October 1998 Issue

Teams replace traditional hierarchical management structures.




By Janice Maiman

In Brief

Work in the Year 2012 Won't Be the Same

The nature of work continues to change. The demand for technologically fluent workers is at an all-time high and will continue into the foreseeable future. The demographic makeup of the workforce is also changing. Workers are getting older, and the disparity in compensation between the well educated and less educated will continue to grow.

The workplace is changing also. The traditional hierarchy is disappearing, with a strong emphasis on teamwork and cooperative activities. The emphasis will be on what you can do, not where you do it--technology will take care of that.

CPAs in practice and in industry are advised to consider and understand the changes that are likely to occur in the workplace of the future. It is all part of the AICPA's Vision Project.

"Hi ho, hi ho, it's off to work we go." So sang the charmingly quirky dwarfs in Disney's Snow White. In many ways they stood for the hopes of mid-century Americans: Hold down a secure job, produce your share of goods or products, do what the boss says, go with the program, and earn enough to support a comfortable lifestyle for yourself and your family. Things haven't really changed all that much--or have they?

Only a few of us are currently involved in any type of manual labor or production. In fact, more than 80% of the workforce is in a service position. In the past 100 years, the tools of the trade have changed dramatically. We've gone from plows to assembly lines to computers as the primary drivers of our livelihood.

What about "off to work we go"? All indicators point to an ever-increasing rise in telecommuting, home offices, and part-time and just-in-time workers, spurred on in large part by the increasingly transnational nature of corporations. So this place called work is rapidly becoming any place at all.

Doing what the boss tells you? In many industries, the hierarchical structure is giving way to competency-based status and compensation. What you know is rightly asserting itself over who you know.

These are the trends in employment and work that have the potential to make society as we currently know it virtually unrecognizable by 2012. They are forces the accounting profession cannot afford to ignore.

The "3 Fs":
Facts, Figures and Findings

As the next century settles in, so will a number of specific workplace realities. In its Occupational Outlook Handbook, the Bureau of Labor Statistics makes the following projections:

* Between now and the year 2005, there will be a slowdown in employment growth.

* Service industries will account for most of the new jobs.

* The goods-producing sector will decline.

* The occupations shown in the Exhibit will account for half of all job growth between now and 2005, with computer technology and health services aggressively leading the pack.

* Jobs requiring the most education and training will be the fastest growing and highest paying.

* Jobs requiring the least education and training will provide the most openings, but offer the lowest pay.

* The labor force will become increasingly diverse, with greater representation by women, African Americans, Asians, and Hispanics.

The Workforce Will Continue to Age

Workers aged 55 and over are projected to grow about twice as fast as the total labor force, and about 15 times faster than between 1979 and 1992. Also on the rise will be employees between 45 and 55 and employees 65 and older. According to Michael Farr in America's 50 Fastest Growing Jobs, "Because older workers ... have substantial work experience and tend to be more stable than younger workers, this could result in improved productivity and a larger pool of experienced applicants from which employers can choose."

In addition, aging baby boomers will account in large degree for the extraordinary projected growth in health-care positions.

A Helpful Way to Categorize Growth Positions

As CPAs seek to understand which positions and industries are prospects for growth, the following three categories of high-potential career types (outlined by William Knoke in his book, Bold New World: The Essential Road Map to The Twenty-First Century) could help their analysis:

* Those who use and develop technology--engineers, computer graphic artists, software developers

* Those who respond to demographic shifts--chefs, health-care workers, physical therapists

* Those who help society to adapt--management consultants, specialists, accountants, lawyers

A Hierarchy of Competence

During the next century, the traditional hierarchical management structure will give way to the dictates of ability and competence, a trend already underway in Generation X companies, advertising agencies, computer organizations, and entertainment conglomerates. Knoke observes: "No longer will divisions, departments, and individuals be 'subordinate' or 'superior' to one another ... The role of the individual will be not unlike that of the cell in a growing plant: Each contributes to the others and is necessary for the robustness of the whole." This trend is a direct offshoot of the burgeoning service age. The consumer cares not about rank, but about results.

