Tag: employment

Contemplating a jobless future

Few industries are going to be untouched by the disruptions of the next decade and that’s going to present challenges for all of us.

Last October, ahead of the company’s Orlando Symposium, Gartner Research Director Kenneth Brant released a paper looking at the effects of technology on the workplace.

“Most business and thought leaders underestimate the potential of smart machines to take over millions of middle-class jobs in the coming decades,” Brant wrote. “Job destruction will happen at a faster pace, with machine-driven job elimination overwhelming the market’s ability to create valuable new ones.”

Brant’s view about middle class jobs is a sobering thought, many of the corporate ‘knowledge worker’ positions can be easily replaced by computers to make the decisions now being made by armies of mid level managers, bean counters and clerks.

Indeed the whole concept of ‘knowledge worker’ that was fashionable in the 1980s and early 90s in describing the post-industrial workforce of nations like the US, Britain and Australia is undermined by the rise of powerful computers and well crafted algorithms to do the jobs unemployed steel workers and seamstresses were going to do.

Twenty years later and the ‘knowledge workers’ had morphed into the ‘creative class’ and it appears the computers are coming for them, too.

Personally, I subscribe to the view in the medium to long term new jobs in new industries will evolve – a view shared by economists like GE’s chief economist, Marco Annunziata.

Over the next decade however there’s no doubt we’ll be seeing great disruption to established industries and the hostility to Google buses in San Francisco may be just an early taste of a greater antagonism to the technology community in general.

For managers, the problems are more complex; while their own departments, corporate power bases and even their own jobs are at risk, they are going to have to find ways to incorporate these changes into their own business. Gartner warns CIOs in its briefing paper;

The impact will be such that firms that have not begun to develop programs and policies for a “digital workforce” by 2015 will not perform in the top quartile for productivity and operating profit margin improvement in their industry by 2020. As a direct result, the careers of CIOs who do not begin to champion digital workforce initiatives with their peers in the C-suite by 2015 will be cut short by 2023.

Few industries are going to be untouched by the disruptions of the next decade and the resultant job losses are going to present challenges for all of us.

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Driving out inefficiencies

Inefficiencies are being squeezed out of business and corporations are going to have to adapt, warns the World Economic Forum.

“We’re driving inefficiencies out of every single facet of life,” AT&T CEO Randall L. Stephenson told The World Economic Forum’s New Digital Context panel last month.

The CEO panel at the Davos forum, which included Yahoo!’s Marissa Mayer, Salesforce’s Mac Benioff, Cisco’s John Chambers and Gavin Patterson of BT discussed how corporations of all sizes are being affected by rapid market changes.

“All this bandwidth, all these connected devices, are as disruptive as anything this society has ever seen,” Stephenson said.

“Companies that aren’t moving and driving the new technologies are companies that don’t stay alive.”

Stephenson’s view was supported by Cisco CEO John Chambers, “if you look at big companies only a third of us will exist in a meaningful way in two decades.”

Chambers cited Cisco’s experience from the past two decades to illustrate how business is rapidly changing, “my competitors from fifteen, twenty years ago – none of them exist or they’ve exited. From ten to fifteen years ago only one exists, from five to ten years ago only a few.”

“If you don’t disrupt, you get left behind,” warned Chambers.

Chambers’ advice to managers is that teams have to be empowered and encouraged to take risks and learn from failures, advice endorsed by Yahoo!’s Marissa Mayer.

“The best thing you can an executive can do is play defense, not offense. Get out everybody out of the way and set up an evironment where they can really run and make a difference.”

Yahoo!’s Marissa Mayer endorsed the change, describing a much flatter organization; “we try and run things really flat, really transparent.”

That flat organisation is really the biggest risk to many executives in staid, safe organisations; it means fewer middle managers as the workplace is increasingly automated.

As businesses adopt new technologies, the need for Executive Vice Presidents or Group General Managers is eliminated – along with the armies of assistants and underlings required to help these folk in their roles.

In the past, those layers of management have isolated senior executives from their customers which Salesforce’s Marc Benioff is a luxury companies can’t afford in the current marketplace, “everything is going faster, companies have to change faster.”

“Today if you’re not listening to your customers more deeply than ever before and not reacting to them more rapidly than every before,then you are probably making a mistake,” warns Benioff.

Most of those in the room at WEF were the world’s top executives and government officials, how many of them take note of how business is changing will become clear in the very near future.

There’s also a warning for those government leaders on how employment and government services are going change in the near future which a lesson that needs to be heeded as policies are developed.

Now’s the time for every manager, business owner or executive to look at the inefficiencies in their workplace and whether it can be eliminated either through technology or business restructuring. It may well save you from being identified as an inefficiency yourself.

Steam train image courtesy of Gabriel77 through sxc.hu

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InfoSec’s looming labor shortage

A looming shortage of IT security experts is one example of new jobs being created.

For the last few days I’ve been reading Cisco’s 2014 annual security report and trying to decide exactly which parts are suitable for this site, Networked Globe and the various other outlets I write for.

