It wasn’t long ago that the world of manufacturing work was simple. One job, one task on an assembly line. The focus: Build as much as possible in order to achieve economies of scale to lower costs. Sell goods in your own country, with the rest of the world an afterthought. Even office work tied to manufacturing was simple, with everyone assigned to a different portion of an overall task.
That made the worker-manager relationship simple as well. Workers did the work. Managers gave the orders. Everyone was a full-time employee and expected lifetime job security.
But the new world of work thats emerged in the last 25 years has many fundamental changes that have radically altered how work is done and the relationship between workers and managers.
- Managers now identify needed skills and provide workers with the resources to solve problems, rather than give orders.
- Workers in a manufacturing plant manage the production process and decide the most efficient way to get things done.
- Suppliers are part of the manufacturing process.
- Employees, managers, suppliers, and customers work as a team.
As a result, workers and managers need different skills, different competencies — and more of both. And they are likely to have assignments or projects, not narrowly defined jobs. At the same time, technology has turned homes into offices, and offices into homes. And the anytime, anyplace workforce now includes temporary, contract, and electronically connected employees.
Why and how, Henry Ford might ask, did the days of a single, repetitive job on an assembly line with strict rules from management on how to perform the task disappear so quickly at so many companies worldwide?
The answer is simple. The information technology thats imbedded in the new manufacturing industries has created a global economy and also transformed nearly every job in every industry worldwide — not just jobs in high-tech industries or in the U.S. — into a process of managing information.
Computers run the machinery. Workers rely less on their physical skills and more on knowledge skills, using the information inside computers.
To be sure, every organization worldwide isnt evolving at the same pace toward this new world of work. There will continue to be a sizable number of low-skill, low-wage jobs in the U.S. and the rest of the world. But nearly two-thirds of the workplace jobs that will be created in the coming years will require education beyond high school and be tied to the use of information technology.
“If you have the right training, then technology will be your friend,” says former U.S. Labor Secretary Robert Reich. “But if you dont, it will take your job away. Technology is driving a wedge between those who have the right training, education, and skills and those who dont. If you do not have skills, if you are not adequately educated, you are inevitably on a downward escalator even in good times likes these.”
That doesn’t doom those without a high-tech education to life on skid row. However, nearly everyone in the workplace will need to learn how to use technology to perform work.
All of this puts the employment relationship at a historic point in time. The old rules are obsolete. New rules are emerging. Everywhere across the world, information technology is spawning a new way of doing business that is radically altering long-standing definitions of work, work space, workplace, and workforce. Companies have to change how they work, how they reward work, and their definitions of both a workforce and a workplace — or they will cease to exist.
The virtual revolution
The world of work has been transformed.
This revolution in the way we work and the relationships between companies and their workers — still in its early stages — is the most significant business event since the industrial revolution, declares Marc J. Wallace Jr., cofounder and partner of the Center for Workforce Effectiveness (CWE), Northbrook, Ill.
“We are witnessing the advent of an age of virtual organizations . . . and the virtual workplace, a work environment that is bound by neither time nor space, where work gets done by people in harmony with technology to create goods and services on demand,” says Wallace.
This revolution is a global change, not just a U.S. phenomenon. “Geography is not the main determinant” of change, says management expert Peter F. Drucker, professor of social science and management, Claremont Graduate University, Claremont, Calif. “One company in an industry changes and achieves . . . major competitive advantage. Others in the same industry then follow.”
Granted, “It will be a long time before Tibet and China look like the U.S.,” says Edward E. Lawler III, director of the Center for Effective Organizations (CEO) that is part of the Marshall School of Business at the University of Southern California. “But if you go to Europe, it will not be that different from the U.S. And, as the Asian economy recovers, companies in those countries will rapidly incorporate these [virtual organization] techniques.”
What’s unleashed the virtual workplace? Information technology. “The world of work has transformed from physically manipulating things to managing the flow of machines that create products or perform services,” says CWEs Wallace. “We are becoming nations of knowledge workers where individuals are increasingly linked to computers, rather than machinery.”
