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The death of the employee: on digital disruption and changing attitudes in the workplace

The backlash against excessive consumerism, captured by books such as Oliver James' bestseller Affluenza, has seen workers in developed countries come to increasingly examine and question their work life balance. There is a burgeoning realisation that full time work is maybe not the only option.

Tim Ferriss' New York Times bestseller The 4-Hour Work Week has developed what is almost a cult following for its "new way of living", which consists of applying the Pareto principle (the 80/20 rule) to eliminating wasteful activities to free up time and improve quality of life. While Ferriss has taken these principles to the mainstream, they are not new, only the techniques have become more accessible as a result of the digital revolution and a shift in attitudes to work.

Ferriss rejects the traditional lifestyle model of working as long and as hard as you can for 40 years so that you can retire and at last live the life you always wanted, and instead encourages us to incorporate mini retirements throughout our careers.

What is perhaps most compelling in Ferriss' lifestyle design philosophy is that he provides practical tips on how to use existing digital technology to achieve the work-life balance we want. Unwanted but necessary tasks can be outsourced at low cost using crowd-sourcing tools, thereby freeing up valuable time to leisure. Work (whether as an employee or business owner) can be carried out remotely, thereby opening up travel and geo-arbitrage opportunities.

But how can this work with many employers still guided by an outdated view of the workforce?

Rewarding output rather than hours

The coupling of wages with hours is an industrial revolution artefact. By removing all task autonomy from the individual worker, the assembly lines introduced by Henry Ford around a century ago effectively broke the link between the effort of the worker and the output of the production unit. As accurately predicted by Adam Smith, increasing industrialisation led to every worker's business being reduced to "some one simple operation." As such, a worker repeatedly completing a prescribed task was best remunerated on a hourly basis, rather than in relation to his contribution to the final output of the factory.

In today's information-based economy however, knowledge workers are growing more autonomous and the tasks they perform are ever-variable in their form, intensity and most importantly, productivity. For evidence of this, think back to what you have achieved in the last 60 minutes at work, and compare that to what you did in the previous hour (if you can still remember what you were working on back then).

The output is what should matter, not how long it took to get there. The premise that a worker's output is best measured by time spent, rather than the work's actual contribution to strategic goals, is therefore not only outdated but worse counterproductive. Not only do such systems allow poor managers to set unnecessary tasks, they also remove any incentive for workers to act efficiently in the completion of those tasks. All things being equal, are we not rewarding the least efficient worker, by implying that the more hours you work the more you should get paid?

The efficiency dividend and the efficiency disincentive

Imagine two full time co-workers, both with similar jobs. One returns to work four days a week, after a period of parental leave. Invariably what will happen is that the output expectations of that newly-created part time role haven't changed much from what they were previously, only the associated pay has been reduced by 20%, leaving the part-time worker under more pressure to work more efficiently. In other words, the less efficient, full-time worker is now being paid a 25% premium for being less efficient.

When we engage any other supplier in the provision of services, do we stipulate whether they must work full time or part time, whether they are allowed to take on other clients, what times of day they must be working and where they should be working from? No, instead we focus on results and deliverables, and allow them the benefit of the doubt in how they complete the work.

Higher-performing workers typically get given more work than their less competent counterparts, and feel stressed as a result. In a context that rewards all staff the same on the basis that they are all working full time, this can lead to feelings of injustice and cause top performing staff to quit. Shifting to a remuneration system that rewards staff for their results will help retain top performers, while incentivising unproductive workers to raise their game and earn a fair wage.

But large employers are starting to acknowledge that the current model is broken and outdated. This week, professional services firm PwC announced that it was extending flexible working to all its employees by default. Employee can now for instance switch from full-time to part-time without having to build a business case for the change. In other words, it's an example of an employer trusting its employee on how they can best manage their time and get the job done.

The Results-Only Work Environment

In 2003 Cali Ressler and Jody Thompson developed the Results-Only Work Environment (ROWE) while working at electronics retailer Best Buy. The system is focussed on managing the employee's results in order to not have to manage the employee's daily routine. The aim is to make staff completely autonomous, but also accountable. It was adopted by Best Buy, and later by Gap and Yahoo. Ressler and Thompson went on to write Why Work Sucks and How to Fix It, offering a framework for better managing staff productivity.

The book includes best practice tips such as making individual staff goals public (both to encourage collaboration and understanding of why someone may be turning down your meeting request), and setting key performance indicators which focus on relevant outcomes rather than specific projects. Just because you complete more projects than anyone else, that doesn't mean you are adding the most value. The book also identifies many unspoken truths of the modern workplace, such as how we consider people who are doubled-booked to be more important than those who go to fewer meetings, and the impact on productivity of the dreaded "drive by" (when a colleague pops by 'just for a quick question').

