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FEBRUARY 14, 2020

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WILLIAM KERR

GORICK NG

Talent Management and the Future of Work

The nature of work is changing—and it is changing rapidly. Few days go by without industry giants

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such as Amazon 1 and AT&T 2 announcing plans to invest billions of dollars towards retraining nearly
half of their respective workforces for jobs of the future. What changes lurking around the corner are
Amazon and AT&T seeing? What tools do managers have to confront the accelerating change? How
should talent management and workplace design evolve for the new landscape? This note summarizes
the key drivers of change and offers a framework for managers to apply to their businesses.

Akin to tectonic plates rubbing against each other, technology advancement, demographic
transition, and global integration are interacting in unprecedented ways and impacting firms’ ability
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to access the right workers with the right skills and competencies. It is also redefining worker
productivity. As a result, management teams are facing increasingly urgent questions of whether to
adapt and how best to adapt—whether it is through talent management practices, workplace design,
and/or collaborations with external parties.
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Source: Created by casewriters.

Professor William Kerr and Research Associate Gorick Ng prepared this note as the basis for class discussion.

Copyright © 2020 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
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 820-084 Talent Management and the Future of Work

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Forces of Change
Technology advancement, demographic transition, and global integration are changing the outlook
of the economy, the makeup of the labor force, and, in turn, the agendas of management.

Technology Advancement

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Compared to the room-sized computers that NASA used for its Apollo space program in the 1960s,
Apple’s 2018 iPhone had 100,000 times the processing power, 3 was 3,300 times cheaper, 45 and fit in
one’s hand. As a consequence, it has become an essential tool for knowledge workers to collaborate in
real-time, front-line workers to collect payments and check inventories on the retail floor, and for house
cleaners to secure assignments. Beyond smartphones, Wi-Fi, cloud computing, connected devices,
machine learning, and robotics have also become pervasive. The growing, compounding, cheapening,

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ubiquity, and consumerization of computing power has reshaped—and continues to reshape—how
goods are produced, services are delivered, and work gets done:

1. The digitization of nearly every industry, function, and business process…

…fueling the need to transform business models, organizational structures, and legacy practices

2. The decline in barriers to entry for technology-first players with different cost structures…
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…fueling the need to rethink one’s value chain, value proposition, and business model

3. The pressure for human labor to be automated or augmented by technology…

…fueling the need to reevaluate how work gets done and how proper technique is taught

4. The unlocking of an unprecedented amount of latent data and insights…

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…fueling the need to adopt more analytical methods and cultivate more digitally savvy workers

5. The declining half-life of worker skills…

…fueling the need to continually ensure that workers’ skills are sharp, relevant, and up to date

The competitive landscape of many industries is tilting to favor data- and technology-savvy firms
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with robust technological infrastructures, skilled and adaptable workers, and cultures of
experimentation. Speaking on the impact of Vanguard’s technology-enabled financial advisory
services on its core business, Tim Buckley (HBS 1996), CEO of The Vanguard Group notes, “Technology
will change the advice industry, and that’s uncomfortable. You can fight it, you can deny it, or you can
embrace it as an opportunity to scale your business better and lower your cost structure.” 6

Demographic Transition
While the future of technology can be uncertain, the upcoming demographic changes are not.
Female labor force entry, as a natural and accessible way to grow the workforce, has mostly run its
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course, with participation rates peaking in the late 20th century. 7 Birth rates, which peaked in the 1950s,
have since plummeted to historic lows, 8 pushing retirements to exceed new worker entry. 9 Millennials,
who already comprise 35% of the workforce, the largest of any generation, 10 are especially well-
educated and bring new preferences regarding work to the labor market. 11 Educated workers have
decisively chosen to migrate to urban centers in search of economic opportunity. 12 The workforce has
never been more diverse in composition. 13 The result is a changing makeup of the labor market:

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 Talent Management and the Future of Work 820-084

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1. The slower growth (or decline) in national workforces…

…fueling the need to identify and compete for scarcer and often hidden workers

2. The rising age and impending retirements of many workers…

…fueling the need to succession plan, fill vacancies, and support workers’ caregiving burdens

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3. The growing diversity of the workplace in terms of age, ethnicity, and background…

…raising the importance of appreciating different worker needs and team capabilities

4. The changing attitudes and expectations of Millennials and Gen Z towards work…

…raising the need to rethink the firm-worker relationship and one’s value proposition as an employer

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5. The growing concentration of economic power and skilled workers within large cities…

