This week, how the “workforce of the future” came early to the party. Plus, customer reviews take center stage, and questions for Zhang Ruimin, the longtime CEO of Haier, on tossing out 100 years of organizational orthodoxy. |
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The workforce of the here and now? Reskilling, upskilling, microskilling, skill adjacencies, talent gaps. As talk grows of what the future of work will look like, these terms may seem daunting for employees and leaders alike. “I’m good at my job, why do I need to upskill?” “My company creates value, why upset the apple cart?” The answer for both groups is that there’s little choice not to. |
And that’s not a bad thing. One of the (rare) silver linings of the COVID-19 pandemic is that organizations have had to reskill at scale, on the fly. They’ve gotten a good look at how workforce needs have to change, and they’re responding at pace. Many of the most successful companies are approaching skill building in a more integrated way, by following several principles. |
Put your workforce first. In the current hot labor market, organizations are finding human capital to be scarcer than financial capital. Employees now expect much more from their employers and will engage, or disengage, depending on whether their needs are met. They want a better employee experience, and they want to do meaningful work that resonates with their values. |
Address your skills deficit. Fifty-eight percent of respondents to a McKinsey Global Survey earlier this year said that closing skill gaps has become a higher priority since the pandemic began, and 69 percent said that their companies engage in more skill building than they did before the crisis. Intriguingly, the skills that companies prioritize most include leadership and managing others, critical thinking, and decision making. This suggests that in addition to wanting to be more employee centric, organizations are still coming to grips with the new ways of working ushered in by the pandemic. |
Create and follow best practices. Companies need to prepare their people for a future in which emphasizing new and evolving skills is a given and embracing continuous learning is the key to relevancy in the workplace. In “Three keys to building a more skilled postpandemic workforce,” we look at core principles that stand out: finding a true starting point, making skill building a way of life, and taking an ecosystem view. |
Industries that tell the tale. The retail and consumer-goods industries have been deeply affected by the pandemic, as shoppers have gone all in on digital. Companies now have to manage the new expectations of employees and field staff coupled with the longer-term reskilling challenge as automation and digitization advance. In a recent podcast, McKinsey experts discuss how companies can track the skills that people develop in their jobs. Bryan Hancock, the global leader of McKinsey’s work on talent, believes that companies should have this conversation as part of employees’ annual performance reviews. “Turn the performance review from ‘How did you do this year?’ to ‘What skills did you build this year?’” said Hancock. |
Banking branches out. The global banking industry had already been undergoing huge changes when the pandemic struck, from shrinking branch footprints to digitizing front, middle, and back offices. The COVID-19 crisis added more urgency to innovate: banks pivoted to a digital-first model for sales and service, scaled up remote advice, and reshaped physical distribution. Accordingly, talent was redeployed from teams with surpluses to those with shortages. |
Role play. Unlike prior crises, banks have had to make more creative use of various levers to deploy talent dynamically and to build future workforces, including reskilling, upskilling, and redeployment. Since 2020, banks have been reskilling their workforces rapidly and at scale, taking advantage of the efficiencies available from skill adjacencies (skill sets from previous roles that are complementary to those required by new roles). We’ve seen banks train tellers to become customer-service reps and train customer-service reps to become universal bankers. |
Seizing the moment. Talent leaders have been pushing for dynamically redeploying employees to roles that are increasingly in demand, as well as providing employees with diverse career paths and with corresponding upskilling and reskilling support. Equipped with the right mindset and tools, companies can expand on these changes and get ahead of competitors to build a more resilient, future-ready workforce that will achieve true business impact. |
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OFF THE CHARTS |
Stars in their ayes |
The COVID-19 pandemic has led to an explosion in the number of product reviews as more people stayed home to do their shopping. Yes, some customer reviews are false, and, yes, companies have been known to manipulate star ratings. But consumers still largely trust digital word of mouth. The surge in global online reviews—up 87 percent from December 2019 to December 2020—will add to their credibility. In lockdown, customers focused on reviewing streaming services, food and beverage, and health products; out-of-home services were less reviewed. |
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PODCAST |
The room where it kept happening |
Broadway is back, but it’s been a long stretch since the Great White Way’s lights went dark in March 2020. McKinsey recently interviewed Jeffrey Seller, the producer of such Broadway hits as Hamilton, In the Heights, and Rent, among others. Seller spoke about how hard it was when “live performance went into a coma” but also about the pivot to getting a digital version of Hamilton to audiences in the summer of 2020. “Knowing that I wanted to keep Hamilton at the top of many, many Americans’ minds, it was an easy decision,” said Seller. |
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MORE ON MCKINSEY.COM |
What matters most? Five priorities for CEOs | To prepare for the post-COVID-19 era, leaders need to do more than fine-tune their day-to-day tasks; they need to step back, take a breath, and consider a broader perspective in five key areas. |
What Europe’s draft AI regulations mean for business | Proposed EU rules are just the latest step toward global AI regulation. Here’s how smart organizations are preparing for compliance—and managing AI risk. |
China’s digital R&D imperative | Chinese companies are upgrading their R&D capabilities as they strive for technological self-sufficiency. Success depends on building a new generation of engineering and science-led innovation capabilities to support existing strengths in efficiency, responsiveness, and customer focus. |
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FOUR QUESTIONS FOR |
Zhang Ruimin |
After 37 years at the helm of Haier, CEO Zhang Ruimin has built the company into a global powerhouse. Now he wants to overthrow 100 years of organizational orthodoxy. How? With a radical experiment in which employees manage themselves and self-organize into thousands of microenterprises that respond directly to user needs. The following is an excerpt from his recent interview with McKinsey.
