CONCLUSION
Emerging Trends and Challenges
We are experiencing an explosion of change: the influences of continually fluctuating laws and regulations, economic factors, technology, and globalization. Nothing is static. Throughout the chapters in this book, we’ve talked about the impact of these changes not only on the human resources professional, but in the organizations they support. These changes affect organizations of all sizes and in all industries, and innovative ways of managing work are evolving in response to these changes. Social media usage impacts a great deal more than just how organizations recruit new talent. We’re also using social media platforms for employee development, and for facilitating the management of and communication with workforces spread around the globe.
The increased availability of good data means that organizations can now make decisions based on data and not on antidotal information. This is having a deep impact on the human resources field in particular; however, it also impacts everything an organization does.
The ways in which organizations are rewarding their employees are changing dramatically. Variable pay, a type of incentive compensation, is on the rise as we see a decrease in merit pay adjustments tied to performance ratings. A contributing factor to this trend is the re-engineering of performance management systems within many of these organizations.
Total reward systems, which go beyond how employees are paid, are also evolving. Responding to employees’ desires for more flexibility and work-life integration, companies such as the Virgin Group are doing away with formal vacation policies and providing unlimited vacation. CEO Richard Branson has said, “Treat people as human beings, give them that flexibility and I don’t think they’ll abuse it. And they’ll get the job done.”1 Netflix’s offer of unlimited parental leave and full pay to employees in the first year after the birth or adoption of a child is one of the most generous parental leave policies in the United States to date, particularly among large employers.2 Following Netflix’s example, other companies in the technology industry—Adobe, Amazon, and Google, to name a few—began adjusting their parental leave policies.
Though these changes may reflect the needs of the knowledge workers in higher-paying jobs looking for more flexibility and even willing to forego more pay in exchange for more balance, employees in other industries, such as service or manufacturing, are at the lower end of the labor market. These workers are having opposite experiences with low wages and limited benefits, raising concerns about inequities and gaps. Such gaps give rise to concerns and discussions about raising the minimum wage and mandatory paid sick and parental leave.
Enter the so-called “gig economy.” More and more individuals are becoming part of the contingent workforce, working as independent contractors, freelancers, or temporary workers. They work on single projects or tasks. They work on demand. Whether by choice (the desire to be independent) or by need (the inability to find full-time employment or the need to supplement income), the number of workers in the gig economy is growing. Although the data are unreliable, current estimates of the number of independent contractors range between 3 million and 50 million.3 Disruptive and innovative technology are spawning new companies, such as Uber and Lyft, which provide ride services, that are contributing to the rise of such workers. The advantages of such a working arrangement includes providing flexibility and variety of work. The disadvantages include a lack of consistency in the hours, pay, and work itself, along with a lack of benefits. The concern about the lack of benefits for such workers is raising interesting questions and suggestions about changing the current social contract with workers that was designed for an industrial workforce.
According to Virginia senator Mark R. Warner, an entrepreneur himself before entering public life, there is a safety net missing for freelancers and contractors working in this new economy, and he wants to re-engineer the American economy to provide a system of portable benefits. People still need access to healthcare and retirement benefits, as well as protection from injury and loss of income. Warner is calling for innovation and creativity to provide such benefits, suggesting one scenario in which freelancers and contractors would partially fund their own benefits and carry them from job to job, with employers making contributions as well.4
The movement to re-engineer the social contract with workers has begun. In order to attract and retain workers, some organizations are moving to offer a version of traditional benefits for part-time or independent contractors. There has been a re-purposing of the 11th-century guild model, with Uber agreeing to create a guild that could negotiate discounts on life insurance and disability benefits for New York drivers. Etsy, an online craft marketplace, is proposing regulatory changes that would allow its sellers to set aside money to pay their taxes and create a federal government-run portal that would be in charge of certain benefits.5 Another model has existed within the building-trades unions in which members were sent by the union to a job site. They essentially did work as contractors for a variety of organizations throughout the course of their working years, but received benefits from the union.
It is not just the American economy and workplace that are being impacted by change. In the United Kingdom, an employment tribunal has rejected Uber’s argument that it is a technology company that links self-employed drivers with people who need rides, and not an employer.6
What is clear is that the way work is being performed is changing, and these changes are presenting both challenges and opportunities for organizations. We are no longer rooted in time and place to get work accomplished. Rules crafted during the industrial era no longer have relevance in many industries. Employers need to be aware of such changes and the impact they are having on their organizations, and take responsibility to ensure that workers’ protections are not eroded in the process. If they do not, their freedom to implement new policies and benefits may be usurped by legislative mandates or the emergence of unions.
This is certainly not a call to rapidly abandon all that is old, but it is an appeal to examine what is and is not working in your organization. If it is time for new initiatives, those initiatives need to be carefully thought through before being implemented. There needs to be a strategic alignment with your organization’s mission and values. Unlimited vacation or parental leave may sound interesting, but is it right for your organization? The business case for any new initiative has to be made, it has to be relevant, and it has to have an economic benefit for the organization and the worker. Organizations have to consider various options and the cost and benefit of each of those options.
We once heard historian and author David McCullough speak at a conference. During his speech, he said that you have to know where you’ve been to know where you’re going. While writing this book, we often looked to the past—workers’ lives without the protections that laws and regulations now provide—to understand the present. Understanding the past explains how we’ve evolved to where we are today with respect to human resources and management practices. The human resources profession is, and should be, a dynamic force that shapes organizations and public policy. It’s time for innovation and creativity to take hold and leverage the technology that is giving rise to change and to new industries in the new economy that we are in today.