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The new workplace culture: Building for the future workforce

Organisational structure and culture is becoming one of the biggest and most talked about trends and considerations for top executives and HR practitioners globally.

A more globalised world is forcing businesses to rethink the workplace and this is further being compounded by changes in technology, a fast-changing demographic workforce, and increasing demands for big corporations to operate with a leaner and more nimble approach; largely due to the demands of markets and their customers.

Whether the change comes from the creation of smaller units and teams that hold some autonomy or it comes from disrupting traditional management structures, business leaders across the world are feeling the pressure and moving organisational change to the top of the agenda.

According to research by Deloitte, 50% of the global workforce is made up of millennials. Forrester Research predicts they will be 75% of the workforce by 2025.

Beyond the generational impact, other forces that are causing businesses concern are the new digital workers, global project-based work, robots, artificial intelligence, and a rise in temporary workers.

After decades of operating and being structured much in the same way, businesses are starting to realise that their current way of working is limiting their productivity, their ability to innovate, and ultimately their growth as well as limiting them from recruiting high-quality millennial talent.

The strategies that employers use to attract and retain vital millennial employees are changing. CEO’s fear that they won’t be able to find the talent they need to succeed. Competition is fierce and HR teams and business leaders need to think hard about their cultures and organisational structures to stay ahead of the curve, and most importantly, to attract the workforce that will take them into the future.

So, what does the workplace of the future look like?

Corporate Entrepreneurship

There’s much debate about “millennial entrepreneurship”. The reality is that millennials are the least entrepreneurial generation in recent history. According to research conducted by the Wall Street Journal, the share of people under 30 who own a business has fallen by 65% since the 1980’s. Additionally, the average age of a successful start-up founder is 40 years old (according to the Kauffman Foundation). In 2014, less than 2% of millennials were self-employed, compared with 7.6% for Generation X and 8.3% for Baby Boomers. Why the decline?

Between student debt, which the UK leads in the English-speaking world with an average of £44,000, corporate dominance of large industries such as retail and technology, and the increasing impossibility of getting onto the housing ladder, it’s no surprise that the most important thing millennials crave is job security. This is according to a survey conducted by ManpowerGroup, which used a sample size of 19000 21 to 36 year olds across 25 countries.

So why should corporate entrepreneurship be considered and encouraged? Although entrepreneurship is at an all-time low, millennials do have an entrepreneurial mentality, which unfortunately hasn’t translated into activity, largely due financial barriers and increased risk aversion caused by financial insecurity.

Research by Ernst & Young showed that 62% of millennials have considered starting their own business, and 72% believed that entrepreneurship was essential for promoting innovation and jobs.

The appetite for entrepreneurship is very much there so the workplace cultures of the future must promote the core ideals of entrepreneurship to remain attractive to millennials — freedom, flexibility, empowerment, and ownership of what you do. The new workplace culture will encourage and value the ability to work from home or a coffee shop — ultimately work doesn’t just need to get done in the office. In the US, 24% of Americans work remotely on a weekly basis so there is clearly an upward trend. A PwC study showed that 64% of millennials would like to occasionally work from home. This is a massive cultural step from the old world and one that some businesses will struggle to cope with. To earn commitment and loyalty from a millennial workforce that is considered “loyalty-lite” (according to PwC, over a quarter of millennials expect to have six or more employers compared with just 10% in 2008) the workplace of the future must begin by building its culture around the working styles and desires of its audience and workforce.

Millennials are gravitating to the organisations’ and jobs that they want, not need. 60% of millennials care about purpose and values. 89% of millennials want to be constantly learning in their roles. 72% of millennials want to be their own boss. With these insights in mind, it’s clear the workplace of the future must promote self-management and freedom and create a sense of purpose through a defined mission and value-set. To redesign the organisation, it needs to first understand the desires and needs of the workforce it’s trying to attract and retain.

Organisational design for the new generation — the rise of the network of teams

According to a survey by Deloitte, 92% of executives see organisational design as a top priority. 20th century organisational structures that are hierarchical and focus on top-down management and decision making, for instance, are being redesigned, while new concepts like flatarchies — essentially team structures rather than hierarchical ones — and networks of teams across cross functional disciplines are being investigated.

Beyond the generational pressures, there are other advantages to new and more modern structures. Less layers mean more agile and creative businesses. More team focused working leads to more collaboration and a better customer experience. Everything from vertical career paths and silos within organisations need to be redesigned with the purpose of being able to rapidly react and adapt to changes in market, technology, customer preferences, and competition. This new collaborative environment is further strengthened through technology. Whether it be Slack or Skype, technology is allowing businesses to increase collaboration across teams, levels, and geographies.

The rise of teams will be one of the biggest organisational changes of the next few years and this deconstruction of hierarchy will be a real challenge for most. These teams will be connected by a few key things: Shared values and culture; transparency and easy access to information; clear and visible goals and projects; and, a rewards structure connected to skills and abilities, not job title and position.

