Today’s firms are striking an ever more flexible pose, from modular workspaces, open plan offices and hot-desking, to looser organisational designs. The freelance economy is blurring the borders of the workforce, with Morgan Stanley predicting that freelance workers could make up half of the US working population within a decade. This outside army helps companies scale up during peaks without bloating the permanent headcount. Full-time employment is also becoming more flexible. Remote work, flexible hours and job-sharing are among the perks that sought-after companies offer employees. Digital innovation enables the frictionless organisation to become a reality, from gig economy matchmaker websites and freelancer management software, to file-sharing, video conferencing, and workflow platforms.
Yet, as companies become more agile, across a growing number of sectors outside of the technology industry, they are running into a host of problems. For example, firms can be penalised for misclassifying their freelance workforce, or be punished in the court of public opinion if they are seen to be evading statutory duties to workers. Freelance-using firms might also expose themselves to intellectual property theft, or give external parties access to valuable information, such as new product launches.
The nature and feeling of work is changing too. Just like an e-book lacks the tactile pleasure of the printed edition, what organisations gain in flexible efficiency they can lose in cohesion and culture. Frictionless communications, meanwhile, are remarkable in their convenience and trivial in cost, providing ease of contact, regardless of time or location. However, they also are leading to distraction and a blurring of lines between work and leisure. Might it be time to bring back some controls, even a little friction? To find out, WIRED Consulting, in collaboration with Baker McKenzie, conducted a global survey of companies in Europe, North America, Australasia and Asia to see how they balance the benefits and risks of the flexible age.
For much of the twentieth century, corporations were smooth-state operations in what now seem sleepy commercial waters. The average age of an S&P 500 company was 60 in the 1950s, falling to 20 by 2017 as weather-worn giants were felled by hyper-scaling startups. As a result, firms of all sizes have tried to mimic the tech industry. Agile management replaces top-down bureaucracy with iteration and experimentation, delivered by small autonomous teams working in sprints. It started in software, but today the lingo is as likely to come from the boardrooms of companies in pharmaceuticals, banking or the automotive sector.
The terms of work are relaxing, too. Remote work, telecommuting, flexible hours and job-sharing are becoming more common. In the war to recruit talent, workplace review websites like Glassdoor make flexibility a reputational edge. Some highly successful firms have taken the strategy to its extreme; Base Camp has no offices at all. Companies are leveraging the freelance workforce more as well, scaling up and down without incurring the full costs and hassle of hiring, training, and legal obligations such as pension contributions and insurance, from health to employee liability.
If the tech sector forced companies to be more agile by setting off the age of disruption, it also provided the tools to do it. With smartphones, tablets, file-sharing and cloud computing, software-as-a-service and audiovisual conferencing steadily improving in cost, convenience and quality, it has become possible to work remotely, integrate freelancers into projects and workflows, and assemble teams in a nimbler way. The spirit of agility has even reached the most physical of frictions: the workspace. “The traditional model, where I need to sign a 20- to 30-year lease, is a significant impediment to companies, and a massive financial commitment that people just don't want to make anymore,” says Veresh Sita, CWeO of WeWork’s enterprise division. “We live in a world that's dynamic, that's changing all the time. Building a five-year business plan doesn't make sense anymore, because the rate and pace of change is so fast. So how do you make a long-term commitment when you don't even understand what the future is going to be like?”
As more companies get flexible, they are realising new costs and risks. Freelancers are a talent pool on tap, but if companies do not clearly delineate employment categories, they could risk mis-classifying them, falling foul of labor obligations such as minimum wages, pension contributions, and holiday and sick pay. Externals could also act against the interests of the firm if they become privy to sensitive intellectual property or strategic insights. Not knowing where the "edge" of the labour force is also makes it hard, maybe impossible, to track compliance with GDPR since firms may not always know where their customers' data has gotten to.
And there are subtler downsides to a flexible workforce. Cohesion and togetherness make a company more than the sum of its parts ("culture eats strategy for breakfast", after all). Freelancers, external workers and physically remote co-workers, can dilute culture and identity. Increasing their number also makes it harder for a company to track metrics like workforce diversity.
A majority of 64 per cent of participants agreed that a flat organisational structure leads to more innovation, versus just 14 per cent who disagreed.
A majority (53 per cent) also agreed that a frictionless workforce that uses freelancers increases creativity and innovation by bringing together diverse views, skills and cultures. Comparatively, only 25 per cent disagreed.
However, the survey did identify that respondents see downsides with half (51 per cent) of respondents acknowledging that a frictionless workplace, such as hot-desking or renting flexible workspaces, weakens cohesion and corporate culture, compared to only 27 per cent who disagree.
A plurality (43 per cent) also agreed that increased use of freelancers is creating a fragmented workplace culture, burdening the organisation, with 36 per cent disagreeing.
