FRAMINGHAM (03/02/2000) - In an increasingly competitive world, companies no longer have the luxury of holding on to more employees than they need or workers who are not contributing fully to the bottom line.
As a result, more companies are beginning to pay attention to extending the value of their existing "human resources," recognizing that it is far more expensive to recruit and train new workers than it is to maximize the value of the workers they already have.
One of the new buzzwords that's sprung up is 'headlighting,' which refers to companies taking a close look at where they want to be in the medium to long-term and determining what changes need to be made to ensure they get there. Texas Instruments has been doing some headlighting by listing as far as a year in advance which jobs are in jeopardy and asking those employees, "What do we need to do to broaden you to assume a new job inside or outside this company?" Workers and companies alike have come to find that if they don't spend time now preparing for the future, they might well find they have no role to play once they get there.
The perceived decrease in company loyalty has resulted in employees who are far more inclined to take responsibility for their own success rather than pin their hopes on the achievements of any one organization. Those workers best positioned to succeed in the coming decades will be those who recognize that they must continually upgrade their skills and work to maintain or extend their competitive edge, for there is no guarantee that the organization they work for today will need their current skill set tomorrow.
In this shifting world of work, we see five major trends.
1 FULL-TIME EMPLOYEES DECREASE IN NUMBER Rather than shoulder the financial burden of permanent, full-time employees, many companies are turning to part-time and temporary workers. In North America, temporary services firm Olsten Corp. has found that more than a third of companies employ temporary workers in managerial or professional positions. Among companies using temporary workers, 53 percent utilize accountants, 32 percent retain information systems specialists, 28 percent utilize human resource professionals, and 27 percent use administrative professionals. Forty-five percent of companies surveyed by Olsten plan to increase their use of temporary employees during the next five years, and 51 percent intend to maintain current levels.
Middle management, however, seems to have bounced out of this stagnation and is expected to steer companies through the next several decades. Today's supervisors need the same skills as upper-level executives and then some. This is a huge turnaround from just a few years ago, when middle management was being cut at a rate of 23,000 employees per month.
Estimates on just how many contingency workers there are in the American workforce today range from less than 5 percent to 30 percent. It is estimated that this number will grow to 50 percent by 2005 due to advances in technology, which make it possible to work from anywhere. Recently the Human Resources Institute conducted a study called "The Changing Nature of Work." In the 90 companies participating, 25 percent to 35 percent of their work was being done by contingency workers or outside contractors.
2 COMPUTERS REPLACE HUMANS Analysts predict that in the coming century, employment as we know it is likely to be phased out in most of the industrialized nations of the world. For the first time in history, human labor is being systematically eliminated from the economic process. A new generation of sophisticated information and communication technologies, together with new forms of business reorganization and management, is wiping out full-time employment for millions of blue- and white-collar workers.
According to commentator Jeremy Rifkin, "The hard reality that economists and politicians are reluctant to acknowledge is that manufacturing and much of the service sector are undergoing a transformation as profound as the one experienced by the agricultural sector at the beginning of the century, when machines boosted production, displacing millions of farmers. We are in the early stages of a long-term shift from 'mass labor' to highly skilled 'elite labor,' accompanied by increasing automation in the production of goods and delivery of services."
3 SMALL OFFICES AND HOME OFFICES GROW As workers begin to rely less on corporate loyalty and more on their own skills, while also taking advantage of the opportunities new technologies afford, more and more of them are setting up shop on their own. SOHO stands for Small Office, Home Office, and is a very chic code word for "free worker" and entrepreneur. Small offices and home offices are expected to increase from 34.7 million in 1997 to 40.2 million by 2000. Men and women work from home in approximately equal numbers, according to the Department of Labor, but women are more likely to work exclusively from the home.
4 EQUAL-OPPORTUNITY OPPORTUNITIES The battle for equality is far from over.
American women are still struggling to gain power. Almost 90 percent of board seats on Fortune 500 companies are held by men (98 percent of them are white).
