In 2018, more business leaders will channel a potent combination of digitalisation, generational change and growing diversity, to streamline their hierarchies, distribute responsibility, and transform their organisations.
Leaders of large companies such as Michelin, Microsoft, Ericsson and others are already pushing more decision-making power out to their front-line workers. Others will follow as the success of this approach catches on.
Aspiring young leaders already place more emphasis on using their influence, rather than trying to exert power through the embedded authority of their position or their assigned title. Many are already gaining leadership experience, not through promotion at established institutions but by running bottom-up movements and voluntary groups, or by shaping their own start-ups.
I expect more companies to develop leaders who know how to manage networks — not just the traditional internal network of employees, but more loosely connected webs of suppliers and contractors, managed remotely via the internet and social media.
That will require different skills — notably a clearer vision among leaders of their organisation’s shared purpose. The dilemma of how to lead “teams” of robots and humans will become even more pressing this year.
I do not see much evidence that radical “managerless” models such as “Holacracy” will catch on. But more companies will realise that if they constantly test innovative ways forward — as start-ups do — they will be more flexible and decisive than old-style bureaucracies and meritocracies.
When it comes to diversity, I am optimistic that at some point the rise of enlightened younger executives will trigger a sudden change of attitude in the boardroom. This will not happen in 2018, though the imbalances and abuses of power evident in sexual harassment scandals, from tech to media, could accelerate change.
Ultimately I expect these new leaders to start selecting from a broader pool of candidates and appoint direct reports from more varied backgrounds, defying those who use current imbalances to extrapolate gloomily that leadership parity between men and women is still decades off.
Of course, these same new forces may also trigger a backlash and a reversion to old command-and-control ways of leading. The politicians who dominate the world stage are, depressingly, mostly cut from the old cloth, and the leadership challenges they face, from Brexit to North Korea, are particularly complex.
US president Donald Trump’s zero-sum, Art-of-the-Deal approach to negotiation will give comfort to old-fashioned incumbents. I am hoping 2018 will provide an opportunity for positive, problem-solving new leaders to emerge. But change could stall if business chiefs, disheartened by the poor quality of political leadership, turn inwards instead.
Andrew Hill is management editor
The Big Tech backlash will spread to technology industry employees in 2018, as many question whether the work they do really is saving the world.
Large technology companies were criticised throughout 2017 for becoming too powerful, using their size to dominate markets and not paying enough attention to how the tools they create can be used for ill.
The worries stretched from the global, such as Russian attempts to influence the US presidential election in 2016, to the local — concerns about users’ mental health and the drain on productivity as they drown in notifications and news feed posts.
Next year, more tech workers will speak out, following former Facebook employees Sean Parker and Chamath Palihapitiya, who have condemned social media’s addictive properties.
Inside larger technology companies, female employees will be hoping for signs of change in pay and promotions — but will also be on guard
Others will look for ways to use tech to help people spend less time online. Tristan Harris, a former Google employee, is building a following for his Time Well Spent movement, tackling what it describes as the “digital attention crisis” by encouraging designers to understand the subtle psychological forces they control. Tim Kendall, formerly of Pinterest and Facebook, is reported by Recode to have plans for a start-up focused on fighting device addictions.
After a year of sexual harassment scandals that started in Silicon Valley and spread to just about every industry, women will try to capitalise on the momentum to push for permanent changes. And attention will focus on the plight of marginalised minorities, with so few black and Latino employees in the tech industry.
Female founders in Silicon Valley will raise more money next year, as sexual harassment scandals have forced investors to rethink their habit of backing ventures founded by mainly young, white men. Some start-ups founded by men pursued by rumours of unsavoury pasts will not get funding, even if they are a good investment proposition.
Inside larger technology companies, female employees will be hoping for signs of change in pay and promotions — but will also be on guard, as a men’s rights backlash brews in some corners of Silicon Valley.
Hannah Kuchler is San Francisco correspondent
Big banks have more or less given up on trying to retain people with higher pay. Ever since the financial crisis it has been clear that if you want to get seriously rich, you go to Silicon Valley. Ruth Porat laid down a big marker in 2015, swapping an annual $13m or so salary as CFO of Morgan Stanley for a package at Google (now Alphabet) about five times bigger.
Banks just cannot afford to keep up. At Goldman Sachs, for example, net revenues have dropped about a third since 2009, beaten down by structural shifts in trading and new rules crimping risk-taking. The bank tries to keep its pay ratio stable, so that means smaller total packages for the typical employee.
