We find ourselves at an interesting confluence in the history of labor. We preserve work practices from the industrial age of the last two hundred years that coexist with the new work patterns of the information age. Organizations continue to be managed as hierarchical chain-of-command systems in a world of networked individuals and autonomous entrepreneurs.
For the last historical change of such magnitude to occur, it took many decades and several generations. During the Industrial Revolution, work slowly moved from the countryside to factories, thus transforming the face of society. Today we are in the midst of the information revolution and we are also facing fundamental alterations in our ways of living and working. The difference is that the ongoing revolution has caused as many changes in a single decade as the industrial revolution caused over a century.
So we have 20th century work practices – in some cases alongside 19th century management processes – in established companies, while new ones work in a very different way thanks to technology. Some companies recognize that the world around them is changing and try to adapt, but many continue as if nothing has happened. Those that do not address the necessary changes run the risk of being left behind in the race to attract and retain the most prepared workers, who will leave for more productive competing companies.
NEW WORK PATTERNS
It is evident, even to the least expert observer of work patterns, that technology has revolutionized our ability to perform all types of tasks. We can now send and receive emails from anywhere, participate in meetings on the other side of the world, and stay in touch with our colleagues through various social media outlets. We can access all the documentation in our “office” without having to go near it and stay up to date with the latest advances in our field without having to attend endless conferences or meetings.
But despite the ability to choose where and when we want to work, we remain slaves to the routines established by previous generations of workers. For most, the “norm” is still having a permanent job in a fixed location and with fixed in-person hours. In exchange for going to work and carrying out the tasks assigned to them, people receive a salary, enjoy a series of social benefits and a certain degree of economic security. But this model is increasingly seen as unproductive, barely satisfactory for the employee and not at all effective for the employer.
Today we have a generation of young people entering the workforce who have not known a world without the internet. They take it for granted that they will be able to communicate with their colleagues wherever they are and whenever they want. They do not understand the traditionally established boundaries between private and work life or the need to be tied to an office in order to work. They question the culture of long hours and the “in-person” work model inherited from previous generations. In addition, they value their personal freedom, so they expect to have decision-making power over the prevalence that work should have in their lives.
This combination of social change in attitudes towards work with the freedom that technology gives openly clashes with traditional management practices. The idea that work has to take priority over all other areas of our lives is beginning to be questioned. Why do we have to organize our personal lives around fixed work patterns when many activities can be carried out flexibly? If I can answer my emails from home or on the go and at a time that suits me, why should I be in my office from 9:00 a.m. to 5:30 p.m.? Why can’t I take my kids to school and then go to the office instead of having to be in two places at once? If we now always carry our virtual office and filing cabinet in our pockets, why are we still anchored to jobs in physical locations?
The fact that we have fixed work patterns is largely explained by historical reasons. When the job involved passing physical objects to the person next to us, we had to be in the same place together. In the industrial sector, this is still the predominant model, although in today’s automated factories it is most normal for the exchange of objects to be carried out between robots and not between human beings. In office jobs, this is no longer necessary. We don’t have to carry papers from one office to another, or even be in the same room with our interlocutors in a conversation. And yet, the standard scheme of work in the knowledge sector continues to respond to the formula of a fixed place for a fixed period of time.
The management systems, leadership practices, and communication processes we use today were conceived during the industrial age. According to them, people had to be willing to dedicate a fixed part of their lives to their work and subordinate leisure, vacations and family to this. This used to work in the days when the man was in charge of putting bread on the table and he went to work leaving his wife to take care of the home and children. But this outdated view of work does not mesh well with current values of parity, freedom and flexibility.
Offering reduced hours in response to the demands of those with children is no longer enough to meet the expectations of younger workers. Whether or not they have the responsibility of caring for other people, they want to be able to choose the way they work. It’s what they are used to in other areas of their lives. They can shop and engage in leisure activities twenty-four hours a day, seven days a week. As adults, they are free to decide what they do on the weekends. On the other hand, during the rest of the week they are treated like children. If they arrive late for work they can be penalized, despite the fact that they have to travel during peak traffic hours.
Whether or not they have responsibility for caring for other people, younger workers want to be able to choose how they work.
Many companies have introduced flexible working arrangements in a bid to meet the demands of their employees. These measures generally adopt the fixed day as a starting point and allow variations with respect to it in order to provide some schedule flexibility. So the concept of physical presence in the office during “core hours” remains unchanged. Working from home or from a virtual office continues to be the exception. “In-personism” continues to prevail and those who are not visible run the risk of being forgotten. Managers spend time finding out what employees do when they are out of sight, and often assume that they are not as engaged in their work as those who come into the office every day.