In other words, “Information technology has become a tool — albeit, one that changes everything — that people who do other things are learning to use as part of their jobs,” says William Bridges, president and founder of William Bridges & Associates, a Mill Valley, Calif., consulting firm.
And its triggered the most radical change in the world of work since the transportation revolution 50 years ago that allowed manufacturers to make products in places other than where they were sold.
New alliances and workforces
Its not uncommon anymore to see customers and suppliers working side-by-side in the same office or manufacturing plant of the company they supply or buy from, or independent project managers who work one day for you, the next day for the organization down the street. Nor is it uncommon to find temporary employees who are given as much responsibility as full-time employees, sometimes receiving the same benefits, or employees who tell their employer (or employers) how many days they will work and from where they will work and for how much. Today it is common for teams of individuals — sometimes not even in the same location — to take a process from beginning to end, rather than to perform individual work that focuses on one element of a task.
“Businesses are combining emerging technologies with creative employment arrangements, contingency-based pay, customer and supplier partnerships, and more to enable employees to work from anywhere at any time” in a seamless interface, says Wallace, coauthor of the just-published Work & Rewards in the Virtual Workplace (1998, AMACOM). For example:
- Kelly Services Inc. supplies temporary assignment workers for semiskilled work during peak periods at Hitachi Computer Products (America) Inc.s Norman, Okla., plant.
- Federal Express Corp. has employees on-site at Lucent Technologies Inc.s Little Rock, Ark., facility.
- To supply Wal-Mart Stores Inc. with just-in-time goods for sale, West Bend Co. has its production floor linked electronically to the retail chains point-of-sale inventory system.
“Companies have to move quickly to compete because with information technology it takes only days — not months or years — to gain or lose a competitive advantage,” adds Wallace. “The time and space buffers that used to limit a companys exposure to changes are gone. Business now is vulnerable to anything that happens anywhere instantly.”
The new alliances and nontraditional workforces reflect the even more radical changes that are taking place in how work is done and the relationship between companies and their workers.
For starters, explains Bridges, “The line between traditional manufacturing workers and knowledge workers is getting fuzzy.”
Salespersons often check — in real time — the availability of goods and start the production process when they transmit an order. Autoworkers monitor screens of information to control machines that lift, stamp, press, bolt, and paint. Suppliers electronically linked to customers plan daily production based on actual customer needs.
That ability to distribute and gather information with the click of a button also is changing how companies distribute their work, where their people work, what people perform what work for companies, what constitutes a workplace, how you reward work, and how you manage.
“The more you move to knowledge work, the less important it is for people to be in a common workplace for 40 hours a week,” explains Lawler. “That means a lot of work can be done wherever the person who has the knowledge lives.” Lawler points to one New York-based start-up firm, for example, with three employees whove never met, including a software programmer from Bulgaria.
What’s more, at many companies “the notion of the workday has all but disappeared,” says Paul Saffo, a director at the Institute for the Future, Menlo Park, Calif. “The line between work and personal life also has evaporated. People are taking work home and taking personal time during the day.”
The new emerging workforce also is “more complex because it is more than just union and nonunion workers,” says CEOs Lawler. “There will be core workers, hired guns, and contingent workers. There will be a lot of options for employees on how to relate to a company” — with the employee often deciding what type of work arrangement he or she wants to have with a given employer.
Just as high-tech workers in demand get signing bonuses and dictate their perks and where they will work, more and more workers in the coming years “will determine where and how work is done and how they will be paid,” says Peter V. LeBlanc, national practice leader, organization performance and rewards, Sibson & Co., who has his office in Cary, N.C.
“Workers will tell employers that this is the basket of benefits, pay, and time off that I need and here is what I am willing to give back to you,” says LeBlanc.
