The Elite and the Excluded
5.1. Key Finding
In 2020 the workplace will be defined by two groups – a growing elite of well-educated workers who will strive to improve their skills and a struggling group who lack skills and, critically, the desire to acquire them. Access to elite status comes through a willingness to invest in ‘human capital’ – the individual’s own education and training.
5.2. The Polarisation of Jobs
Our worker of 2020 is a full-time permanent member of staff and enjoys a working life that would have seemed alien in 2010. His working day begins later to allow him to drop his youngest at childcare and it will continue at home; going into the office is only for more formal meetings now. Work is easily structured around the school day. Indeed, home video-conferencing with workers in other countries and time zones makes early mornings or later evenings effective work time. The demands of the knowledge economy mean that ingenuity and the quality of ideas are now essential for any company to prosper. As a result, over the past decade the employment market has increasingly polarised with well-educated and trained workers at one end of the spectrum and a group of largely unskilled workers at the other.
The first signs of this change came ten years ago during the recession in 2009 / 10. At that time employers retrenched but did so in a way that retained skilled workers rather than making them redundant. By 2010 companies had recognised that, in the long term, it was counter-productive to lose experienced staff as these were the individuals that were key to future growth. Wage bills were reduced through shorter working weeks and salary cuts rather than making people redundant. Compared to the previous recession of 1990 / 91, this was a new approach to managing a downturn. These temporary measures kept the intellectual integrity of organisations intact and ready for the economic recovery.
“One of the surprising features of this downturn is that employers have been much less willing to get rid of labour… I think that the value of the workforce (in terms of employer investment) is now much higher than it used to be. They are less regarded as a disposable asset…”
Ian Brinkley, The Work Foundation
Among our Delphi Panel, five out of six of our experts believe that the workforce will polarise into a high skill, high salary group at one extreme with another group of unskilled workers with poor prospects and limited expectations at the other.
A forecast from the Institute of Employment Research shows growth to 2017 in technical, professional and managerial roles and a decline in administrative, clerical and unskilled jobs. Their twenty year forecast shows managerial jobs increasing from 13.5% to 17%, technical jobs from 13.5% to 15% and the professions (such as medicine and law) from 11% to 14%. At the same time less skilled jobs are in decline; administrative jobs will decline from 14% of all jobs to 10% and ‘elementary occupations’ (the least skilled and most basic jobs) from 13% to 11%. This confirms the vision created by our experts.
5.3. A Definition of the Elite and the Excluded
At the top end of the job market there will be an elite group of workers. They will work in technical, professional and managerial roles – the backbone of the knowledge economy. Jobs in the professions such as medicine and law will also increase. Many of these roles will become more specialist than those we have today. The elite will be well educated and will be enthusiastic about learning new skills. They will be aware that they must invest in themselves to be part of this elite group.
Our excluded group are mostly men and work in unskilled jobs at the bottom end of the labour market – cleaners, labourers, machine operators, drivers, basic office jobs and hospital porters.
The British Household Panel Survey is a study that acts as a proxy for ‘excluded’ workers. It predicts that by 2020 there will be 890,000 individuals in this group. The survey identifies the excluded as people who will find themselves frozen out of the job market as the British economy continues to evolve into more of a knowledge economy and low-skilled jobs become increasingly outsourced abroad. The forecast is overlaid onto population projections for this age group to provide the figures in absolute terms as well as a proportion.
Our quantitative data illustrates a clear difference in attitude between elite and excluded workers. One third of ABC1 workers worry that their skills will become outdated – that compares to only 27% of C2DE workers. This suggests to us that a gap is already forming as the higher social grades – the core of the knowledge worker base – already appreciate the benefits in acquiring new skills.
This is alarming, especially given that less skilled jobs will be in decline in 2020. Clearly a sense of inertia is setting in amongst those likely to be in the excluded category.
5.4. Elite Employee Power: The Ascendancy of Workers
“I think we’re going to see the emergence of people being drawn to jobs that they are going to find interesting and drawn to companies whose values they identify with, so I think it’s naïve to assume that the financial dimension won’t be important but I can see that the non-financial dimension is going to be in the fast lane.”
Michael Jenkins, CEO, Roffey Park Management School
Where does elite employee power come from? The main reason is that there will simply not be enough skilled workers in 2020.
A powerful illustration of this comes from a 2009 CII survey among financial services companies. In a sample of over 2,500, 74% of respondents agreed that more staff will need higher level qualifications. Similarly 84% of the sample anticipated that the demand for professional qualifications will increase in the coming years.