One of concerns Cisco raises in their study is the labor problem facing the information security (InfoSec) community with a shortage of a million workers this year.

Even when budgets are generous, CISOs (Chief Information Security Officers) struggle to hire people with up-to-date security skills. It’s estimated that by 2014, the industry will still be short more than a million security professionals across the globe. Also in short supply are security professionals with data science skills—understanding and analyzing security data can help improve alignment with business objectives.

“There are essential a million jobs across the globe that can be filled but we don’t have trained people to fill them,” Cisco’s Chief Security Officer John Stewart told a media conference yesterday. “We’ve got a dearth of talent and skills.”

As governments tighten up laws on liability for data breaches and privacy lapses a lot of businesses will be fighting to find people with the right skills to fix their problems or help them manage various technology and security risks.

So if you have a teenager moping around the house wondering what to do for a job, or you’re looking for a career change, becoming an IT security expert might be the answer.

Just as we see many jobs disappear in the face of technological change, we see new ones appear. This is a good example.

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Peak employment and the political challenge

The current angst about employment in an age of automation is a political, not technological, problem

This week’s edition of The Economist asks about the Future of Employment and where the jobs are in a society where work is increasingly done by machines.

For the Economist the conclusion is that the future of employment is ‘complex’ and observes economists and politicians haven’t given enough thought to the effects of the changing workplace and the dislocation of many workers.

Much of the Economist’s story is based around the ideas of professors at MIT Erik Brynjolfsson and Andrew McAfee in their upcoming book “The Second Machine Age”.

The race with the machines

Professor Brynjolfsson gives his view at TED 2013 in the key to growth? Race with the machines, a presentation countered by Robert Gordon in the ‘death of innovation, the end of growth’ and followed by an excellent debate between the two.

Brynjolfsson cites the dilemma of bookkeepers being displaced by software applications such as Intuit Turbotax as an example of where service sector staff are being displaced.

“How can a skilled worker compete with a $39 piece of software?” Brynjolfsson asks.

“She can’t. Today millions of Americans do have cheaper, faster, more accurate tax preparations and the founders of Intuit have done very well for themselves. But 17% of tax preparers no longer have jobs.

“That is a microcosm of what’s happening not just in software and services, but in media and music, in finance, manufacturing, in retailing and trade. In short, in every industry.”

The great decoupling

Brynjolfsson’s key point is that workers’ wages have been decoupled from productivity and that the workforce isn’t sharing the rewards of improved practices and increased wealth.

That is certainly true over the last forty years, however that may not be a technological effect, but the business consequences of liberalising the financial sector which has seen massive pay increases to the banking industry and managerial classes that has been way out of kilter with the rest of the workforce.

It may well be the current golden era of high executive salaries is a transition effect of an evolving economy, albeit one where our grandchildren will puzzle over an era where a failed executive can receive a $100 million payout on being fired.

As The Economist points out technological change itself tends to create new jobs that make up for those displaced in old industries, this is a view supported by GE’s Chief Economist Marco Annunziata.

The main problem that Brynjolfsson identifies is the medium term issue of dislocated workers finding themselves out of work with superseded skills and, as The Economist point out, it’s clear the developed world’s political leaders haven’t though through the consequences of that transition.

In almost every sense, the current crisis of confidence about employment prospects is more a political and social problem rather than technological.

Helping displaced workers is going to be the greatest challenge for today’s generation of business and political leaders, the real question is are they up to that task?

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What do startup founders really earn?

A global survey of salaries drawn by startup founders illustrates some truths about being a business enterpreneur

One of the myths of the current cult of the entrepreneur is that everyone will be a winner as their startup gets bought out by Google for a billion dollars. The reality is life for a startup founder is a grind.

Startup Compass looked at 11,000 startups across the world to discover what founders really earn and the results show the reality of life when you’re starting up a business is that the wages are pretty poor.

In San Francisco, London and New York, the wages are piddling compared to the cost of living in those cities.

Low pay and business success

This is good news for investors though, as there’s a clear correlation between the success of a startup business and the salaries its key staff members draw – successful businesses are built on the back of founders ploughing everything into the venture.

It’s also high risk as a failed business can leave the founder with nothing to show for several years of hard work, something that’s overlooked by the ‘liberate yourself from your cubicle’ gurus advocating everyone starts up their own venture.

Australia’s high cost economy

Notable in the stats is the high rates demanded by Australian founders, more than 25% higher than their Silicon Valley counterparts and a gob-smacking 60% more than London or Canadian equivalents.

Australia’s high cost of doing business was emphasised last year where a comparison by Staff.com found Sydney was the second to Zurich as a place to base a tech startup. Worryingly, that survey didn’t consider owners’ drawings.

Part of Australia’s high wage requirements are no doubt due to the country’s lousy tax treatment of options and share plans but a bigger problem is property ownership – an Australian who hasn’t bought a home by 35 is destined to be one of the nation’s underclass.