“Flexible working” is usually a measure introduced by the human resources department as a benefit for employees with family responsibilities. It is usually associated with situations such as maternity leave and is designed for those people who cannot work a “normal” day. Consequently, the most ambitious and dedicated employees prefer not to take advantage of it. Instead, they remain immersed in the culture of long work hours that has dominated the 20th century and has crept into the 21st.
But all that is about to change.
As we emerge from a global recession and face a shortage of key talent, employers will have to fundamentally rethink how they think about work. We have extensive experience of people who decide to change jobs to better balance their private life and work. A good financial incentive package is no longer enough to retain employees with unusual skills. Individuals know that time is as valuable a commodity as money, so they will be attracted to work environments where employees are expected to have a private life and not sacrifice their freedom for the sake of professional success.
In the era of “smart” work, there is a new approach to work that involves a transfer of control from the company to the employee
This new approach to work involves a transfer of control from the company to the employee. In the era of “smart” work, individuals are masters of their time. They decide when and where to work and their boss places all his trust in them. There is no assumption that work can only be performed during normal hours and locations. Many people, especially those hired for their creativity, do their jobs better outside of traditional hours. Why do we have to limit them to working during the hours when they are least productive?
The first major measure that company managers must take is to stop measuring contributions or input (hours worked) and start measuring performance or output data (achievement of objectives). If the basis for recognition of a job is actual production, then the time and place where it is performed are practically irrelevant. There will be many jobs where there are limits on when and where work can be done, but they do not have to be imposed by management. When a person is trusted to decide for themselves how to do a job, they will assume boundaries and work within them.
So the old version of flexible working – an arbitrary gift from corporate management – is being replaced by more agile working practices in which the individual has true autonomy over their work pattern. It is not just a change in the employment contract, but a revolution in work culture. It involves moving from a command and control mentality to a leadership style that empowers individuals and trusts them to know how to organize their work. It is a sign that employees are beginning to be treated as adults capable of making decisions that take into account the needs of the company and also their personal priorities.
THE WORK OF THE FUTURE
This evolution from fixed work patterns to highly flexible ones is a journey that many entrepreneurs are currently embarking on. Results measurement systems and autonomous work patterns are beginning to be used in which employees enjoy a high degree of freedom. Others have not gone that far, although they have applied different degrees of “agility” and have varied the levels of empowerment of their staff. But, regardless of the stage of the journey in which each one finds themselves, the most obvious direction is the same for everyone.
Alison Maitland and I decided to call this “future work” in our book of the same name (Future Work).1 The expression reflects the fact that we are moving towards a future model of work that truly responds to social, technological and economic influences. of the 21st century. For many companies, this change will be tough, as it challenges existing power bases and established command controls. It threatens the existence of certain middle managers and erodes many of the power and status symbols of hierarchical structures.
We are moving towards a future work model that truly responds to the social, technological and economic influences of the 21st century. For many companies it will be difficult.
While researching the book we found many examples of new ways of working. Some companies, such as WL Gore and Semco, had been able to adopt radically new ideas thanks to the vision of their CEOs. Others, such as IBM, Vodafone and Cisco, have used their technologies to drive change. And we discovered a few that had already come a long way and were beginning to see benefits in their income statement.
One of these examples is Ryan, a global tax services company. Its MyRyan program allows employees to work anywhere, anytime as long as they are on task. There are no mandatory hours, no fixed office and no calendar. As we see in Future Work, “the results are impressive,” in the words of Delta Emerson, current chief of staff. «In recent years we have received more than one hundred awards for excellence in employment quality, including the prestigious Great Place to Work from Fortune, in the United States and Canada. Our employees highly value flexibility, which makes us a “talent magnet” and allows us to have a more stable workforce. Furthermore, the performance indicators that concern any CEO—customer satisfaction and profits—have skyrocketed. “Flexibility is an imperative in business and not just a nice touch.”
None of this should surprise us. Management gurus, occupational psychologists and motivational leaders have been saying the same thing for fifty years. If we give instructions to individuals, they will simply follow them. If we give them responsibility, they will feel motivated to go further. Gone is the era of “Taylorism,” in which work was reduced to its simplest elements and jobs were inherently boring. Now, repetitive work is done by computers and robots, and people are employed for their human skills.