From jobs to assignments
As workers more and more dictate where and how they work, companies, by necessity, will have to “rethink how work gets done” to fit the new world of work, says Wallace, who suggests that companies have traveled only about 10% of the distance they will need to travel by 2002 if they want to remain competitive.
“Companies are going to have to map out the entire business process and organize people around that. They will have to have a team for every business process. Formal, narrow jobs will have to be replaced by fluid, versatile, flexible roles on a team.”
How do you do that? He recommends companies “identify key processes, introduce information solutions or software to those processes, and rearrange workflow to support the new process. You will have to ask workers to be more versatile and to take on responsibility for a greater breadth of activities or for an entire product or business activity, not just a part of it.”
And that, he argues, will necessitate more changes. Companies will need to reduce dramatically the number of departments, replace job classifications with roles on teams, ask themselves whether their people have the skills needed for the new work, and determine whether the proper reward arrangements are in place to send the right message and encourage the right behaviors, he says.
What will make that change so challenging, contends Bridges, is that everything that “used to be integral to a business — the traditional job, the traditional job classifications, the traditional concept of a boss, and the traditional pay grades and compensation plans — is beginning to become part of the problem.
“Jobs . . . encourage hiring. Jobs lock people into doing only certain kinds of work. Jobs obscure the larger picture and the ultimate goal of the collective effort. Jobs are an old way of getting work done that does not fit the reality of the new economy,” says Bridges.
“The days when someone was situated at one point in the assembly line (or performed one task in an office) don’t make sense anymore,” Bridges adds. “Companies need to develop something more flexible so a person can work both over here and over there.”
Lawler agrees, “We are witnessing the disappearance of the job as we know it. People will be assigned to projects or programs and their job will be to work on projects or programs for a certain period of time” rather than doing the same task over and over again.
In addition, not everyone who does work for a company will be an employee of the company.
“In the future, the question of who does an organizations work will be an open question with lots of different answers,” says Bridges. “The old answer was a firms own workers. No longer. Many workers will be almost like temporaries who are brought into an organization to help with a problem and then leave when the task is done,” Bridges says. “That is the world we are moving toward.”
At the same time, says Wallace, some workplaces may not exist “in a physical sense,” but rather as a virtual workplace, leading to a more efficient use of resources. Suppliers, manufacturers, and customers will work together in cyberlinks from wherever they are located — and often only for as long as a given project demands.
New skills for managers
As work evolves into a series of assignments with a team of workers for every process, it also means the skills and competencies that are needed will be different.
Managers will have to learn how to identify the skills their organizations need, manage those competencies, and learn new ways to manage and motivate workers.
“The new paradigm for managers will be the ability to know what people can do and to be able to define the outputs of any effort,” says Lawler. “Companies will need to define what is the intellectual capital for their organ-ization and manage that.” That means the old days of “traditional micromanaging will become quite impossible,” he says. “All you can do is manage products and output; you cant manage the process,” because in the new world of work that is the workers responsibility — and different workers in different locations often will perform different parts of the process, which has now become almost “invisible” to the supervisor.
Those changes will dictate a new management style. “The command-and-control management mentality really gets less and less successful” as this work revolution grows, says Bridges. “You are managing temps, contract workers, associates, and consultants, so you cant just give people orders. Companies are going to have to change their management style in the direction of coordinating resources instead of telling people what to do.
“Rather than being a strong-arm person who coerces others to do work,” says Bridges, “the manager will have to be more and more the interface person” — that is, someone who serves as a liaison between teams that are responsible for different processes — some of them inside and others outside the corporation.
What’s more, close supervision will disappear, says Wallace, and managers will become facilitators who provide teams with long-term goals, resources, training, and development. “Manufacturing workers will no longer accept insulting demeanor and arbitrary company rules. The old days of the authoritative bosses are gone.”
So, too, he adds, are the old pay systems.
New ways to pay
“How you will motivate the new workforce is a big open question,” says Lawler. First, he suggests, companies must create projects “interesting enough to engage people or to enable them to learn.” Then they must motivate that team of workers — from both within the company and from outside — to perform well on a project. “That will be an entirely new motivational challenge for companies.”
