adoption of guidelines from Climate Change Act 2015 and Ecosystem Act 2016 2018 G-Bank relocates HQ to new energy efficient eco building in the suburbs
Slide 45: 07 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. 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, 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. Millennials at Work Managing tomorrow’s people Green World How G-Bank emerged from the global crisis ‘86% of millennials would consider leaving an employer whose behaviour no longer met their corporate responsibility expectations.’
Slide 46: 08 ‘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 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. 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 Corporate responsibility is key. 88% of millennials would deliberately seek employers whose CR behaviours reflect their own values % 100 80 60 40 20 0 All regions Asia Australasia and Pacific Islands Central and Eastern Europe Western Europe Middle East and Africa North America and the Caribbean South and Central America 88 89 81 89 94 82 90 93 Base: 3922 global respondents Source: Millennials at work: perspectives from a new generation (PwC December 2008) Figure 2
Slide 47: 09 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 Managing tomorrow’s people Green World
Slide 48: 10 Future view ‘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 Extract from operating review G-Bank was one of the first organisations to disclose their environmental activity. G-Bank Sustainable business report G- BANK G-BANK recognises its statutory responsibilities under the Climate Change Act 2015, Ecosystem Change Act 2016, and all other sustainability legislation. We have been active participants in the International Business Panel on Climate Change since it was established in 2010. The group has adopted the European Sustainable and Responsible Corporations guidance and has comprehensive company-wide policies on sustainability, energy and climate change, and responsible procurement. We require all suppliers to be certified as carbon balanced and eco-friendly. During 2020 G-Bank made further changes in its energy providers in 25 countries, so that 95% of our total energy consumption now comes from renewable sources. Our extensive use of videophone technology and virtual meeting software means that business travel has reduced by 75% over the past five years. In the last quarter of the year our environmental auditors completed their annual sustainability audit and issued an unqualified opinion. This has allowed G-Bank to retain its status as a AA+ company within the S&P sustainability index. Key environmental data is provided below Key Environmental Statistics Energy use – properties Total energy consumption – Gw Energy consumption/FTE – Kw Renewables as a % of total energy consumption 2020 2019 1,015 0.10 95% 1,200 0.13 91% CO2 emissions – properties CO2 – kilotonnes CO2 – tonnes/FTE 21.0 0.21 21.8 0.23 Business travel Total travel-related CO2 – kilotonnes Travel-related CO2 per FTE – tonnes/FTE 1.0 0.01 1.9 0.02
Slide 49: 11 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. • 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. Managing tomorrow’s people Green World • 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.
Slide 50: 12 The Blue World: corporate is still king 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’. Timeline of company 2010 Como introduces mass people measurement regimen across the organisation 2012 Como bought by China’s Yao Generics and becomes Yao-Como. Other acquisitions follow 2013 Yao-Como data theft scandal prompts ‘dark pool’ recruiting 2016 Yao-Como’s ‘Resilience’ wellness at work programme is cited by the World Health Organisation as ‘best of breed’ model 2017 New CEO Betty Chang moves the HQ from Rome to Shanghai (China remains its biggest market) and changes name to Yao
Slide 51: 13 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 supercharged, competitive atmosphere. 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: Millennials at Work Managing tomorrow’s people Blue World 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. ‘47% of millennials think China, Russia & India will have more economic influence than the US & Europe by 2020. Only 28% of US graduates disagreed.’
Slide 52: 14 ‘Over one third of millennials believe that by 2020 companies will be more influential than governments.’ Millennials at Work 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). 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.
Slide 53: 15 Many millennials would be comfortable with an employer providing personal services such as housing/food/regular doctor and dentist appointments. % who answered yes 100 80 66 60 40 20 0 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. 73 61 68 65 72 61 66 All countries Asia Australasia and Pacific Islands Central and Eastern Europe Western Europe Middle East and Africa North America and the Caribbean South and Central America Base: 3,884 global respondents Source: Millennials at work (PwC December 2008) Figure 3 Managing tomorrow’s people Blue World
Slide 54: 16 Future view ‘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.
