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Home > Articles > 2004 > Why all the Fuss?

Why all the fuss? by Andrew Holmes

"In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists."
Eric Hoffer

Organizations have always been concerned about their competitiveness. Taking this seriously has meant developing the right products and services, recruiting and retaining the best staff and keeping an eye on the future to ensure they are appropriately positioned to meet the challenges ahead. In the past this was a relatively simple task because the economic backdrop was one of steady growth and stability. This stability led to the creation of benevolent and paternalistic organizational cultures that looked after their staff and their careers. Employees could turn up for work in the knowledge that unless they did something very seriously wrong, they would be guaranteed a job for life. They were willing to place their future careers in the hands of their employers and as long as they did a solid day's work, kept their noses clean they would gradually move up the hierarchy over the course of their career. If they were very lucky they might even reach the board of directors. In this environment there was no real need for continuous learning because the workplace was predictable and stable. Learning was predominantly on the job and directed by the company not the individual.

It is now clear that the nature of work has changed irrevocably and that the comfortable days of working with a single employer for 30 years and looking forward to a well-trodden career path are over. The business and economic environments are now more turbulent than they have ever been, with the long term cyclical patterns in the economy being replaced by uncertainty and unpredictability. This turbulence and unpredictability is increasingly reflected in our working lives. We now have to have to contend with information overload, heightened insecurity, reduced job tenure and the loss of the incremental steps that defined our careers. In addition, the reduction in organizational hierarchies through downsizing has reduced the sources of power within the workplace, thereby making it more difficult to navigate through our careers. Consider the following facts about the nature of work:


With this backdrop of increased complexity and turbulence organizations are recognizing that their staff need to take control of their own careers. Staff can no longer rely on their employer to manage their careers for them. Nor can they expect employers to retain them when their skills or performance deteriorate. Increasingly employers look for continuous improvements in performance, productivity and adaptability in their staff, and some, such as General Electric will regularly remove their poorest performers from the payroll. Working life is no longer comfortable, and for many it is a fearful place in which they never quite know when the axe will fall. This makes work a miserable existence for all but the few at the top of the hierarchy who are cushioned from its effects (and even when they are removed from post, they usually have a huge payoff). So what has caused this monumental change in employment patterns and what has lifelong learning got to do with it? Before we can answer this latter question we need to outline what has changed and why.

Globalization and technology have changed the game

Much of the change in the workplace has arisen from the combined effects of the globalization of commerce and the increasingly rapid advance of technology. One could not exist without the other. For example the global financial system depends entirely on computer technology to process the millions of transactions per day and transnational corporations depend on their ability to manage their business seamlessly across the globe. Computer technology has advanced considerably over the relatively short period of 50 years. From its humble beginnings, information technology (IT) has become the most critical component to the smooth running of most industries and has fundamentally changed the way we work. Historically, computers started out within the finance department where they were used to process vast amounts of financial information, such as payroll and accounting. Computer technology was ideally suited to this type of processing and great tranches of manual activity were eliminated, although at this time staff were typically redeployed elsewhere within the business. The successful application of technology within finance demonstrated the benefits that could be achieved through automation. And it wasn't long before every function within the organization wanted a piece of the action. Before long computers were everywhere and deeply embedded in the way work was executed. As a result, some jobs disappeared such as typists, whilst others were created, such as software engineers. Increasingly we are all becoming familiar with the benefits and risks associated with IT. On one hand it is unlikely that we can exist within the work setting without it and on the other it has the ability to reduce our career options. As we will see later, the implications on our working lives are significant and mainly weighted on the downside rather than the upside. For example it creates problems when systems malfunction, it displaces us from our familiar patterns of work and it forces us to cope with increasing levels of information and data. Technological change has shaken up the slow moving world of work familiar to the post war generation and has created one in which business can be conducted at breakneck speed. It is this speed of change that has important implications for how much we need to learn throughout our careers.

