Do company executives really appreciate company employees?
A spectre is haunting Europe – the spectre of low productivity. Despite billions of euros being invested in new technologies, labor productivity has still increased by only 0.6 percent annually over the past 20 years (before Corona), says the European Central Bank(1). This so-called productivity paradox is puzzling for many economists: Why has digitization not caused a long-lasting boost in productivity? Various explanations have been given(2). However, what is clear is that most production and administrative processes have already been extensively rationalized and streamlined. So, what next?
Purpose Is Better Than Parking Space
Because eventually there were fewer potential gains to be garnered in technological efficiency, corporate executives began to optimize work at the 'social level': their aim being to optimize the engagement of employees within the production process: or in management speak – employee empowerment. The focus has been on Generation Y (born in the 1980s/90s)(3), who are less motivated by traditional executive manager incentives: company car, company parking lot and corner office. So, corporate executives have had to rethink and answer two questions:
What can Generation Y employees be motivated to do?
How can Generation Y employees be motivated to do it?
Purpose(4) not Profit would appear to be the new heartbeat of corporate capitalism. Meaning as a purpose has now become a focus of attention. "What am I working for?" has, perhaps surprisingly, become a question for which corporate executives must find an answer: Covestro ("To make the world a brighter place"), SAP ("To help the world run better and improve people's lives"), Volkswagen ("To make this world a mobile, sustainable place with access to all the citizens") or Siemens ("We make real what matters") and even "to serve society" (Joe Kaeser)(5).
Another question which needs answering is: "How should we work together?" Is the answer flat hierarchies instead of strict control, coaching instead of command? Self-management and self-realization are promised by Human Resource departments as well as New Work and Agile Working concepts to achieve more efficient and productive commitment and collaboration by employees.
New Work And Agile Working –Use Or Abuse
It is worth looking closer at the fundamental ideas of New Work and Agile Working. The basic ideas are not banal, in fact they are unconventional, egalitarian, and envisage a world of work which is more meaningful. New Work is a concept that was developed by Frithjof Bergmann(6) in the 1970s to describe a completely new way of working. New Work embodies a concept of freedom, a new understanding of work structure that is human-centered because self-determined and offers more space for creativity and self-management, while making a positive contribution to the community.
Self-determined action is a conscious and deliberate departure from the old Taylorist work methods of fixed hierarchies and time-and-place regimes which degrade humans to cogs in a production machine. Only by abandoning this outdated method does sustainable and human-centric work become viable. Bergmann's key concepts are: human-centric, freedom, work, meaning, self-realization. And his argument is as follows: Not mankind should serve work, but work should serve mankind. Work should activate people's strengths and energy and help humans to evolve and grow into a more alive and complete person.
Agile working, which was rapidly adopted at the start of the millennium, is a value-oriented concept based on trust and teamwork, which takes full account of the employee, the customer, as well as the competitiveness of the business. The Agile Manifesto(7) is less a method and more an attitude – in which an autonomous, flexible, and self-managed team of employees assume responsibility for short-cycle manageable planning and the implementation steps and – in constant consultation with the customer – develop preliminary solutions ("prototypes") which are adapted in iterative processes to match the needs of the customer and continually changing parameters. This enables a quick response to potential mistakes as well as to the needs of the team members.(8)
Reinterpretation of Means and Ends
New Work and Agile Working methods are purposes (ends) in themselves, and are intended to establish an ethical (moral) relationship between employees and their work. However, executive managers who practice a managerist style of leadership have instrumentalized these otherwise ethical work methods simply to harness employees for conventional profit-making purposes. This occurs, for example, when New Work and Agile Working methods are super-imposed by executives on a team of employees without consultation and only those fragments of the New Work and Agile Working are implemented which promise higher labor productivity (profitability).
This is a functional reversal of the original intention:
Original idea of New Work
End: People as free individuals can realize their strengths.
Means: People define the purpose of work via autonomous action, a democratic decision-making process, in a creative work environment.
Re-interpretation of New Work
End: The given task is simply to be completed by employees within a fixed time and budget in a strict micro-managed environment.
Means: Employees are motivated by Agile Work and New Work to commit themselves to the work task.
However, a managerist re-interpretation of New Work and Agile Working merely aims to gain a short-term commercial competitive advantage by boosting operational efficiency: this exploits the intellectual, emotional and social capability of employees simply to achieve higher labor productivity.
