The future of enterprise – 5 – Welcome to the disorganized organization

Photo Denis Maillard / Vice President Communication and Strategy, Technologia / November 29th, 2014

Work organization has undergone major evolution over the past 40 years, but we are only at the beginning of this path. If an enterprise today, with its current organization, wishes to stay in the market and ensure the personnel are committed, it must start by taking into account what these persons really are: individuals with weaker professional and personal binding to the company, though constantly building new links round the successive projects proposed. Digitalization allows for remote work in a sort of cooperative nomadism. The general trend to adopt project-mode organization may lead to the arrival of project contracts. Up to recent decades, the enterprise was characterized by a unity of place. Enterprises tomorrow will be characterized by a unity of time, that needed for a project, for a small and large scale contracts, but with no unity of place, inasmuch as the workers can be thousands of kilometres away, in third party office premises or at home, in a remote tele-work mode. Working no longer consists of collaborating with colleagues in a given place built for this purpose, but rather networking with others and organizing a shared sociability. The question is: will the very concept of enterprise survive?

This article is the fifth of a series which will be published within the next three months.

ParisTech Review – Work organization has undergone major evolution over the past 40 years. How will it continue to evolve? What forces will determine the changes?

Denis Maillard – To understand where this is taking us, we must first recall where we come from. Schematically, we can distinguish two historic periods. The first covers up to the early 1970s. It began with the industrial revolution that led to Taylorism. Up to that time, workers had the skills and know-know they acquired. They not only mastered their work, but could change employer frequently, depending on their personal aims and on the pay offers they received. Industrialization and the principles of Taylorism have placed workers in large-sized factories where all professional skills needed for production are integrated. In these conditions, the workers carry out tasks that have been thought out and prepared by others. That particular model proved very successful, in that it was efficient and productivity gains were high. An accompaniment to this was the invention and dissemination of salaried work, such as we know today. Compared with the independent workers of previous centuries, the weight of Taylorian workers in the power equation with their employers was reversed since they were forced to accept a form of work organization the responsibility for which lay exclusively with the company owners.

At what point in time (and how) did we leave Taylorism?

We have not entirely left Taylorism, and certain services, for example, are run on a purely Taylorian model. But a second period opened up as of the 1960s and can be described in various ways. One way is by evolution of the workers themselves: for instance, by the massive influx of women to the labour market, by increased qualifications of salaried workers, by the arrival of young generations, the so-called ‘baby-boomers’, whose aspirations were different. Another way is the economic context: the end of the post-war economic catching-up in Europe, the end of the Bretton Woods system and exchange parity that guaranteed a certain stability, the oil shocks. But, we could also define this new period by noting changes inside the companies: Taylorist organization had developed in large bureaucracies, such as Ford or General Motors. In the 1970s this model began to run out of steam faced with the competition by the Japanese manufacturers such as Toyota.

Lean management inspired from the Toyota Production System, is the flagship model of the new period. It underscores the strong concerns about cost saving (a characteristic of the immediate post oil crisis years, compared with the expansion phase before) and a concern to see the salaried personnel contribute, not as simple operatives but more as inventive colleagues, capable of eliminating wasteful processes that decrease efficiency and performance of an enterprise or a production unit. The advantages of this involvement lay in calling on their ideas and creativity, with flattened and simplified organization chart pyramids. An author such as Peter Drucker was highly representative of those times when work and workplace organization were overhauled and people tried to imagine new forms of management.

This evolution saw a gradual increase of individualization of work: merit-pay and work schedule flexibility illustrated the trend. A new concept arose, that of task enrichment. The underlying concept is to break the assembly line and abandon Taylorism. In parallel, lean management and its inherent ideal of ‘no fat’ meet increased power of financial players in the industrial world, which encourage decisions to break down large conglomerates into lighter enterprises, just as powerful but more reactive, with surrounding sets of sub-contractors.

Has this major trend led to today’s organization structures?