We should be under no illusion that the advance of technology and its associated impacts on work will continue. Indeed, futurologists predict that by the year 2019, $1000 worth of computing power will have the computational abilities of one human brain - by 2029 this will have increased to 1000 human brains, and by 2060 to the collective brains of the entire human race. Perhaps artificial intelligence is not that far away. If it is, the world of work may no longer exist and we may enter the leisure society that was predicted when computers first entered the workplace back in the 1950s. The question then, would be who pays for it, and where will our sense of purpose come from. The transition may be too great for us to cope with because we have become so defined by work and the need to work, that a huge majority of us wouldn't know what to do with ourselves.

In tandem with the advance of technology has been the emergence of the globalization of commerce. The process of globalization started during the 1960s with the emergence of multinational and transitional corporations that coincided with the expansion of international trade following the Second World War. During the 1970s a number of factors came together that moulded globalization into what we know today. These were:

The impact of globalization on the flow of capital and the growth of world trade has been enormous. For example the annual average percentage growth of world trade rose from 4 per cent between 1853 and 1913, to 6 per cent between 1950 and 1985 and 7.5 per cent between 1985 and 1996. At the same time trade between companies has risen from 10 to 40 per cent.

Each of the factors above has led governments and organizations to consider how they can remain competitive in a commercial environment with fewer controls and increased competition. Many corporations have responded by merging with, or acquiring other organizations that were better placed to deliver a truly global service. Others sought out the cheapest labour with which to manufacture their goods, leading to a massive reduction in the manufacturing bases of the industrialised world as the work was transferred to the cheaper economies of the Far East, Central Asia and, more recently, China. With further advances in technology since the 1970s, globalization is increasingly allowing the transfer of knowledge around the world. And, with the emerging economies of Asia providing a ready source of well-educated cheap labour, corporations are beginning to source their knowledge workers overseas rather than at home. As the competition intensifies, corporations are having to develop more sophisticated knowledge-based products and services in order to compete within the global market. The process of globalization is therefore leading to an increase in the levels of uncertainty for us all, as it causes corporations to reconsider their hiring, location, and skill requirements far more regularly than in the past. It is also leading to uplift in the demand for smart, versatile employees who are capable of continuous learning. This is the upside of globalization.

So what are the implications of the combined effect of globalization and the rapid advance of IT? Five immediately spring to mind:

1. None of us can be guaranteed a job for life.

2. The psychological contract between the employee and their employer has been severely eroded to the point where it no longer exists. No one should kid themselves when they hear those hollow words our staff are our most important asset. This is only true in times of skills shortages.

3. The world of work has become more pressurised, with longer hours, fewer benefits and more uncertainty.

4. The rapidly aging populations of the industrialised world is creating huge burdens on the state and this has to be funded by high taxation, which affects everyone in work. For example the United Kingdom is having to increase the level of tax to fund the increasing costs of pension provision and healthcare. The demographic time bomb that has already hit Japan will be hitting the United States and Europe from 2010 onwards with major economic consequences. At the same time the African and Indian sub-continents will become a major source of human capital.

5. Organizations are not around for long. Very few commercial entities survive forever, and many barely last beyond one or two decades. Takeovers, mergers, and business failures all take their toll.

Let's take a brief look at these five implications.

No more jobs for life

In 1991 global unemployment stood at 800 million, by 2001 this had risen to one billion and according to the international labour organization almost 30 per cent of the world's population is now either unemployed or underemployed. As technology continues to replace manual and white-collar labour, the levels of unemployment will undoubtedly rise and with it the likelihood that everyone's job will become more insecure. For decades technology affected manual and blue-collar workers; office workers were mainly exempt. Not any more. The 1990 reengineering revolution stripped millions of office workers of their jobs, including many middle and senior managers - no one was spared. The increase in unemployment amongst the mid career middle managers was largely offset and hence invisible within unemployment statistics by the return to work of so many wives, many it has to be said forced into work to provide some degree of financial stability. And despite the recent employment boom fuelled by cheap oil and money, turnover in jobs has never been higher and the nature of the new jobs created during this boom has changed significantly. More often than not these jobs have been low paid and part-time positions in the service sector, often called the pink-collar ghetto. Uncertainty within our jobs is here to stay and employers cannot offer any hope for those who desire long-term stability in their careers. Even Japan, which had always been held up as the employment model to us all is faltering. Japanese firms are shedding staff and breaking their patterns of lifetime employment. Unemployment in Japan is now at an all time high. Also with the average job tenure declining from 23 years in 1960 to a little over two today we should expect to change jobs many times over during the course of our careers.