Slide 55: 17 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. • 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. Vivien Broughton, Career Development Manager, Europe & African Unit, Transocean Managing tomorrow’s people Blue World • 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. ‘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.’
Slide 56: 18 The Orange World: tribes thrive 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 Timeline of company 2010 Data Honey helps to establish the first global guild – The Guild of Web Designers 2012 Data Honey creates Head of Talent Sourcing role 2016 Workbook takes care of 95% of Data Honey’s team worker recruitment needs. All team workers belong to guilds 2017 Workbook now has three serious rivals and introduces the Universal Employee Rating to regain its market lead 2019 Guild of Web Designers successfully sued by ex-Data Honey employee for unfair employee rating
Slide 57: 19 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. Managing tomorrow’s people Orange World 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. ‘85% of millennials are members of online social networks.’ Millennials at Work
Slide 58: 20 ‘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 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. 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.
Slide 59: 21 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 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. Most millennials have at least one email account, 44% have at least 3 or more % who answered yes 100 13 80 31 60 40 44 20 0 11 All countries 11 Asia 9 Australasia and Pacific Islands 9 Central and Eastern Europe 13 Western Europe Middle East and Africa 44 46 41 32 46 35 32 51 28 39 14 12 15 11 12 13 4+ 22 3 2 1 Millennials at Work 44 37 48 34 11 North America and the Caribbean 6 South and Central America Base: 3,864 global respondents Source: Millennials at work (PwC December 2008) Figure 4 Managing tomorrow’s people Orange World ‘40% of Millennials would be prepared to give employers greater access to personal information, only 35% disagreed.’
Slide 60: 22 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 quasilegal status and can be challenged in court.
Slide 61: 23 Future view 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 Chin Han’s Universal Employee Rating ‘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 Managing tomorrow’s people Orange World
Slide 62: 24 ‘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 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.
Slide 63: Summary 25 Green World Focus on socially and environmentally responsible business practices ‘Your corporate values match mine – I belong here.’ Coaching and nurturing to promote the right behaviours CS and transparency underpin everything to drive moderate but steady growth Sustainable business for a better society Blue World Fast-paced, global operator, with high performance culture ‘Only the best work here – I am the best.’ HR is a hard discipline, very metrics focused with rigorous recruitment processes Controlling talent is key, the line between home and work is blurred Perform well all of the time and everybody wins Orange World Flexible and highly networked with a focus on the short term ‘I will work with you because it suits me right now.’ Emphasis on global talent sourcing, global guilds replace the HR function Small means agile, innovative and able to adapt to change quickly Networks make the world go round Workplace culture Employee profile People management style Key themes Corporate ethos Managing tomorrow’s people Summary
Slide 64: 26 Is your people strategy fit for the future? ‘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. 3 Extract from the full interview with Alf Göransson which can be found on pwc.com/ceosurvey
Slide 65: 27 • 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 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. Managing tomorrow’s people Conclusion
Slide 66: 28 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
Slide 67: Some of the key decisions made by each company as a result of scenario planning 29 2020 – Data Honey 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 2016 HR function is closed down and Head of Talent Sourcing role moves into Procurement, managing outsourcing arrangements with various guilds Managing tomorrow’s people Conclusion 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 2008-10 Economic crisis 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 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 2020 – G-Bank 2020 – Yao
Slide 68: 30 Appendix 1: global forces Business fragmentation: the potential break-up of large businesses and the rise of collaborative networks Technology controls me: allowing technology into almost every part of a person’s life Globalisation: the free-market trend prevails as trade barriers disappear Collectivism: the common good prevails over personal preference, e.g. collective responsibility for the environment over individual interest Global forces Individualism: focus on individual wants; a response to the infinite choices available to consumers Reverse globalisation: protectionist policies begin to rebuild barriers to free movement of people and goods I control technology: a yearning for the human touch minimises the personal impact of technology on consumers Corporate integration: big business rules all
Slide 69: Appendix 2: from scenarios to real options 31 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. Managing tomorrow’s people Appendices • 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.
