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Work 4.0 – the challenge for the employer

20/04/2022 2022/04

Neither a corner office, nor a company car, nor prestige are enough to inspire employees in Work 4.0. Generation Z has different needs. They want instead work-life balance, independence, and the realization of their personal goals. Instead of just convincing applicants, companies now have to do the same. And so, the question arises as to how employers will respond to the changing demands of their employees and how the profile of requirements for employees will change in the future.

Generation Z – digital, connected, independent

The term Industry 4.0 is familiar to many. It describes the transformation of industry primarily through digitalization, as well as globalization and the accompanying technological change. Now Work 4.0 has also arrived and is subject to the same developments. This is because the change in the world of work is also always a discussion about generations. These generations are in turn shaped by their environment, and so it is hardly surprising that the current generations on the labor market are stark contrasts. Additionally these contrasts are also accompanied by very different needs. As particularly evident in Generation Y, i.e., the birth cohorts from around 1980 to around 1995. The “Millennials” are characterized above all by their ambition in terms of education and career, their weaker ties to an employer and the demand for a work-life balance. They are also the first digital natives, meaning they grew up with the Internet and therefore possess digital skills. As a result, companies have adapted to this generation and laid the first foundations for Work 4.0. Home office, flexible working hours or constant learning of new things are part of it. But no sooner have companies adapted to the new situation on the labor market than the next-generation change is about to take place: Generation Z is coming.

The birth cohorts from 1995 to 2010 are usually referred to as Generation Z. Since they were born into the digital age, social media and the digital space are strongly interwoven with their everyday lives. In addition to their playful approach to digital content and pronounced networking through digital media, they are associated with an independent and self-confident demeanor. The demands of “digital natives” on their potential employers, differ, once again from the previous generation. While for Generation Y work-life balance was exremly important, Generation Z wants a little more in a way: independence, self-realization, a positive working atmosphere and enjoyment of the job are the top priorities for young graduates. But another point is also becoming increasingly important, to contribute something valuable to the world. This means that companies also need to step up in corporate responsibility. Corporate responsibility means ethical and environmentally friendly behavior on the part of the company. In addition to the working conditions, the image of a company must also be right. Generation Z will be the ones who demand Work 4.0 and will continue to drive it forward. 

Changes in the availability of labor

In addition, developments in education policy are ensuring that more and more young people are starting university studies and aiming for an academic career. While this was already common among Millennials, this trend is increasing once again. Statistics underscore the trend toward academization: While around 1.98 million students were enrolled at German universities in the 2006/2007 winter semester, the figure was 2.94 million in the 2020/2021 winter semester. An increase of around 48 percent in just fourteen years. However, this also means that fewer and fewer young school-leavers are choosing to start an apprenticeship. Since 2008, the number of newly concluded apprenticeship contracts has been negative year-on-year - except for 2011, 2017 and 2018, and that too only slightly. Especially in 2020, which brought a record low due to the situation at that time, the number of contracts sinks to -11%. Despite the long-standing shortage of skilled workers, which is causing problems for employers, particularly in the area of traditional apprenticeships, there is currently no reversal of the trend in sight. 

These factors will continue to change the world of work in the future, especially Work 4.0. However, in the long term, it is quite possible that apprenticeships will regain popularity. The extent to which these professions can be replaced by machines in the course of digitization is constantly changing. However, there are currently as many unfilled apprenticeships as ever. At around 63,200, the number of unfilled training positions is higher than ever. The trend toward academization is not stopping at industry. German SMEs in particular are complaining about unfilled training positions and fearing lost sales worth billions.

More and more areas are demanding highly qualified specialists as part of digitization, which has leapt forward by several years, according to McKinsey. The skills in demand are in the digital area. Data skills such as analyzing big data and the aforementioned transformation to Industry 4.0 are at the forefront. In Work 4.0, generations Y and Z have the best chances of finding a job in technical and scientific fields. 

