Are You Ready For The Next Workplace Revolution?

You say you want a revolution... Well, you know... We all want to change the world... You tell me that it's evolution... Well, you know... We all want to change the world... But when you talk about destruction... Don't you know that you can count me out?

“Revolution”, John Lennon and Paul McCartney, 1968

December 8 was the 25th anniversary of John Lennon’s death but his words about the destructive aspects of revolutions echo as strongly as ever. Indeed the contemporary workplace in the midst of revolution. Technology and globalization are wreaking havoc – sweeping up jobs and workers in their destructive wake. Practices such as reengineering, automation, outsourcing and offshoring have combined to relentlessly squeeze out productivity gains from labor and ruthlessly eliminate jobs and workers. These are painful and depressing trends for the majority of workers not securely ensconced in the executive suite.

The New Workplace According to McKinsey
But take heart. New research by those Barons of the Boardroom at McKinsey & Company offers new positive insights on job growth in developed countries. While their research confirms that many jobs have disappeared, they point out that most of these involve low-value and relatively low-paying work. More encouraging, is that new jobs are being created. Many of them are high-value and high paying.

Professor Joseph Schumpeter would be surely smiling at this report. As he wrote in his 1942 book, “Capitalism, Socialism and Democracy”:

"The fundamental impulse that sets and keeps the capitalist engine in motion comes from new consumers, goods, the new methods of production and transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates. The same process of industrial mutation - if I may use that biological term - that incessantly revolutionizes the economic structure from within, incessantly creating a new one... This process of Creative Destruction is the essential fact of capitalism. It is what capitalism consists in and what every capitalist concern has got to live with."

Out With Routine Jobs
Yes, creative destruction apparently is alive and at work in the economy today according to the paper, “The Next Revolution in Interactions”, just published in the McKinsey Quarterly. The authors state, “Companies in many sectors are hiring additional employees for more complex interactions and fewer employees for less complex ones.” What this means is that jobs like designers, nurses and front-line managers that require lots of ‘interactions’ – tasks demanding great amounts of expertise and judgment to perform - are growing at a greater rate than those requiring routine ‘transactions’.

Tacit interactions are at the heart of jobs in which people have to think and make decisions and take actions based on their deep expertise or “what economists call tacit knowledge”.

New Complex Jobs Are Growing At A Faster Rate
To support their contention, the authors offer several statistics drawn from their study of the US labor market since 1998. They claim for example, that since that time, the number of US jobs that include tacit interactions as an essential component has been growing 2 ½ times faster than the number of so-called ‘transactional’ jobs and three times faster than employment in the entire economy. According to the authors, 70% of all US jobs created since 1998 – 4.5 million jobs require judgment and experience. These jobs make up 41 percent of the labor market in the US and the growth is the same in most developed nations.

Another interesting insight from this work is how different industries and job categories are being affected. While all industries employ tacit workers, this type of work dominates fields like health care, financial services and software. As time goes on, this trend will steadily increase its impact on traditional industries such as retail, manufacturing and transportation. Transformative and transactional jobs in these sectors will gradually be automated or eliminated and replaced by tacit ones.

Are Managers Ready?
The McKinsey authors predict this shift toward organizations doing complex interactions will cause a revolution in how companies organize and operate. Raising the performance of workers undertaking complex, high value work will be the critical management challenge. Companies have perfected automation and labor substitution. They are quite good at process streamlining and standardization to drive efficiency and productivity. Few however, have a clue how to improve and sustain the productivity of high-value knowledge workers. For the past two decades, many managers could get away with half-hearted and clumsy attempts to nurture knowledge workers because there were relatively few of them and so many juicy cost-cutting targets on which to focus.

But those days are coming to an end. If McKinsey’s predictions are correct, this class of implicit knowledge worker will increasingly dominate organizations. The good news is that companies that crack the code on how to make them happy and productive will gain significant competitive advantages that will be very difficult to copy.

The burden of accomplishing this falls squarely on the shoulders of managers. They will need to learn how to shift from automating or eliminating lower-skilled or routinized labor to improving the performance of highly-skilled labor. This is no mean feat and the majority of managers are not prepared for this shift nor will many be capable of making it.

How many managers in your organization are prepared to lead this next workplace revolution? Is your organization dominated by downsizers, outsourcers and reengineers or people developers, collaborative experts and inspiring leaders? The answers to these questions could well determine whether your workplace revolution proves to be ultimately destructive or creative. Let’s hope that John Lennon was right when he sang in the refrain to “Revolution”:

Don’t you know it’s gonna be... Alright?