In fact, the assumed supremacy of teamwork has become a cornerstone of our workplaces and work practices. Team meetings, committees and team-building exercises providing the rituals that underpin an almost religious conviction that we must all work in a state of constant collaboration and groupthink. This is in spite of the fact that research points to brainstorming not being effective and to individuals generating more original ideas when working alone.

A rejection of privacy and solitude is standard. Susan Cain is the author of the New York Times bestseller QUIET: The Power of Introverts in A World That Can’t Stop Talking. She writes about Apple's Steve Wozniak, and his advice to "work alone", because most creative and innovative breakthroughs don't happen when in a committee or team. She suggests we need to refine the ways in which we collaborate, by facilitating an environment which balances spaces in which to collaborate and spaces in which to reflect. And how better to provide that balance than trusting staff to elect when they come in to the office and when they work remotely.

It's fair to say ROWE later fell out of fashion to some extent, perhaps partly as a result of kneejerk reactions by leaders wanting to go back to basics after the shock of the GFC. The ditching of ROWE by Best Buy and Yahoo in 2013 no doubt arose out changes of leadership and macro problems at those companies, rather than any evidence that the system didn't work. Best Buy CEO Hubert Joly expressed his reasons for giving up on ROWE here. While the jury's still out, I suspect that history may not judge Joly and Yahoo's Marissa Mayer too kindly. Their decisions appear to contradict research on the benefits of workplace flexibility for business and productivity, and the generally-accepted evidence that it presents a win-win for employer and employee.

Strategies for workplace flexibility

While there is a widespread trend towards adopting workplace-flexibility programs, in most cases the espoused flexibility is limited to baby steps rather than the paradigm that is required. Research by the Workplace Gender Equality Agency shows that while nearly half of employers have policies on flexible working, only 13% have a strategy for it.

Large corporations are run in the public eye and as such are more risk averse in their decision-making. This provides an opportunity for smaller businesses, who can win the fight for talent by adopting a more progressive and adventurous approach to revolutionising the workplace. London-based media agency the7stars deliberately set out to build engagement and trust with their staff. "We asked, what rules can we get rid of?" says business co-founder Jenny Biggam. The agency shared profit targets with all staff, gave everyone unlimited holidays and allowed staff to choose what hours they worked. "We have few problems with absenteeism – why pull a sickie when you can just take a day off?"

Asleep on the job

Extensive research into our circadian rhythms tells us that our levels of alertness decline after lunch, hitting a low around 3pm, and making the traditional workday not optimised for productivity. But further research reveals that there are individual variances in circadian cycles, making some of us more disposed towards 'lark' or towards 'owl' patterns of alertness. Failing to recognise the variances in how people work best can lead to reduced productivity outcomes - no matter how many cups of coffee we drink.

Unfortunately the attachment to the rigid nine-to-five framework remains all too common, and no doubt has its roots in a lack of imagination and inherent aversion to change that seems to pervade so many HR departments and boardrooms. The notion that an employee should not be permitted to work flexibly because some employees who are afforded too much flexibility fail to meet expectations, or are generally harder to manager, is a little like saying that immigrants should not be allowed in the workplace on the grounds that some don't meet expectations, or are harder to manage due to cultural differences. If a line manager cannot deal with teams working flexibly, surely the problem is the ability of the manager rather than the flexible working model itself?

It's as if we are replacing common sense and judgement with rules and process. And the problem is, to quote Elon Musk, "that at a lot of big companies, process becomes a substitute for thinking. You’re encouraged to behave like a little gear in a complex machine. Frankly, it allows you to keep people who aren’t that smart, who aren’t that creative."

Ironically we trust undergraduates to get through university in a relatively autonomous fashion, making their own decisions about where, when and how they will study and how they use the resources made available to them, and yet upon graduation and entry into the workforce, at a time when they have presumably gained some im*-portant insights into their own work style, we remove that autonomy and tell them where, when and how they will complete their tasks.

Australia is likely to fall behind its neighbours in the productivity stakes if we don't heed the call to review our outdated ways of thinking about work. Research reveals that Australian workplaces are the least flexible of any in the Asia-Pacific region, with 79% of workers saying they are unable to work remotely in their current position, as compared to 59% of Chinese workers, 62% of Indian, 64% of Malaysian and 65% of workers in Hong Kong and New Zealand.