No wonder that banks have begun to get creative.
According to Oliver Cooke, a financial-services recruiter at Selby Jennings in New York, banks have been stressing what they call “internal mobility”, or redeploying staff from one department to another. If a bank facing sluggish conditions in debt trading, for example, can convert a trader to a risk analyst or a compliance officer, it can keep people interested — and it can save a bundle on severance.
They will get more creative in 2018, including on non-cash benefits. Bank of America, for example, has just introduced a programme allowing employees of the global banking and markets unit to take a sabbatical — on full pay — for up to six weeks in a year. There are conditions: people must have been with the bank for at least a decade, and can request the time once every five years, to a maximum of three. But in a memo circulated this week, seen by the Financial Times, chief operating officer Tom Montag urged eligible employees to consider it.
“You can choose to spend the time however you like,” he wrote, suggesting people “go travelling, pursue a philanthropic project, spend quality time with family or simply take time out to recharge and refocus”.
Perhaps it will not catch on in the cut-throat world of Wall Street. Some may see an extended absence as an admission that their jobs are expendable, and that colleagues can survive — and perhaps thrive — without them.
But I expect other banks to follow suit. Any effort to keep good people fresh and engaged, without paying them more, should be up for consideration.
Ben McLannahan is US banking editor
Technology is hardly a brand new phenomenon in the legal world — many firms now have partnerships with AI and machine-learning businesses, while some have set up their own “incubators” or invested in lawtech start-ups. But the trend has reached critical mass and will accelerate sharply in 2018.
Lawyers are inherently cautious but most have realised that technology is crucial to crunching through the vast amount of information they handle. Without it, certain document heavy processes, such as disclosure and compliance, would be nearly impossible.
Bolder lawyers will start working with more “sci-fi” programs that claim to predict the outcomes of legal disputes before they have reached court, by analysing similar cases and past rulings, opposition tactics and win/lose statistics, the success rates of certain lawyers before certain judges, and so on.
Such insights are of particular interest to litigation funders, who back claimants in return for a cut of damages and who try to assess the likely outcomes of disputes before committing their money. But that may have to be 2019’s breakthrough, or probably beyond.
People have been predicting consolidation in this very fragmented sector for years and there have indeed been big mergers recently. But there is little doubt that price pressures on City law firms are intensifying.
Big-spending US firms are forcing their UK counterparts to increase salaries right the way from newly qualifieds to the top rainmakers — though that did not stop David Higgins, private equity star at Freshfields, from decamping to Kirkland & Ellis just before Christmas. Boutique specialists are luring clients away by offering faster, more focused services.
And in the UK, could this be the year that the big consultancies make proper inroads into the legal market? Will other “alternative business structures” — aka purveyors of “Tesco law” — finally gain a toehold at the consumer end by offering fixed-fee services, putting work out to tender to loose networks of lawyers, or cranking up the legal chatbot for instant, affordable advice? Someone has to bust this sector open for the sake of the average citizen.
Barney Thompson is legal correspondent
The gig economy
If 2017 was the year policymakers began to worry about the growth of the “precariat”, 2018 will be the year they try to do something about it.
The rise of populism, even in countries such as the US and UK where plenty of people are in work, has made politicians realise that the quality of jobs is as important as their quantity.
They are beginning to fret far more about insecure contracts, precarious scheduling, low wages and new forms of work via online gig economy platforms such as Uber. The OECD, the influential Paris-based club for rich countries, will publish a “jobs strategy” in 2018 that is likely to put much more emphasis on the quality and inclusiveness of work.
But what will politicians actually do? While President Trump is focused on bringing back traditional manufacturing jobs to America, different US states are experimenting with other policies to help low-paid precarious workers. These range from sharply higher minimum wages to new rules to stop employers changing staff schedules at the last minute.
Enthusiastic supporters of the idea of a “universal basic income” for all citizens, meanwhile, will look to Finland where a trial is now well under way. In France, Emmanuel Macron will try to tread a delicate line in 2018 as he reforms the labour market, hoping to inject flexibility without increasing insecurity or incensing the unions.
As for the fortunes of the gig economy, the UK will be a key country to watch. The government is due to respond to an independent review into whether British law is keeping up with this new trend. Bold policy action — either in favour or against online labour platforms — now seems less likely given the fragility of the government and the time-consuming nature of Brexit.
But the UK courts may land a heavy blow on ride-hailing app Uber. In 2017, the California-based company failed to persuade an appeal judge that two of its London drivers are independent contractors. In 2018, the test case will go to the Court of Appeal and possibly to the Supreme Court. If Uber loses the case and is told to assume the responsibilities of an employer, the implications will ripple far and wide.