…fueling the need to bridge concentrated talent pools with broader workforces

The best-in-class firms of many sectors are increasingly those where people and strategy, data and
human resources, and business performance and talent management go hand-in-hand. As Greg Case
(HBS 1989), CEO of Aon Corporation, notes, “People allocation is as powerful as financial allocation.” 14
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Global Integration
Since World War II, technological advancement and globalization have gone hand-in-hand, with a
rise in information and communications technologies both enabling and resulting from the explosion
of multi-national firms. As emerging markets continue to industrialize and climb their respective
income ladders, the arena of business has become unprecedentedly global—and globally competitive:
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1. The opportunity to access an increasingly global base of customers, clients, and partners…

…fueling the need to be build overseas capabilities and be sensitive to local differences

2. The ability to access an increasingly international talent pool, both at home and abroad…

…fueling the need to navigate immigration laws and to manage a globally distributed workforce
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3. The potential for work to be done anytime, anywhere, and by a broader range of workers…

…fueling the need to redefine productivity and navigate remote and complex team structures

4. The continued economic pressure to place routine support work in lower cost settings…

…fueling the need to manage regulatory, reputational, and operational risks and complexities

5. The increasing emergence of formidable overseas competitors with global ambition…

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…fueling the need to safeguard intellectual property and keep a pulse on foreign rivals and trends

Globalization has been beneficial to many, but has hurt the job prospects and livelihoods of others.
Alarming levels of economic inequality has led to a surge in populism, nationalism, and protectionism
worldwide, leading to the likes of Brexit threatening to stall or even reverse global integration trends.
Nevertheless, some leaders such as Jamie Dimon (HBS 1982), CEO of JPMorgan Chase, express

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 820-084 Talent Management and the Future of Work

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optimism: “Globalization—I don’t think it has to be reversed… there were flaws and maybe some
unfair trading practices and… people were hurt by it. So you go to some towns in America and people
lost their jobs. And, if they didn’t lose them, they went from earning $40 an hour to $10 an hour. We
need to recognize that and do something about it… think of retraining, relocation, business
redevelopment—all these things which you know can work if properly done.” 15

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Workplace Challenges
Managers are increasingly considering three key questions: (1) “Do we have access to workers?” (2)
“Do these workers have the right competencies and skills?” and (3) “Is this talent productive?”

Worker Access: “Do we have access to sufficient quantities of the right talent?”

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To access workers, firms can recruit on campus, hire active and passive job seekers, encourage entry
of those outside of the labor force, and reallocate internal talent to better-fitting roles.

A. Recruit on campus. Firms can partner with colleges and universities to offer internships, co-
ops, scholarships, apprenticeships, and full-time jobs to labor market entrants and transitioning
workers. Despite the appeal of being able to assimilate entry-level workers into a firm’s working
culture and “promote from within,” firms typically struggle with…
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a. …the high hiring costs due to competition against better-resourced and branded firms

b. …the relative inexperience of hires and the need to invest in foundational skills training

c. …the risk of churn among interns and new hires who have received training

d. …the need to offer work cultures that align with the expectations of younger workers
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B. Hire active and passive job seekers. For experienced workers, firms will typically post jobs
online and/or use recruiters and employee referrals to poach “passive candidates,” employed
workers with requisite backgrounds. The typical challenges include…

a. …the reliance on often poor and bias-ridden proxies to evaluate worker compatibility

b. …the reliance on a firm’s own name recognition to attract candidates

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c. …the need to offer passive candidates wages that they cannot refuse

d. …the likelihood that workers will resemble existing workers and add little diversity

C. Encourage entry of “hidden workers” outside of the labor force. Some firms have begun to
explore non-traditional talent such as the previously incarcerated, those who have recovered
from substance abuse, the physically impaired, and those re-entering the workforce after
parental leave or retirement. While early experiments have shown promise, obstacles include…
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a. …the need to reimagine hiring processes to expand the funnel of considered workers

b. …the need to invest in training for workers with substantial employment gaps

c. …the need to restructure working norms to accommodate workers’ personal lives

d. …the need to address stigma towards applicants with non-traditional backgrounds

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 Talent Management and the Future of Work 820-084

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D. Reallocate internal talent to better-fitting roles. While firms often rely upon the external labor
market to fill job vacancies, increasingly firms are also sourcing from their internal pools of
talent. Enabled by algorithms used to connect gig workers with projects and the increasing
desire of workers to switch roles, firms have greater opportunities than ever to promote worker
mobility. However, successful employee mobility programs require that firms confront…

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a. …the need to identify, map, and train for role-specific skills and competencies

b. …the need to overcome institutional inertia and funding constraints to train workers

c. …the need to combat friction arising from workers having less traditional career paths

Competencies and Skills: “Do these workers have the right competencies and skills?”