Some companies are using stock options to tie workers to the success of a project and to the company. Others are letting workers choose their rewards within a framework set up by the corporation.
“Organizations are beginning to give workers more flexibility, autonomy, and accountability to design rewards,” says LeBlanc. “Workers get to decide whether they want two, all, or none of the items — such as skilled-based pay, team incentives, team recognition, and goal-sharing — that are part of the reward menu.”
Indeed, within 10 years many experts such as Wallace see variable pay accounting for 20% of all pay compared to just 2% today (excluding sales and executive compensation).
“Across-the-board increases are dead and gone,” says Wallace. “Companies are going to have to stop trying to match base pay to jobs and instead match base pay to the personal worth an individual adds to the business process. They will have to pay person by person, not job by job.”
The big question and challenge for workers in this new world of work: How do they find work stability in a world that is less certain?
“We all will have more control over our lives, but less certainty,” says Saffo of the Institute for the Future.
Does that mean a free-agent nation of workers represented by agents — as some software engineers are now? Some think so. But others like LeBlanc arent so sure. “The free-agent nation is overblown. The security of working for a company will always be important because in this new world of work that changes daily, it is one less thing for people to worry about.”
Much more to come
The changes in the workplace, the workforce, and work relationships now throwing a wrench into what weve viewed as the traditional way of doing work will seem like tinkering compared with the changes we might see in the world of work 25 years from now.
First, the information technology will be nowhere near the end of its era of influence. “Computers are going to be much more deeply imbedded into business processes — and especially manufacturing — that we will look back 25 years from now and laugh that we thought computers were so integral to our lives today because they will be even more integral and in ways we havent even imagined,” says Saffo.
As a result, expect much of what we do 25 years from now to be “activities that we cant even imagine today,” says CWEs Wallace. “Sixty percent of work will be working with equipment and activities that we dont even know today.”
The anytime, anyplace workplace will continue. And there no longer will be a typical workday. “Some people will work three hours, others 14 — and not everyone will be rushing in to work or rushing to leave work at the same time,” says Wallace. “You will not be seeing everybody at work every day. Some will be at home. Some will be at a clients site. Others will be working electronically.”
Whats more, the convergence of work and personal lives will lead to workday breaks for social and personal activity and a greater effort by corporations to “supply peoples needs” at whatever work locations exist, says consultant Bridges. “Companies will offer more in-house eating possibilities, help people with errands, offer shoe repair and dry cleaning.” More companies will offer workers social services such as child care, literacy programs, counseling, and skills training.
Workplaces will become work spaces with fewer corridors of offices, more open spaces, and more meeting rooms where teams can conduct business.
Yet dont expect everyone to stay at home or face-to-face contact to end. “The vision of everyone living in the electronic cottage will never happen. The vision of traveling less will never happen,” says Saffo. “The more we communicate, the more we will travel. Workers and managers are going to spend a lot of time in front of computer screens and a lot of time on airplanes.”
As for rewards, workers will “cut their own compensation deals,” says Sibson & Co.s LeBlanc. There will be more of a trend toward equity ownership and more focused behavioral incentives — paying people to join, paying people to stay on a certain number of years, and paying people to leave. “What is now covert will become overt.” At the same time, says Bridges, “much more pay will be at risk and dependent upon results, with bonuses” for achieving goals.
Whether unions can be an effective representative of workers 25 years from today is a matter of debate. USCs Lawler says, “There is no reason to believe that unions will fit into the new world of work — except for their niche in lower-level work and the public-sector area — unless they are willing to take on a new role of providing benefits or providing worker training, a tack that they appear unwilling to take.”
But others say the future of unions depends on what happens with worker salaries. “Wages and salaries will have to have caught up with the returns to other economic players [the rise in stock prices and increased profits],” says Wallace, “or you will see a doubling of members in the AFL-CIO.”