The way we work is changing. Make sure you know the new rules, says Tammy Erickson.
We’re moving to the drumbeats of change: amazing new technologies, including social media, search, gamification, cloud storage, mobile, and big data analytics are cutting the financial and time costs of communication to next to nothing. They make it possible to find almost anyone or anything, anywhere, quickly and easily. Already, we take for granted many of the changes we’ve already embraced at work – Google searches, social marketing, text communication. Yet we’ve barely scratched the surface of what these technologies can do; a far greater magnitude of change lies ahead.
The workforce, too, is changing in remarkable and unprecedented ways – longer life expectancies and lower birth rates combine to create an ageing population in many parts of the world. This upside-down population pyramid means that traditional career paths may be blocked to the young by the overwhelming number of older workers entrenched in the workplace. At the same time, our longer lives are allowing us to experience a new life stage – ‘active-old’. Demand for ways to engage older workers productively will only intensify. And around the world, we encounter tremendous diversity – ethnic, racial, religious, and attitudinal – bringing differing expectations and preferences to the fore.
Throughout all of this, the nature of the work we do is also changing. Today, much of our most important and differentiating work leverages, in some way, the plethora of information that is now available. In some businesses, the key is harnessing small units of knowledge to detect patterns and provide insights or create new capabilities. In others, it’s about innovation: combining different types of knowledge and expertise to come up with something better. We are challenged to detect and respond to market and environmental shifts, customize our relationships with customers and suppliers and evolve as we go; we are challenged to learn.
That these trends are happening is not in doubt, but their implications are still being discovered. Over the next few years, I expect five major trends to emerge…
How work is organized: a shift to tasks
Today, in most organizations, we allocate work according to job or role. Individuals are given a title, say ‘vice president of marketing’, and responsibility for a broad set of activities. This approach to organization worked well in the more structured manufacturing-based world of the past, where responsibilities were well defined and their scope stable. The pyramidal shape of the population, coupled with company growth, made promotion through a series of jobs an effective way of providing people with variety.
But shortcomings are becoming apparent in this approach to organizing work. Broad, prestige-based titles make it difficult for senior individuals to phase out elements of their job, since stepping away from one of their titles feels negative, and the options for further constructive contribution are limited. It’s also difficult to give young employees the variety they crave, since existing middle-aged and older workers often block roles and career paths. Allowing people the flexibility many are demanding is difficult if all you have to offer are fixed roles, few of which are designed to be done at less than an all-out pace. And correlating pay is head-scratchingly hard.
All these problems become easier to address if you organize work by project or task, rather than by job or role. People still have titles, but they are time-bound and action-orientated: ‘head of the xyz product launch’, for example. Some people will take on multiple projects at a time. Some projects will be short (months); others very long (perhaps a decade or more, for example in the space industry). Compensation is tied to the project (“this project pays x amount”). And, ideally, people will have great flexibility in choosing or bidding for assignments on various projects – with the option of taking on a number of difficult and high-paying projects in years when their lives permit it, or signing up for fewer or easier ones when non-work demands take precedence, or they simply want to scale back. Benefits of this approach include:
- providing variety and challenge to young workers through the opportunity for easy, natural movement ‘horizontally’
- making effective use of experienced workers who want to contribute in meaningful ways, but not at the same pace as at earlier points in their lives
- enabling the use of contingent talent in ‘as-needed’ arrangements, providing businesses with the ability to use the best talent for each project and avoid the costs of maintaining talent not currently required
- allowing choice in many dimensions, not just time, place and pace, but difficulty, area of learning, and career path design (focused specialization versus broad capabilities)
- enabling meaningful performance reviews, by tying reviews to project milestones and enabling peer review, essential for effective collaboration
As we move to task-based organization, we’ll naturally cut most ties to management based on time. The concept of a fixed nine-to-five workday didn’t come into play until the early 1900s, as production processes became too complex and integrated to allow for individual latitude. With projects, the team may decide that it’s important to be together at certain points, but the overall organization is likely to have many more flexible arrangements in play. In short, our 100-year experiment with time and titles is coming to an end. do you, as an organization, need to do to prepare for and get ahead of this change? You could perhaps start with one functional area; for example, a number of the companies that have begun moving down this path have found that applying it in research and development is relatively straightforward and provides some immediate benefits. Then follow these lessons:
- Break work into activities or projects
- Eliminate or downplay broad, position- based titles
- Create ways of allocating projects that allow individual choice and tap the best expertise
- Allow teams to choose members and/or allocate compensation
- Create new performance review processes: task-based, aligned with task milestones, and reviews conducted by peers on the task team
How work is integrated: using real- time coordination
Have you ever watched young people go through the process of meeting face- to-face? Their approach rarely involves scheduling in advance or even planning a place and time. They’re more likely to let each other know their current locations – to exchange coordinates – and then home in on each other like ships using radar.
This real-time, needs-based, location-driven approach will reshape many processes in business over the next few years. Just as we had to rethink things back in the 1990s, when computer systems first allowed us to re- engineer business processes, rethinking is required today to take advantage of the new communication and coordination tools that are available. As we build processes around coordination, there will be a shift similar to that of the 1990s, when IT cut the costs of communication. These lower costs enabled companies to spin off non-core activities; decades-old notions regarding the need for forward and backward integration fell away as companies raced to focus on core competencies.