I am currently working for my seventh employer, thus giving me an average tenure of a little over two years. Unlike those middle managers that were shocked to discover they were no longer needed and had failed to maintain the skills they needed for a long-term career, I have actively managed my own career moving jobs deliberately and not relying on a single employer to guide me. This is the reality of work today and key to succeeding in the new world of work is the ability to reinvent yourself. This depends on understanding what you need to learn to maintain your employability. It also means taking control of your career, directing your learning to expand your skills and capabilities and recognising that your usefulness to your employer will depend on what you do now, and what you can do in the future; not what you have done in the past. Increasingly you will only be judged on your last job. This of course is not easy, and something that fits uncomfortably with many people because it forces them outside of their comfort zone.

The end of the psychological contract

Previous 'revolutions' such as the Industrial Revolution only affected those whose livelihood depended upon their physical prowess. The coming of the Information Age changed all this and ensured the revolution was felt much wider than ever before. With the advance of the computer, the white-collar worker, whose intellectual abilities had been safe from the previous disruptions in the job market, started to feel the cold wind of change. Great tranches of white-collar jobs were eradicated during the early years of computerisation. As the process of automation continued, the level of uncertainty about longevity in the workplace increased. But it was the emergence of business process reengineering (BPR) during the 1990s that led to the most significant changes. BPR was designed to secure the long awaited benefits from technology and make the corporation more effective and efficient with fewer employees. Initially starting within the manufacturing sector, it soon spread into the service, utilities and public sectors with dramatic effects. It wasn't long before BPR became synonymous with downsizing. As we have seen, the drivers that led to downsizing were principally associated with the globalization of commerce and the impacts of technological change. The fiercely competitive global economy led many organizations - particularly in the United States and the United Kingdom - to cut costs in response to the availability of cheap labour elsewhere, particularly in the Far East, China and India. And, given that the principal cost for any organization is its labour, it was this that bore the brunt. For example, between 1980 and 1993 Forbes 500 companies shed eight million employees. And, despite the usually positive impacts on the bottom line such headcount reductions had in the short-term, many organizations came to lament the time when they cut headcount with such gusto. For those that cut deep into their headcount, there has been a realisation that downsizing has broken the psychological contract between themselves and their employees. As a result, organizations can no longer depend on their staff being more committed to the organization than themselves. And for many, this has resulted in poorer financial performance, plus a general lack of loyalty to the firm. Moreover, there is plenty of evidence from corporate America that downsizing has worsened company performance rather than enhanced it. For example, in one study of 531 large corporations, more than three quarters had cut their payrolls. Of these:

It is also believed that downsizing has destroyed much of the cultural glue that held organizations together. It is ironic that many are now trying to re-establish what has been destroyed. Downsizing has resulted in the contract between employer and employee becoming too one-sided. For example, instead of being balanced with the employer offering security in exchange for commitment and responsiveness, it has become one sided, with the employer still expecting commitment and flexibility, but only offering insecurity in return. Furthermore, in times of tight employment markets, particularly within professional service firms (which bore the brunt of the headcount reductions during the 1990s), staff are more likely to change jobs than remain with their current employer. What is more worrying is that such one-sidedness means that employees are generally less committed to their employer and are no longer willing to go that extra mile. This can have a significant impact on the bottom line because employees turn up for work, switch off and do the bare minimum to get the job done. This is not unique to Anglo Saxon companies, as similar problems are now appearing in the Far East especially Japan. A final problem with downsizing is that it reduces the confidence of the staff. It is well known that those people who are concerned about their job tenure tend to be less productive than those who are not. This is because they believe they have lost control over their working life, have lost faith in their managers and worry about their ability to get another job if they lose their current one. All this serves to make the employee less trusting of their employers.

