- Our economies are on the cusp of an acceleration in tech-led productivity.
- This is occurring at the same time as a generational change in attitudes to work.
- If businesses want to thrive, they need to embrace work flexibility.
We’ll be dealing with plenty of challenges post- COVID if we want to still be going strong in 10 years and beyond. Sustainability is a broad canvas and as an economist there are various daubs I could add to the picture.
It’s highly likely we’ll belatedly get serious about climate change, despite the domestic political challenges (Aussie coal, Kiwi farming). It’s odds-on that we’ll see a tougher global tax code and tighter tech regulation. And inequality of outcomes and opportunities will continue to drive the political agenda. (Remember, that global tax code didn’t materialise out of thin air, nor did the victories of Trump in the US and Johnson in the UK, who rode the left-behind resentments of their Rust Belts.)
While there are some economists sounding alarm bells about a post-COVID ‘stagflationary’ world, I’m not there myself. But if you’re easily panicked, it mightn’t hurt to run a scenario in your next strategic planning retreat where your orders stay flat but your costs take a jump north.
My top pick is different. It’s something that has been revealed (and accelerated) by COVID but was quietly underway in any event. I suspect we are on the cusp of an acceleration in techled productivity, which is about to interact with a generational change in attitudes to the workplace. Between them, the two trends are going to upend established ways of doing business. The businesses that are still standing 10 years from now will be those that successfully ride the combo.
A tech-led productivity boom
Let’s start with the productivity boom. We’ve been waiting a while. As far back as 1987 a Nobel-winning economist said: “You can see the computer age everywhere but in the productivity statistics.” But this shouldn’t be a surprise. The innovations we think of as the Industrial Revolution date to the late 18th century, but we only saw the big payoffs from the mid 19th century onwards. We’re at the equivalent lift-off now.
A moment ago, Wikipedia asked me for a donation. I gave them one and got a receipt. It took five minutes. The graph (opposite) took me 15 minutes, tops. Either exercise would have taken weeks to do 30 years ago.
Let’s face it – the productivity payoff is underway, no matter what the official GDP numbers still say. It’s going to run and run, with all the predictable benefits for innovators and adopters and risks for slower-to-react incumbents. And it’s interacting with a second, generational change.
“Let’s face it – the productivity payoff is underway, no matter what the official GDP numbers still say. It’s going to run and run.”
Survey after survey is showing that Generation Z and the Millennials see the world of work differently. One run by Adobe, which included Australia and New Zealand, found that “more than half of Gen Z workers plan to pursue a new job in the next year – more than any other generation. They are the least satisfied generation at work, with only 56% satisfied with work-life balance and 59% with their job overall ... Younger workers are especially likely to switch jobs for more control over their schedule (Gen Z 66%; Millennials 73%) or the option to work remotely (63%; 66%)”.
Surviving the Great Resignation
You might well think, yeah right, we’ve been here before. Us card-carrying Boomers with our 1960s values felt the same, but we ended up chasing the dollars and pleasing the boss just like our parents.
But the rather dramatic chart on the opposite page shows the number of people who quit their jobs each month in the US, other than to retire. The blue-shaded bits are periods of recession, when people are understandably more wary than normal about jacking in their existing role. But there’s been nothing, ever, like the past few months.
There’s clearly a cyclical element as the US economy has strengthened out of COVID, but there’s something else going on. It’s even attracted its own name: The Great Resignation.
Working from home during COVID, enabled by the productivity benefits of Zoom and other tech, has let people have it all. They can jack in the 9-to-5 and have more control over how and when they work. And without the hassle of an each-way, hour-long commute, it’s no surprise that bigger houses with more amenities in greener suburbs have been a big winner and the traditional office a loser.
Flexibility is the new rule
Not every business is over the moon. Some organisations have mandated going back to the office, or else. They’re still hooked on the conventional economic theory on why firms exist (which sounds odd, doesn’t it, like asking why egg cups exist). The theory says firms internally coordinate arrangements that would be too expensive to buy in the open marketplace. The archetypal one is the employment contract, where internal supervision (it is argued) is needed to be sure you’re getting the production you’re paying for.
But what if the successful example of remote working has eroded that logic? Take away the dead weight of head office HR and IT functions and ‘control’ in general, and maybe everyone comes out ahead.
Here’s where we’re headed, from an ad I saw the other day for a policy adviser with the NZ Privacy Commissioner: “Flexible working to support your work-life balance... You get to make a real, direct, and measurable difference in the lives of New Zealanders... We are small – it allows us to be highly nimble, not bogged down by process... We have a flat structure – you get to work directly with the Commissioner and senior leadership... We are family friendly and flexible in how we work, because we think looking after the ‘whole person’ brings out the best in each one of us.”
That’s an outfit which has got the message about productivity, flexibility and what people are looking for from their working lives. I’d guess their chance of carrying a committed team along with them over the next 10 years looks pretty good. What did your company’s last job ad look like?
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