Yes, with strong implications for Society at large. In developed countries, the previous phase was a time for harmonization of social conditions, with a building up of a salaried middle class, which the working class households could hope to access quite fast. As of the 1970s and in different manners, depending on the country concerned, we witnessed the advent of a two-tiered society. The protected, salaried world started to retract whilst at the frontiers gathered a nebula of often lesser qualified workers, whose situation was more precarious. In some industrial sectors, such as the car-manufacturing sector, the organization mode now depend more and more on availability of interim workers.

One concept leads the rest: flexibility. You must be reactive to clients’ orders and those of the prime contractors. But flexibility also develops within companies, with the advent of a new concept: that of the internal client. More intense work and pressure on the individuals have become the standing orders in a world where personal initiative and increased responsibilities for the salaried personnel are now standard, accepted practice. 80% of Europe’s salaried personnel say that they must solve unforeseen problems at work, which implies that they must adapt, call on behavioral resources and manage their job in “project mode,” doing this with teams that are constantly being reshuffled.

A positive point here: the change brings more freedom and creativity to the personnel, but by way of contrast and in certain cases, a community bond at work is more difficult to create than before. Phenomena such as harassment, burn-out and suicide now occur. And on top of this we have the digital revolution that completes the ongoing changes.

Does that mean that today we have reached the limits of a hyper-flexibility logic?

Certainly not, on the contrary. This economic logic, in fact, results from an individualization process that has become more radical since the 1980s. Thus, today, personnel are expressing a demand for recognition that no longer equates with what they do but with who they are. This places management in an awkward position. Offering a given salary or a status is no longer sufficient. All the less so that budget cuts and flattened hierarchies make it increasingly difficult to satisfy this demand. An example, among others, of this need for personal recognition: the sudden appearance in the companies of demands of a religious nature, or on special work scheduling or on food or clothing at work. Far from being reactionary or dictated by obscurantism, demands like these are ways to assert one’s personal identity. Tomorrow, if a company does not wish to disappear, it will have to integrate these individual expectations. It is with this proviso that work organization will be re-invented.

Could you describe for us the contours of these new relationships within enterprises?

The first change will concern management. Today’s principle of authority will rapidly be disbanded. We might say that the authority must be authorized to exert its powers. Managers will no longer be persons who give orders, as in the Taylorian enterprise, or even those that motivate fellow workers, as today. Their main mission will consist of networking individuals, whilst respecting their individualities, their personal constraints and their aspirations. And far more than happens today, the new managers will have to adapt to individuals as they are. They will have to respect the work-life balance wished by salaried personnel who will demand, over and above their salaried position, to simultaneously be able to develop a personal project, to be allowed to reply to their own clients or to look after a dependent relative. In a country like France – which has a good social benefits system, with an as yet positive demography, it is estimated that over the next 10 years, some 17% of the salaried personnel will also assume the role of family support for an older parent; this figure might indeed be much higher in other countries, such as Japan, Germany, Italy or China with its population ageing more rapidly. Enterprises will have to take these facts into account.

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The question of the manager’s legitimacy, and hence the distribution of power and democracy in the company will also be raised. Let us dream a little: in a company organized, not as a hierarchic pyramid, but as a network of associates, it could go as far as setting up a manager election process, or even election of the CEO. A minima, there could be as assessment of management by all the salaried personnel, as already suggests the generalization of 360 degree feedback. It will represent the price to pay to ensure that personnel stay committed, allowing them to work together … and employers to retain them!

Will it prove so difficult to motivate staff?