Benefit of the doubt

A key failing of our workplace systems is that they begin with the premise that employees will act in bad faith, and as such put rules in place to control them. Why not instead assume staff will act in good faith, and rely on other processes (such as improving managerial practices) to identify and address under-performing employees? In the words of the7stars' Biggam, "if you trust the people you work with to behave like grown-ups, they generally do."

Companies that prove too slow to move with the times can find themselves clinging to policies that bear little relation to what their own staff are actually doing. I recently worked for one company where the formal policy was that flexible work was not an option - and yet out of the six staff that reported to me, four (and at one stage five) were working either part-time, flexi-time or remotely.

Netflix was one of the first high-profile employers to recognise that their conventional staff leave policy was out of kilter with the reality of the modern workforce - and so scrapped it in 2010, allowing staff to take as much leave as they liked, as long as their manager knew where they were and that their work was being covered. Virgin later followed in Netflix's footsteps, after Richard Branson's daughter read about the Netflix initiative in the paper.

"The policy-that-isn’t permits all salaried staff to take off whenever they want for as long as they want," Branson explains. "There is no need to ask for prior approval and neither the employees themselves nor their managers are asked or expected to keep track of their days away from the office.

"The Netflix initiative had been driven by a growing groundswell of employees asking about how their new technology-controlled time on the job could be reconciled with the company’s old-fashioned time-off policy. That is to say, if Netflix was no longer able to accurately track employees’ total time on the job, why should it apply a different and outmoded standard to their time away from it?"

Towards the portfolio career

A US survey by Accountemps (an affiliate of Global staffing firm Robert Half) suggests that conventional thinking around the practice of job-hopping is starting to shift, though unsurprisingly with significant generational differences. The survey reported that over half of younger workers viewed regularly changing jobs positively, as compared to two thirds of 35-54 year olds and three quarters of 55+ year olds viewing job hopping as a bad thing.

With 60% of Millennials leaving their jobs within the first three years, should employers give up on retaining their best staff and simply get used to talent rotating in and out of their organisations (at a cost that can exceed 200% of their annual salary)? How can employers best adapt to this generational change in worker values and aspirations?

Tom Amos, co-founder of freelancer-sourcing hub Sidekicker, sees both challenges and opportunities for employers seeking to retain their best workers. "Millennials coming in to the workforce are not into the idea of a 50 year relationship with one employer, but that being said they can be very loyal to good employers. Companies have been getting better at working on their culture and physical workplaces."

For a start, companies should be offering workers authentic opportunities and appropriate support to undertake a variety of different roles within the organisation. And no, this is not just about a jobs page on the intranet and a 'yes we have a policy for that' tick-and-bash approach. It's about leaders genuinely investing time in changing a culture. It's about giving enough breathing and thinking space to over-worked managers, constantly under pressure to improve operations and look for incremental gains, to step out of the business and take a longer term perspective on talent retention and career building - both for themselves and for the teams they manage.

BYO career

Mass Career Customization is a framework developed by Cathy Benko and Anne Weisberg in the eponymous Wall Street Journal bestseller published in 2007. The book highlights the misalignment between the rigidity of traditional career structures and the variability of today's family structures and lifestyles. This is of course particularly relevant to high-performing women whose intensifying careers come to clash with their biological clock. The authors' proposed approach is to replace the traditional corporate ladder with a 'corporate lattice', a framework that enables employers to reduce turnover of key staff by developing long-term relationships with them. The framework allows employees to construct customised careers, and reject the usual trade-offs associated with the all-or-nothing corporate ladder approach. For example, employers are encouraged to look beyond the upwards-only career path, and focus instead on planning the employee's progression in roles, quality of assignments and pace of promotions. It is neither necessary nor desirable that every year staff should be expected to work harder and longer than they did the preceding year.

Lynda Gratton, a London Business School professor and ranked Most Influential UK Thinker by Human Resources Magazine in 2011, spoke last month at the World Business Forum in Sydney about key trends that are shaping the future of work. Gratton talked about redesigning the cycle of work and thinking beyond the three stage sequential lifecycle of education-work-retirement. As life expectancy increases so does the length of the average career, and there is an increasing likelihood that we will need to adapt and re-educate ourselves as certain jobs disappear and new ones emerge. Gratton encourages us to break the "caustic cycle of modern work" by becoming more flexible and re-examining the delineation between work, family and interests.

A generational shift

Research into generational differences in the workplace suggests that unlike Baby Boomers who equate hard work with long hours and want a long term commitment to their employer, Generation X workers want work-life balance and flexible work schedules, and both Generation X and Millennials expect to have multiple employers and even multiple careers. Millennials will soon make up over three quarters of our workforce, and according to a recent PwC survey 97% of female Millennials say that work-life balance is important to them.

