Simplify The Future of HR David Swanson – EVP Human Resources June 11, 2015

What is the “future of work” and what is the impact on HR? The nature of work is radically changing, driven by:

Technological advancements Shifting demographic patterns

Transition to knowledge-based economies

Increasing pressure for innovation

The rapid transformation created by these shifts will help redefine how we work – now and in the future

Business leaders must take action so they can adapt to this shifting environment.

Organizations that are not prepared become obsolete.

Change is inevitable.

Why is the “future of work” topic important?

A convergence of forces is pushing businesses to change the way they work.

Accelerating globalization

Shifting demographics

Technology change

Let’s consider each force and its impact on the future of work.

Focus on employee engagement

Technological change The expanding reach of computing, mobile, cloud, and connected technologies is rapidly changing the way we live and work.

1.28 billion Number of registered Facebook users2

1.75 billion Projected number of smartphones in use worldwide by 20143

21% in 2013 54% in 2018 Number of worldwide mobile devices that are smart devices4

37 minutes Average time Americans spend daily on social media1

88% in 2013 96% in 2018 Mobile data traffic originating from smart devices5

1 “BI Intelligence Report,” Business Insider, October 2013. 2. “Key Facts,” Facebook. 3. “Worldwide Mobile Phone Users: H1 2014 Forecast and Comparative Estimates,” eMarketer, January 2014. 4. “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2013–2018.” 5. Ibid.

Accelerating globalization

1.7 billion Size of Asia’s middle class by 2020, triple that of 20096

20.6% Global rate of extreme poverty in 2013, down from 43.1% in 19907

Together with technology, globalization will profoundly impact the way we work.

6. Linda Yueh, “The Rise of the Global Middle Class,” BBC News, June 18, 2013. 7. World Bank, 2013.

Shifting demographics

Millennials will comprise 75% of the global workforce by 2025.8

The workforce makeup is changing in a variety of ways – and these shifts impact best practices for organizations.

Five generations of people working side by side

Approximately 35% of workers in the United States are contingent – and that number is expected to rise to 40%, or even 50%, in the coming years.9

More contingent workers and more people working remotely

Nearly 5 billion people are entering the middle class for the first time.10

Emerging class of new workers

8. “Gen Y Women in the Workplace,” BPW Foundation. 9. “DCR Trendline 2013 – Contingent Worker Forecast and Supply Report.” 10. Linda Yueh, “The Rise of the Global Middle Class,” BBC News, June 18, 2013.

Focus on employee engagement

Employees who feel involved and committed to their jobs are more likely to drive business innovation,

growth, and revenue. Yet, 87% of workers worldwide say they are not engaged at work.11

What are the implications of poor employee engagement on leadership, management, and organization in the future of work?

11 “2013 State of the American Workplace,” Gallup. 12. Ibid. 13. Ibid.

13% Of employees worldwide are actively engaged in work12

24% Of employees worldwide are actively disengaged in work13

What are the impacts of these trends? Businesses Individuals Society

Each of these forces will exert tremendous influence on:

Individuals: Empowering and engaging people • Enhanced connectivity and improved collaboration

• Freedom to choose when, where, and how people work

• Increased engagement and greater social responsibility

• Focus on employee health and well-being

19.2% Increase in operating income when businesses have high levels of employee engagement14

14. Tower Watson, 2010.

Businesses: Creating an environment that breeds success

72% Of organizations have difficulty finding and keeping high-potential employees15

• Understanding how engagement and leadership drives productivity and business success

• Winning the war for talent

• Using technology to support employee collaboration, learning, innovation, and passion

15. Tower Watson, 2010.

Society: Advancing change • Supporting opportunity growth in developing countries

• Leveling the global playing field

• Building new business opportunities by enabling creativity and innovation

50%

Contribution of developing countries to the global GDP:

2013 55%

2018

16 17

16. “Southeastern Shift: The New Leaders of Global Economic Growth,” Financial Times, June 4, 2013. 17. International Monetary Fund.

How can businesses prepare for the future of work?

• Attract, develop, and retain talent inside and outside the organization

• Embrace diversity across demographics, skills, ethnicity, and geographies

• Employ effective leadership strategies

• Include learning and education as part of the foundation for success

46% Increase in the likelihood of being first to market when organizations have a strong learning culture18

18. “The Corporate Learning Factbook 2014,” Bersin by Deloitte.

14 © 2014 SAP AG or an SAP affiliate company. All rights reserved.

What Are the Implications for HR?

We’re @ the Table …. But In the Back Row

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Driving Strategy – How to Keep Your Seat @ the Table

The CEO’s View

HR’s View

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David Swanson EVP Human Resources, SAP david.swanson@sap.com

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Thank you!