The worldwide business environment has become one of fierce competition, high risk, erratic markets, constrained resources and unpredictable resource needs. Organizations and individuals are forced to adjust to the new norm of constant change and uncertainty.
- Employers of all shapes and sizes are constantly trying to become leaner, more flexible and high performing. Downsizing, restructuring and re-engineering are now accepted as constants of the workplace, taken for granted now as “continuous improvement.”
- The myth of job security is dead. Employers are more likely to undertake major organizational changes that eliminate jobs regardless of employees’ lengths of service. Employers are also more likely to implement new technologies that eliminate jobs. Meanwhile, there is a strong trend of hiring fewer employees (full-time, exclusive workers) while hiring more contingent workers. Most employers’ staffing strategies for the future continue to move in this direction. As a result, the number of traditional employees is diminishing as a percentage of the overall workforce, while the percentage of contingent workers is increasing. This has meant a fundamental change in employment practices away from long-term, stable employment relationships and toward a more efficient supply-chain management approach known as human capital management.
- The new norm. Layers of management have been removed, and more employees are being managed by short-term project leaders instead of “organization chart” managers. Employers are less likely to award status, prestige, authority, flexibility and rewards on the basis of seniority, and employers are more likely to award these on the basis of short-term measurable goals. Employers are also reducing long-term fixed pay as a percentage of overall employee compensation while increasing the percentage of variable performance-based pay. Compensation strategies for the future reflect this change. Part of this includes a reduction in the percentage of employee benefits (paid for by the company for full-time, exclusive workers) in relation to overall compensation. Further, employers are increasing the percentage of employee services (paid for by the worker on a pre-tax basis) such as health insurance and retirement savings.
- Employees today are much less likely to believe employers’ promises about long-term rewards. While many employees may doubt the sincerity of long-term promises, that is not the biggest problem. Many more employees worry their prospects for receiving long-term rewards are vulnerable to a whole range of external and internal forces that might shorten the natural life of the organization employing them. Workers worry openly about events or circumstances that have little or nothing to do with business, such as politics, terrorism and natural disasters. They worry about broad business climate factors including monetary policy, global market shifts, changes in particular industries and organizational changes. As well, they are acutely aware the organization employing them might simply lose out in the fiercely competitive marketplace. Workers also worry about the continued employment of their immediate supervisors and other leaders who know them best.
- The free agent mindset is now the prevailing workforce mindset. Without credible, long-term promises from employers, employees no longer labor quietly and obediently. Rather, most employees work anxiously to take care of themselves and their families and try to get what they can from their employers — one day at a time. People of all ages and all levels realize nowadays they are “free agents” because they have no other choice.
- There is no going back. There is no going back to the workplace of the past, in which the default presumption was employer-employee relationships would be long-term, full-time, on-site and based on a one-size-fits-all hierarchical career path. Because organizations will need to continually increase productivity, quality and cost effectiveness, employment relationships will become increasingly short-term, transactional and highly variable. The traditional employer-employee relationship will finally fade away.
For more information, visit www.rainmakerthinking.com or email Bruce Tulgan at brucet@rainmakerthinking.com.