Why economics and empathy are driving reinvention

How will we remember 2020? Will it be the year of acceleration – where trends we’ve been discussing for years finally became a reality, like flexible working, automation, or telemedicine? Or will it be the year we paused – a genuine watershed moment – in which companies reset their focus to redesign their purpose and rethink how to drive a more equitable and inclusive society?

Time will tell. Either way, one thing is true: transformation lies ahead. The World Economic Forum’s Future of Jobs Report talks about a period of “double-disruption”, stemming from the economic fallout of COVID-19 on industries and economies, and exacerbated by executives’ plans to accelerate automation agendas. The double-disruption is forcing organizations to redefine the size, shape and skill set needed to compete. It’s challenging institutions to rethink work settings and success metrics, and daring businesses to shed their previous identity in favor of a new north star.

Early results from Mercer’s 2021 Global Talent Trends Study reveal that while eyes are on reinvention, the reality of what’s occupying HR’s time is very much grounded in survival. HR leaders say they are still in the eye of the storm; struggling to move ahead given the enormity of an as-yet-unquantifiable change to their business and their workforce. The focus on returning to financial stability and returning workers to the worksite safely will certainly continue into 2021. But the year ahead will also be one of reinvention: a necessary part of survival for many, a chance to translate new learning into new beginnings for others.

A fundamental shake-up was already on the cards before COVID-19: Mercer’s 2020 Global Talent Trends Study revealed 98% of executives planned to redesign their organizations with a focus on making their structure and policies “more human”. The opportunity to reshape work has never been greater. As Harvard Business School’s Francesca Gino says, learning and curiosity will be a competitive advantage in this new world and there is a real opportunity to reflect, reset and reinvigorate. There are also calls to prepare for a new creative culture as AI and automation hollow out the middle of many industries. We all need to evolve. But with many paths ahead, and an unforgiving budget climate, we need to make smart choices about how best to reinvent. There are three things in particular we’ve learned:

• Consumers and employers value different things than before. Necessity means we are not flying or eating out as much, and there are opportunities as we discover new ways to shop and work. Further, priorities shifted as the spotlight on our own and family members’ health coverage, caregiver support and reliance on essential workers changed perceptions of what’s important.
• We have felt the full force of agility. Companies that were able to flex to a new reality (be it utilizing different suppliers, instituting curbside deliveries or being able to flex capacity rapidly) remained in business and some thrived. Primed for future shocks, organizations today place a premium on flexibility in business and work models.
• More online operations and enhanced social connectedness laid bare corporate values. Ethical business practices, empathetic leadership and the equitable treatment of people have started to shape a new climate of responsibility for investors and employers.

Interestingly, these changes are influencing reinvention plans. Over the last few months, we’ve seen companies make strides in how they are reinventing for value, reinventing for flexibility, and reinventing for sustainability – each tackling different challenges and opportunities whilst in aggregate defining an new shape of work that acknowledges both an acceleration of trends and a reset of priorities.

Reinventing for value, reinventing for flexibility, and reinventing for sustainability

What people value and how value is created is shifting. Changing consumer preferences have affected business models and organizations are now looking to design around value creation and are seeking ways to incentivize transformation towards these new and emerging business models. Take the convenience stores in South Korea offering e-bike charging services, or the UK’s Royal Mail starting to pick up (as well as deliver) parcels amid an ecommerce boom.  At the same time, what employees value from their employer has changed dramatically. During the pandemic, employee health and wellbeing took center stage, and the talent value proposition needs to adjust to this new reality. This requires a rethink of what people value from their employer and a re-examination of the benefits that truly benefit them. The conversation is already moving from one of “employee costs” to the level of “employee investment” needed to attract, retain and ensure productivity. With transactional employment relationships evolving into more trust-based ecosystems, there is closer examination from both workers and employers on the return on value of various parts of the total reward proposition.

Key takeaways:

• COVID-19 is first and foremost a health crisis, with direct and indirect consequences on health emanating from the reduced uptake of preventive health actions, prolonged isolation on our mental and physical wellbeing and from the virus itself. Now is the time to design benefits that truly benefit by taking a holistic view of what it takes to ensure healthy and productive employees. It’s also the time to ensure benefit provisions are delivering true value. How informed are you of what trade-offs employees would make within their current employment deal? What insight do you have into how different individuals are using benefits and the outcomes they are delivering?
• The health crisis is not the only crisis. The BLM movement highlighted inequities in society and the pandemic has exposed gaps in societal provisions. This has thrust inclusive benefits into the spotlight and the differential needs of various groups given demographics, lifestyle and life stage. How well do your current benefits reflect your values and the values of people who work for you? How aware are you of how different people are experiencing this period and how this might affect their health and financial benefit needs? What adjustments would improve workers’ lives and futures, while optimizing your spend?
• There is a need to design for new business realities and fast. Now is the time to be bold on organizational change while there is still a halo of crisis-collaboration in the air. How are you identifying those parts of the business that are future value drivers and uncovering those that will be zombie functions in the new world order? What changes will drive agility in your work structures and work processes? What rewards will incentivize people to embrace and sustain these changes?