The employer of the future

According to the German Federal Statistical Office, the number of people in employment will continue to decline in the course of demographic change until 2060. From a workforce of around 43.6 million in 2019, at least 41.5 million or, in the worst case, only 33.3 million workers will remain by 2060. However, the working age is expected to range from 15 to 75 years. This is an enormous loss for the economy, which urgently needs the workforce. The reason for this is on the one hand the loss of the baby boomers, i.e., the generation from 1943 to 1965, and the low birth rates. Experts are therefore already talking about a “war for talents” and are calling for new strategies from employers to acquire and motivate young talent from Generations Y and Z. To be attractive to these generations, organizations need to consider several things. On the one hand, they must adapt to a shift in performance mindset and shifting expectations of their employees. In addition to these factors, visibility is also crucial. More and more employees are finding their employer through social media and job portals. Not only that, they also form an opinion about the company via it. This, too, is part of Work 4.0. Employer branding deals with what this development means in concrete terms and with which HR strategies employers will be successful in the future. This term refers to strategic corporate measures for branding and presenting the company as an attractive employer. The most important measures for the modern working world in this context include:

Modern management concepts

Due to their needs, Generation Z employees demand flat hierarchies in the work environment and an exchange that takes place at eye level. They want to be heard and respected because for them, age is not synonymous with competence. Managers must therefore be able to question themselves, engage in processes with an open mind, and show empathy toward employees. Young employees expect their managers to work with them in a spirit of partnership and appreciation, to give them room for self-development, and to provide regular feedback.

Flexible working hours and locations

Creativity nor productivity are neither tied to a fixed workplace nor to a specific time. The new generation of workers requires trust, performance-based agreements and flexibility. The move away from the classic “nine to five” workday can already be found in many companies, leading to a smooth transition between work and personal life. The last few years in particular have shown that it is usually possible to do one's job entirely from home. This will also have far-reaching consequences in the future. The number of jobs that are already offered completely remotely is enormous and offers the option to choose the work location completely independent of the place of residence. In addition to home offices, the trend towards variable office workstations, creative retreats and childcare within the company also plays a role. After all, if the decision is made to have a family, this must also be compatible with work. Changing employers if they cannot offer this is not uncommon. 

Training and continuing education

The faster technologies change, the faster the requirements profile for employees also changes. No industry can still afford not to follow developments. Instead, regular training is needed in Work 4.0, as well as continuing education that brings employees up to speed. It is not a question of the managers receiving training first and then the others. Rather, companies have the task of working closely with employees to create individually tailored development offerings and regularly put them to the test. In the same way, more and more companies are allowing internal knowledge exchange to take place, i.e., employees teach employees.

However, the same also applies to employees. They cannot afford to remain in old ways of thinking and not develop their skills. This includes skills such as independent work, digital thinking, playful use of the PC and foreign language skills. These will be taken for granted in the future. Due to advancing technological developments such as the artificial intelligence (AI) of machines, the human worker will take on a different range of tasks. While machines will take over schematic logical thought processes in the future, humans will be increasingly responsible for the “creative” part. The following skills, among others, will be important here:

  • Adaptive thinking: The situation-specific recognition and evaluation of problems.
  • Digital thinking: Recognizing complex interrelationships in computer models and databases.
  • Social intelligence: Machines will not be able to replace humans on a social level, even in the long term.
  • Intercultural competence: the ability to deal with different languages and cultures in a globalized world

Work 4.0 will therefore become significantly more complex for employees in the course of digitization and internationalization. The same applies to the requirements that employers will have to meet in the future to be perceived on the labor market as an attractive option for future skilled workers.

We would be happy to support you in determining the current status quo and uncovering optimization potential because often the view from the outside is more objective and unbiased, and therefore more purposeful. Has your company already arrived in the world of work 4.0? Then we will find the right experts for you who will work with you to make your vision a success.

About the Author
Nadia Döhler | Organisational & HR Consulting
Nadia Neumann
HR Consultant (HR Development)

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