And yet we continue to maintain organizational cultures that reflect this outdated approach to work. We have hierarchical structures in which power belongs to the top and is delegated through layers of middle management. To justify its relevance, managers hoard knowledge instead of sharing it with other employees. Instructions come from above and those below obey them. Those who best fit the prevailing culture are promoted to management positions. Those who question the status quo are marginalized. With this state of affairs, we should not be surprised that companies like this resist change. They defend their management model from external influences and only feel forced to change when they reach a critical point.
In the world of work, this critical point is imminent. The generation of “digital natives” that have just entered the workforce over the past decade is challenging preconceptions about employment. They are not willing to simply do what they are told. When they ask why they have to work the way they do, they don’t get satisfactory answers. In their private lives they use technologies that free them from the limitations of time and space, but in their jobs the idea that they are something fixed continues to prevail. They use social networks to interact with their friends from a distance, but at work they are forced to attend endless meetings stuck in an office.
When many jobs could only be done on site, life was simple. He went to work and spent a few hours there. The “work” was a place where one went during the time stipulated in a contract and received a salary for the hours completed. The reward system reflected the contributions or input. Now life is more complex. Technology has freed work from the limitations of a fixed location and given workers more options about when to do it. “Work” is no longer a place to go, it is an activity with a purpose. It is a process aimed at achieving results and what counts is the performance or output data. Rewarding results that contribute to the company’s objectives seems much more logical than rewarding an effort that may not contribute to the success of the business.
In today’s connected world, work is slowly becoming a tradable commodity. Instead of turning work into a series of tasks to be performed by an employee, it is considered a product that is paid based on results. So to get someone to do a job, the most practical thing to do is to post a bid online and assign it to an independent contractor or freelancer. According to a study carried out in 20102 by the software company Intuit, by 2020 more than 40% of the working population in the United States will be made up of so-called “contingent” workers. That means more than sixty million people.
Contractors and consultants will increasingly bid for online work and charge based on results. This is an emerging form of what has been called crowdsourcing (open task outsourcing), in which the power of the Internet is used to assign tasks to people anywhere in the world by disseminating a job offer. Initially, this phenomenon was associated above all with the search for volunteers willing to contribute their knowledge for free. The free and open software movement is based on this model, and we have other notable examples such as Wikipedia, the “free” encyclopedia.
However, there is now a growing job market paid over the internet. Elance and oDesk, launched in the United States in the mid-2000s, are two well-known online job boards where companies can locate freelancers who work on demand.
Since 2005, Amazon has run its Mechanical Turk as a job marketplace that allows applicants to submit “intelligence human tasks” (IHT) and pay to have someone perform them. These are usually simple, repetitive tasks, such as web searches, where you pay a few cents for each positive result. At the other end of the spectrum is Innocentive, where rewards of up to a million dollars are offered for finding the solution to research problems. This is a very attractive model for companies with the capacity to assign jobs over the Internet, since they will be able to use suppliers who carry out these jobs for a fraction of what an employee costs. In fact, there is a good chance of getting the job done for free if you find enthusiastic collaborators willing to donate their efforts.
WORK VS. EMPLOYMENT
These new ways of connecting people to work are making their way into traditional labor markets. Companies (“employers”) no longer need to offer employment, a career and stability for someone to perform tasks. When something needs to be done, you simply find someone to do it and pay them once they finish it. They do not need “employees”, only “tailor-made” workers who perform certain tasks. They do not have to worry about labor laws and, in any case, they can outsource the work to someone residing in another country. If individual providers charge by results, then they control their own time, and regulations such as minimum wage, expressed in terms of an hourly amount, are irrelevant.
It might be thought that this trajectory benefits the company more and is not very attractive to workers, who would miss the benefits of a conventional job. However, for many people it is a preferable way of making a living to being tied by a commitment to an employer. They are free to decide when they work and have control of their lives. They will join the growing ranks of self-employed people who are willing to give up the security of a traditional job for the flexibility of selling their expertise on the open market.
An option that is gaining popularity is the so-called “zero hours” contract, a system that allows flexibility for the employer and the employee, while maintaining some of the benefits that self-employment does not have. In a report published in November 2013,3 the UK’s Professional College of Personnel and Development (CIPD) analyzed these contracts rigorously. And it concluded that 23% of companies used these contracts with an average of 19% of their workforce. Instead of feeling exploited, almost half of these employees declared themselves satisfied with not having a fixed minimum number of hours, and only a quarter said they were not happy. The majority of “zero hours” workers (52%) do not want to work more hours than they would in a normal work week.
