Our job as leaders is to look around corners, and all signals are pointing to a need to more intentionally and systemically redefine the relationship between workers and organizations. New work models, new business requirements and new employee expectations are coming together at full speed, putting at risk our status quo arrangements in the organization—and even the role and scope of HR.
As you read this issue of People + Strategy, you'll find these are the recurrent themes from our authors—chief people officers, chief talent officers and CEOs of firms who are all in the vortex of these changes.
New Work Models
Once upon a time, full-time employment was the only legal way to earn a decent living. In return for showing up 9 to 5, five days a week, and performing well in highly defined jobs, employees received job security, benefits, equitable treatment and opportunities to advance their careers. However, the predominance of this familiar structure is quickly eroding. As industry analyst Josh Bersin points out in his article, independent workers now make up an average of 47 percent of workers in U.S. organizations. And a recent large-scale study found that more than two-thirds of independent workers see independent work as less risky and more secure than traditional employment.
"Rented" workforces are extending to core strategic work, not just advice (consultants) and support (outsourcing) activities. Raphael Ouzan, CEO of A.Team, describes in his article how major companies such as McGraw Hill, HCA and PepsiCo are hiring fractional teams of highly skilled engineering talent to design and deliver new products, create new consumer experiences and perform other high-value core work.
This phenomenon extends even to our own profession. Former Uber global head of people analytics RJ Milnor observes in his article that large numbers of highly skilled top performers in people analytics are opting out of the traditional labor force, joining a specialist platform and seeking projects that interest them that require less time navigating bureaucracy and provide more autonomy, flexibility and agency.
And let's face it—the traditional deterrents of independent work are fast disappearing in a digital economy. Platforms match supply and demand seamlessly, and the combined power of the internet and generative AI can enable operations without the fixed cost of a staff accountant, personal assistant or research analyst. Professionals earn triple-digit incomes from their homes without the hassle of driving to work, dealing with a difficult boss or taking on less-than-fulfilling work. Already, 30 percent of freelancers have health benefits, and employers looking for scarce talent are inching toward this change, most notably in health care.
New Business Requirements
The second development is a shift in what business needs from workers. As Bersin points out in his article, companies are optimizing for innovation rather than scale, and this requires a different kind of workforce and culture, operating with more fluidity and more speed.
Traditional ways of working, leading and structuring decision-making—all designed for a more predictable scalable set of requirements—are quickly losing their effectiveness. This has led to the creation of new departments focused on transformation of systems and culture—often absent the participation and advocacy of HR, missing the critical strategic, analytical, operational and organizational insights our function can offer.
From a productivity perspective, employers are also re-examining their workforce models, shifting from primarily employee workforces to a higher portion of contingent workers, moving the work overseas to captive or outsourcing services, or re-blending how work gets done using automation and AI.
One longstanding reason for not hiring a contractor is institutional knowledge. "Susie knows how to navigate an exception through accounting and compliance." But now generative AI can capture and share institutional knowledge in a digital workplace, making human institutional knowledge less valuable than before.
New Employee Expectations
The third development is a dramatic shift in employee expectations at work. The pandemic, the growing mental health crisis, the tortuous return-to-the-office saga and the wave of job cuts that followed have all disrupted the employer-employee relationship, catalyzing this shifting mindset among workers.
Increasingly, employees are asking "Why are you asking me to do this?" They want the specifics, they want to buy into the mission and they want to feel that the reasons are connected to their own values. Given their greater array of choices, perhaps this mindset shift can be characterized as employees expecting a better answer to that question, a more compelling value proposition in exchange for their valuable time. And as employees experienced the benefits of more time with family and in their community during the pandemic, many are looking to build their careers around the life they want to lead, as opposed to the traditional reverse arrangement.
We're already in the midst of change, with an emerging new deal ushered in by advances in technology and by the pandemic. Elements of the new deal include democratization of job opportunities in internal talent marketplaces, greater focus and accountability for workplace inclusion practices, more flexibility in time and place of work, and increased benefits for caregivers and for wellness.
But is this enough? As Deb Bubb, former chief people officer of Optum, points out in her article, "Many organizations are still struggling to find the magic combination that makes people willing to join, stay and thrive. The result is a kind of stalemate, exacerbated by pressure for growth, efficiency and profitability, the scarcity of skills and a rising tide of unionization."
We are in an unsettled period of profound reassessment of the deal at work. One thing is certain: No professional discipline is better prepared to step up and lead us into the next model than HR. Over the past decade, we have deepened our strategic, technical and analytical skills. We've heightened our capacity for creativity through employee-centered design. We've drawn from adjacent domains in behavioral psychology, neuroscience and organizational behavior.
What does all this mean for our traditional arrangements for employees and contractors—and for HR's scope of services? We can't risk sidelining HR's important role as the steward of our people and culture. It's time to take stock of the fundamental shifts in work models, business requirements and employee expectations.
There is a clear opportunity to achieve competitive advantage by holistically revisiting the overall deal—including rewards and work arrangements—and to update the scope and responsibility of our HR function in this new world of work. It's our time, HR.
Perspectives in This Edition of People + Strategy
What is the way forward from these trends? In this issue of People + Strategy, our authors weigh in with their perspectives:
- Josh Bersin describes the importance of an integrated workforce strategy and governance, and how higher-performing companies have already made the change.
- David Rock brings an invaluable neuroscience lens to understand how to deal with the changes in employee expectations.
- Deb Bubb challenges us to define the next world of work by imagining a way forward that is more humane, creative and better for the planet.
- RJ Milnor, CEO of People Analytics Partners, makes the case for a value proposition for independent workers involving them in listening programs and benefits offerings.
- Alexi Robichaux, CEO of BetterUp, makes the tantalizing suggestion that work, not jobs, should define pay.
- Judith Wiese, Siemens' chief people and sustainability officer, describes a vehicle she put in place for continuously aligning on expectations to stay ahead of missed opportunities.
- Fred Delmhorst describes how at Chubb there is a recognition of a more configurable employer-employee relationship characterized by individual differences in mobility, flexibility and fulfillment.
- And to address shorter tenure expectations and different motivations in the workplace, Jacqueline Welch, CHRO of The New York Times, suggests revisiting compensation practices, succession planning time frames, and the concept of cliff retirements versus glide-path retirements.
Diane Gherson is the former CHRO of IBM, board director at Kraft Heinz and senior advisor at BCG. She is a senior lecturer at Harvard Business School.