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What have been your biggest lessons as a leader? |
I saw that after the mobile internet, there would be another age coming, and an even bigger market—the IoT [Internet of Things] market. The Fourth Industrial Revolution will usher in the age of maximizing the value of mental labor, not manual labor, as in earlier times. Goods will be interconnected by the Internet of Things, and this creates different scenarios based on the customized needs of users. This is why, for more than ten years, we’ve explored an organizational model as a tool to totally transform the architecture of the enterprise to remove bureaucracy—all so we can better meet user needs. |
Consider the smart home. This is not the product of a single enterprise or a single industry. It requires the involvement of different enterprises and different industries. Therefore, we like to say that products will be replaced by scenarios, and industries will be covered by overlapping ecosystems. Think of a car not as a car but as a computer on wheels. That means that in the future, products won’t matter. What will matter is a scenario or setting. |
How is this thinking reflected in Haier’s operating and organizational models? |
I think the operating model and the organizational model are interconnected and are mutually promoting. Since the Industrial Revolution, more than 100 years ago, the American model—a bureaucratic model—has prevailed. What we want to do is to overthrow the old models. In our Rendanheyi model, the value of each individual is reflected in the value they create for users. Establishing our model disrupts everything traditional, such as hierarchy and bureaucracy, because everyone has direct contact with the users, the end consumers. |
Ren is a Chinese word that means people or person. We mainly use it to refer to employees within an organization. Dan means orders, and here it represents the needs or demand of users. Heyi means integration. So we’re talking about the fact that everyone, every employee, gets to create value for users. Whatever your value, it is mirrored in the value you create for users. For example, typically an R&D person works without worrying about the final sale [of the product]. But in our model, everyone, including R&D people, must be responsible for the final sale—or lack of sales—of the product they develop. With Rendanheyi, we’re talking about a virtuous cycle built around creating value for users. |
How does the model disrupt traditional bureaucracy and hierarchy? |
We removed the intermediate layer of more than 12,000 employees. After bureaucracy was eliminated, the organization was no longer hierarchical. It became a decentralized, distributed network. The intent is to create an experience for users, instead of just selling products, as we previously did. |
To this end, we apply a microenterprise structure. Currently, we have 4,000 microenterprises, which coalesce with one another to form ecosystem microcommunities—or EMCs. Among our 300 self-organizing EMCs, we have more than 100 start-ups, four of which are already publicly traded companies. |
Do you think self-organization is necessary for companies to become more people-centric? |
People-centric organizations have two features: autonomy and self-organization. In a traditional enterprise, there is no autonomy; leaders manage workers with different tools to improve efficiency. We don’t have managers. We only have employees. All employees are their own managers, and everyone is their own autonomous person. This is very important. |
I think the biggest problem for enterprises is to transform traditional enterprises into self-organizations. In the Fourth Industrial Revolution, all employees will be value creators or entrepreneurs. This is the basic condition to meet the call of the times, and without self-organization, you will not be keeping pace. |
— Edited by Barbara Tierney |
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BACKTALK |
Have feedback or other ideas? We’d love to hear from you. |
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