All of our experts believe the UK will continue to be reliant on skilled immigrant labour. To an extent this is due to demographic changes that mean there will be less young people emerging from education to fill skilled roles.
“I think that people want to be intrinsically motivated and if you are in a job where you don’t need to be paid a great deal… …you need an up-to-date manager. I think that people are more likely to work hard if they are enjoying the work and are well managed.”
Adrian Furnham, Professor of Psychology, University College London
As a result all of our experts agree that companies will have to work harder and offer more to attract and retain elite workers. They will do so not only through salary and benefits but through making jobs more fulfilling and keeping their workers engaged – five out of six experts agree that jobs will have to offer a high degree of personal and professional fulfilment. In part the competition for skilled people will be driven by a shortage of skills; four out of six experts agree that a lack of people with the right abilities and experience will hamper economic growth (a point that we will explore further in the outsourcing section).
The shortage of skilled labour in 2020 will naturally strengthen the position of employees and change attitudes towards working life. Michael White of the Policy Studies Institute believes that workers will be more critical and demanding in what they expect from their employer. For that reason it will become harder for employers to satisfy employees. An additional factor here is the cost of tertiary education. Graduates will be emerging from university or college with substantial debts and high expectations of getting a return on their own investment in their own education. They will expect a pay-off, not just in terms of salary level but also job satisfaction. In ten years student debt levels will have increased substantially. In July 2009 academics at Oxford University were quoted as saying that they expected fees to rise to £10,000 a year (treble the current amount) as early as 2010. This would allow Oxford to compete with American Ivy League universities – the under-graduate tuition fee at Harvard is $33,000 a year.
One of the implications of this is that people management will be a more critical skill within the organisation. For years there have been many empty platitudes around ‘our people being our greatest asset’ but in 2020 this will take on a new and more sincere meaning.
5.5. Just Rewards
With skilled labour a scarce yet valuable asset in 2020, staff retention will be vital. In large part that is going to mean keeping staff fulfilled and stimulated. Our research shows that pay is less important to employees than either enjoying the work or finding it satisfying. This will require jobs to be re-thought and more effort put into job specifications. A significantly higher quality of people management will support these new, more interesting jobs. It’s hard to understate how important this will be. Employees with the right skills will be able to be selective about the roles they accept. Pay will of course be a factor but other considerations will be in play.
We will discuss the importance of training in section six. However the quality of training a company offers can become something that attracts new job candidates. Companies are likely to compete in terms of the quality of training offered, knowing that a reputation for quality will attract the best candidates. We believe that the quality of training provided will enhance brand and corporate reputation.
“If you think of the three P’s: Promotion, Pay and Personal Development, in terms of importance [in 2020] I think it would be professional development, followed by pay, followed by promotion. I think that professional development will be a very important piece.”
Michael Jenkins, CEO, Roffey Park Management School
5.6. The Excluded
While we can interpret this desire for training as mainly positive, some problems remain. Not everyone in society benefits equally and there are fears that a growing group of younger, unskilled, males are disadvantaged by the changing structure of the employment market. As Adrian Furnham, Professor of Psychology, University College London comments, the problem with this group has been manifest for some time:
“We have seen particularly white, semi-skilled, males not being able to find a job because all the jobs have been exported [out-sourced]. If the authorities are keen to up-skill and get this type of person into education so they can become knowledge workers, I think the situation can improve. However the trend is certainly for a widening gap between the flexible knowledge worker and the unskilled blue collar worker.”
Ian Brinkley of the Work Foundation concurs:
“I think the far bigger problem from this recession is the people who don’t have degrees or much in the way of qualifications particularly if you are young; their place in the labour market over the next ten years is looking pretty bleak…”
The knowledge economy demands an educated workforce and one that will be eager to learn. Looking at attitudes among those aged 16 – 24 we can see some worrying attitudes and behaviours. Firstly among the C2DE group there is much less enthusiasm to train.
Would you like to be able to attend more training courses at work?
Source: Friends Provident/The Future Foundation/nVision | Base: 16-24 year-old male respondents, GB, 2009
Our research shows that not only does this younger, less qualified group appreciate training less, they are also receiving less workplace training now. This demonstrates a concerning shift that, when extrapolated ten years from now, could create a real divide.
These young males risk being excluded from the better jobs provided by a knowledge economy. Among ABC1 16-24 year olds, 76% would consider re-training in the future for a change of career. Among our C2DE excluded group that figure is only 41%.