Slide 70: 32 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 Decision scenarios Real options High level, descriptive, creative, inductive, general, a basis for strategic discussions More detailed, deductive, company-specific, a basis for strategic planning Very detailed, a basis for decisions
Slide 71: 33 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. 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. Figure 2: Types of real options Inherent options Created options Switching options Modification options Platform options Capability options Portfolio options Already exist for free, simply need to be identified Need to be consciously constructed or acquired, possibly at a price Give the possibility of switching between products, processes, inputs or business activities Create additional possibilities by modifying products, processes, infrastructure Investment in new infrastructure or capabilities to give new business opportunities Development of distinct competencies – human resources, brands, reputation, culture, knowledge, processes Development of new markets, channels to market, products, pricing strategies Managing tomorrow’s people Appendices
Slide 72: 34 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 Decision 1 Decision 2 Decision 3 Decision 4 Positive outcome Negative outcome Negative outcome Negative outcome Scenario B Positive outcome Negative outcome Positive outcome Negative outcome Scenario C Positive outcome Negative outcome Positive outcome Positive outcome
Slide 73: 35 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 Managing tomorrow’s people Appendices
Slide 74: 36 Publications 12th Annual Global CEO Survey Redefining success PricewaterhouseCoopers 12th Annual Global CEO Survey: Redefining success Views 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 Fool proof plans Future proof plans Contents Next Managing tomorrow’s people Millennials at work: Perspectives from a new generation Millennials at work: Perspectives from a new generation Over 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 2020 Managing tomorrow’s people: The future of work to 2020 The 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. *connectedthinking www.pwc.com/managingpeople2020
Slide 75: Contacts 37 Michael Rendell Partner and leader, Human Resource Services PricewaterhouseCoopers LLP (UK) +44 (0) 20 7212 4945 michael.g.rendell@uk.pwc.com Europe 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. Henk van Cappelle Partner PricewaterhouseCoopers (Netherlands) +31 20 568 6210 henk.van.cappelle@nl.pwc.com Asia Leyla Yildirim Marketing, Human Resource Services PricewaterhouseCoopers LLP (CI) +44 (0) 1481 752039 leyla.yildirim@uk.pwc.com US Ron Collard Partner PricewaterhouseCoopers LLP (Singapore) +65 6236 7278 ron.pa.collard@sg.pwc.com Karen Vander Linde Partner and leader, People and Change PricewaterhouseCoopers LLP (US) +1 (703) 918 3271 karen.m.vanderlinde@us.pwc.com Mandy Kwok Partner PricewaterhouseCoopers (Hong Kong) +852 2289 3900 mandy.kwok@hk.pwc.com John Caplan Partner and leader, Human Resource Services PricewaterhouseCoopers LLP (US) +1 (646) 471 3646 john.caplan@us.pwc.com Visit our Managing tomorrow’s people site at: www.pwc.com/managingpeople2020 Managing Managing tomorrow’s people Introduction contacts tomorrow’s people Acknowledgements and
Slide 76: 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. © 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)
Slide 77: Contents Next Managing tomorrow’s people Millennials at work: Perspectives from a new generation
Slide 78: Home Next Back Contents Introduction Talent crunch Report highlights 2 4 4 5 Employee loyalty 14 Training and development 15 Retirement Thoughts on 2020 So what do these findings mean for companies in their search for talent? 16 17 18 About the survey Key findings 6 7 Global mobility Sustainability and climate change 7 8 Message to the CEO Market challenges A connected world Generation X and the Baby Boomers 18 18 18 19 Technology at work 10 Work place flexibility Sharing personal information 11 12 Managing millennials 20 Portfolio careers 13 Contacts 21 2
Slide 79: Home Contents Next Back 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 Millennials Wikipedia 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.
Slide 80: Home Contents Next Back Introduction 4 “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 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 crunch The 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?
Slide 81: Home Contents Next Back 5 Report highlights Many 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: • 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. 2 Managing tomorrow’s people – the future of work to 2020 (published by PwC in October 2007)
Slide 82: Home Contents Next Back 6 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. About the survey PricewaterhouseCoopers 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.