This loss of the strong bond between employer and employee has affected both organizations and staff alike. No longer comfortable and cohesive places that encouraged loyalty and commitment, the environment had become one of fear and distrust with a culture of self-interest. Fear rules the roost for many employees; always looking over their shoulders to see if they will be the next to face the axe. Unfortunately this creates an atmosphere of distrust in which no one trusts management or their colleagues. Unwilling to speak out, drive forward controversial ideas or raise risks, employees are more likely to keep their mouths shut. This in turn creates a culture of self-interest in which individuals look out for number one, rather than remain loyal and true to the organization which employs them. Points scoring and backstabbing has replaced teamwork and honesty.

The intensification of work

Over the last decade the quality of white-collar work has gradually deteriorated for the majority of employees. The combined effect of technological change and globalization has resulted in a significant intensification of work. There are five issues that we all face in our working lives:

1. Increasing hours

2. Job spill

3. Less time to unwind

4. Increasing stress

5. Reduced employment benefits.

Each issue impacts the next creating a compound effect that has made people's working lives a mostly miserable experience.

Longer working hours is the root of the problem. For example, Americans are working longer and harder than ever before - 25 million now work more than 49 hours a week, with a large number working a lot more; 11 million spend 60 hours or more at work. The same is true for the United kingdom which has the longest working hours in Europe; 91 per cent of British managers now work more than their contracted hours. Another study of working couples showed that almost half of men and over a third of women were working more hours than they wanted to. Downsizing has not helped either, as many who survived the headcount reductions found that their workload increased significantly. The increasing hours spent at the office is also reflected in the amount of work that is conducted outside of traditional working hours, mainly at home or on the commute home. Such job spill, as it is called, impacts our leisure time and invades family life. For example 39 per cent of Americans no longer take lunch breaks instead favouring to work through to keep up with their work. In addition, commuting 'dead time' is becoming an extension of the working day, made possible by cellular phones, laptops and wireless links to the office. As expected longer working hours both inside and outside of work means that there is less time to unwind. With work spilling over to weekends and evenings, white-collar workers are finding themselves squeezed with little or no time to unwind and recover from the working day. Worse still is that vacations too are being reduced through cost cutting initiatives, reducing even further the time to recharge. With less time to unwind workers are experiencing greatly increased levels of stress. Despite the impacts of job spill, longer hours and reduced time to unwind, Americans are finding it ever more difficult to keep up with demanding schedules. According to the American Management Association, almost 50 per cent of Americans now feel stressed at work. Stress is a way of life for many white-collar workers irrespective of age or position within the corporate hierarchy. This stress is in part driven by the feeling of fear of losing their jobs if they are not seen to be keeping up. The final issue that is creating an environment in which the other four can fester is the reduction in benefits from employers as they pursue shareholder value and seek ways to continue to drive up profits and please the investment analysts (although some of the ways were clearly at odds with the regulators, as we saw with Enron). Therefore at the same time as expecting more from their employees, employers are scaling back the rewards they provide. For example, middle income families in America saw their income rise by just $780 between 1988 and 1998. In the United Kingdom, companies are cutting back on pension provision, which is creating a pensions time bomb as fewer and fewer people with have any hope of a comfortable retirement because they cannot afford to save enough money. The implications of this on the State, as well as the individual are enormous. The State will have to bear the burden of the increased poverty levels within the pensioner community through the provision of benefits and safety nets. Individuals are faced with a stark choice of having to increase funding for their old age or work well into their 60s or 70s. So for the majority, the misery of working live may well continue until they literally drop dead. Companies are also employing an increasing number of contingent and part-time workers as a way of reducing costs and it should be noted that part-time workers find it very difficult to move into full-time employment. This locks them into a world of low pay, uncertainty and limited opportunities for career advancement.

Aging populations

The populations of the industrialised world are growing older. The bulge of the 1960s baby boom and the secondary boom that began in the mid 1970s and peaked in 1990 is hurtling towards middle age and retirement. At the same time the average number of births per women is falling to below replacement levels as women choose working life over family life. Consider the following statistics for the industrialised nations:

It is clear that all industrialized countries are destined to experience similar problems as birthrates continue to fall. But it also seems that such falls in birthrate are no longer restricted to the industrialized world. Recent United Nations data suggests that the developing world is following in the West's footsteps, with families choosing to have fewer and fewer children in return for greater economic prosperity. With birthrates across the world expected to fall below replacement levels the world's population is now expected to peak at 8 billion and then start to fall in the second half of the 21st century. Some believe that the world's population will halve within 150 years. With this backdrop, companies will no longer be able to rely on a stream of fresh-faced twenty-something recruits to add to their existing pool of workers. Couple this with an aging workforce, and there are major problems on the horizon for organizations and workers alike. This is particularly acute when we consider how hard it is to change an older workforce.