I prefer to talk, not so much as about motivation, but rather about personal commitment, or adhesion. Indeed, up to the early 1980s, individuality took on meaning through adhesion and registration in a collective entity: the nation, a party, a church, a trade union, an association, a local community and of course one’s employer company: workers identified themselves as “Ford workers,” or as a railroad workers, postal service agents, etc. The collective entity and, consequently, other people were vectors that enabled individuals to reach into themselves. Contemporary individuals – beginning with you and me – are different. They become unbound beings whose individualities are never as flourishing as when they divorce with previous connections, reset their marks, cancel adhesions and end earlier commitments. By acting this way, they assert their individuality and personality and, of course, they hope their individuality and personality will be recognized. After being allies, the collective entities (as well as ‘others’) now represent obstacles on the road to personal accomplishment. Enterprise does not escape these changes and it lends a new meaning to the expression “working together”! If an enterprise today, with its current organization, wishes to stay in the market and ensure the personnel are committed, it must start by taking into account what these persons really are, i.e., individuals who are both unbound yet constantly building new links round successive projects proposed by the company. This is precisely what digitalization allows, with the possibility of remote work in a sort of cooperative nomadism. Obviously, this does not cover all possible structures, or professions. But it is a long-term deep trend that will concern a growing number of workers, well beyond globalised, highly qualified managers and professionals as we see today.

The massive development of project-mode work will be the other major change: work contracts will essentially be project mission contracts that will encompass the enterprise’s vision and aims. Signing such contracts will constitute a very concrete and binding agreement. As a signatory, I shall no longer be given a life-tenure position by a company that will guarantee me work, but I shall be recruited for a precise project mission to be carried out in an assigned time schedule. Up to recent decades, enterprise had a ‘unity of place’, but not necessarily a ‘unity of time’ since a career path could last for a complete life. Tomorrow’s enterprise will be exactly the opposite; unity of time will be the project time, the contract time, the order time, but there will not be any ‘unity of place’ since the salaried personnel could be thousands of kilometres away, in third party premises or at home or as remote on-line workers, etc. This “de-spacing” of work is an important novelty. Working does not amount to getting together with others in a place specifically built for this purpose, but more to network with others and organise a shared conviviality or sociability.

In this scenario, what are the demands of these new style salaried personnel?

Rather than seeing the demands reduced to questions of quantities (pay, work schedules, material production level … for example, number of parts produced), which used to define work and the worker’s demands under Taylorian principles, they could henceforth be defined by questions of quality. Reinventing enterprise will revolve round quality of life at work and the possibility to do high quality work.

For the time being, enterprises see no advantage in reforming themselves from this point of view since they can still hire motivated salaried staff willing to sacrifice themselves to their assignments. That is why the changes will probably stem from the insurance systems. It is the insurance companies who pay for the work-related damage (absenteeism, accidents at work, professional disorders, burn-outs …). These companies do see an interest in change. In particular, I am thinking of mutual insurance and superannuation companies but also national insurance systems and the private insurance sector, as has been exemplified in the US in the 1990s: the level of accidents at work fell, partly under the pressure (and with the collaboration) of US insurance companies.

Lastly, the trade unions also would see an interest in changing. They are going to be forced to take account of these “autonomous, interconnected” individuals and to reframe the way they should propose solidarity. We are definitively moving away from affiliation logic and representative delegation of the right to speak on behalf of persons that were characteristic features of major organizations hitherto. Individuals now feel strong enough to negotiate with their employers or main contractors; trade unions are only needed when negotiations break down. They just act as service suppliers. Of course, this may happen from within the company but more certainly from outside the company, in much the same way as the first labour councils gave rise to trade unions: providing jobs, defending rights, assuring social cover, sociability, etc. Will they continue to be called unions, professional guilds or associations? The question is open, but the logic of defending the workers should continue for a long time to come.

You also envisage a more radical scenario, viz., total obliteration of enterprise per se. Can you describe this?

This prospect can be read between the lines today. Over recent years, atypical working modes, such as the independent workers (viz., outwith salaried work) have increased almost 10% in Europe. This evolution relates partly to the economic crisis, but is also to be seen in the context of a major trend made possible by evolution of democratic societies. This ‘re-merchandising’ of work in the form of sub-contracts, independence, self-employed entrepreneurs, liberal or interim activities relies on a fantasy of self-sufficiency and independence entertained today by our democratic societies. This desire is relayed efficiently by libertarian imagination and new technologies.