Despite some negative reactions from the media, these flexible contracts are here to stay. In the CIPD study, only 9% of respondents stated that the conditions of the ‘zero hours’ contract did not allow them to work for another company when there was no work. So we are witnessing the birth of the era of the portfolio worker, in which an individual can have several “work” arrangements and combine several part-time “jobs.” The idea that someone can only work for one company and that they have to do it full time to prosper is about to become history.
RISE OF PART-TIME WORK
There are also many successful executives who have shed the burden of full-time work with long hours of physical presence in the workplace and have shown that part-time work can be just as effective. In fact, it’s becoming increasingly clear that part-time workers can contribute more to a company’s success than full-time employees. They possibly enjoy a better balance between work and private life and are therefore less stressed when carrying out their tasks. They are also more likely to bring a more objective external view and not be limited by a narrow, corporate view of reality.
Companies are moving from being rigid organizations to becoming flexible networks in order to bring out the best in their employees. Those that adapt will survive
The British employment website Timewise publishes a list called “Power Part Time”, which aims to dispel the myth that part-time work only works for low-skilled jobs. This list contains the revealing stories of fifty men and women who exceed profit goals, foster innovation and lead large teams; and all this with employment contracts that allow them to maintain a healthy balance in the other areas of their lives. The list includes CEOs, general managers, financial directors and partners of professional services firms. These executives occupy positions with a very high level of demand, so they have to manage their time and priorities well. Many of them emphasize the importance of communicating clearly and agreeing objectives with their teams and then trusting them to get the job done.
The traditional idea that work should be divided into tasks to be performed by full-time employees is clearly outdated. Companies are moving from being rigid organizations to becoming flexible networks in order to bring out the best in their employees. They need to accommodate the different preferences of their staff, which range from permanent full-time employment to having full control of the work system. Those that adapt will survive. Those who cling to the current model will have a harder time.
THE FUTURE IS HERE
This new work model already exists in leading organizations. In the book Future Work we describe many examples of companies that have realized that the command and control culture of the past is outdated. Those that have adopted “smart working” or “agile working” schemes as a business strategy and have changed their leadership culture are already seeing the benefits. On the other hand, those leaders who have accepted the new ways of working only for the sake of it and have not adapted their culture will find themselves with frustrated and unproductive employees.
Clear leadership from the top is needed to scrap certain hierarchical processes and introduce a more horizontal structure. Managers have to act in accordance with the new values of the business world and actively delegate power to their employees. An example of this, which we cite in the book, is Unilever. Over the past few years, Unilever has been introducing radically new ways of working at its sites around the world. At the end of 2009 it launched its Agile Work program, which contains the following principles:
- All employees can work anytime, anywhere as long as they meet business needs.
- Leaders must set an example by working in an agile way.
- Performance is determined by results, not hours of presence. Every employee has a personal work plan that specifies the desired results and how to measure them.
- Avoid travel whenever possible.
- The ability of managers to promote work agility will be evaluated annually and a variable part of their salary will depend on this evaluation.
Leaders are required to model and embrace the principles, technology and means of Agile Working. Around 20% of Unilever’s senior positions are “locatable”, meaning those in them can live anywhere in the world. The company has invested in training people on business objectives, how to work and collaborate remotely, and how to manage and participate in virtual teams.
These new “smart working” schemes often meet resistance from middle management. We are talking about individuals who have been climbing positions within the organization through long hours and sacrificing their private lives in the process. They expect the same dedication from their employees and do not understand that their priorities are different. These managers justify their existence with a visible team of people who work for them and a large payroll budget. Suggesting that the same work could be done by a small group of external collaborators or people working from home constitutes a direct threat to your position.
For these managers, their job is to control their employees, assigning them tasks and teaching them how to carry them out. They monitor compliance with company standards and ensure that correct procedures are followed. For the sake of “quality work,” they insist on the standard model, which guarantees consistency. They reward those who put in extra effort, are loyal to the company, and don’t question the existing system too much.
New “smart working” schemes often meet resistance from middle managers who have risen through the ranks within the organization and sacrificed their private lives in the process.
Success in the 21st century will depend on managers being willing to do exactly the opposite. They will have to give employees autonomy and trust that they do not abuse this freedom. They will allow everyone to decide to do their job in the way that is most convenient for them. They will clearly express the results they expect, but will not attempt to impose a detailed methodology to obtain them. They will reward creative new ideas that challenge established practices. And your success will be measured by your ability to achieve results with fewer employees and a smaller budget.