Today’s lower cost of coordination will lessen companies’ need to ‘own’ resources, including employing full-time workers. They will increasingly use coordination to find the necessary resource or talent when and as required.
- Look for opportunities to substitute some form of coordination
- Identify resources, including skill sets, that you don’t need to ‘own’ full-time – prepare to tap them as needed
- In so doing, embrace a variety of flexible arrangements (share, rent, borrow)
How organizations relate to those who work: new ways of staffing
Organizing by task, and using coordination to find the best resource when needed, drive the third major change: organizations will no longer be comprised primarily of full-time employees, but will constitute a flexible community of workers. These individuals will be in a variety of arrangements – full-time, part-time, contingent, outsourced, consultative, expert-for-hire and others. Companies will become adept at finding the best person for a specific task at a specific moment in time.
This shift will be accompanied by several interesting corollary changes. Companies will need a new function – along the lines of the role of staffing managers in professional service firms or talent agencies in the film industry – to serve as the ‘home base’ for this complex body of talent, working in diverse ways. Nearly 20 years ago, management guru Peter Drucker predicted that
the HR function was headed toward a radically new operating model. He wisely noted that the growing complexity of the workforce – the need to juggle a variety of individuals, with diverse preferences and needs and a dizzying array of relationships – would take the staffing function out of general management and into a specialized agency-like HR function.
A strong employment brand will also become essential. As the relationship with workers takes on an episodic nature, the need to provide continuity between episodes of work, similar to the need to maintain continuity with customers between purchases, will be critically important.
Several things will diminish in importance. Tenure will no longer be a metric applied to the overall workforce; it will, of course, remain important and be measured for some tasks, but not all. A more relevant metric will emerge, related to ‘fit for purpose’ – the extent to which individual projects are staffed by people with the ideal skill sets.
University degrees will diminish as a currency in the job market. Employers will seek task-specific credentials. In response, ‘badging’ – signifying and communicating on-the-job learning and achievements – will grow. Companies will compete for talent on the basis of the learning they provide.
To prepare for managing a portfolio of individuals:
- Create a wide variety of work arrangements
- Develop a ‘people function’ role similar to that in an agency
- Learn how to find and tap skills anywhere, anytime, matching talent from all over the globe with tasks
- Establish a reputation as a great place to work and maintain a long-term relationship with pools of individuals that you may need to tap in the future
- Emphasize learning and development; create a system to provide marketable credentials to those who excel in your organization; assist with future placement
- Develop an approach to understanding individual needs and preferences. Adopt management practices required to support a mobile workforce across geographies
How differentiating value is created: discretionary effort
Most of the work that adds the greatest value to our businesses today is not work that you can codify. It’s not work you can force people to do well – or even necessarily know they’re doing it to the best of their abilities. The greatest value today comes from innovation, collaboration, and customer service – areas that require individuals to dig deep and do their best willingly and wholeheartedly. It requires them to invest their own discretionary effort.
A core challenge for organizations, therefore, is to create environments in which people want to give their very best. Even individuals who have just come in for a brief, specific task need to be swept up in the sense of who you are and why doing this work is important and meaningful. They must be engaged through studying companies that do this well, I’ve noted the common thread is a sense of confidence about who and what they are… and being comfortable with not being all things to all people. Excellent companies are quick to explain what it means to work in their organization, why they are special. They recognize that ‘meaning’ is the new money; it’s what motivates and inspires today’s workforce to create extraordinary value.
- Understand what makes your organization unique – and that you strengthen the work experience
- Identify your own powerful set of ‘design principles’ (values)
- Create a powerful, differentiating employee experience, orchestrating elements throughout the organization: leadership behaviours, people practices and processes, day-to-day work experiences, as well as corporate stories and legends
How some companies will become this century’s icons: lead to leverage intelligence
Leveraging intelligence calls for a very different form of leadership to that of past decades. Today’s leaders require skill in stimulating innovation and collaboration, an openness to new ideas and the ability to invite all interested parties to engage around meaningful work. Leadership today must be deeply rooted in meaning, in consideration of the organization’s values and the individuality of its mission.
- Rethink your approach to leadership selection and development
- Identify individuals who understand the importance of creating an environment in which many different people can contribute
- Develop the ability to engage with meaning; disrupt with new perspectives; connect by building collaborative capacity; and intrigue with great questions
Above all, recognize that leadership and the organizations we create must be geared to meet the specific challenges we face at this moment in time. As a result, leadership practices and organizational designs will evolve over time and are logically different among different businesses.
As you prepare for the future, focus first and foremost on identifying the most significant challenge your organization must solve. What will set you apart? How will you create extraordinary value? Then consider what will influence your ability to meet this challenge successfully: the nature of the work to be done and the characteristics of the workforce you will need to attract. Only then can you begin to wrestle with formulating your own answers to questions about how best to organize the work, relate to the people you’ll need, and to function effectively as a leader through the ongoing changes that lie ahead.
Tammy Erickson is a McKinsey award-winning author and a widely respected authority on leadership, the changing workforce, collaboration and innovation, and the nature of work in intelligent organizations. She has been named three times as one of the 50 most influential living management thinkers in the world by Thinkers50, is a member of Duke Corporate Education’s global educator network, and an adjunct professor of organizational behaviour at London Business School.