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July 17, 2012 / Mervyn Dinnen

5 Challenges Organisations Have to Face Before they Evolve

The Carnival of HR rolls into Town again and this time my good buddy Gareth Jones steps up to the plate for his first hosting…and he’s thrown down the gauntlet asking us to blog about ‘Challenging the Future of the Organisation’. As he says in this blog, it’s a topic that has had HR bloggers and tweeters debating quite a bit recently.

I could have approached this by talking about organisational structures, internal communications and how we get the best out of people but to be honest most discussions about flatter, collaborative organisations tend to ignore a lot of the basic challenges that businesses increasingly face now and over the next few years, and which will either have to be dealt with before evolving or else will have to be part of the evolution, probably driving it.

The way we get business, transact and fulfil that business is changing, and no debate about the future of organisations can overlook these changes.

So here are my five challenges that will need to be solved by any future organisation that wants to embrace Gareth’s vision of more open, flatter hierarchy, collaborative and self-directed strategies. It’s really a question of skills, training, space, engagement and communication.

Knowledge Drain

The recent McKinsey Global Institute Report on Work predicts that by 2020 the global economy will be short of 38-40,000,000 degree educated workers. Primarily as they leave the workforce, taking their skills and knowledge with them, this shortfall accounts for 13% of workers needed at this level. How will companies replace this knowledge and capability?

Skill Shortages – Are we Training the Next Generation Properly?

It seems not. Alarmingly the recent UK Commission for Employment & Skills report on youth employment found that in the UK 32.7% of degree educated 25-29 year olds were working in jobs below their skill levels. The US figure was 25.8% and the OECD average 22.8% (chart below). When we talk about underemployment we usually mean people not working enough hours… the concept of under-utilisation of abilities, knowledge and education is rarely discussed.

The second chart below shows the proportion of UK employees receiving training, either on the job, off the job or both. You can see the alarming decline in training for 16-24 year olds. In fact, every age group is receiving less training except 50-64.

When I blogged about unemployment a few months ago I drew attention to the continuing rise of long term unemployment amongst lower skilled workers, particularly those who leave school at 16 with precious few qualifications. The same report showed that only 22% of companies in the UK recruit people straight from education, be it school, college or university. Interestingly only 4% of 16-17 year olds who leave school and find work actually get a permanent job – 76% are classed as part time, and 18% as temporary.

The Deskless Office

We found that only 35% of work activity took place in offices and cubes, yet we were dedicating 85% of our space to those”. You may have seen this recent quote regarding workspace strategy at GSK. The solution – deskless offices – creates fluid spaces where employees can interact in whichever way suits them best.

This is clearly a development which can help speed the move to a different type of organisation, but at what cost and with what disruption? When you read the next quote – “It’s about creating environments so people can do their best work, and we’ve seen a 45% increase in the speed of decision making. But our biggest surprise is that within two weeks most folks say they wouldn’t go back to cellular space” – you just know that it will happen!

The Experience Economy

We are moving from a consumption economy to an experience economy. I’ve heard this a few times (and referenced it in a blog) but most recently, and lucidly, from Prof Lynda Gratton at CIETT.

If it’s all about the experience that a business gives its customers, suppliers and partners then it isn’t just about what happens inside the shop, restaurant or office. It’s about the interactions, online or in person, which the consumer has with everyone employed by or connected with an organisation. And the quality of that experience will usually be dictated by how engaged those employees and connections are.

Lines of Communication

Last but by no means least, you won’t change the way businesses are run and managed unless you change the way that they communicate. The phone is dying, e-mail is a conversation killer and too much internal communication is broadcast monologue.

I’m not pitching straight in with social here but the way an organisation communicates with its employees – whether permanent, temporary, flexible or any other working arrangement – will dictate the way that those employees feel about the business…it’s vision, values, culture and commitment.

I highly recommend reading this interview with the authors of a recent book Talk, Inc.: How Trusted Leaders Use Conversation to Power Their Organizations. This quote says it all…

So the book is, how do you actually have productive conversations in an organization? And the reason why it’s actually more important now in the 21st century than before is that, if you think about what’s going on around us, we’re a knowledge-based economy. Our sources of competitive advantage are actually people who are working for us, working for our corporation. And the more engaged they are, the more productive they’re going to be.

So I think having right conversations in the 21st century is more important than 20 or 25 years ago. I think the speed of change, how industries are changing, how products are changing, is much, much faster than it used to be. So staying close to customers, staying close to your employees, that’s becoming more and more important.

Many companies nowadays are global companies, so you actually have to not only engage employees here locally, but you have to engage them across the board. And so communication, being able to be in touch with employees, is becoming more and more important”.

Who’s up for the challenge?

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