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Tight labor markets force firms to reevaluate their screening of candidates. The phenomenon of
“degree inflation” (wherein job postings require more education than what current workers possess)
can lead firms to needlessly inflate labor costs and shrink the pool of seemingly qualified workers. The
lack of career readiness among college graduates raises questions regarding whether a degree is a
strong signal of future worker productivity. Core to the debate are soft skills and digital skills.

A. The soft skills gap. As technology automates tasks that can be performed by following explicit
rules—and complements complex problem solving and communications tasks 16 —the demand
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for soft skills such as teamwork is growing. To cope, Walmart is using virtual reality headsets
to train employees on customer service 17 and McDonald’s is elevating the hiring of retirees who
tend to be more reliable and professional than younger workers. 18 The struggle involves...

a. …granularly identifying, clearly articulating, and effectively teaching the attitudes,

behaviors, and methods that separate effective workers from mediocre ones
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b. …overcoming the belief that soft skills are difficult to teach, awkward to discuss, and
even more difficult to quantify from the perspective of returns on training investment

c. …confronting the reality that soft skills are a function of “cultural capital” (tastes and
mannerisms of the dominant class that may not be shared by all in diverse workplaces)

B. The digital skills gap. A John Deere tractor now has 30-40 on-board computers. 19 This requires
not only technical literacy, but also digital soft skills such as customer-centricity, data-driven
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decision making, and comfort with ambiguity that are vital in technology-rich contexts. 20 To
ship user-centered, bug-free product on time and within budget, even outsourced software
developers an ocean away need to “manage up” and navigate institutional interdependencies.
As more workers postpone retirement and smaller cohorts of young workers enter the labor
market, firms will increasingly confront the challenges of…

a. …managing large numbers of non-digital natives who may be less open to change, less
comfortable with technology, and less fluent in the language of digital natives
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b. …allocating time and funding to help workers upskill while grappling with the
possibility that not all workers will reach the necessary levels of proficiency

c. …engaging in transformations that are costly, disruptive to business operations, likely

to result in painful job cuts, and likely to be met with employee resistance

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 820-084 Talent Management and the Future of Work

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Productivity at Work: “Is this talent productive?”
As worker attitudes toward work evolve and as technologies enable work to be performed
anywhere and anytime, firms are increasingly taking a closer look at worker productivity.

A. From inputs to outputs. The traditional input-oriented, eight-hours-per-day, five-days-per-

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week, full-separation-between-work-and-personal-life working model is giving way to output-
oriented working models that prioritize the extent of one’s value creation over the extent of one’s
“face time” in an office. Such a shift has led to the challenges of…

a. …upholding strong and cohesive team cultures when workers are not collocated

b. …mitigating misunderstandings arising from an inability to observe non-verbal cues

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c. …assessing output in jobs not atomizable (e.g. data entry) or quantifiable (e.g. sales)

B. From low- to high-value. From software that processes insurance claims to chatbots that resolve
basic customer issues, “robotic process automation” is eliminating routine tasks and enabling
workers to perform higher-value work. While the cost savings are clear, challenges include…

a. …securing sufficient worker buy-in and behavior change to institute new processes

b. …placing risky bets on emergent technologies, digital standards, and coding languages
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c. …maintaining adequate levels of customer service, especially for non-digital natives

C. From treatment to prevention. In the face of rising medical costs, employers are looking to
preventative health coaches and apps to help workers manage chronic illnesses and mental
health issues. Firms are also offering tuition reimbursement and student loan repayment
schemes to boost worker retention. Though early attempts show promise, struggles include…
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a. …engaging high-risk employees most in need of financial or health-related support

b. …securing the buy-in and sustained commitment of organizational leadership

c. …assessing the return on investment of employee wellness and assistance programs

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Managerial Levers
Leaders can manage the changing business landscape by considering questions regarding talent
management, workplace design, and external collaborations.

Talent Management
1. Assess and continuously train for hard and soft skills.
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• How might assessments, real-time feedback, just-in-time-learning, and dedicated

training time help workers close gaps between their current and potential capabilities?

2. Capture, retain, and codify institutional memory, especially for high-attrition-risk roles.

• How might redundancies be built to ensure that critical expertise, best practices, and
tacit knowledge do not vanish when workers leave?

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 Talent Management and the Future of Work 820-084

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3. Assess and mitigate obstacles preventing workers from considering certain roles.

• How might changes to marketing, job descriptions, location, hiring processes, and
working models make it easier for target groups to discover my firm and apply for jobs?

4. Assess and mitigate obstacles preventing workers from being considered for certain roles.

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• How might changes to our candidate sourcing, screening, and evaluation practices help
us separate signal (skills, competencies, etc.) from noise (gender, credentials, etc.)?

5. Systematically analyze and mitigate the drivers of employee absenteeism and turnover.

• How might changes to our employment agreements, working style, benefits,

compensation, and promotion policy lower employee absenteeism and turnover?