If businesses don’t adapt fast, they risk becoming extinct. A Harvard Business School paper found that as competition increases, organisation’s must become more efficient by shredding layers and widening areas of control. Pressure from this new millennial generation, who want to collaborate more, means that the workplaces of the future will need to provide the structures and tools to enable them to do this.

Beyond teams, a network of teams who are empowered, have access to information when they need it, and strong communication networks will become the new norm.

Fostering a culture for innovation

This new team structure means nothing without the right culture — across the business world, executives and HR professionals are already offering incentives, acquiring smaller and more disruptive businesses, and they are reforming the organisation from a structural point of view. But, the workplace of the future must also consider the cultural factor.

This comes in a multitude of ways: Engagement, Environment, and Authenticity.

Engagement comes in many forms. To build an effective innovation micro-ecosystem as a tool for growth and a culture that attracts millennial talent, businesses must be able to allow fast progression and a varied and interesting career paths. Beyond this, a clear mission and a feeling of empowerment creates a more engaged workforce. Without that innovation, it will not exist.

The workplace of the future will need to allow their employees to take ownership, to work in the way they like to work, and to make independent decisions. They will also need to be engaged with the overall big picture and a mission that connects directly to this. HR departments will be the main drivers for engagement by providing the tools and structures to allow for such engagement to flourish. Learning on-demand for instance is critical and HR teams will need to look at how they can roll out new technology and initiatives to build a more engaged workforce.

An environment that encourages innovation

The physical space in which a business operates communicates a lot about its culture. It’s the body language of the organisation. Companies must design environments and cultures that communicate that there’s flexibility, a work/life balance, and benefits that stand-out from other businesses.

Samsung recently designed a new office space in Silicon Valley, which houses a series of Green Floors with gardens’ and places where people can meet to develop new ideas, have meaningful conversations, and develop innovation. According to Scott Birnbaum, the VP for Samsung, “The most creative ideas aren’t going to come whilst sitting in front of your monitor, [workspace needs to be] designed to spark not just collaboration, but that innovation that you see when people collide”.

Authenticity is driven through an alignment of culture to business goals

A culture of innovation is often part of the DNA of any successful start-up. For bigger corporations, sustaining this is a lot harder but to build the right culture and to keep a new millennial workforce engaged, authenticity is key. Millennials want purpose, to contribute, and they want to be proud about where they work. Further, employers must implement policies that encourage the needs and desires of this new and powerful workforce. For example, by enabling a culture that has a “work anywhere” rule, rather than just making it an exception means that trust is placed firmly within the company culture.

Engagement, environment, and authenticity is great, but evolution comes from a change in traditional leadership

According to Deloitte, 90% of companies cite leadership as a major problem. The leaders of the future workplace are being asked to move away from positional leadership to team leadership. This requires a very different skillset that is fuelled by passion, energy, and empowerment. It’s also a big cultural shift.

Top-down leadership impedes growth and innovation while also existing at complete odds with the needs and desires of the new millennial workforce. According to a Steelcase Global Report, 58% of executives still work in private offices compared to only 23% of employees. But executives are under pressure to explore new ways to lead. The world is changing fast and large corporations are constantly facing the risk of disruption from smaller, more agile start-ups. Added to this, millennials are jumpy; if they aren’t happy, they’ll leave. If employees are made to feel like they’re just following orders then job satisfaction suffers. Millennials want to feel like they’re making a difference and they need to be engaged in a very different way.

Command and control leadership will be removed and replaced through leadership that empowers teams. It’s about setting the direction of a project and allowing the team to dictate the method and process to achieving it.

The traditional leadership structure is probably one of the toughest challenges to organisational change as fundamentally there is a big generational and cultural gap. HR essentially needs to give leadership a kick up the arse and challenge them to change. Leaders must become coaches, mentors, and teachers.

As well as the current status-quo being disrupted, building a new pipeline of leaders is also an urgent priority. A new model is needed and it’s one that allows people to operate across many different teams effectively. These new leaders will understand how to drive innovation, how to engage a dynamic workforce, and know how to inspire those around a common mission. How we create these leaders must change and new methodology, such as design-thinking, will need to be brought into the leadership lexicon and taught to the next generation for organisations to evolve within this new world.

2017 will be a major year for upward trends towards organisational design. Whether it be fuelled by the need to attract and retain the millennial workforce or the continued threat of disruption, the businesses of the future must innovate to survive.

Furthermore, the workplace of the future must allow individuals to create this innovation. Businesses must find a way to build an innovation micro-ecosystem as both a tool for growth and as a culture that attracts the millennial talent that will be the workforce delivering this change. Clearly there are big movements towards a ‘network of teams’ approach, but equally there’s no one size fits all. Businesses will need to spend 2017 looking deep into their organisations to identify the structures, tools, and culture that will help them compete in this new world.

Alex
I’m a Founding Partner of Bamboo Crowd. I help our clients invest better in people and scale through Engine. I solve recruitment challenges and help our clients source the best talent across operations, business development, programme management, and technology. Ask me about good films, beards and hip hop.