Reinvent for Flexibility

COVID-19 has tested our ability to flex how & where we work, to adjust capacity rapidly, and to accelerate digital transformation. It has proven the need to bake flexibility into our business models and people practices to ensure we can meet new realities and weather future shocks. Hearteningly, we’ve seen unprecedented collaboration in pursuit of this vision – such as the consortium of airline, hospitality and fast food companies in Sweden that designed training programs for laid-off staff to take up roles in healthcare and nursing homes. Leading companies are fusing together the best of the pre-COVID era (including personalization, global outreach and outcome-led actions) with new work and health models based on digital working and living. This necessitates rapid building of capabilities in digital tools, digital working and distributed collaboration skills. It also demands a move to a more flexible talent model that can deliver future skills at a price and pace that achieve transformation aims.

Key takeaways:

• Flexibility is more than just when and where you work. Companies that fail to move beyond work-from-home/return to the office will fall behind those who are reinventing for a more flexible future. How progressive is your flexible working vision today and what are you doing to define a supporting culture? How are you flexing work models for different lifestyles and life stages? What benefits can this deliver in terms of real-estate costs, hiring strategies and worker profiles?
• Companies run on skills. During this period, it was critical to know what skills you had and to have the capacity to direct talent to income-generating parts of the business. This revelation has quickened the move towards skills-based talent strategies and the automation of the process of knowing and building skills. How are you incorporating skills into your hiring, developing, learning and pay strategies? What visibility do you have on what skills you have, what’s critical to your future strategy and the price and availability of these skills in the wider market?
• Automation is here. No longer the preserve of future of work strategies, executives attest that COVID-19 has accelerated their automation plans. With virtual the moniker for virtually everything, the need to design for digital work and lives is critical. How are digital tools helping you deliver a superior employee experience? How can technology enable you to be more agile? How are you equipping employees to collaborate and innovate using robotics and AI?

Reinvent for Sustainability

Companies and investors alike are taking collective responsibility for the futures of multiple stakeholders. Business sustainability through cost optimization, while critical, is not enough to design bright futures. There is an increasing focus on environmental, social and governance (ESG) factors – both risks and opportunities. Making this happen while contending with near-term priorities is tough. Yet, is has never been more critical to build new models of success that take into account broader outcomes for investors, shareholders, employees and customers. Starbucks’ decision to make diversity goals part of executives’ bonuses is one example of companies driving a more diverse agenda across their transformation plans and investment strategies. Companies are seeking to demonstrate their transformation and commitments to decarbonize - take recent pledges by companies such as GE and Germany’s RWE to go carbon-neutral;  meanwhile businesses like Unilever are looking at how to translate their zero-impact pledge into job creation and displacement. Failing to take this opportunity to reset priorities with a broader societal agenda, or aligning value goals with actual behavior, will leave organizations behind in competing for investors and future talent.

Key takeaways:

• Now is the time to design for business sustainability. Given your purpose, what macro-economic issues impact your industry most, and what ESG goals should you consider? What activities within HR and your business can you outsource to free up people’s energy and resources, and realign with your commitments e.g. delegating investment activity?
• Designing for diverse, equitable and inclusive futures is the new normal. This requires deliberate design to chart a progressive trajectory – a path that may have been interrupted as companies right-sized and refocused their businesses. What metrics and dashboards are key to making informed workforce decisions? How are you taking advantage of the current technological revolution to drive this agenda? What will support human capital disclosure and equity reporting?
• Effective transformation is sustainable transformation. More than just metrics, sustainable practices within and outside the organization are a business reality. How are you reflecting new consumer and investor preferences in executives’ goals? How are you redesigning how you meet people’s welfare needs throughout the employee lifecycle? What are you doing to support the societies in which you operate and ensuring everyone in the company can participate in this vision?

Reinventing for the new shape of work

Debates will continue about how the new world of work will ultimately shape up. Whatever the future has in store, we need a new mandate for work and our life at work. We’re entering a new chapter for which businesses simply don’t have a rule book to follow, nor the luxury of time to defer conversations about how to rise to the challenge. What we do know is that companies that galvanize around value, flexibility and sustainability in their reinvention plans will be first to capture the spirit of the new economic and social order being laid down.