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Workplace Design
1. Combat unspoken rules of the workplace that favor workers’ “inputs” over “outputs.”

• How might making performance evaluation rubrics more explicit level the playing field
for workers who may lack the social and cultural capital to navigate unspoken norms?

2. Optimize the firm’s monetary and non-monetary value proposition as an employer.

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• How might we better align what workers expect from us as an employer to what we
actually offer in terms of brand, training, lifestyle, pay, benefits, culture, and values?

3. Assess the extent to which data and technology may improve worker productivity.

• How might the deployment of technology improve decision making, augment human
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labor, automate routine tasks, and relieve workers to perform higher value work?

4. Explore policies that help workers more ably balance their work and personal lives.

• How might policies around remote work, vacation, parental, bereavement, and medical
leave be reformed to help workers achieve a more sustainable work-life balance?

5. Expand ways for workers to move between roles and functions to achieve better job fit.
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• How might policy changes make it easier for workers to change jobs, functions, and
geographic locations to better suit their interests, capabilities, goals, and circumstances?

External Collaborations
1. Develop curriculum design and hiring partnerships with educational institutions.

• How might co-designing curriculum, creating awareness campaigns, and building

talent pipelines with regional organizations increase the quality and supply of workers?
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2. Partner with organizations that serve non-traditional pools of talent.

• How might hiring and retention goals be met through the previously incarcerated,
recovered addicts, the physically impaired, and those on retirement or parental leave?

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 820-084 Talent Management and the Future of Work

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3. Establish industry consortia to pilot, launch, and scale workforce development efforts.

• How might joint investments by peers, suppliers, and vendors lead to mutually
beneficial outcomes and make previously uneconomical training efforts feasible?

4. Educate and work with lawmakers to improve the availability and quality of workers.

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• How might local, state, and federal legislations be reformed to improve the quality of
education, the availability of skilled talent, and the conditions of workers?

5. Implement systems to monitor and manage risks arising from outsourcing or offshoring.

• How might my firm better protect its business processes, data, reputation, and
intellectual property vis-à-vis temporary workers, vendors, and contractors?

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Forces of change, workplace challenges, and managerial levers

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Created by casewriters.
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Source:

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 820-084 Talent Management and the Future of Work

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Endnotes

1 https://www.wsj.com/articles/amazon-to-retrain-a-third-of-its-u-s-workforce-11562841120.

2 https://www.cnbc.com/2018/03/13/atts-1-billion-gambit-retraining-nearly-half-its-workforce.html.

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3 https://theconversation.com/would-your-mobile-phone-be-powerful-enough-to-get-you-to-the-moon-115933

4 https://www.consumerreports.org/cro/news/2009/07/apollo-11-reflecting-on-how-far-we-ve-come-
technologically/index.htm.
5 https://www.apple.com/us-hed/shop/buy-iphone/iphone-xr/6.1-inch-display-64gb-white-unlocked.

6 https://www.financial-planning.com/articles/vanguard-tim-buckley-has-advice-on-robo-advisors-and-price.

7 https://www.bls.gov/opub/reports/womens-databook/2017/home.htm.

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8 https://www.cdc.gov/nchs/data/vsrr/vsrr-007-508.pdf.

9 https://www.bls.gov/web/empsit/cps_flows_recent.htm.

10 https://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/

11 https://www.shrm.org/hr-today/news/hr-magazine/Documents/millennials-at-work.pdf.

12 https://www.philadelphiafed.org/-/media/research-and-data/publications/business-
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review/2015/q3/brq315_big_cities_and_the_highly_educated.pdf?la=en.
13 https://www.census.gov/content/dam/Census/newsroom/press-kits/2018/jsm/jsm-presentation-pop-projections.pdf.

14 https://www.mckinsey.com/business-functions/organization/our-insights/an-agenda-for-the-talent-first-ceo.

15 https://www.cnbc.com/video/2017/01/18/globalization-does-not-have-to-be-reversed-jamie-dimon.html.

16 Autor, D. H., Levy, F., & Murnane, R. J. (2003). The skill content of recent technological change: An empirical
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exploration. The Quarterly journal of economics, 118(4), 1279-1333.

17 https://corporate.walmart.com/newsroom/innovation/20180920/how-vr-is-transforming-the-way-we-train-associates.

18 https://fortune.com/2019/04/25/mcdonalds-aarp-hiring-senior-citizens/

19 https://www.union-bulletin.com/news/education/walla_walla_community_college/fixing-the-big-green-
machines/article_618451ce-3ab7-11e8-88fc-8b93ad647fb5.html.
20 https://www.capgemini.com/wp-content/uploads/2017/10/report_the-digital-talent-gap_final.pdf.
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