WORK IN THE “SMART” COMPANY
People who work in these companies will feel truly empowered. They will decide where and when to work to achieve their objectives. If they know they are more productive at night, they can dedicate their mornings to leisure. They will choose the workplace that best suits their needs instead of receiving a salary to appear in your company’s offices. They will accept to be valued by results and not by a number of hours that are not necessarily productive.
Individuals will appreciate being treated like adults and allowed to make decisions about their work, just as they would in other areas of their lives. They, too, will benefit from coming up with smarter ways of working and achieving goals in the shortest time possible. The best workers will end up being those who work the fewest hours. Employees will question the appropriateness of certain meetings and will be rewarded for it. Supervisors will become advisors capable of bringing out the best in people, motivating and supporting them, giving them control whenever possible.
Gary Hamel summarizes this situation well in The Future of Management:4
If there is one thing that has obsessed managers of the 20th century, from Frederick Taylor to Jack Welch, it has been: how to get more of our people? To some extent, the question seems innocuous, for who would object to the goal of increasing human productivity? But it is also burdened by the industrial-age mentality: how can we (“management”) get more (units of production per hour) from our people (the individuals who are obligated to do our bidding)? The irony is that the management model behind this question practically guarantees that a company will never get the best out of its people. Vassals and recruits may work hard, but never willingly.
THE VIRTUAL WORKPLACE
Once the link between work and fixed location is broken, a wide range of potential workplaces emerge. Some may find it convenient to work part of the time from home. When this translates into a balance between private life and work commitments, the result can be very beneficial. The time and hassle savings of not having to travel is gratifying in itself, but there is also evidence that people perform better at home than in a noisy office.
However, most jobs involve personal contact. Although technology partially meets this requirement, individuals still need to meet to exchange ideas. Some meetings can be replaced by video conferences or online forums. Social networks will allow geographically distant teams to discuss points of view. But there will still be a need for a space for in-person meetings. So the same office will be used by different people at different times and for different purposes. These workspaces defined by activity will allow people to move from one point to another in the building depending on the task they are performing.
But this “tailor-made” approach leads us to question the very need for a permanent workspace. If you can rent a meeting room or office space by the hour or day, why take on the expense of a permanent headquarters? For many people, the workplace could be a combination of a multi-purpose office, rented space in a fitted office, such as those offered by Regus, or a table in a cafe, including a day at home from time to time. For the truly mobile worker, the workplace goes with him, as long as he has internet access.
For the employee, this ability to work anywhere is both a blessing and a curse. He may have control over when and where to do his work, but he also risks losing control over his private life. If his boss expects him to be available at any time, there is a danger of invading his private life. For a manager, it may be tempting to use technologies so that the people under his or her responsibility are continuously available.
It can also be difficult for some employees to be available all the time, just to impress the boss. But over time people begin to feel uncomfortable with this invasion of their private life. The worker of the new era will have to be able to delimit this blurred border between work and home. The capacity for self-management, project development and communication skills will be important skills for both employees and independent professionals.
Self-management or the ability to develop projects will be important skills for new-age workers
The freedom to choose how to work comes with the responsibility to produce results. Companies like Netflix, which entrust their employees with control of their work systems, also expect high performance from them. They don’t care how many hours they have put in, just that they work well. A reflection of this policy is that there are no stipulated vacations. Since the time people spend working is not controlled, it does not make sense to calculate the days they do not work.
Sir Richard Branson picked up this idea and introduced it to Virgin’s headquarters in the United Kingdom and the United States. As he explains in his blog: 5
Flexible working has revolutionized how, where and when we do our work. So, if working nine to five no longer works, why should we apply strict regulations to annual leave? […]. We leave it up to the employee to decide when they need to take a few hours, a day, a week or a month off, because we are convinced that they will only do so when they are one hundred percent sure that both they and their team are up to date. in all projects and that your absence will not harm the business or, consequently, your professional career in any way!
The ability to combine work and pleasure with the help of technology will be a key factor shaping people’s lives over the next decade. If companies do not adapt to this trend, they may lose their best talent, who will leave for more agile organizations or opt for some form of self-employment. If they assume that work is an activity that can be carried out anywhere and at any time, they will limit their workforce less. And if they are able to measure and reward performance and treat their employees like adults, they will be successful. It seems like an easy goal but one that, however, clashes with the dominant culture in many companies, and achieving it may require a profound revolution in leadership styles.