Slide 83: Home Contents Next Back 7 Key findings We expect global mobility in our jobs, and we want to experience opportunities to work overseas Almost 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 Interest work overseas compared to 62% of those – by country wishing toin working outside home country in careerfrom the Netherlands (see figure 1). Preferred destination of those who would like to Preferred destination of those who would like work outside their home country in their career to The most desired their home country in their career and Australia, work outside location is the US, followed by the UK Preferred country – Top 5 Preferred country – Top 5 (see figure 2) but overall Western Europe was the most desired with 31%. USA USA United Kingdom United Kingdom 19% 19% 10% 10% 4% 4% 4% 4% 26% 26% 100% 80% 60% 40% 20% All countries 93% 92%90% 80% 89%89% 88% 86%85%85% 85%85% 84%84% 82%81% 80% 77% 74% 70% 69%69% 65% 62% Australia Australia France France South Africa Netherlands Hong Kong Hungary Belgium Ireland Turkey Argentina Australia Slovakia Germany Canada Poland India China Brazil Chile Russia France Spain UK USA Greece 0% China China Q: Would you like to work outside your home country in your career? (% who agreed) Base: 4140 global respondents Figure 1 Q: Would you like to work outside your home country in your career? IfQ: Would you like to work outside your home country in your career? yes, where would be your preferred destination? If yes, where would be your preferred destination? Base: 3043 global graduates Base: 3043 global graduates Figure 2 “International experience is an essential requirement for future leaders and as such should be cultivated from the very beginning of a graduate’s career.”
Slide 84: Home Contents Next Back 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 countriesto use a language other than first language an work – By country Expect where English is the main language, there is at expectation that another language will be needed at work, for example in the US 34% agreed (see figure 3). 100% 80% 60% 40% 20% All countries Netherlands Hong Kong Belgium Hungary South Africa Poland Turkey Argentina India Germany Australia Slovakia Russia Spain China Brazil Chile Canada France UK Greece USA 99%99%99%97%97%97%95%95%95% 93%91%91%90%90% Our employer must have a strong stance on sustainability and climate change Corporate 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%),leaving an employer whose92%) were the Percentage who would consider the US and Brazil (both at behaviour most likely to leave whilst Indian respondents were the least (66%). no longer met corporate responsibility expectations – By region 90% 84% 80% 59% 59% 46% 38% 34% 18% 70% 100% 80% 60% 40% 20% 0% 86% 84% 82% 82% 82% 85% 91% 91% All countries Central and Eastern Europe Middle East and Africa Base: 4084 global respondents 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. Q: Would you consider leaving an employer whose behaviour no longer meets your corporate responsibility expectations? (% who agreed) Base: 3906 global respondents Figure 4 3 Managing Mobility Matters: A European Perspective (PwC published December 2006) Australasia and Pacific Islands North America and the Caribbean South and Central America Western Europe Q: Do you envisage using a language other than your first language at work? (% who agreed) Ireland 0% Asia
Slide 85: Home Contents Next Back 9 An employer’s policy on climate change is also seen as important to 58% of respondents. The contrasting views between countries who state employer’s policy on climate change and the environment Percentage is interesting as those in Brazil (86%) felt this was an important issue compared to only 40% ofis important in deciding whetherfigure 5). work for company – by country US and Belgian respondents (see or not to 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 86% 81% 77% 76% 73% 73% 58% 70% 70% 68% 67% 65% 62% 61% 58% 55% 53% 53% 52% 51% 46% 43% 40% 40% Republic of Ireland Germany All respondents Netherlands Hong Kong Hungary South Africa Argentina United Kingdom Australia Slovakia 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 Figure 5 Belgium Turkey Poland Russia Spain China Brazil Chile India Canada “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.” France Greece USA 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. “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.”