Richard Branson, CEO of the Virgin Group of Companies, is one executive who has beat the millennium to the draw (by about 20 years) in abolishing hierarchical structures. Although he may seem a leftover hippie fostering an anti-corporate culture, he has in fact built an international empire of 200 companies. His anti-hierarchical philosophy goes something like this: Keep divisions small. (He actually works out of his home.) Make sure work is fun. Let everyone have access to the CEO. (Branson freely gives out his home address to all employees.) Make sure your people believe that their opinions matter. A University of Chicago study on Branson sums it up this way: "He is able to attract young, dynamic people to his companies and work them extremely hard because they perceive Virgin (and Branson) as being very hip and innovative. Thus, Branson through controlling image ... has removed the drudgery from business."

The Perpetual Learning Curve

Those companies and individuals who make it will share a vital trait: the ability to continuously adapt and learn. Many individuals will change not just jobs, but careers, many times over the course of their working lives. The savvy company will nurture their need for growth and change. For example, according to the Information Technology Association of America, there has been a 43% drop in computer science graduates since 1986, resulting in nearly 200,000 technology jobs going begging. Here is a key opportunity for organizations to redeploy rather than unemploy. In fact, Senator John Warner of Virginia has proposed a commission on the information technology worker shortage, whose agenda includes ways to encourage employers to offer additional training.

Here also we see hints of things to come. According to an MIT study, Shell has for years integrated learning into the infrastructure of its organization. "Because learning is integral to planning, and because planning is inescapable to management, you cannot escape learning at Shell." Another example is GM's Saturn Division. According to President Richard LeFauve, "We're passing on to employees design tools for assembly, manufacturing, and synchronous operations. Traditionally, these tools were the property of management ... But at Saturn, they are common property." At Saturn two trends combine: the increasing emphasis on upgrading and changing skills as well as the move away from the hierarchical structure.

Full Time, Part Time, Just in Time?

Just as the 21st century will bring with it an increasingly diverse workforce, so too will it usher in a varying range of work styles and work hours. Freelancing, consulting, part-time, and temporary assignments will become not the sanctuary of those who have been laid off or are between positions, but the career choice for many highly talented individuals who for any number of reasons--from independence to family needs to aging-will find it an outstanding alternative to the nine-to-five schedule. The Labor Department predicts that, by 2005, there will be a 60% increase in temporary employees--who presently number 2.5 million.

In industries such as technology, there will continue to be an unquenchable thirst for a wide variety of talent, resulting in a segment of the workforce that will virtually be able to write its own ticket. Simultaneously, temporary placement agencies will continue their dizzying growth in their role as matchmakers.

Welcome to the Age of Everything, Everywhere

The importance of place is vanishing. Virtual and actual modes of transportation including airplanes, e-mail, telecommuting, video conferencing, and the Internet will make it easier and easier to work just about anywhere: home, office, or on the run.

The consequences, good and bad, for corporations, executives, and professionals are staggering and include:

* Ubiquitous communication will be a way of life, making both good and bad news instantaneously available.

* All transactions--grocery shopping, banking, doctor's visits, stock purchases, financial statement analysis--will happen online and on demand.

* Emphasis will be on what you can do, not where you live--another aspect of the supremacy of competence in the next century.

* Corporations will take on an "amoeba form" (to use a term of Knoke's), with groups from all corners of the world coming together and dissolving as needed--most often electronically.

* Individuals will enjoy ever greater control over when and where they work. Night owls and early birds will both have their day.

* As the century progresses, large corporations that fail to adapt to the faster-paced entrepreneurial environment of placelessness will die like the dinosaurs they will have become.

And that's just the tip of the iceberg.

Will We Work Harder, Smarter, or Just More?

For years, it has been claimed that technology will make workaday life easier. And so it has. But as technology assumes its role as the primary driver of the 21st century, an irony emerges. Will technology, instead of enriching leisure, destroy it? Will it make millions jobless; will it chain the elite few who do survive to their work?

As early as the 1950s, Norbert Weiner, thought by many to be the father of cybernetics, wrote, "the automatic machine ... is the precise economic equivalent of slave labor."

Then there are the optimists like Daniel Hillis, CEO of Thinking Machines Corporation, who enthusiastically pines, "I'd like to build a machine that can be proud of me." (Both are cited in Jeremy Rifkin's highly acclaimed The End of Work.)

