Some weeks ago a student of Business Administration at the University of Applied Sciences Kiel approached me and asked for an interview. Michael Roos (pictured above) was working on an essay – as he put it – “about the ways in wich labour markets will develop and how one can take advantages from that”. In the article he went on to write Michael looks at the ongoing changes facing the German labour market today from the perspective of a young German.
The essay was handed in at a competition held by scientific journal “Adaptive Options”. It won the competition and was published in the magazine’s Spring Edition 2010. For me it captures in a nutshell many of the ideas I put forward in my books “Morgen komm ich später rein” and “Meconomy”. So especially for those of you who cannot read German here’s a chance to get a quick insight into some of the things I care about. Thank you, Michael!
“Last week I noticed a remarkable situation at my family’s dining table: My sister, who is about to write her thesis, announced excitedly that she was offered an undated contract of employment, but my parents just did not consider it being anything exceptional. I thought they really should have because just recently I had read in a newspaper that in the majority of cases for young professionals the contract period is limited to less than two years nowadays.
This was the moment that I realized that the labour market had changed and that the situation that I will have to face someday will be entirely different than the situation on the labour market my parents knew. So in this article I want to take a look at the changes in the labour market and how the participating groups of employees, companies and states can deal with it.
I would like to summarize very briefly what experts like Markus Albers, with whom I had a long telephone call during my research process, predict: Work will become more flexible and mobile in every way. People will no longer work for just one company their whole life. Limited contracts will become even more common and so we are all going to end up having fractured labour biographies. Thus employees will increasingly have to take responsibility for managing their own career. They will get closer to being freelancers, which will be rather challenging for many because it will not be sufficient anymore to just succeed once in the hiring procedure. Entering that competition, people will have to perceive themselves as a brand that needs to be established continuously.
How will we feel in our insecure jobs?
Having heard this several issues came to my mind: How will our relations to our employers look like? The 2008’s Gallup Poll, that analyses employee’s work engagement, revealed that in Germany the group of people saying that they have no emotional bonding to their employer already rose up to 20%; only 13% said that they have a strong bonding. I assume one does not have to bother about the principal-agent theory from which one can deduce that these results are alarming since work engagement certainly influences workers’ productivity and conscientiousness. So are not these simultaneous developments of decreasing contract durations and decreasing engagement at least a hint that they might be correlated?
Then I wondered whether I like the development that borders between professional life and private life are getting blurred. On the one hand I see the advantages of the new flexibility but on the other hand I fear that people will have problems to really unwind at home after work. I guess it requires certain abilities of personal time management to perform the cut there. In other words some people will be delighted by that development and others will have to discover self-discipline first.
The other side of the coin looks like this: There has not just been a change in working conditions – also workers are not the same anymore! My generation, the so called digital natives who grew up with Internet and mobile phones, come along with completely new values, competencies and beliefs. Broad media literacy is absolutely common to them. Accordingly they actually do not have to be taught how to brand themselves via Twitter or Facebook, it has already become part of their lives and thus they can deal with those challenges and take the benefits from the new ways of working. Relating to values bestseller author Dan Pink says that this generation longs for three simple things: Autonomy about directing their own lives, mastering challenges and working on a purpose they believe in.
From all this, one may conclude that there seem to be a lot of new “musts and cans” for employees. Insecurity vs. self-actualisation, what weighs more? Maslow put security in the foundation of his pyramid – scientists in happiness research tend to say that autonomic living is a condition for happiness nowadays. I guess it is neither black nor white. It primarily depends on everyone’s personal justification. Nevertheless I believe that one will not even have the possibility to choose between both anyway since refusal will not make anybody happier.
How companies will profit from new solutions
When it comes to companies it seems obvious that they will benefit from the new flexibility of working culture, but there are also factors that threaten them. For instance they will have to deal with the predicted lack of specialised workforce especially in the developed countries. Business book author Seth Godin predicts that a “company’s success will primarily depend on how well they will manage to attract and coordinate skilled, innovative freelancers.”
Agreeing to that point I prognosticate that in order to succeed in that market human resources departments will be valued up as key competitive factors. And I also assume that there will be a relocation of their job definitions: Their main challenge will not be the plain supervision of existing employees anymore, but the detection, attraction and allocation of adequate personnel. In the course of that, budgets will be moved from on-the-job training to recruitment and coordination activities, because the increasing fluctuation of employees will shorten their average continuance in one company by far, implying that investments in a fluctuating personnel will not be reasonable anymore.