Organizations will have to respond to this rapid ageing by a combination of the following:

None of these are easy options. Training older staff who have become familiar with the working patterns of the past is difficult, especially as these are people who have not been brought up in the uncertain world we now live in. Moreover, it is unlikely that these people have trained themselves to continually develop new skills and adapt to new situations. Equally difficult is how to transfer operations to the younger nations of the earth. Many have different cultures that impact their attitudes to work. In addition, there is an increasing perception that organizations that transfer work to other countries are merely pursuing cheaper labour in the pursuit of profit. Considering that the income levels of similarly qualified people vary by ten to one or more, in real terms, between rich and poor countries it should come as no surprise that companies wish to transfer their operations elsewhere. Despite the benefits offered by developing nations to relocate, organizations have to contend with non-governmental organizations that lobby governments, pressurize companies and demonstrate in order to redress the balance between the exploited and exploiters. This makes it a much harder option to shift work overseas. The final option of immigration is also fraught with problems. Immigration would have to expand well beyond the historical levels experienced either by the United States or Europe. For example, the European Union would need net inflows of well-qualified immigrants close to 20 million by 2030. Political will is vital if this is to happen and all indicators suggest that Europe and Japan will not allow such levels of immigration to occur (although they will be difficult to stop; witness the problems that the United Kingdom is having in preventing illegal immigrants from entering the country via the Channel Tunnel, and how difficult it is for the United States to prevent the mass illegal immigration across its southern borders). Moreover, it is essential to ensure that emigres have the right mix of skills required by the economy. If they don't they become an added burden on the welfare state and an economic drag rather than a benefit. Because of the difficulties associated with mass immigration, it is expected that the populations of Europe and Japan will fall 12 and 17 per cent respectively creating problems for businesses everywhere.

Organizations: they are not around for long

It should be obvious that all of the issues identified above affect not only you but also your employer. You therefore need to accept that few organizations are around for long these days. Just as the half life of information is reducing, so is the half life of the organization. The reasons why organizations fail, are taken over or just fade away are manyfold and include:

Unfortunately there are no magic bullets for long-term success apart from the ability to adapt, learn and change. Indeed we only have to look as far as Peters and Waterman's classic In Search of Excellence in which they linked the strength of an organization's performance to their underlying culture, and asserted that successful organizations shared certain common cultural characteristics. A mere five years later only 33 per cent of the 43 organizations were still in existence. This outcome is supported by a study by Royal Dutch Shell which found that between 1979 and 1994, 40 per cent of Fortune 500 companies disappeared. So what does this tell you? First that you can't rely on your employer to provide you with a safe working environment for your entire career. Second, that keeping your skills and capabilities as current as possible is essential so that if you were unfortunate enough to be caught out by a failing company, you will be able to find alternative employment in a short space of time.

Can you (or your employer) afford to be left behind?

There is no doubt that the preceding paragraphs make for depressing reading, but there is little point in pretending that the issues that these points raise will disappear. If anything the combined effects of technological change, globalization and an aging population will lead to even greater changes in the workplace as firms attempt to remain profitable and in many cases viable. Although there are no easy answers, there is one common option that remains constant, human capital.

The ultimate survival of any business depends on the quality and abilities of its people. Equally our individual economic health relies on our ability to add value in the workplace and apply and adapt our knowledge. Learning and the ability to learn (and hence adjust to new situations) both at the individual and organizational level is probably the best way to navigate through the uncertain and turbulent future. At the individual level failing to develop our personal learning abilities will lead to stagnation, unemployment and a career that will become a series of short-term, and perhaps part-time jobs. This does not just apply to the basic office worker it also applies to the professional, the senior manager and occasionally board level executive. Old dogs it seems do need to learn new tricks. At the organizational level too it is imperative to maintain an educated adaptable workforce as to fail in this basic of requirements will destine the firm to takeover or bankruptcy. Of course this need to continuously learn is not lost on employers and is certainly not lost on professionals. For example a survey by Watson Wyatt asked top performers in their fields to rank the importance of pay, benefits and other attributes. It found that professionals under 30 ranked career development higher than salary and those over 30 still placed career development near the top of their priorities. Many organizations have also grasped the learning nettle by setting up their own corporate universities (see below). There is also a clear link between learning and improved productivity. For example a 10-year study on work force quality carried out be the University of Pennsylvania found that a 10 per cent increase in education leads to a 9 per cent improvement in productivity.

