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Change, Challenge And Choice

This chapter looks at the key trends which are bringing widespread social, political and economic change.

The Economist Intelligence Unit published a research report in Spring 2006 which assessed the likely changes to the global economy, to eight major industries and to corporate structures over the next 15 years. More than 1,650 senior executives, analysts and policy makers from across the globe took part in a survey and a series of in-depth interviews conducted especially for this report. The report identified three trends which are producing important changes in our lives, and which are likely to continue to do so for the foreseeable future.

Under the heading of demographics, the report examined the consequences of ageing and the impact this will have on economies and companies. In particular, it highlighted the impact of an ageing workforce, and the difficulties we may have in funding pension schemes.

The report also stressed the importance of knowledge workers and the need for management attention to be on "the areas of business, from innovation to to customer service, where personal chemistry or creative insight matter more than rules and processes".

A third key trend identified in the Foresight 2020 report is globalisation. The globalisation trend is reflected in the rising volume and falling cost of traffic between countries around the world. "Traffic" in this context includes the movement of ideas, finance, people, products and services between organisations, communities and individuals.

The impact of these three key trends is increasing and can no longer be ignored. In this chapter we will review some of the possible consequences of these trends, the changes they will bring to our lives, the challenges we will be facing and the choices we will have to make.

Demographics

The significance of demographics trends was identified by that great American sage Peter Drucker in an essay which he published almost twenty years ago:

"The dominant factor for business in the next decades is not going to be economics or technology. It will be demographics."

Drucker was still writing best-selling books on management and a keynote speaker at conferences up to the time he died in 2005 at the age of 95 - making a nonsense of stereotype opinions about age and loss of brainpower.

Let's now look at the UK Demographic Trends.

A hundred years ago, life expectancy was 48 years for men and 49 for women. By 2003, life expectancy had risen to 76 for men and 79 for women. Over the past 20 years, the average lifespan in the UK has been rising by about one year every four years. If this trend continues, by 2020 the average life expectancy in the UK is likely to be over 80 for men and over 83 for women.

According to the government actuary's department, more than a million people in their thirties today could live to be 100, compared with about 10,000 centenarians today.

Over the past 50 years there has also been a significant decline in the number of children per UK family. In 1960 the average was 2.5, but this had fallen to 1.6 in 2003. The consequence is that there are now about one million fewer people in their 20's than 10 years ago.

If we combine these demographic trends with the trends in working life, consumer spending, education, training and attitudes as shown in the diagram above, it becomes clearer where the potential problems lie, and what action we have to take to prepare for the changing world that lies ahead.

The rising life span and falling birthrate result in an ageing population.

The "baby boomers", the product of a sharp rise in the birthrate in the years following the end of World War 2, are now mostly in their late 50s and 60s. This has added to the rise in the average age of the workforce.

While life expectancy has been going up, the retirement age has, until recent years, remained unchanged. This has contributed to the urgent need for change in the pensions structure. IN the past 20 years, early redundancy and early retirement has become commonplace, leading many people to expect or hope to retire before they were 60.

At the same time, personal debt is at a record high level and personal savings are lower than they have ever been. This situation leaves over 40% of the UK population with the prospect of an inadequate income in their retirement.

While employers complain that they cannot get staff with skills that they need, the majority regard anyone over the age of 45  as too old to employ, and anyone over 50 as too old to train.

With the increase in automation of work, the decline in jobs for unskilled workers and the growing demand for skilled knowledge workers, many employers still fail to invest in the necessary training for their workforce.

For further information and opinions about Demographics, Life Expectancy and Ageing, click on >>More

Knowledge Society

Peter Drucker also had the distinction of inventing the terms "knowledge worker" and "knowledge industries" around 1969, over fifty years ago, when very few people even knew what an "information society" was. Here is what he wrote in an article for the Economist in 2001:

"The next society will be a knowledge society. Knowledge will be th key resource, and knowledge workers will be the main dominant group. Its main characteristics will be:

* Borderless, because knowledge travels more effortlessly than money;

* Upward mobility, available to all through easily acquired formal education;

* Together, those three characteristics will make the knowledge society highly competitive."

In later years, Drucker made this observation:

"Now everyone uses these terms, but as yet hardly anyone understands their implications for human values and human behaviour, for managing people and making them productive, for economics and for politics."

Here is a simple definition of knowledge workers:

"Knowledge workers use their intellect to convert their ideas into products, services and processes."