Career flexibility is no longer an exclusively female issue though. With a general acceptance of the importance of the father's involvement in child-rearing, the co-parenting dynamics have shifted and a new wave of fathers are more involved and engaged in childcare responsibilities than the previous generation, leading to better outcomes for the children. As such, males are slowly becoming less fearful of taking the parental leave entitlements offered by their employers - even though it is a phenomenon still somewhat frowned upon by many workplaces, as I recently experienced.

In other words, having laws which compel employers to offer flexible working opportunities is a start, but doesn't guarantee that the cultural change will follow. As additional evidence of this, research released last year shows that when faced with staff working flexibly, supervisors tend to assume that those working earlier in the day are more effective in their jobs than those working later in the day. This bias can result in unfavourable performance ratings for some staff choosing to take advantage of flexible working policies.

As part of the on-going career conversation employers should be having with their key talent, opportunities for staff to undertake roles outside the organisation should be discussed. To a certain extent this already happens in a lot of companies, in the shape of volunteer day programs and the like. This is a low risk approach, and ticks the corporate social responsibility box, so most typically won't ruffle too many feathers.

Anything more than this though is unheard of for most employers. The severe risk aversion that's been ingrained into the corporate manager's way of thinking leaves them unable to deal with the notion that an employee may have any other professional interests in their lives other than the job at hand.

A typical job interview

Not that long ago I attended an interview for a fixed term, full time placement. The recruitment agent had been told I was the best candidate on paper, but during the interview I mentioned (in a misguided moment of honesty which years of conditioning should have beaten out of me) that I was involved in other activities and may have to book one or two half days of annual leave over the coming six months to attend to them. I didn't get the job on the grounds that they were looking for someone who would be "more exclusively focussed on the job".

The outcome of such short-sightedness, other than a clear incentive for dishonesty during the interview process, is an unintended bias against people with multi-dimensional professional interests who are more likely to be agile across roles and creative in problem-solving.

This type of myopic, cookie-cutter approach to filling jobs is alas all too common, with most hiring managers and recruiters fixated on short-listing candidates who are currently doing the same role with a competitor. Most often devoid of any creativity or human interest, job ads posted on Seek or LinkedIn tend to express a lack of passion and vision for the role being filled. They are often interchangeable with one another, and instantly forgettable.

Research into different recruitment tools and measures and how they correlate with performance on the job shows that only 2% of workplace performance is attributable to job experience - and yet most recruiters use this measure to exclude a majority of job applications. We all like to think that the jobs we do require highly specialised knowledge that only comes through years of experience in that job, but it is quite often not the case. Hiring staff with unusual career paths can generate fresh perspectives, and is more likely to attract uberslashies, T-shape and Pi-shape professionals, all types of increasingly sought after talent.

Incentivising diversity

Homophily is the tendency of individuals to associate with people similar to themselves, and this manifests itself in the corporate environment and in how we hire people who will 'fit'. This can deprive companies of new perspectives. Around 30% of problems which R&D intensive corporations are unable to solve internally are able to be solved by scientists from outside those organisations, and in most cases the scientists are coming up with solutions outside of their main field of expertise. In other words, the solutions already exist, they just need to be imported from one discipline to another. Hiring staff who've gone to the same schools and studied the same things as your existing staff, is unlikely to bring fresh perspectives.

To be fair to hiring managers, they are not incentivised to hire versatile and multidimensional staff, who might be more likely to outperform in the long run as well as in subsequent roles within the organisation. This could be addressed if companies paid bonuses not just to high performing staff, but also to whoever first hired those star performers (regardless of which team or department they are working in today). If you are any good at identifying talent who can excel in multiple roles across the organisation, then your employer should be incentivising you to do just that.

Increasing shift to freelance work

"No matter who you are, most of the smartest people work for someone else." Better known as Joy's Law, this statement was made 25 years ago by Bill Joy, co-founder of Sun Microsystems. It expresses the challenges faced by companies in accessing the best talent, and acknowledges that knowledge is inherently dispersed and difficult to aggregate. Companies that try to address this by simply hiring the best people they can are missing the point: there will always be someone else out there who is smarter.

The solution? With communication technologies now allowing work to be completed by increasingly distributed teams, innovative organisations are looking at collaboration, crowd-sourcing and other strategies which make their boundaries more permeable and their human capital more flexible.