Corporate universities

As the industrialised countries have transformed themselves into knowledge-based societies, the demand for new recruits with a higher level of education has increased dramatically. For example, 85 per cent of current jobs in the United States require education beyond high schools, up from 65 per cent in 1991. The traditional source of educated people, the universities, have themselves changed to accommodate this demand by both catering for a much larger number of entry level students, and offering more in the way of post graduate courses, including Masters and Doctorates. In addition, universities are now providing a much higher proportion of practical courses geared toward the needs of the workplace, rather than the generation of an intellectual elite.

But when it comes to lifelong learning, the key question that has yet to be resolved is who should pay the considerable costs involved. Should the public purse pay? All the trends seem to point to no, at least in the United Kingdom and United States, where those taking higher degrees in order to improve their employment prospects generally have to fend for themselves. And certainly those who work for themselves have to fund their own development, which at between £1,000 and £2,000 per course, is an expensive business. The demise of the individual learning account (ILA) in the United Kingdom is testament to the problems of who pays. The United States still provides a minimal level of funding, but this is just not enough to accomplish real lifelong learning. As for individuals, the costs for the majority are too high and help to limit the level of continuous learning that takes place. The advent of the Internet is changing all this. In the end, the bulk of the costs fall to the employer... as long as they see a return on their investment. Increasingly, the corporation is taking the matter into its own hands by turning to the concept of the corporate university.

One of the first corporate universities was McDonald's Hamburger University, which opened its doors in the early 1960s. Since then the number of corporate universities has grown steadily as the need for lifelong learning has been recognised as a priority for most corporations. Growing from approximately 400 in 1985, to 1,000 in 1995, it is believed that there are now some 2,000 corporate universities in existence with an average yearly spend of $10.7 million. It is now estimated that 40 per cent of Fortune 500 companies have established corporate universities, and at the current rate of growth, corporate universities will out number traditional universities by 2010.

Corporate universities have seven functions:

Corporate universities are principally designed to provide timely training and education that has been tailored to the specifics of the organization. As a result, they tend to be practical, business focused offerings that reinforce existing competencies and develop new ones. Typical subjects covered by such universities include corporate history; globalization; team working; quality; project and programme management; leadership and leadership development as well as a host of functional subjects such as software development; sales and marketing; finance and so on. The basic ethos of the corporate university is that all their workers should be learners all of the time and through this become effective organizational citizens capable of furthering the corporate mission. Many organizations are building on their experience of operating corporate universities and a small number are implementing more innovative approaches to foster learning. For example, BP Amoco is offering their employees guaranteed time to think and learn by providing them personal learning days. Others are introducing lifelong learning directors, directors of learning and similar roles.

So now you know that responding to the pressures created by the combined force of technological change and globalization is not easy for either the individual or the organization. But you also know that no response is not an option. Having a well-educated responsive workforce will make a considerable difference and will set the best organizations aside from the mediocre. At the individual level, taking learning seriously throughout our careers will ensure that we remain attractive to those who employ us, either as fulltime members of the organization or as short-term contractors and consultants. Organizations too will benefit from a workforce who are keen to develop, learn and adapt. In addition, for those organizations that take this seriously they will remain attractive to the talent that they need to remain competitive. Lifelong learning is, I believe, a virtuous circle where individuals gain satisfaction and long-term career opportunities and employers gain a smart workforce capable of tackling all that is thrown at them.

What can we conclude from all of the changes outlined above, especially in relation to lifelong learning?

Our futures rest with ourselves, and to survive the uncertainties we face in our working lives we must embrace lifelong learning.



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