Results of a survey done by Catalyst (a nonprofit organization that has worked to get women on boards for 25 years) found that women hold just 10.6 percent of the seats on Fortune 500 boards. Eighty-one of these companies, or 16 percent, have no women on their boards; 238, or nearly 50 percent, have only one; 30 percent have two; and 6 percent have three or more.
Among Fortune 500 companies, only two have female CEOs. Interestingly, the Catalyst survey also found that women hold 60 percent of the wealth in America.
In fact, a 1997 survey by Nasdaq found that 47 percent of its shareholders were women. Women use this economic power, but they do it quietly. In the last 10 years, women have started companies at twice the rate of men. Fifty-eight percent of these women worked in the private sector, and 25 percent worked for medium to large companies, according to the Nasdaq study.
In Britain, five years of campaigns by pressure groups have yielded moderate success: 41 percent of the 100 largest British companies today have a female board member, as do 12.8 percent of British companies overall. Women now claim about 2 percent of senior management jobs in Europe, ranging from Britain's 5.8 percent to Germany's 1 percent and Italy's 0.5 percent. In the United States, women account for half of the workforce and hold 10 percent of board seats and 5 percent of senior management jobs.
Frequently, women are making their own breaks. Women in the United States own 8 million companies today, up from 3 million in the mid-1980s. These businesses contribute $2.38 trillion to the American economy each year. In Germany, one-third of all startups are woman-owned, up from 10 percent in 1975.
Altogether, economists estimate, the 150,000 new female-run companies in Eastern Germany alone have created approximately a million new jobs and contributed about $15 billion to Germany's annual gross domestic product.
Researchers who study new-business growth in Germany say that companies run by women develop more slowly than those managed by men. One reason is that the profit motive isn't as strong among women entrepreneurs. According to government surveys, women cite earning profits as a fourth or fifth reason for setting up their own companies, after their desire to be self-sufficient and develop their own ideas (male entrepreneurs cite profits as the number-one motive).
5 HOT JOBS FOR THE MILLENNIUM Which occupations will thrive in the next millennium? The following are likely to be on the upswing thanks to the rise in contract workers, SOHOs and temporary workers.
Onsite repair services. When a friend's recently purchased computer broke down, the manufacturer sent a technician to her home within three days to repair it.
Expect such services to be available for all types of electronic equipment.
Equipment lessors and business sites. Rather than invest in expensive equipment right away, savvy entrepreneurs will lease the needed equipment or rent a cubicle (or meeting space, as needed) from a business supersite. Also certain to grow are videoconferencing centers and technology consultants, who will advise small businesses on information technology purchases.
An increasing need for skills trainers. The rapid pace of technological change, combined with the growth of contract workers, will create an increasing need for people who can train not only current employees of a company but also freelance workers.
Executive coaches: The next new twist. One of the latest twists on businesses devoted to helping busy people cope is "executive coaches." At a cost of as much as $500 per month, coaches will make weekly phone calls to clients to help them prioritize their goals and better manage their businesses and their lives.
And, of course, the digital age will continue to spawn new job opportunities for all sorts of high-tech specialists, including multimedia software designers and intranet coordinators.
Ira Matathia and Marian Salzman are chief executive officer and worldwide director, respectively, of Young & Rubicam Inc.'s Brand Futures Group in New York City.
Next: Trends for the Near Future By Ira Matathia and Marian Salzman The Overlook Press, Woodstock, N.Y. September 1999, $26.95.
Among Fortune 500 boards of directors, 16 percent have no women, 50 percent have one woman, 30 percent have two women and 6 percent have three or more.
Among firms that use temporary workers, 53 percent place them in accounting, 32 percent place them in IS, 28 percent place them in HR and 27 percent place them in administrative positions.
45--percentage of companies who plan to increase their use of temporary employees over the next five years 51--percentage that intend to maintain current levels of temporary employees Source: Olsten Corp.