Overall a picture emerges of the excluded group already falling away from the people who will become elite workers. It’s instructive to look at differences between young ABC1 workers and C2DE workers. For example among the ABC1 group, 32% of men agree that they have the necessary skills to reach the next stage of their career – among the C2DE group that falls to 9%.
Similarly 45% of ABC1 men see career progression as an important aspect of their current job – compared to 23% of C2DE men. Finally, if we look at future expectations, among ABC1 males only 24% of men expect to continue working in the way they do now. That compares to 35% of C2DE males.
To achieve the exalted status of an elite worker doesn’t require education alone; it requires both a desire and opportunity to learn.
This lack of enthusiasm among younger people may be explained by the relatively small number of people who believe that their skills will become out-dated; only 11% are very concerned about this (compared to 36% who are ‘not very concerned’).
There is also an interesting difference between the genders. Among all ages, ABC1 women attend the most training courses at work (63%) and are also most likely to retrain to change career (50%). When we look at the motivation to attend training courses among ABC1 16 – 24 year old women, the leading reason stated is to improve their skills, whereas for men the principal reason is to improve their chances of getting another job. These attitudes will be central to the success of elite workers. From our data, it seems that more women than men already have the mindset to succeed in the workplace of 2020.
5.7. The Evolution of the HR Function
5.8. 360 in 2020
The HR director is a powerful individual, professionally qualified in his role and responsible for developing a culture that empowers staff, giving them more freedom to blend their professional and personal lives. At the same time the HR director has to ensure that the company’s huge investment in people is achieving results.
On a spring morning in 2020 our worker is preparing for his annual appraisal. This year’s review is based on a raft of new performance measures. For some years now he has been assessed on a range of productivity measures. These metrics evaluate the quality of ideas and thinking generated in the last year; they seek to measure the intangible and intellectual. Other metrics look at the employer investment in the worker through salary, training and benefits to calculate a return on that investment.
The meeting is run by the HR department – something of an outdated term these days as the function has become vastly more sophisticated (many companies now use the term People Management). It’s a more strategic function now and one that is routinely represented on the main boards of British companies, closely allied to the finance function. Each month the HR department produces key performance indicators monitoring productivity, staff contentment and turnover, the return on training investment and the quality of people management among the company’s ranks of line managers. Resource is a critical issue – with full-time staff being more expensive to employ than they were ten years ago, any position is considered carefully and the option of outsourcing the role locally or internationally is routinely considered – indeed it’s often the default option.
Among our Delphi Panel, all the experts agree that companies are becoming more interested in measuring productivity – with half of the experts strongly agreeing. Similarly all the experts agreed that, by 2020, productivity metrics will be in place. These measures may monitor the effectiveness of training, the contribution of ideas, the development of intellectual property, and skill levels.
Measuring productivity will become a feature of working life – given the rising cost of employing permanent staff and cost of continually training the workforce. Some metrics (both hard and soft measures) are being introduced now. While there are difficulties in measuring intellectual output, companies will be forced to develop measures that calibrate it. Measuring marketing effectiveness is also tricky but the sheer scale of the investment in above the line campaigns forced both advertisers and their agencies to develop measurement techniques. The measurement of marketing and advertising effectiveness creates a precedent and indicates that, while difficult, measuring productivity can and will happen. In 2020, people metrics will be vital measures to both individuals and to the board.
The human resources function within companies will have to become more sophisticated as it meets the challenges of 2020. Among our Delphi Panel, 83% of the experts agreed that the HR function will have to become more strategic. The people who work in these departments will face a number of new challenges – recruiting people with very specialist skills, monitoring intellectual productivity, increasing the quality of people management to meet the needs for fulfilment at work (and hence reducing turnover), and developing tailored and continuous training.
This more dynamic HR function will employ people with different skills. We can argue that the stature of the department will rise within UK businesses as it becomes central to generating performance. For that reason the HR function is likely to attract a different group of people than it does at the moment. With a more strategic remit, ambitious individuals are likely to see HR as a dynamic function and a means of advancement.
5.9. Conclusion
The strength and influence of the finance function within British business makes the measurement of performance inevitable. Companies will find themselves in the costly position of having to offer higher salaries to more demanding employees while at the same time continually training them. In 2020 people costs will be a much higher proportion of a company’s costs. Organisations won’t introduce metrics because they want to, they’ll introduce them because they need to.
