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 / Second Quarter 1997 / Issue 7(originally published by Booz & Company)


The Triumph of People Power and the New Economy

The New People Partnership heralds the appearance of a different "company man and woman." As corporations and employees grapple with the new realities that exist between them, organizations must do more to make workers employable within their own companies.

Products can be copied. Technology and training can be duplicated. No one, however, can match highly charged, motivated people who care. For that reason alone, people are one of the three key enablers of the new business model, which views companies as systems in addition to their independent parts.

At all levels, companies need people who can deliver at the frontier of performance. They must understand where the company is going and be able to influence its path. They must be willing to share in its fortunes and be motivated to push for greater achievements. They are the ones ultimately entrusted with the competitiveness of the corporation. They are the repository of much of the knowledge and skill base that makes the firm competitive. No company can be successful with a detached and unmotivated work force.


Of the radical shifts that result from the new business model, none is more significant than the new relationship it requires between the company and its people. While we talk about how fast the business environment has changed, probably no dimension is changing faster than the dynamics between employer and employee.

The epitome of the traditional model was the "company man" of the 1950's and 60's. When Charles Handy, the prominent European management guru, first joined Royal Dutch Shell about 40 years ago, he recognized that Shell, at its whim, could repeatedly shuttle him and his family anywhere in the world. His first loyalty had to be to the company if he was to advance in his career. But in that process, he knew the company would take care of him and his family's needs over both the short and the long term.

In short, in the days of the company man, employers offered job security and a stable work environment with rising responsibilities and pay in return for loyalty and acceptable performance.

But this kind of relationship is now exceedingly rare. Today, companies must continually reinvent and restructure themselves to gain competitive advantage. The consolidation of industries, the growth of global markets and the increased presence of activist investors have exacerbated competitive pressures. This demands doing more with less.

At the same time, technological innovation, the rise of customer-
driven markets and regulatory actions are dictating new skills for a company to be successful. This poses significant challenges for companies in recruiting, developing and retaining skilled staff. In a 1996 study by the Conference Board, 43 percent of companies reported that they had problems finding and keeping high-quality workers. Meanwhile, global markets are forcing companies to redeploy resources throughout the world. In some cases, they are finding that the bulk of their growth opportunities exists in new areas, like China and India. But they are also sometimes finding that they do not have enough people with the suitable skills, cultural sensitivities, language ability -- and willingness -- to relocate there.

From the employee's perspective, the world is also changing rapidly. Companies have repeatedly demonstrated that there are no guarantees when it comes to employment, and people do not expect any. Yet, downsizings or right sizings have cut deep and affected the psyche of the average person on the street. Many workers see little benefit in doing anything that requires "going the extra mile." On the other hand, employees realize that their greatest security is their skills and that there is a very attractive market for talent.

Demographics and cultural aspects are also changing the composition and preferences of the work force. More women are entering the labor market and more households than ever are supported by two income earners. Lifestyle issues are more important in general as the "New Age" work force seeks some kind of balance. People are becoming highly trained and mobile, if not geographically, at least across companies. This has dampened the willingness of many people to relocate just because the company feels they should.

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