In recent years, Agile Working concepts have been adopted by the managements of major business corporations(9) – often successfully. But in many corporations(10) these progressive concepts have been super-imposed fractionally upon legacy operating processes and organizational structures without proper preparation or adaptation – in the hopeful expectation of a 'minor miracle'. In reality, these projects are nothing more than real-time management experiments on the backs of employees.
Agile Working projects implemented in this way are just one of many 'productivity enhancing' projects: supposedly autonomous teams will often lack access to necessary resources, especially time, and to skilled personnel with necessary competences. The culture of punishing team members for errors and failures is retained. Self-direction by the individual employee is minimal. Immature clarification of roles will mean that team members do not know what they should do, can do, and must do. The product owner has no precise idea of their product. Meanwhile the team leader is crushed between the unclear expectations of the product owner and the real needs of team members. In many cases, there is no change in the leadership style or culture, task description, centralized personnel planning, long-term central planning or associated cycles of approval.
Due to this dual pressure the work process can become more inflexible rather than agile. This can become a source of conflict within the team as team members become overworked and more chaos ensues. Dissatisfaction will spread if the promising words of self-realization, freedom, trust and cooperation are not supported by real action, and the attractive infrastructure of 'cool' office landscapes with pool tables and hammocks becomes a front behind which there is backstage pressure of deadlines and targets.
Human-centric Work needs Rules and Routine
So that the potential benefits of human-centric work processes are not abused to the disadvantage of employees, three things must be done:
- Capture the true spirit and concept of New Work and Agile Work. Create free spaces for employees to realize their true potential and satisfy their human needs (recognition/reward, belonging, control) so that the intrinsic motivation of employees is triggered.
- Prevent managerist-style abuse of New Working and Agile Working methods by setting up corporation-wide agreements(11). New human-centric working requires close coordination of clearly defined roles and tasks as soon as the methods are implemented by employees. All team members and supervisors need to be properly trained to achieve a shared understanding of what Agile Working embodies. A so-called sounding board (elected representatives from the group) should be set up to clearly communicate what the team members actually need to be able to work well, and what burdens and conflicts (between team members and vis-à-vis line managers) have to be overcome.
- An honest stocktaking of employee willingness to use these new methods within a team. Less hierarchical forms of working require more communication across a team and more self-organization. Not everyone can do this and not everyone likes to do it. After all, traditional hierarchies already provided a means of authoritatively regulating work and have facilitated decision-making.
Corona adds Pressure
The introduction and support of new working methods in the sense of "human-centric work" was already difficult and occasionally a source of conflict even before the pandemic when times were good. Today, when times are harder, the question arises: What next? The coming months will be very difficult for almost all businesses, profits are melting, and job cuts have already begun. The chance of a re-start is desirable, but the opposite may occur. When even faster, cheaper and more flexible strategies are needed by executive managers, the automatic reflex is to centralize, to reinforce command and control, and to focus only on costs. Businesses with the requisite liquidity are already investing more in digital processes in the hope of increasing efficiency and productivity. However, they should be aware of the "productivity paradox" and take some simple advice: Start with humans, not with technology.
(1) See : European Central Bank (2020), Statistical Data Warehouse: Labour productivity and "Given ubiquitous technological innovations, the weak growth in productivity seems paradoxical," German Council of Economic Experts, Autumn Report 2019, p.3.
(2) Cf. German Federal Ministry of Economics (2020): Highlights October
(3) Cf. Zukunftsinstitut (2013): Generation Y. Das Selbstverständnis der Manager von morgen (The Self-Image of the Managers of Tomorrow)
(6) Cf. Interview with FB: https://t3n.de/magazin/new-work-urvater-frithjof-bergmann-alte-mannmehr-247621/
(7) The four principles are: Individuals and interactions have higher priority than processes and tools – Functioning software has a higher priority than comprehensive documentation. Cooperation with the customer has higher value than contract negotiations, and rapidly reacting to change is more important than following a plan,
(8) Details: https://www.boeckler.de/pdf/p_fofoe_WP_023_2016.pdf pp 8-12
(9) The same applies to many DAX corporations: https://www.manager- magazin.de/harvard/innovation/agilitaet-inunternehmen-wie-sie-agile-arbeitsweisen-ausweiten-a-00000000-0002-0001-0000-000161308118
(10) A Sobering Study: https://www.haufe.de/personal/hr-management/studie-unternehmenarbeiten-agil-sind-es-aber-nicht_80_501490.html
(11) See: https://www.imu-boeckler.de/de/betriebsvereinbarungen-15454-23131.htm