Frictionless communications, similarly, has companies in two minds. Computer scientist and productivity guru Cal Newport talks of "attention capital", a hitherto under-appreciated facet of knowledge work. A constantly distracting environment, from social media, email and workplace chat-apps, to the shift towards open-plan office design, makes focus increasingly difficult. It is also leading to burnout as people feel a constant pressure to respond to every communication at all hours. Flexi-workers, who tend to work limited hours, especially need ways to limit the time demands of corporate communications. Companies and governments are both stepping in. Some firms have introduced bans on emails out of hours. Daimler introduced an auto-delete function on emails sent to workers while on holiday. Governments are also fighting "technostress" in the likes of France, Italy, Spain, the US and Germany through measures such as the "right to disconnect" rule in France.
Tech execs do not disagree with the peril of communications overload: “we tend increasingly to try and fill every spare moment,” says Bruce Daisley, vice president for EMEA at Twitter. “We're all swiping away emails when we go to the bathroom, when we're dashing between meetings, and there's this notion that by packing more scheduled activity into the day, we're accomplishing more. I'm very pro-technology, but I think we need to educate people about how they interact with it.”
Survey participants agreed (75 per cent) that frictionless internal communications (e.g. email, chat, video calls, document sharing and professional social media) helps their organisation be responsive and agile
In comparison, four out of ten participants think these same tools can cause distraction and burnout (only 34 per cent disagreed)
A majority (74 per cent) of participants said that companies need rules to avoid an always-on work culture (only 15 per cent disagreed)
All shifts in technology, management and organisational strategy bring benefits and risks. The age of "agile" and flexible companies is no different. No-one wants to forego the agility benefits of a flexible, frictionless organisation. Smart companies, though, will be judicious in their adoption of new methods, working styles and technologies.
While there is no "one-size-fits all" model for how far and fast companies move towards a frictionless model, the most important step is to listen to their people and make regular adjustments, rather than conjure a static plan in the boardroom. That can help strike a better balance than many have yet discovered between freedom and fixity.
What lessons can be learned from corporate experiences so far?
Hire outside help because you need the talent or to address specific bottlenecks, not to avoid responsibility. Regulators, union groups and the court of public opinion are closing in on companies seeking to use freelancers merely to lighten their taxes and worker obligations. Don’t conflate outsourcing with flexibility. Forward-thinking companies will be clear about how they classify and categorise their workforce, and what problem they are trying to solve, while maintaining visibility over internal and outside resources.
Figure out where the organisational border is. In the GDPR era, a freelance workforce could be a liability in terms of data protection. Freelancers could also access sensitive corporate information, and even IP. Structured onboarding and information access policies can ensure the company’s integrity and security is upheld. This requires clear division of labour and accountability between human resources and procurement, departments which may not always have been closely interactive. Firms need not reinvent the wheel; cloud-based freelance management platforms are emerging to help govern the external workforce efficiently and in compliance with relevant regulations.
Avoid an atomised workforce. While remote work, telecommuting and distributed teams have many benefits in terms of cost, speed of business and scale of collaboration, they can have subtle negative effects too, which companies should be attentive to. Cohesion, physical proximity and stable teams are all markers of successful companies too. Churn, turnover and constant change may be deleterious to such factors. If the push to a frictionless organisation undermines cohesion, it could hamper a company’s productivity by undermining teamwork and staff engagement at work. Therefore, look to protect culture and cohesion by integrating flexible workers into the tone and mission of the firm. Everyone benefits when they feel engaged at work, rather than merely transacting.
Ask why, instead of why not. There is a growing portfolio of communications technologies, apps and platforms, each offering greater speed and flexibility than what came before. Adopt a purposeful, conscious strategy to newfangled frictionless communications tools, rather than letting them into the organisation passively. Think through the "human factor" and ask if a communications tool might cause unintended harm. To counter technostress, make sure the message is clear that workers have agency to decide when and how regularly to engage in communications platforms. Look also to the growing battery of machine learning and AI tools, which are helping sift and sort communications for salience.
Nurture "attention capital". The "knowledge work" era has so far under-appreciated "attention capital". The ability to focus is critical to value-creating work; proliferating communications should not disturb it. Attention capital can also be undermined by open plan offices and hot-desking. Despite their benefits, such approaches might be reducing workers' abilities to focus, explaining some of the sluggish productivity experienced by so many firms in the digital age. Instead, implement communications strategies and physical layout to facilitate a focus on essential tasks. This could include rules protecting workers from tacit expectations to respond to out-of-hours emails. It could also entail technology solutions that limit how easily communications tools can interrupt other workflows, and even protecting mutually agreed windows of time from meetings, virtual or in-person, like the "no-meeting Wednesdays" employed by productivity firm Asana. More careful attention to office design, distinguishing between open, noisy spaces and more cloistered environments, could also help workers who are sensitive to distractions. A rested, focused workforce is a dynamic workforce. Being constantly plugged in and exposed to other people's communications causes burnout, lowering creativity and energy.
The WIRED-Baker McKenzie survey reflects a deep-seated ambivalence about the frictionless era, with respondents both recognising the fruits of flexibility, while being increasingly aware of its dangers. In a context in which frictionless innovations are likely to continue and deepen in the future, as vendors improve their technologies and companies venture further into the experimental playing field, getting a strong handle on how best to calibrate these solutions to the organisation's needs will be increasingly crucial to 21st century management.
Collected resources on the modern workforce are available at bakermckenzie.com/modern-workforce
This article was originally published by WIRED UK
