Watch out for these top 5 trends in the future of work!
In MBO Partners’ State of the Independence in America studies, we’ve always mentioned that there are major disruptions that promise to change the very nature of work.
From the ongoing shifts caused by the COVID-19 pandemic to other possible disruptions to the status quo, many wonder what the future holds in terms of employment.
For example, a report by the McKinsey Global Institute estimated that automation will eliminate around 73 million jobs by 2030.
That’s quite alarming, right? And whether you’re a full-time employee, an independent professional, or a business leader, you have to prepare for what the future of work looks like.
In my one-on-one interview with Phil La Duke from Authority Magazine, I discussed some of the major disruptions for employers in the next 10 to 15 years. These are:
- The rate of change is accelerating. There is no question that the rate of change is accelerating. This results in more innovations occurring at an increasingly rapid pace. When innovations converge, you see a demonstrable impact on societal issues and opportunities. For example, we can now carry the power of a supercomputer (a smartphone) in our pockets, whereas this would not have been thought possible decades ago. As changes accelerate and innovations converge, work and the workforce will need to evolve faster than ever before.
- Progress is deflationary. This is the case as long as the rate of innovation is outstripping the cost of capital, which it has done for decades at this point. With the pace of change accelerating, I continue to see deflation as an ongoing societal impact. Converging innovations not only change societal norms but also often disrupt existing industry value chains. Innovative companies can beat well-established incumbents faster by improving their quality, speed, and/or price and by taking advantage of the changes in the supply and distribution chain.
- Knowledge stocks to knowledge flows. Traditionally, companies have been built on an ethos of knowledge stocks; meaning, they developed a proprietary product or idea then defended that innovative advantage against all rivals. In today’s business climate, the value of breakthroughs is quickly eroded by rapid innovation and the unbridled power that comes from instant access to the best ideas and talent.
Modern businesses find innovation at the edge of their companies as opposed to their proprietary core. They measure competitiveness, not by the number of engineers on their payroll, but by the degree of access to a global talent pool—knowledge flows, instead of knowledge stocks. Just twenty years ago, opening a company’s proprietary code base (knowledge) to others would have been heresy. Today, even the biggest tech giants are doing it. Moving from knowledge stocks to knowledge flows helps the business industry innovate more quickly and creatively to create new products and outcomes.
- The fractionalization of everything. When you fractionalize assets, you make it possible and easier for more people to use that asset or to take advantage of it. For example: Publicly traded companies. It makes it possible for retail investors to invest in mortgage-backed securities and de-risk the investment in a mortgage that fueled the U.S. economy over the last 30 years. Now you see fractionalization of assets like rideshare platforms, lodging platforms, and more. The next significant asset to be fractionalized is the most valuable asset of any company, which is its workforce and its people. You will see that they will fractionalize their workforce to get the right people with the right skills at the right time and the right price. Workers can also take advantage of this, fractionalizing their workday and their career in a way that has never been possible in the past. With that fractionalization, workers can bring liquidity to the way work gets done and how it gets done, effectively reducing what has historically been a significant barrier to the relationship between the worker and the employer.
Aside from these major disruptions in the workplace, I also highlighted the top 5 trends that businesses and individuals need to watch out for in the future of work. Let’s take a look at them one by one:
- In the future of work, a larger portion of the professional workforce will be made up of independent professionals vs. full-time employees. We need to look no further than the 34% growth in the last 12 months of independent professionals in the U.S. workforce, 68% of whom were millennials and Gen Z’s, and 55% of whom were women. When workers stand up and declare their wishes, companies will be forced to adapt.
- Companies will increasingly utilize project-based outcome arrangements over full-time hourly rates. The reasons for this are manifold, including the increasing need to tap into specialized, deep skills vs. broad generic skill sets and the need to accomplish work in quicker sprints. If you look at the current extended workforce, including consulting, BPO, talent platforms, and more, that’s growing at more than 12% per annum, significantly faster than GDP.
- We are in a talent shortage, not a talent surplus. More than 3 million Baby Boomers exited the workforce in 2020 alone, a trend that’s been dubbed as an upcoming sansdemic, or a growing trend of a world without people. Broader recruitment strategies, targeted and ongoing skills training, and better plans for talent retention will keep companies fresh and free from so-called “talent droughts.”
- Global wage scales are normalizing for white-collar jobs. This is because the same job and function can be accomplished remotely and therefore done by people operating in lower cost of living locations. As such, the balance of power can again tilt towards the worker as we grow used to having both a remote and more transient workforce.
- Politicians will continue to pursue protectionist policies until shown otherwise. This can be a negative thing because those policies tend to treat every member of society as if they are the same. People choose to work in the way they want to work and they will, regardless of the policies. It’s detrimental for both the economy and society to regulate human desire. Until forced otherwise, political pressures will push towards homogeneity in the workforce and continue to challenge this new workforce model.
The COVID-19 pandemic accelerated the social acceptance of working remotely by probably a decade. While I do believe that there will be more back-to-work arrangements and it won’t be completely remote, we will see a hybrid model in the future of work. In short, we will not be in the office as often as people were before the pandemic.
My advice to employers is you need to embrace change. Do not choose to be a protectionist around protecting the old traditional methods and approaches—rarely does protectionism work.
It doesn’t mean that you need to eliminate the physical presence and human connection in a company, but it does mean that your culture needs to be activated in ways that don’t rely solely on physical presence.
There’s an old saying to contemplate here as well: “When you think that things need to change, perhaps you should first focus on what you need to change.”
The most valuable capability that an individual can have is an enhanced learning capability, and it’s both the capability and the interest in learning.
If you are good at learning and you practice a learning discipline, you will be able to adapt to changing skills, changing careers, changing jobs. If you know how to learn, you can continue to pick up new skills and capabilities. You can work well into subsequent decades beyond what has historically been the experience. This advice applies to knowledge work and, in fact, any job that requires technical skill development.
My advice to workers is to make sure you learn how to learn and leverage that skill. Whether you do that through college or other learning mechanisms is a personal choice. The most successful and satisfied individuals will pursue a path of becoming constant and continual learners.
Hope you’ve found this week’s insights interesting and helpful.
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