Industrial models vs. post-employment
by Isabel Wu
The knowledge economy was supposed to bring unprecedented levels of opportunities to workers. As more work depended on the use of information rather than manual labour, these workers as contractors and freelancers would have the freedom to choose independence over traditional employment. They would be able to negotiate contracts that recognise their unique abilities outside the confines of controlled employer remuneration systems. They would be able to work at times and locations of their choosing to suit their lifestyle.
For some, the ‘post-employment’ era has met this expectation. These workers have been able to shift from passively offering their skills as employees to commercialising and marketing their capacities.
For others, the need to maintain enough work to survive drives them to accept work that may be of a lesser capacity level and/or to lower their rate to win the contract. Rather than the work on various contracts that would broaden their skills and experience, they are progressively becoming less skilled in their profession. While platforms such as Elance and Freelancer.com open them up to a larger potential market, they also facilitate a race to the bottom in fees.
There are also those who are not independent agents by choice. Writers, academics, project managers, and in particular, recent graduates might all find themselves without the option of on-going employment and playing to stay may be as high on their list of priorities as performance of the contract. Many, such as the writer of an article entitled, Surviving the post-employment economy, believe that the post-employment economy has simply allowed employers to exploit workers as they have no obligation to offer continued employment, or even to pay people for their work.
When things are not working well it can be tempting to yearn for the past, however, the days of people working like automatons in production lines for minimum wage were not so good either. In the old industrial workforce, workers could break into higher ranks of specialised or management roles but they were at far greater risk of burnout and stress. Yesterday’s bad old days are not today’s good old days.
For corporations, independent agents provide them the ability to be more flexible and agile to keep up with the rapidly changing and volatile business environment. They provide greater access to diverse skills, abilities and experiences that is available on demand. The combination of the in-house staff who understand the direction and culture of the business, and the outside view provide by external workers, offers great ability to find creative solutions and innovations that would not have been able to be developed by the internal workforce alone.
Corporations will be unlikely to be able to take full advantage of the opportunities offered by the post-employment economy without rethinking the basic organisation.
Under the industrial model workers are organised to serve the hierarchy. The outcomes they produce are set and measured based on internal expectations. Decision-making and planning are centrally controlled while work performance is managed at the local level. This is a great structure for the control needed for production-oriented businesses in slow-moving industries. However because of the layers and divisions that make up the industrial structure they can be unwieldy and the management needed to divide then re-aggregate work is expensive. They are also clumsy and the ability of individual units to create the complete whole that the organisation was designed to achieve is always overestimated.
With last century’s business models where the greatest returns were achieved from the investment in physical capital, the cost of the top-down hierarchy was by comparison, minimal. When production is physical, it is easy to see and make good any gaps in the process. When production is based on knowledge it is impossible to see where all the gaps between the desired and the actual exist – in particular the gaps caused by different ideas, perceptions, values, opinions, experiences, preferences and ideals. A physical product can be quality-tested, skills needs analyses can be conducted, but the discrepancies between individuals’ knowledge contributions can be difficult to see even when they are being specifically studied.
A Board or CEO cannot simply mandate how people should feel about and interpret every aspect of their role in the ‘production’ process. Even if they could, the performance of the entire organisation is too dependent on meeting the expectations of too few. A recent customer service call between Comcast and a customer which has gone viral on the internet is an example of why production-style management is always going to experience failures.
If corporate managers see the post-employment economy merely as giving them the ability to pay fewer people less money for the same work they will miss many opportunities to enhance their companies’ performance.
Firstly, devaluing the labour market only serves to enforce the lowest common denominator of skills. There is no incentive for workers to develop highly specialised, well-tested capabilities available to the corporate sector – even if they had the means for acquiring them. Benefiting from access to independent agents depends on their quality and availability.
The real benefit however will come when organisations are able to engage with the opportunities that occur when independent agents working with internal teams can respond to the market. The organisation must have the strength of culture and clarity of direction so that strategy can grow from the ground up not just be dictated from top down.
Managers will need to be retrained to facilitate collaboration and manage it, and to create and manage situations that come with risks as part of such a structure. Their role should be facing outwards to ensure that their unit is shifting and responding to the environment, rather than facing inwards chasing people to perform. The task and responsibility of performance management becomes that of the individual, especially the independent agents. Managers focus on and create networks to draw from them and contribute back so that the overall is continually enhanced.
The post-employment organisation structure is hard to set up, but become easy to manage as they mature. In contrast the industrial organisation structure is easy to set up, but managers spend many difficult and unproductive hours trying to achieve a non-existent ideal – that is, the assumption that ideal people, doing the best possible work, being prepared for when things change, having no personal issues to interfere with the workplace, and at a cost that is consistently low can be a reality.
A loosely managed, tightly efficient post-employment structure is not only possible, it can be devastatingly effective. Studies into the operation of al-Qaeda show an organisation that consisted of both hierarchical management but also of a network of cells, all of which could act independently guided by the ideological inspiration of the senior members.
Start-ups and small business entrepreneurs are taking advantage of the shift to post-employment. Large businesses have the most to gain but their biggest barrier is not the size of their operations but their commitment to continuing that which has worked in the past.