Be Global. Think Local.

Paradoxically, though existing in placelessness, corporations of the future will have to think locally. The service mentality of the next century will demand nothing less. It's what McDonald's calls "multi-local." With all outlets staffed by regional personnel, they serve beer in Germany, wine in France, spaghetti in the Philippines, green tea in Japan, and are planning muttonburgers for India.

Levi Strauss is another master of the global/local mix, happily bowing to the requirements of their diverse markets: tight-fitting jeans for the Brazilians, loose-fitting ones for the Japanese, and expensive ones for the Europeans. As a result, foreign sales account for well over half the company's profits.

Is the Glass Half Full or
Half Empty for CPAs?

All these trends and projections will impact the accounting profession in the next 10 years. In some cases, the outcomes are cut and dried. In others, CPAs themselves will determine which way the wind will blow.

The Good News First. In many respects, a bright new day is dawning for CPAs as they dovetail their present and emerging talents to meet the demands of the next century. The growing number of jobs in the computer and health-care industries will bring opportunities for those individuals and firms willing to seize the day. Specific knowledge of computer fraud, websites, encryption, and electronic commerce issues will be required skill-sets for CPAs seeking to capture a piece of the expanding electronic commerce pie.

CPAs interested in applying their expertise to health care will find opportunity in analyzing relationships between medical services and outcomes and in assessing the health-care delivery system--the services provided and the quality attributes associated with these services.

In addition, the aging of the workforce will allow CPAs themselves to stay in the profession longer, providing empathetic financial advice and assistance to their fellow seniors.

As more and more employees become temporaries, consultants, or just-in-times, CPAs will have potential engagements on both the corporate and individual sides. Employers will need help in formulating new accounting policies and procedures to deal with the part-time workforce, and part-timers and consultants will require assistance in dealing with their increasingly complex tax and financial planning requirements.

As businesses become more service-oriented, so will CPAs, forging relationships which involve consulting, business planning, and management analysis, and so compensating for the decline in the standard attest and audit functions.

And, of course, in the next century's inescapably global business environment, there will be a potential leading role for CPAs to play in a number of areas, including international regulations, patent requirements, and global taxation. Here again, the opportunity for engagements extends to both corporations and individual executives.

And Now the Bad News. As more and more non-CPAs perform the functions formerly within the exclusive purview of the profession, some
negative effects will quickly rise to the surface:

* Services provided by nonaccountants will grow in number and breadth. The perception of CPAs as a profession will erode, and so will the CPA's competitive edge.

* Non-CPA providers of accounting services will become motivated more by profit than service. CPAs will be lumped together with them, and the public will see them as adversaries, not allies.

* To make a bad situation worse, projections show that in the next century, young people, lured by higher-paying positions, will be less likely to enter the profession. Consequently, marshaling the forces needed to ward off non-accounting competitors will grow more difficult.

Will the fall of the hierarchical structure be good or bad for CPAs? CPAs could wind up with more clients and more opportunities within a given organization, because bureaucratic approvals would be done away with. On the other hand, if anarchy usurps hierarchy's place, no one may have the sense to call in a CPA.

Responding to Change

In the workplace of the future, competence will reach a critical mass. Certain jobs in the production sector will decline dramatically. It will be a know-ledge-based age of technology-driven decisions. In their lives, people will have not one, but many careers. The truly successful will be those employees, managers, consultants, and corporations who boast flexibility and a high tolerance for change in their basic skill sets. As pointed out in The New Millennium Worker, the next century will require a "professional eclectic.... It doesn't mean you're a generalist, and it doesn't mean you're a specialist. It means you know how to find a balance between the two."

So in reality, whoever you work for and whatever you do in the next century, change will be your CEO. To deny change its due, or let it bully and intimidate, is a sure prescription for obsolescence.

If CPAs fail to forge a successful working relationship with change, they will be among the many who have proven the wisdom of Pogo, old comic strip philosopher, when he said, "We have met the enemy and them is us." *

Janice Maiman is a director of communications with the AICPA. This article is one of a series of position papers issued in connection with the AICPA's CPA Vision Project.

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