For the 60 years the New Zealand Institute of Management has been in existence, people have been the focus of our reason for being. And now the world of enterprise is beginning to understand why. It is people that deliver success, no matter how efficient the processes or how clever the technologies.
The world of management is catching up with the realities of life, particularly life in the fast lane. In the past decade organisations have focused on financial performance. Before that it was new technology and before that again, processes. Now organisational success is all about people performance, flexibility and creativity, and recent research out of Australia backs up this thinking.
A study released earlier this year by Boston Consulting Group (BCG) on how the role of Australia’s, and I believe New Zealand’s, senior managers will change between now and 2020 says that improving people performance will be part of the core agenda for the next generation of executives. The report argues that given ongoing labour shortages, “managing and improving the performance of people in future is likely to demand the same levels of attention and rigour that financial processes do today”. We agree.
But why this switch in emphasis and sudden recognition of the importance of people in the management process? In word: change. Between now and 2020 things will be dramatically different. The impact of that change is new agenda for managers and executives. They will, as the BCG study suggests, need to respond to “major changes in their external environment, globally and domestically, as well as changes in the workplace”. Expectations of manager’s role are changing too, as is the way we assess their performance.
“The new executive agenda will place responsibility on education and human resource specialists to develop the next generation of executives and up-skill the current generation,” says BCG. Which is exactly where NZIM sees itself playing an increasingly influential role in the ongoing development of this country’s leaders and managers.
Working through the changes that will confront us in the next 14 years highlights just why things will be different for managers in 2020. Take the generational shift in the labour market for instance. Baby Boomers have dominated proceedings for the past few generations and now there are generations X – the materialists of the ’80s, and Y – the children of the Boomers who have grown up in period of prolonged and relatively undisturbed economic growth.
Each of these generations brings different outlook on life and different set of needs and values. “None fits readily into traditional working arrangements,” says the BCG study. Consequently, tomorrow’s executive will be confronted with cross-generational management challenge which will be intensified by “period of structural labour shortage” as skilled people demand an increasing say in the way their workplaces operate. Managers will need the skills and practices to meet much more complex and diverse set of needs and preferences than those faced by today’s managers.
And then there is the changing global economic order of things. Globalisation may have been on the agenda for 20 years now but its impacts and consequences are intensifying and will continue to do so over the next 15 years. As the British magazine The Economist recently pointed out: “globalisation is unstoppable”. The rise and rise of China and India is changing the world economic order and “driving significant long-term rebalancing of industrial activities towards lower-cost economies”. And that is changing our economy and our traditional trading patterns and partners.
Globalisation and its many manifestations will be continuing feature of executive life in Australia and New Zealand. Executives will increase their focus on outside markets, travel more and spend more of their careers in other countries. “They will need to take the building of language and inter-cultural skills more seriously,” says the BCG report. This is call that New Zealand’s Asia Knowledge Group has been making just as loudly and even more persistently. And managers’ understanding of offshoring, supply chain management and diverse workforces will need to improve.
But it is the changing workplace that offers the greatest challenges for 21st century managers. Executives have, over the past decade or so, managed their businesses to extract the “full value of their financial and physical resources”. They have not been so diligent about delivering the same from their people.
According to BCG, the tools, methodologies and approaches used to improve people performance are increasingly sophisticated and rapidly evolving. Current best practice may, therefore, be seen as “barely scratching the surface”.
Workplace flexibility will be defining characteristic of the next 14 years. The Australian study suggests that accommodating flexible work practices will require:
• Different methods of communication as individuals and functions operate from an increasing number of different locations;
• More sophisticated work monitoring approaches to account for the diverse combinations of weeks, days and hours worked;
• New approaches to performance measurement and management to reflect multiple pay structures and career streams; and
• Greater attention to building and maintaining coherent, shared set of corporate values and culture in workplace with high numbers of contractors and project-specific part-time employees.
Meeting these challenges requires new ways of thinking about the nature of the workplace. “In future, executives are likely to spend much more of their time negotiating and managing the employment conditions of direct reports,” says BCG.
And in world where problem solving and creative skills attract premium, managers will be required to think and act differently. Executives will be challenged to demonstrate their ability to nurture and develop these individual skills and attributes and to create an environment which supports problem solvers and creative individuals.
I agree with the study’s finding that the past decade has “produced little progress in the status of women in the corporate workplace”. Successful executives will bring talented women into management ranks and keep them there. This will like as not involve the acceptance of more flexible working arrangements and the development of the skills needed to mentor and develop talented women.
Above all, changing executive mindset is at the heart of things for managers in 2020. They will undergo “a transformation in the way they think about their role, the way they interact with colleagues, consider the basis of leadership and address their broader attitude to life”, according to BCG.
Much of this change in thinking is linked to shifting attitudes toward enterprise ownership and the priority rights of shareholders. The rules of the game are being rewritten and with this shifting perspective, executives will be more concerned with balancing and reconciling the interests of all stakeholders. The concept of single ‘owner’ whose interests are paramount may not apply so widely in future. Executives may see themselves as stewards, appointed to nurture the long-term health of the business or organisation, rather than simply deliver short-term financial rewards.
According to BCG, the age of the generalist manager is also coming to an end. Our 2020 executive will have to demonstrate deep industry and/or functional expertise as well as advanced communication and team-building skills. And while they may still command high levels of remuneration, the cult of the CEO may fall to “more team-based consultative” management at the helm.
However it turns out, I believe NZIM will be there in 2020 delivering leadership and management skills to people, just as it always has. M
• David Chapman is national chief executive of the New Zealand Institute of Management.