The consequence is that lifelong learning will become even more an employee’s duty, which I really do not consider as bad for two reasons: First, because of the many autodidactic possibilities via new media nowadays like ItunesU for instance and secondly, because in contrast to in-company education it will be equally assessable for all hierarchies and that means a democratisation of education.
Furthermore those self-educations and the possibilities to buy in providers for almost any services like accounting, IT or production will reduce the complexities and risks of self-employment dramatically and will evoke an unprecedented measure of entrepreneurship across the whole society. The resulting amount of start-ups will not just release enormous creativity, but will also allow new business models and finally change the corporate landscape in a massive way.
Two brief case studies
These concepts of flexibility, autonomy and freelancing may all sound rather nice but still fairly utopian, so I just want to present you the ambitious approach of Best Buy and their experiences. Best Buy is the leading US electronics retailer and they introduced a concept called ROWE (Results Only Work-Environment) which basically means that each person is free to do wherever, whenever, whatever they want as long as the work gets done. So they radically proceeded from an input orientated performance measurement to an output orientated one.
People at Best Buy – managers as well as employees – initially had serious concerns about that new model: How fairly will my performance be measured? Will we lose control over our employees? But then they made very positive experiences: Employees were urged to really focus on the processes that are valuable for the customer and to act more efficiently than ever before. The predicted chaos in communication did not occur, instead people found creative collaborative solutions and restructured processes reasonably.
Giving you some hard facts about Best Buy’s experiences here is an extract from the analysis which they did in cooperation with the University of Minnesota: Productivity rose by 10-30 %, voluntary labour turnover sunk by 50-90 %, customer satisfaction hit the all time record and millions of dollars were saved in real estate costs each year.
Another remarkable instance revealing the benefits of new working solutions is Google. Engineers at Google are allowed to spend 20 % of their time to work on any subject and however they want. On average half of Google’s new products like Gmail or Google-News were created in that creative fifth – that seems to be quite efficient to me.
In what way should states contribute?
Dealing with the role of the states I see two major tasks: Providing the right circumstances and mending social hardships.
For instance the whole school system needs to be restructured because its main purpose is to prepare students for the new labour market. I plead to put a much larger emphasis on the whole soft-skills sector: media-competences, the ability to judge sources, figuring something out on your own and being able to work collaboratively will enable people to participate successfully in the new labour market – learning facts and figures by heart will not.
Also the statutory framework has to be redesigned to invigorate the new entrepreneurship. Dealing with those tasks will already be a hard nut to crack. But an even bigger challenge to the governments will be the overdue reconstruction of the welfare systems, as we have them in Western Europe, which were once designed for an industrial society. The welfare system will have to face not just the demographic change, but also more common times of temporary unemployment and a hardening core of long-term unemployment, which will accrue since it will become even more difficult for less educated workers to participate in the new labour market.
In consideration of these issues I really do not see how the old social insurance system could keep its level. Under these circumstances I think it will be the state’s only option to concentrate on providing a basic social care available for everyone, while taking reduced social security contributions. Everything beyond will have to be provided by personal financial precautions. I am calling for that, because I do not think that the welfare system will be able to cope with the new changing working models in an appropriate way. Emerging free resources shall be used to qualify people for the new labour market to avoid a pre-programmed elderly poverty.
What can be confirmed?
Even though we can see that there is a lot of change going on right now, some points seem quite certain to me: People, companies and states will have to face a shifting labour market that will require different skills and organisational structures and offer unseen development potentialities coevally. Not everyone will be able to profit from that process in the same way, which obligates activities by the state concerning education and welfare policy. Nevertheless an uprising generation of digital natives will establish new values and determine their new perception of working lifestyles.”
This was a guest post by Michael Roos. He can be contacted at Michael.Roos@Student.fh-kiel.de
References
1) Albers, Markus (2008): Morgen komm ich später rein: Für mehr Freiheit in der Festanstellung.
Campus Verlag.
2) http://gorowe.com/know-rowe/ (Status: 04/23/2010)
3) Conlin, Michelle (2006): Smashing the Clock. Published in Business Week No. 48/2006