Slide 86: Home Contents Next Back 10 “Technology will be at the centre of everything we do, in ways that may now be unimaginable.” We use technology to enhance our ability to network Much 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 Percentage who are a member of an a social networking site such as Facebook (see figure 6). online social network – by country 100% 80% 60% 40% 20% 0% 85% 97%96%95%94%93%93% 92%90%90%89% 88%87%87% 84%83%81% 75%74%73% 65% 61%58% 51% All respondents Hong Kong Netherlands Poland Republic of Ireland Hungary France United Kingdom USA Belgium South Africa Turkey Argentina India China Germany Australia “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.” Q: Are you a member of an on-line social network (e.g. Facebook, Bebo, MySpace etc)? Base: 3822 global respondents 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. Slovakia Chile Brazil Canada Russia Spain Greece Figure 6
Slide 87: Home Contents Next Back 11 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. “Employees may have more flexibility in choosing where to work, when to work, how to work.” Expectations of office hours – by country 100% 80% 60% 40% 20% 0% 16% 18% 11% 11% 9% 15% 17% 7% 12% 13% 10% 24% 19% 6% 13% 18% 23% 8% 13% 18% 8% 24% 29% 13% 29% 21% 3% 7% 6% 17% 31% 23% 7% 23% 33% 21% 27% 20% 3% 4% 2% 6% 50% 49% 53% 54% 59% 3% 78% 66% 76% 76% 75% 71% 71% 69% 69% 69% 68% 68% 66% 64% 63% 60% 60% 56% 53% 47% 47% 45% 44% 35% Regular office hours with some flexible working Mainly flexbile hours Mainly regular office hours 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 Figure 7 “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.” All countries Netherlands Hong Kong Hungary Belgium Ireland Brazil South Africa Poland Argentina Australia Slovakia Germany Canada Russia Greece France Turkey China India Spain Chile UK USA
Slide 88: Home Contents Next Back 12 “It is very likely that the employer will intervene more directly in the personal life of the employee.” 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 Willingness their home/personal lives. to give employer greater access to personal information in the interest of personal and business security – By region 100% 80% 60% 40% 20% 0% 40% 44% 40% 39% 38% 40% 38% 47% 25% 25% 20% 23% 20% 18% 29% 26% Don't know / Don't understand 36% 30% 40% 38% 42% 42% 34% 27% No All regions Asia Australasia and Pacific Islands Central and Eastern Europe Western Europe Middle East and Africa South and North Central America America and the Caribbean Yes 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 Figure 8
Slide 89: Home Contents Next Back 13 The concept of portfolio careers in the future is not a reality for us Another 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 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 most likely to follow – by country Career path attuned to cope if it does. 8% 12% 19% Experience a number of different roles/ fields in a variety of organisations Progress within the field I have been recruited to in a variety of organisations Progress within the field I have been recruited to within the same organisation 100% 80% 60% 40% 20% 0% 7% 10% 21% 18% 13% 12% 11% 5% 11% 4% 10% 10% 10% 10% 7% 8% 7% 21% 6% 4% 6% 23% 6% 11% 5% 10% 4% 11% 3% 14% 3% 7% 2% 13% 2% 7% 2% 1% 9% 13% 11% 8% 19% 23% 19% 31% 14% 73% 73% 73% 76% 80% 70% 82% 71% 76% 73% 81% 81% 76% 80% 66% 83% 79% 82% 90% 60% 65% Progress within the same organisation but in a variety of roles/ fields Take the path that permits me the fastest progression 75% 53% 60% 30% 8% 17% 4% 10% 11% 12% 7% 5% 6% 2% 8% 8% 12% 5% 7% 10% 5% 9% 2% 11% 6% 0% South Africa Slovakia Hong Kong India All countries Argentina Belgium Canada Netherlands Australia Greece France Poland Turkey Hungary Russia Germany Ireland Spain China Chile Brazil USA UK 17% Don't know 1 2-5 6-9 10+ Q: Please tell us which of the following best describes the career path you hope to follow. Q: How many employers do you think you will have in your career? Base: 4065 global respondents Figure 9 Base: 4039 global respondents Figure 10
