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Beautiful chaos | Print – Issue 160 | Article of the Week

Paul Sparrow

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The Internet of things, is creating new cross sector collaborations and B2B arrangements like we have never seen it. Organisations will have to reconfigure their approaches to workforce planning and dismantle internal and external barriers, experimenting with never-before conceived business models. Article by Paul Sparrow, Emeritus Professor of International HRM – Lancaster University Management School

“Never assume a linear trend line or pattern. It is the old “a butterfly flaps its wings in one part of the world leading to a hurricane in another” problem”

A couple of years ago when UKCES, as was, commissioned work to examine future skills scenarios, there were four plausible pictures of what the UK’s job landscape might look like in 2030, and workforce planning and, indeed, HR’s role in it, would be different in each. One scenario suggested greater business flexibility, incremental innovation, leading to moderate growth in the economy, but flexibility resulting in fewer opportunities and weakened job security for the low skilled. A second showed robust growth driven by strong high-tech industries, but a two-tiered, divided society emerging. A third showed technological innovation driving the automation of white-collar work, bringing large-scale job losses, leading to extensive government-led skills programmes. In a fourth, a stagnant economy meant that improved productivity could only be achieved through the rigorous implementation of information and communications technology solutions.

Each scenario implies a different value that might be attached to; human capital, different patterns of industrial activity and different institutional interventions in the labour market. The scenarios also identified the factors that are expected to bear on the relationship between skills and productivity, which are many and broad; demographic change, growing diversity, income uncertainty, desire for better work-life balance, converging technologies and cross-disciplinary skills, digitalisation of production, big data, artificial intelligence and robots, economic shifts to Asia and distribution of global centres of excellence, de-globalisation, partial fragmentation of the EU, new business ecosystems, scarcity of resources, reverse migration, changing employee values, and decreased scope for political action. So in such a swirling maelstrom of change and disruption, are businesses future-ready? The limitations of managers and the way they think about strategy is concerning.

A generation of research on management cognition – the study of how managers and strategists model reality and how this shapes their attention, attribution of causes, decision-making, ideology, learning, and rejection of organisation memory – warns us against management errors and bias. Meanwhile, planners converge on the attractive and familiar, seeking only confirmatory evidence. All the more worrying in these days of tweeting, blogs, think tanks, and partial data of unsure provenance and undeclared methodology. They have “illusions of control”, rely on rules of thumb (heuristics), and discount what they see as fanciful. They risk strategic blindness. So what needs to change to mitigate against a potential crisis? We need to put processes in place around analytics and de-risk strategic analysis and planning, and force the underlying biases to the surface. Think about the whole HR strategy, not just today’s pressure point. A classic case study can be seen in the NHS, which has always had periodic episodes of skills shortages, during which it relies heavily on international recruitment, and we can learn from these. Analysis of a prior period of global recruitment in the NHS, the early 2000s, showed that HR had to develop three kinds of strategy: Active recruitment policies where specific skill groups and countries are targeted; passive recruitment policies where organisations may capture employees because of an increase in both the ‘flow’ and ‘stock’ of international employees through a hub-typically London – within the domestic market; and longer term strategies to ensure the continued ability to compete in international labour markets.

Analytics tend to over-egg the importance of micro-planning and numbers. Sometimes these numbers, far from being science, are just extrapolations. So what risks can you foresee in your organisation’s strategy? What principles and values become important in dealing with these? Can you use scenarios to stress-test your analytics? In times of uncertainty, many taken-for-granted regimes – the overriding expectations and planned way of doing things for any given issue-area around which key people tend to converge) get challenged. The way we think it all works doesn’t survive the stress test. Never assume a linear trend line or pattern. It is the old “a butterfly flaps its wings in one part of the world leading to a hurricane in another” problem. Weather forecasters have to use multiple data-runs of their models to lay out potential ranges of weather. The unthinkable still happens. When Harold McMillan was asked what he feared most in politics he quipped “events, dear boy, events!”

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