Our society therefore imagines that there can be a substitution for labour law, rebalancing inequality among workers and employers, with a more egalitarian relationship based on commercial law and the client-supplier relationships. There would also be a substitution of an economic subordination based on market conditions for hierarchic subordination. The fact that this “dependent independence” (since the persons involved are often only connected to a single prime contractor) is developing despite the associated risks, suggests that it corresponds to a deep-rooted desire of the salaried personnel to see themselves as free, equal individuals as they go about their activities. They can prove, in their work, their degree of autonomy, initiative and the possibility to unshackle themselves from what remains of a hierarchic, non-equalitarian society, demanding far too much commitment, still represented by enterprise today.

Could this trend win the day? Might we envision the total disappearance of enterprises?

Let me sketch out two scenarios which are like the two horizons of work. In reality, the ingredients will intermesh. We shall be required to perform “work in crumbs,” to quote French sociologist Georges Friedmann in the 1950s. This work will be carried out simultaneously in an enterprise, remotely, at home or on third party premises; in a team, in a network, alone, for one or several employers or for oneself. In such a context, there will no doubt not be a total disappearance of enterprise but, to say the least, its contours will need to be redefined. It will be more difficult to define the social and legal responsibilities of these very extended and fuzzy enterprises. We must imagine flexible structures with a mesh of salaried staff, sub-contractors and occasional, freelance contributors. Whatever the configuration, in one or other scenario, the overall pattern will remain the same: working signifies temporarily joining forces in a project assignment using all the possibilities that accrue from digital processes. We can also see the utopia brought on by the digital revolution: enterprise can be perceived as a social network in which managers and employers can be compared to community managers whose job it is to harmoniously encourage, direct and enhance the work input of the company’s personnel. To recruit personnel, no need for CVs any more! One need only analyse the image persons provide on social networks and accessible personal online data.

But this utopia runs the risk of stumbling on reality. Though technology-intensive nomadism is going to become a dominant feature, traditional job features, viz., sedentary and physically positioned will last for some time to come. Nonetheless, they will be even more devalued and precarious than they are today, because of the impact of the flexibility factor. Any aspiration to freedom and mobility expressed by individuals carries with it a major risk of precarious work. When we refer to this new type of enterprise, we spontaneously think of digital companies that employ creative, salaried personnel, both skilled and well-paid. But the same reasoning holds for labour-intensive industries, no matter if they are physical or digital. The advent of zero-hour contracts that exist in the United Kingdom today signals this new world of maximum flexibility which shall take various forms, but we still have to invent ‘job security’ for those concerned.

What will the position of work be, finally, in the future for us as individuals?

We can see clearly that there is an oscillation between an attempt we could qualify as socialo-democratic, to reinvent work in enterprise round the notion of quality of life-style, and a libertarian celebration of a post-salary vision of the world that glorifies one’s activities and entrepreneurship on their own merits. It is obvious too that both visions nourish the hope of our living in a harmonious society where work, whatever its nature, will enrich individuals and free them from necessity. And yet, if we move on to a society where individuals dream of freeing themselves from work, reinventing themselves outside work, we shall indeed have to organize this, so as to leave the greatest amount of freedom possible. In this case, it will be non-work, leisure and non-merchant activities that will become mainstay values. As a consequence labour will be devalued, simply becoming one activity among others – and this may effectively make a whole range of work, such as the precarious work we just mentioned, invisible.

Indeed, emancipating certain persons through work will necessarily need to be compensated by increased constraints on others. In order for given individuals to be enriched at (or outside) work, others will have work to procure them the material or cultural objects needed to attain this objective.

Whether we like it or not, an activity-intensive society, with individual autonomy or freed work, will be more than ever a consumer society with invisible labour. Here we are touching on one of the most secret paradoxes of an enhanced ‘individualization’ process: autonomy and enrichment of individuals in (or outside) work will result in a dual alienation. On one hand, the need to consume and, on the other, the need to benefit from invisible work, often painstaking and precarious, to meet consumption needs. This is a paradox of democratic societies that will not disappear tomorrow: post-materialism, which defines itself by increased autonomy of individuals, totally frees the consumers, whereas individuals thought they had freed themselves from being consumers by freeing themselves from work.

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