40% of America's workforce will be freelancers by 2020. In Australia, a survey commissioned by Upwork last October revealed that 30% of the workforce (an estimated 3.7 million people) undertook some form of freelance work in the previous 12 months. This is four times the number of 'independent contractors' identified by the Australian Bureau of Statistics - no doubt owing to Upwork defining freelance work rather broadly as including temporary, contract or project workers.

Either way, we appear to be on the cusp of a paradigm shift in the way work is completed, with Australia being the world's largest marketplace for online freelance talent. With almost three quarters of CEOs viewing a shortage of skilled workers as a threat to the growth of their organisation, employers are turning to new workforce planning strategies. Tom Amos, co-founder of freelancer-sourcing hub Sidekicker, says we are witnessing a much more fluid workforce, with "businesses looking to build core, lean teams of highly intelligent people, complemented by temporary resources sourced just-in-time through platforms like Sidekicker." Businesses can rapidly scale up or down in response to market conditions.

"Really talented people can develop a portfolio career working for multiple employers, and this type of flexibility is really exciting for those workers who it suits. It's not going to be appropriate for all personality types, some people will always prefer the security provided by a permanent position, which enables you to get a mortgage and that sort of thing. But the labour market is certainly moving in that direction."

Cultural revolution

In his book Crowdsourcing Jeff Howe writes about a "first wave of a business and cultural revolution that will change how we think about the Internet, commerce, and, most important, ourselves." Howe, who incidentally takes credit for first coining the term crowdsourcing in 2006, traces its origins to the open source movement in software. The development of the Linux operating system demonstrated that a community of like minded peers could do a better job at product development than a market giant could.

Today there is a plethora of sites facilitating the crowd-sourcing of work, ranging from micro tasks (mechanical turk, freelancer) to creative and design work (namingforce, 99designs) to retired scientists (yourencore) to expert consultants (expert360). A whole industry has emerged in this area, with websites which list and review other sites, crowd-sourcing consultants, publications, conferences, etc.

The combination of crowdsourcing tools and a more flexible approach to careers opens up the hidden potential in all of us, enabling us to excel in more than one vocation and express our creativity in new ways. This can provide an opportunity to rediscover those aspirations we buried long ago when forced into all-or-nothing career choices on the way out of university.

For some this is a chance to complement an existing career. For others it's an opportunity to re-invent themselves as fully self-employed. Micropreneurs are primarily motivated by flexibility, independence and professional enrichment. They may also be hoping to make more money than they did in their previous job, but in most cases this is unlikely. In fact, the uncertainty associated with the lack of job security can prove too much for some who try to make the transition - though 88% of freelancers say they'd never go back to full time work.

Does the advent of crowd-sourcing and micro-entrepreneurship herald the death of the corporation as we know it? Or can companies innovate themselves out of trouble?

Adapt or die

Large employers with enough foresight have the opportunity to integrate some of these digital and cultural trends into their workplaces, rather than wait for disruptors to challenge their business models and poach their staff. Professional services firm PwC is currently trialling an internal crowd-sourcing tool with their R&D tax staff in Australia, allowing tax specialists to take on extra work outside of traditional work hours - and get paid for it. Building on the firm's recently-launched self service tax rebate tool Nifty R&D, the scheme gives staff the option of earning some spare cash by reviewing jobs lodged by clients in the system.

"This provides PwC with a workforce utilisation tool, allowing us to better manage the seasonal peaks and troughs, but also provides staff with more flexibility in how much work they take on," explains R&D tax partner Amanda Gell.

It may surprise some that a large global company like PwC could develop as innovative a program as this - after all, large corporations tend to be notorious for their failed attempts at trying to be more like start-ups. "It's probably no coincidence that this initiative came out of the R&D tax part of the business," says Gell, "if you consider that we spend all our time working with innovators and witnessing their disruptive technologies in action."

Rotational development

LinkedIn, Google and Facebook all provide types of rotational development for their key talent, acknowledging the clear benefits these programs can offer in employee engagement, learning and development outcomes. Facebook's Rotational Product Managers undertake three product rotations over twelve months, at the end of which they "are equipped to lead cross-functional teams that build high-impact, meaningful products."

Zappos, one of the world's largest online shoe stores, has replaced the traditional pyramidal hierarchy and provides employees with the opportunity to expand their roles by taking on additional 'badges' (roles) in other parts of the company.

We appear to be living through a technology-enabled revolution in how we think about work, and it is likely we will witness an increasing number of employers waking up to both the threats and opportunities presented by these disruptive trends. The implications for our economy and our careers are profound - and exciting.

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