Drucker goes on to say that knowledge workers, collectively, are the new capitalists. Knowledge has become the key resource, and the only scarce one. This means that knowledge workers, collectively, own the means of production.

For further information and opinions about the Knowledge Society and the Knowledge Economy, click on >>More

Globalisation

The third key trend identified in the Foresight 2020 report is Globalisation/.

Once again it is worthwhile to see what that wise man Peter Drucker had to say about globalisation:

- All institutions have to make global competitiveness a strategic goal.

- No institution, whether a business or a university, can hope to survive, let alone succeed, unless it measures up to the standards set by leaders in its field, any place in the world.

"Globalisation" is one of those words which mean different things to different people in different contexts. For example, a business person may think of globalisation in terms of the production of goods, e.g. producing UK designed products in China, or the location of support services, e.g. setting up call centres in India.

A politician or an economist may see globalisation as opening up free trade and reducing tariff barriers.

A university may see globalisation as opening up opportunities for cultural, research and teaching exchanges between HE institutions, as well as a wider pool from which to attract students and teaching staff.

Those who are opposed to globalisation often see it in terms of capitalist organisations exploiting poorer countries and destroying their indigenous culture.

For further information and opinions about Globalisation, click on >>More

Organisation Development

The challenge facing organisations in times of rapid change is the subject of many books and articles. Growth of the knowledge economy is requiring companies to re-structure their organisations and methods of operation. Research has shown how knowledge workers waste a third of their time looking for information and finding the right people and sources; they spend more time re-creating existing information they were unaware of, than creating original material.

Traditional forms of leadership and management, especially in larger organisations, are exercised through centralised, top-down, command-and-control systems of domination. In the world of Web 2.0. power is shifting inside organisations, from vertical top-down hierarchies to horizontal networks. The Enterprise 2 business model is based on decentralised collaboration and open innovation.

Leadership and Strategy

Change provides a real test of leadership. In his book "Winning", Jack Welch, former CEO of General Electric, USA, emphasises that:

"Change is an absolutely critical part of business. You do need to change, preferably before you have to. What you've heard about resistance to change is also true. People hate it when their bosses announce a "transformation initiative". They run back top their cubicles and frantically start e-mailing one another with the reasons why it's going to ruin everything."

Welch goes on to stress the need to "attach every change initiative to a clear purpose".

The best guarantee of a successful change programme is leadership which is recognised as having integrity and which can therefore be trusted. Taking a quotation from Steve Smethurst, writing in People Management:

"Trust is a precious commodity and must be handled with care - maintain it and your employees will go the extra mile for you; lose it and your business performance will suffer."

In a world of accelerating change, having a clear and well-implemented strategy is as important as ever, but the time frame for strategy development, implementation, review and revision gets shorter. To quote Professor Michael Watson of the Harvard Business School:

"B-class strategy with A-class implementation is more valuable than A-class strategy with B-class implementation".

A-class implementation of a strategy requires excellent two-way communication between all concerned, so that developing and implementing the strategy becomes an operation which involves everyone in the organisation.

For more information and opinions about Organisation Development and Leadership, click on >>More

People Management

In times of rapid change and an uncertain future, the number one priority must be to select, recruit, develop, motivate and retain talented leaders and managers. In the best companies, performance management is treated as a major strategic priority. Jeff Immelt, CEO of GE who succeeded Jack Welch, says:

"I spend most of my time on the top 600 leaders in the company. These people all get selected and paid by me. I spend the entire month of April in our talent development process."

Performance management and appraisal schemes are commonplace; good and productive ones are rare. To quote Jack Welch again:

"You cannot manage people to better performance if you do not give candid, consistent feedback, through a system which is loaded with integrity".

The UK government has been promoting the concept of lifelong learning for more than three decades, but this initiative has not been clearly linked to the three key trends of demographics, the knowledge economy and globalisation. as a result of demographic trends, over 70% of the workforce in 2020 will consist of people who are in employment today, may of whom have comparatively low work skills.

In the knowledge economy, the technical knowledge acquired by today's undergraduates will, for the most part, be out of date within the next ten years. With a workforce which is below standard in work skills and productivity compared with many global competitors, the UK will need to raise the skills level by at least 50% by 2020 just to hold its place in the world rankings. Therefore lifelong learning on a national scale will be essential for all in employment if they want to keep up-to-date with their knowledge and skills.

For more information and opinions about Organisation Development and People Management, click on >>More

For further information and opinions about People Management, click on >>More

To view a presentation on "Managing Change in the Workplace with 2020 Vision, click on>>More

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