Given ongoing labour shortages, managing and improving the performance of people in future will demand the same levels of attention and rigour that financial processes do today, David Chapman told an Institute of Professional Engineers New Zealand (IPENZ) convention in Auckland recently.
This switch in emphasis and sudden recognition of the importance of people in the management process is the direct result of change, he said. “Between now and 2020 things will be dramatically different. The impact of that change is new agenda for managers and executives. They will, as Boston Consulting Group study suggested last year, need to respond to what the group suggests are major changes in the external environment, globally and domestically, as well as changes in the workplace,” said Chapman.
Expectations of manager’s role are also changing, as is the way we assess their performance, he said.
“Working through the changes that will confront us in the next 13 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.”
Different outlooks
“Each of these generations brings different outlook on life and different set of needs and values. None fits readily into traditional working arrangements. 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 but its impacts and consequences are intensifying and will continue to do so for the next 13 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, said Chapman.
“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. 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.”
The challenges
“But,” Chapman told his audience, “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.
“Workplace flexibility will be defining characteristic of the years to 2020. An extensive 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 more of their time negotiating and managing the employment conditions of direct reports.
“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.
“According to the Boston Consulting Group, the age of the generalist manager is 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,” said Chapman.
The past 10 years have brought significant changes for most managers, he said. The continuing shift to services and the greater focus on people performance rather than asset performance have changed the workplace. The aging workforce has become reality which executives must now address, an issue which NZIM is about to do some work on.
The BCG Report had, Chapman said, highlighted three key issues for the future. They were:
• The changing world: Executives will need more sophisticated strategies to engage in the global market. They will travel frequently and spend greater proportion of their careers overseas. sound understanding of offshoring, supply chain management and diverse workforces will be vital. Managers will also need to give serious consideration to developing strong language and inter-cultural skills.
• The changing workplace: Greater attention will be given to measuring the performance of people, not just physical and financial assets, and also to developing new techniques for improving performance. Problem solving and creativity skills will become increasingly important.
• The changing mindset: In the next decade or so, there will be shift away from dominant shareholder value perspective and towards wider stakeholder view. This will create closer scrutiny of the way in which companies and executives behave.
“For the 60 years the New Zealand Institute of Management has been in existence, people have been the focus of our reason for being,” Chapman told the convention. “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 organisations’ success is all about people performance, flexibility and creativity.”