So an Aussie entrepreneur has to earn enough to qualify for or service a mortgage, it also discourages Australians from starting even moderate risk ventures.

The consequence of the need to draw a high salary is that the proportion of investor funds that goes into founders’ wages is almost three times higher in Australia than it is in Silicon Valley. That’s a big disincentive for foreign investors to put money into Aussie startups.

If you wanted an example of how uncompetitive the Australian economy has become, this is a good start.

Regardless of where a startup is based though, the message remains that the road to a billion dollar buyout from Google or Facebook is not paved with gold.

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Where will the jobs come from in the internet of things?

The internet of things promises to make industry more efficient, but what will happen to employment?

One of the common worries about the internet of things and the automation of business processes is that many jobs are going to be lost as a consequence.

This is a fair concern however we need to keep in perspective just how radically employment has changed in the last century.

Concerns about technology displacing occupations is nothing new; in the eighteenth century the Luddite movement was a reaction to skilled workers being displaced by new innovations.

In an interview with GE’s Chief Economist Marco Annunziata, published in Business Spectator, we covered this topic and Marco had a valid point that the bulk of the Western world’s workforce was employed in agriculture a hundred years ago.

Today it’s less than two percent in most developed country as agriculture became heavily automated, yet most of those workers who would once have worked in the fields have productive jobs. “As an economist I look at this over a long term perspective and I’ve heard this concern about technology displacing jobs over and over again.”

Annunziata sees new roles being created, among them what he calls ‘mechanical-digital engineers’ who understand both how the actual machines work as well as the data and the software used to run and monitor them.

This isn’t to say there won’t be massive disruption – John Steinbeck’s Grapes of Wrath described the massive dislocation that happened in the United States with the first wave of agricultural mechanisation in the 1920s and the decline in rural communities is due directly to modern farms not needing the large workforces that sustained many country towns.

We can’t see where the jobs of the future will be and just roles like as Search Engine Optimisation and ecommerce experts where unheard of twenty years ago, our kids will be working in occupations we haven’t contemplated.

It’s up to us to give our kids the skills and flexibility of thinking that will let them find opportunities in a very different workplace.

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Offshoring, the internet and the future of business

Outsourcing sites like oDesk, elance and Freelancer are changing recruitment and labour markets in ways that big and small businesses need to understand.

One of the big changes in business over the past thirty years has been outsourcing offshore – offshoring – as labour markets around the world have opened, communications have become cheaper and trade barriers fallen.

As the global war for talent accelerates, offshoring may be one of the ways many businesses deal with labour shortages in their home markets.

For most of the last thirty years, offshoring was only really available to larger businesses who had the resources to manage overseas suppliers and service providers.

With the internet becoming accessible services like eLance, Freelancer.com and oDesk started appearing that established virtual labour exchanges where smaller businesses could connect with individual contractors.

As part of the Decoding The New Economy video series, I had the opportunity to speak to Matt Cooper, Vice President of Business Development & International at oDesk about how the global workforce is evolving.

oDesk itself came about in 2005 when its founders Stratis Karamanlakis and Odysseas Tsatalos wanted to engage developers in their native Greece while working in North America.

That project turned out to be a business in itself and now the company now has over three million freelancers registered with the service.

Addressing the global skills shortage

Cooper sees oDesk’s big opportunities in areas such as developers, e-commerce and customer service.

“If you look globally there are very acute shortages in certain geographic areas and certain skills,” says Cooper.

Looking ahead, the company sees new skills coming onto the market with larger companies adopting oDesk and similar services.

“We’ll see new skills come onto the marketplace with increasing liquidity and depth with this longer scale of skills,” says Cooper. “We’re also seeing increased demand from enterprise companies. Of the 600,000 clients using oDesk have been traditionally small companies, entrepreneurs and startups. Now we’re seeing increasing demand from the enterprise companies.”

Managing remote workers

Regardless of the size of the company, managing a global workforce of freelancers presents challenges for management and Cooper has some advice for those businesses looking at engaging workers through his service.

“Managing an online, distributed workforce is different to managing locally,” says Cooper. “You have to be much more specific, you have to document your expectation and you have to make the investment in getting your team up to speed.”

One common problem Cooper sees with engaging workers through services is like oDesk is employers thinking they can throw their problems over the fence, “you can’t just throw your project over the wall and hope it comes back.”

Cooper also suggests businesses “try before they buy” with engaging potential freelancers to do smaller trial tasks to see if they do have the skills needed.

“If you need one person, hire three and keep one.” Cooper says, “create a very small and very discrete project that closely replicates the long term role that you want and see how they perform.”

The threat to existing businesses

Services like oDesk present a number of opportunities and challenges to industry, in some ways they threaten existing service businesses which have relied on providing skilled knowledge work to local markets.

Now cheaper workers are to anyone with a computer and a credit card, there’s a fundamental shift happening in the small business sector.

How the small business sector, and larger corporations, use services like oDesk and Freelancer.com while reacting to the threats these sites present to their businesses will determine how many of them will survive over the rest of this decade.

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