Sarah O’Connor is employment correspondent
Accounting and consultancy
Management consultancies pride themselves on being expert advisers on “change” — from helping clients integrate after mergers, to keeping them at the cutting edge of new technology. Several of the world’s largest consultancies will have to make use of their own advice in 2018 as they prepare for leadership changes — the first in years — that will have significant ramifications for their workforce.
This includes McKinsey, the consultancy that kick-started its secretive leadership election process in October with a gathering of more than 500 senior partners at the Grosvenor House Hotel in London. The next stage involves the firm’s 550 senior partners voting on a shortlist of candidates to replace Dominic Barton — the incumbent since 2009 — in January, followed by a run-off between the two most popular candidates in February.
The winner will be announced in March, and is expected to have a significant impact on the direction of the consultancy. Some insiders favour candidates with expertise in fast-growing areas such as data analytics, whereas others want a traditionalist who will protect the firm’s brand.
The leadership changes across the industry will be of particular interest to female consulting professionals, given none of these firms have ever been run by a woman
Change is also under way at Bain & Company, which announced in November that Manny Maceda will become its global leader in March, the first of Asian heritage, and taking the reins of the Boston-based consultancy from Bob Bechek. Experts say Mr Maceda could be instrumental in helping the firm carve out new areas of expertise and edge away from its reputation as a generalist provider.
The 54-year-old has already said he wants Bain to be recognised as a go-to provider of digital expertise. The question is whether this will be achieved through acquisitions, poaching teams or retraining the existing workforce.
Chicago-based rival AT Kearney is also preparing for a change at the top, with a vote to replace Johan Aurik, who has already served the maximum two terms as managing partner, due to take place in the first quarter of 2018. His replacement will be expected to focus on how to pull AT Kearney out of the ranks of mid-sized players.
Boston Consulting Group could also be poised to make a change given its managing partner, Richard Lesser, is due to come to the end of his second term in October. His future is unclear, however, as the firm declined to comment on its election process or how many terms its leader can serve.
The leadership changes across the industry will be of particular interest to female consulting professionals, given none of these firms have ever been run by a woman. Consulting firms are vocal proponents of the business case for improved gender diversity at the top of large companies. It will be interesting to see if any of them decide to practice what they preach.
Madison Marriage is accounting and tax correspondent
The future is always bright if you are an entrepreneur, and the opportunities to create new ventures based on the digitisation of age-old services has a long way to run.
The education sector has remained largely unchanged by online service delivery — but could be transformed dramatically in 2018.
Despite the promise of downloadable courses, teaching for officially recognised qualifications continues to be a classroom-based activity undertaken in the real world. Start-ups have taken the attitude that if they cannot beat the universities and colleges at their own game with new methods of delivery, they should join them in partnerships. As a result, they have been busy getting examining boards to endorse their online courses so that they can count towards a bachelor’s or master’s qualification.
This has given “edtech” start-ups, such as Silicon Valley-based Coursera and London-based FutureLearn, a foothold in the market. Expect them to continue this year, perhaps with a merger with a bricks-and-mortar higher education establishment.
At tech start-up conferences, such as Slush in Helsinki in December, everyone was talking about experiences. The coming year is likely to see a wider adoption of virtual reality, which places the user in a digitally enhanced environment, and augmented reality, which overlays digital information on to the real world, creating new digital businesses.
AR could be the bigger opportunity after Apple’s Tim Cook gave the technology his backing — it was included in Apple’s latest operating system and its iPhone X device.
The fastest growing start-ups tend to be global in their outlook. The immigration restrictions already imposed by President Trump in the US and those under consideration as part of the UK’s separation from the EU are likely to be a hindrance in the coming year for hiring.
The US and UK’s losses will be Germany, Sweden and Canada’s gain, as founders set up in the cosmopolitan hubs of Berlin, Stockholm and Toronto, which have spent the past year amplifying the message that they are open for business.
The real disrupter is blockchain, the digital ledger for cryptocurrencies such as bitcoin, which has fuelled the creation of hundreds of new businesses in recent years, mostly enabling the buying and selling of digital money and offering money transfer services.
Bitcoin’s value was on a sharp upward curve at the end of 2017. There is growing pressure on regulators to rein in the cryptocurrency sector, but bitcoin continues to flourish. This is not a market for the faint-hearted, however, as jobs will be created and lost.
Jonathan Moules is business education correspondent