Slide 90: Home Contents Next Back 14 We are loyal to our employers... for as long as it suits us Over 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 Strongly agree I will be loyal to the organisation I work for Agree Neutral Disagree Strongly disagree Don't know “I believe that employees who are not happy with their employers will be more inclined to look for another job with another employer.” Loyalty to organisation – by region 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 91% 92% 95% 88% 89% 85% 68% 92% 86% 59% 63% 66% 55% 32% 59% 38% 55% 28% 54% 43% 30% 31% 27% 30% All regions Asia I will be loyal to the organisation I work for I will only be loyal to the organisation I work for as long as I feel fulfilled in my role My loyalty is to myself and my career objectives rather than my employer Australasia and Central and Western Europe Middle East and North America Pacific Islands Eastern Europe Africa and the Caribbean South and Central America Q: Please tell us how much you agree or disagree with the following statements Base: 3915 global respondents Figure 12 49% 42% 1% 8% I will only be loyal to the organisation I work for as long as I fulfilled in my role My loyalty is to myself and my career objectives rather than my employer 23% 35% 20% 16% 1% 5% 8% 22% 34% 27% 1% 8% “Gen Y will continue to look for employers who embrace their desire for challenging work, amazing development and training opportunities, and travel possibilities.” Q: Please tell us how much you agree or disagree with the following statements. Base: 3915 global respondents Figure 11
Slide 91: Home Contents Next Back 15 Top 3 benefits respondents would most value over the next 5 years other than salary We prefer development opportunities to cash bonuses We 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. 1st choice All respondents Training and Development (53%) Asia Training and Development (64%) Australasia and Pacific Training and Islands development (58%) Central and Training and Eastern Europe development (61%) Western Europe Middle East and Africa North America and the Caribbean South and Central America Training and development (57%) Flexible working hours (55%) Flexible working hours (53%) Training and development (73%) 2nd choice Cash bonuses (41%) Financial assistance with housing (46%) Flexible working hours (45%) Cash bonuses (40%) Flexible working hours (38%) Training and development (46%) Cash bonuses (43%) Cash bonuses (45%) 3rd choice Flexible working hours (41%) Cash bonuses (39%) Cash bonuses (42%) Flexible working hours (32%) Cash bonuses (36%) Cash bonuses (42%) Free private healthcare (38%) Flexible working hours (41%) Q: Please select the benefits you would value most over the next 5 years other than your salary? Base: 3953 development opportunities – by Region Importance of global respondents Figure 13 100% 80% 60% 40% 20% 0% 94% 98% 91% 91% 85% 97% 92% 85% 96% 100% 99% 97% 97% 98% 97% 97% 96% 94% 94% 96% 94% 94% 92% 91% 90% 89% 88% 85% 85% 85% 84% 83% Formal face-toface learning E-learning 62% 67% 62% 59% 64% 65% 59% 43% Working with strong coaches and mentors Rotational assignments All countries Asia Australasia Central and and Pacific Eastern Islands Europe Western Europe Middle East and Africa North South and America Central and the America Caribbean Support for further academic training “Personally I find it very important that personal coaching is present.” Q: Please tell us how much you value the following development opportunities. Base: 3907 global respondents Figure 14
Slide 92: Home Contents Next Back 16 Expectations for retirement I will have to take personal responsibility for funding my retirement Millennials 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. Funded by myself e.g. through investments and saving plans Funded by my employer's retirement scheme Haven't thought about it yet Funded by the government/ state 57% 17% 16% 5% Non-existent. I will continue working after 3% retirement age My children will support me financially 0% when I retire Don't know 3% Q: Do you expect your retirement will be …? Base: 3898 global respondents Expectations for retirement – By region Figure 15 100% 80% 60% 40% 3% 16% 3% 17% 2% 20% 4% 27% 1% 14% 1% 6% 3% 21% 4% 10% 5% 21% 1% 16% 6% 2% 16% 3% 8% 1% 15% 4% 10% 7% 13% Don't know Haven't thought about it yet Non-existent. I will continue working after retirement age My children will support me financially when I retire Funded by my employer's retirement scheme “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.” 4 57% 76% 38% 58% 73% 53% 72% 64% 20% 0% 5% All countries 10% Asia 1% 5% 5% Western Europe 3% Middle East and Africa 1% 2% Australasia Central and and Pacific Eastern Islands Europe North South and America Central and the America Caribbean Funded by myself e.g. through investments and saving plans Funded by the government/ state Q: Do you expect your retirement will be...? Base: 3898 global respondents Bureau of Economic Analysis, Economic Intelligence Unit, PwC Analysis Figure 16
