What is the future of work?
The topic of the future of work encapsulates the nature of the changes, the societal and technological developments that are causing them, what the future of work will mean for jobs, future workforces, industries, society and the economy.
Future of work trends
Directors are operating in an environment characterised by constant change, uncertainty and increasing complexity. One of the most significant changes concerns the future of work. There are many factors which are influencing the changes to work and the places of work, some explored below.
Continuing developments in artificial intelligence (AI) will enable this innovative technology to assess, interpret and mimic human reasoning. AI will become better able to communicate in a personal way, to exercise judgement and solve complex problems.
This may mean that outsourcing of labour will fall, as AI is more adept at assisting human workers in automation, cognition or advice. The current demand for cost-effective labour overseas may drop, and costs of freight and considerations of proximity might increasingly drive decisions about where workforces are placed.
Human capital is a core asset for businesses, and often accounts for the greatest percentage of operational cost. Yet this asset is regularly undervalued and misunderstood. According to the AICD’s paper Directors’ playbook: The future of work, only one in 10 businesses nominate their workforce as the top priority for future planning and strategy.
Organisations will increasingly recognise that as technology and business changes, it will require a nimble and innovative workforce. Retraining workers must be part of a forward-looking human resources strategy. Retraining existing workforces will increase capability and adaptation to new challenges and opportunities. It is cheaper than hiring new staff, and can also have a positive effect on a company’s public reputation.
Workplace wellbeing initiatives will be driven by competition for talent. These initiatives are investments which have a positive impact on employees, productivity and performance.
Purpose and business
In the future, the paradigm that portrays big business as a profit-driven machine could be dismantled, or even turned on its head. Larger organisations naturally have more resources to invest in their purpose and in ESG concerns.
Purpose-led businesses have been shown to be more successfully, more likely to grow in revenue and to expand into new markets. Practising social responsibility can help businesses to build their reputation and their brand. Organisations that don’t pay heed to their corporate social responsibility may be penalised by investors, consumers and by governments.
Today, institutional investors are increasingly expecting companies to have social purpose incorporated into their long-term strategy, while millennials seek out purpose-led businesses.
The trend of workforces comprising a greater mix of permanent, contract and casual staff points to a shift towards greater complexity and flexibility. In addition to this, workforces are also increasingly diverse in terms of their age, gender, the languages spoken, ethnicity and sexuality. Leadership roles are not exempt from this – board members are becoming younger, as are business leaders.
In the future, junior leaders will be more involved in developing and implementing business strategy, as leadership becomes less about formal authority and more about personal skills and abilities.
Measurements of performance
Financial measures have been the most relied upon indicator of an organisation’s success. Now, new ways of measuring performance are being introduced and will continue to develop and gain weight in overall assessment of performance. For instance, the use of environmental, social and governance (ESG) criteria and the UN Sustainable Development Goals are progressively incorporated into company reporting.
As technologies continue to advance and consumer behaviours are changing, there will be an increasing need for ‘soft’ skills and service-based work. Concurrently, new ways of aligning an organisation’s output with its purpose and its social and economic impacts will evolve.
Innovation, a critical ongoing pursuit for successful businesses, will be a strategic item to be measured and monitored by the board. Metrics used to gauge innovation might include the volume of new ideas implemented each month, or the volume of sales due to an improved website or product.
The wave of digital transformation will continue, with a huge surge due to the COVID-19 pandemic, resulting in a large and swift change in work practices. Remote working and virtual meetings are just two examples of the migration to online working seen during the pandemic.
Boards and the future of work
The decisions made by boards are crucial to navigating the changing nature of work. The way organisations are governed must also adapt to these changes, and directors will need to take informed and considered steps to take advantage of the opportunities presented. Governance must be flexible in its response to the changing nature of work as well as providing oversight and strategic direction for new ways of working.
To successfully implement AI technologies, companies and their boards must understand that AI is most able to add value when it complements and advances human work, rather than replacing human workers.
A key focus for boards should be to accountability for technology affecting workers, and to oversee flexible strategies with shorter lifecycles which can respond fast to shifting dynamics.
Similarly, another priority for boards should be to define, understand, codify via company policies and oversee the impact of its organisation’s purpose. Directors may need to take greater public roles in representing the company and to share its position on relevant issues.
Other issues that should be considered include: new ways to align the organisation to its purpose, to measure social and economic impact, and to examine whether traditional metrics impede more innovative means of measurement.
Find out more about the future of work
The AICD assists directors by helping them stay up to date on new trends and outlooks that will affect the nature of work.
Learn more about the major trends influencing the future of work and how boards can prepare, download our seminal paper Directors’ playbook: The future of work. This resource was developed with the assistance of Deloitte and in consultation with our Technology Governance and Innovation Panel. It outlines the issues that should be on all board agendas to ensure their organisations are not left behind. In examination of future of work research by Deloitte, it examines the trends that influence work through a governance lens, and how new ways of working will affect the governance of companies.