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April 24, 2000
E:Commerce Causing Sea Changes in Recruiting, Motivation, Outsourcing
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or Shifts Expected in Work Design, Staffing and Management; Staffing Issues More than Just Compensation

Results from the Towers Perrin Internetworked Organization Survey forecast a two-year tripling of e-commerce revenues. And along with that growth will come significant changes within those organizations.

Significant Changes in Recruiting Individual Growth Opportunities Important

While 15% of respondents have significantly changed their recruiting approaches already, almost half anticipate following these early adapters in the next two years, according to survey results.

"However, base pay and incentives aren't the key answers to employer attraction and retention challenges, even though the numbers seeing major changes to pay, short- and long-term incentives, and retiree benefits over the next two-year term jump markedly," said Brad Ivie, a Towers Perrin consultant and a survey co-author. "Instead, respondents believe that offering individual growth opportunities will be a key, with change here more than quadrupling. Companies are looking beyond compensation to intrinsic job fulfillment and employer branding to solve recruitment and retention challenges."

What Won't Get Outsourced: Customer-Centered Activities

While business processes may change, companies are choosing to keep customer-centered activities such as customer service, customer data management, order taking and tracking, and accounts receivable functions in-house. Technology services, the only key area for outsourcing today, is expected to grow only moderately.

With an increasing focus and growth of cross-functional, flexible teams and a fourfold increase in outsourcing of non-core activities from 11% to 44%, corporations are expecting major changes in their organizational structures. "This suggests that while companies understand the need for change, they have not yet developed clear implementation strategies," said Ivie.

The survey findings from executives in over 300 traditional companies also indicate that large-scale shifts can be expected in use of strategic alliances, business and management processes and in customer and employee relations.

"Most companies recognize that they have made relatively modest changes to date in how they manage their business as a result of e-commerce," said Peter Bresler, a Towers Perrin consultant and one of the survey's architects. "However, they accept that large-scale changes are forthcoming and acknowledge the speed required for change in the next two years. It goes well beyond 'business as usual.'"

According to the survey, e-commerce sales on average are expected to more than triple to 14% in the next two years over 3% in the previous two.

Survey Methodology and Respondent Profile

Most respondents were from large multinational companies, with a majority located in the United States, Canada or the United Kingdom. Thirty-five percent were in organizations with more than 5,000 employees, while 34% were in organizations with 1,000 to 5,000 employees. Over half responded on-line. Nineteen percent have offered products via the Internet for more than two years,

29% between one and two years, 14% between six and 11 months and 38% for less than six months.

Copies of the survey may be obtained by calling 1-800-526-6741 or, outside the United States, by contacting your nearest Towers Perrin office.

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