Slide 93: Home Contents Next Back 17 Thoughts on 2020 “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.” 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 By 2020 companies will be more influential (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). than governments… – By region 5% 29% 3% 29% 7% 25% By 2020 China, Russia and India will have more economic influence than the US and Europe… – by country 100% 80% 60% 40% 20% 0% 3% 21% 5% 32% 2% 24% 7% 33% 3% 24% 100% Strongly disagree Disagree 80% 60% 40% 20% 0% 2% 4% 4% 7% 7% 3% 3% 16% 15% 13% 19% 24% 17% 26% 17% 18% 7% 31% 33% 50% 32% 32% 36% 15% 48% 47% 37% 25% 26% 16% 13% 36% 41% 3% 11% 2% 17% 5% 20% 2% 14% 5% 16% 26% 17% 3% 27% 31% 3% 21% 10% 5% 5% 7% 8% 14% 11% 16% Strongly disagree Disagree 25% 25% 25% 30% 29% 30% 32% 20% 32% 24% 46% 31% 32% 26% 24% 38% 27% 29% 31% 38% 29% 27% 27% 29% 37% 30% 25% 10% 6% 23% 40% Neutral 36% 29% 37% 40% 34% 41% 34% 35% 33% 30% 36% 37% 38% 43% Neutral 37% 35% 28% 8% 22% 9% 35% 5% 12% 29% 29% 28% 27% 27% Netherlands Hong Kong All countries Hungary Belgium Australia South Africa UK Argentina Slovakia Germany Canada France Greece Poland Russia Ireland Turkey India China Chile Spain Brazil USA 7% 12% Agree 20% 18% 17% 17% 16% 15% 14% 12% 12% 12% 11% 10% Agree 8% 8% 7% 3% 3% All countries Asia Australasia and Pacific Islands Central and Eastern Europe Western Europe Middle East and Africa North South and America Central and the America Caribbean Strongly agree Strongly agree Q: By 2020 companies will be more influential than governments Base: 3862 global respondents Figure 17 Q: By 2020 China, Russia and India will have more economic influence than the US and Europe Base: 3866 global respondents Figure 18
Slide 94: Home Contents Next Back So what do these findings mean for companies in their search for talent? 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. to place more emphasis on what millennials value most e.g. personal development opportunities, and working with coaches and mentors. 18 Market challenges The 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. Message to the CEO In 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 5 A connected world The demand for global worker mobility has increased dramatically in the last decade with the emergence of new markets and the globalisation of many industries. PwC 12th annual CEO survey published January 2009
Slide 95: Home Contents Next Back 19 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. 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. “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.” 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 6 PwC Measuring the value of international assignments [2006]
Slide 96: Home Contents Next Back 20 Managing millennials 1. 2. 3. 4. 5. 6. 7. 8. Use metrics and benchmarking to segment your workforce in order to understand what millennials want and how these desires might differ from older workers. Think creatively about reward strategies and what motivates millennials? For example, is it time to shift focus from cash bonuses and company cars to other things? Consider global working opportunities – how might this enthusiastic generation support your global mobility needs? Continue to invest in personal development and training – explore expanding coaching/mentoring programmes to younger workers. Articulate your employer brand – communicate internally and externally what it means to work for your organisation. Have a clear statement about corporate responsibility – make this part of your employer brand and be committed to deliver the promise. Think creatively about how technology can be used to engage this audience e.g. avatars, internal networking sites etc. Provide variety and fresh challenges – consider promoting cycles of experience in other parts of the organisation. Our thanks to all the graduates who participated in this survey, and to the PricewaterhouseCoopers human capital teams around the world.
Slide 97: Home Contents Back 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 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.