Home is where the work is: Why the traditional company is busted

No longer tied to our desks, we expect to earn our crust without having to fit into our place in the hierarchy or to clock into the office every day. But are we all workday mavericks?

by Jeremy Hazlehurst
Last Updated: 12 Apr 2017

Drive north out of Derby on the A6 and soon you come to Cromford Mill. These days, it's a museum, but in 1771 it was the site of one of the most influential workplace experiments ever seen.

This was where textile entrepreneur Richard Arkwright set up shop. Cotton-spinning had been a cottage industry, but at Cromford Mill, spinners from all around came together to use machines provided by Arkwright. It was the world's first factory and soon similar mills were springing up all over the country and indeed the world.

It was a groundbreaking idea, and whether we are architects or economists, agronomists or oculists, Arkwright's template remains the way work works for millions of us to this day, because modern offices are based on exactly the same principles.

They are places where you go in order to work for specific hours, using facilities and equipment provided by your employer to do a job, for a wage.

There are good reasons why the model has flourished. Centralising production allowed for dramatically greater efficiency - think Adam Smith's division of labour and the economies of scale that came from it.

And, as an added bonus, bosses - then as now plagued by the nagging suspicion that workers were not always pulling their weight - could keep a ready eye out for backsliding.

Above all, the Arkwrightian model is popular because it works. Or rather, it worked, as, after over 200 years, some observers reckon that the end of employment as we have known it may be nigh. Are they right?

One of the biggest forces changing work and the nature of the company remains technology. Lynda Gratton, a professor at London Business School and author of a book about the future of work called The Shift (which, incidentally, outsold Fifty Shades of Grey in Japan), says that there has been a 'hollowing out of work'.

Unskilled work still exists, as does highly skilled work, but the jobs in the middle have been automated or outsourced away. We have what Gratton calls a 'bi-polar' jobs market, a trend that has exacerbated the move to a knowledge economy.

Interacting with technological change are demographic shifts. We are all living longer and working for longer - there are now reckoned to be no fewer than five distinct generations making up the UK's workforce, a greater range than ever before.

Pressure is mounting not only on old organisational structures but on financial and capital ones too. The dominance of the plc - another product of the Industrial Revolution that was designed to speed up and simplify the access to capital that all firms need to grow - is under threat from rival models as never before (see box p49).

Other certainties are breaking down. You often hear it said that people used to work for money - very much a hangover from the Industrial Revolution, when work was viewed as a straight trade of time for money - but now we are more interested in having rewarding work.

That's something of a caricature, reckons Dustin Seale, managing director of organisational culture consultants Senn Delaney's EMEA operations.

'There's that old joke about the men working at Notre Dame,' he says. 'When they were asked what they do one said: "I move stones from here to there" and the other said: "I'm building a cathedral." So the idea of contributing to something bigger has always been there.'

However, Seale says: 'What's been dialled up in the past seven to 10 years is an overt discussion about the purpose of work. Do I believe in the firm, does it contribute something to who I am, and does that match up with the company's role in the world?'

The division between me-in-work and me-in-my-own-time is collapsing, the walls between work and other parts of life - education, leisure, play - are vanishing.

Another obvious effect of technology is that what we mean by the workplace is changing - it's no longer always a grand (or otherwise) building with the company's name on top. Increasingly, we can work anywhere - in a coffee shop or at the kitchen table.

The demand for more flexible ways of working from employees is encouraging this trend, with workers (especially younger generations) no longer expecting to be chained to a desk from nine to five every day.

For firms this can seem a no-brainer - they save money on expensive office space while giving their employees a valuable and appreciated perk. But it can be tough to implement. IBM embraced remote working in the 1990s and now 45% of its 40,000 contractors work off-site. In the early days, they used grimly to say that IBM stood for 'I'm By Myself', but now video conferencing and private networks have improved things greatly.

At some firms, even the notion of who is part of the workforce is being blurred. US giant Dow Chemical's social network lets employees bounce ideas around with customers, students and even former employees, who can now all contribute to the firm's work.

That's typical of the best modern firms, says Seale, which are like a 'family' of formal and informal networks and whose work is more like a 'conversation' than a series of tasks.

Hierarchies are being dismantled, too. Roger Steare, corporate philosopher in residence at London's Cass Business School, talks about the traditional firm being 'feudal', with kings and earls at the top and serfs below. So the big cheeses sit in solitary splendour on the top floor, while the worker bees toil away on the lower levels.

But times are changing, the pace and uncertainty of the modern world demands a more agile and responsive corporate structure. It's one predicated on serving the customer rather than preserving the rank and status of its component parts. 'In times of crisis, the hierarchies flatten and ideas can come from anywhere. The key is having a culture all the time that has that fluidity,' Steare says.

One such company, which has attracted the attention of business academic Gary Hamel - he called it a 'positive deviant...one of the most delightfully unusual companies I've come across', is Morning Star, a Californian outfit that makes tomato paste. Employees have no bosses and practise self-management.

Sounds like a recipe for Animal Farm-style delusion and disaster, but Morning Star succeeds in the cut-throat world of the US tomato market. It has delivered strong growth, solid profits, extremely low worker turnover and an impressive record of innovation.

Employees negotiate and set individual responsibilities with each other. If they have a good, innovative idea, they can spend the company's cash without budgetary constraints because it's privately owned.

Importantly, Morning Star has a marked lack of perks, privileges and hierarchy. The highest-paid employee is paid only six times what the lowest-paid earns. Among the broader American Standard & Poor's 500, this spread is currently 380 to one.

The big businesses of tomorrow may also turn out to be rather smaller than they are today, at least in terms of the number of people on their payrolls.

Twitter employs fewer than 1,000 and yet is expected to break the $1bn revenue mark next year. Wikipedia has 65 employees, Pinterest under 50 and Reddit only 12.

In a world made up of these kinds of organisations, permanent full-time employment could become the exception.

So will the firm of the future be made up of loose agglomerations of freelance guns for hire, forming and re-forming on a project-by-project basis? Will workers effectively be their own chief executives, using technology to sell their skills to the highest bidder and with little attachment to a place of work, each other or the firms that employ them?

It's tempting to think so, but reality is starting to interfere with this picture of a slick, networked, shape-shifting future. Of course we are living in a time of disruption, change and novelty, but there are also strong continuities with the past. If you were being cynical you might say that continuity sells fewer books, consultancy gigs or MBA courses than innovation.

There is one particular reason why tomorrow might turn out to be not so different from today: human nature. We are social creatures and tend to be at our best in groups rather than operating alone.

In 1992, British anthropologist Robin Dunbar worked out that, according to the size of our neocortexes, a human's natural social group should number around 150. This coincides neatly with what is known of the size of many basic historic groups, including the Roman army's century and Neolithic farming settlements.

Togetherness remains important even in large modern organisations. Perhaps the most telling thing about Yahoo!'s much pored-over recent banning of remote working was the revelation that its own head of HR does a 6,000-mile-a-week commute from the East Coast to California.

An epic trek that suggests, even in a firm built on the globe-shrinking power of the internet, there's a lot to be said for face-to-face contact. Nobody can see you laugh, grimace, roll your eyes, twitch, sweat or yawn on Instant Messenger. Emoticons are no replacement for the real thing.

There's also the hoary old question of office politics. We're all supposed to abhor it, but the truth is that power games are instinctive and most of us enjoy at least a modest level of politicking - either as players or amused spectators.

And a recent study found that remote workers - with fewer opportunities to be seen in the right places and talk to the right people - get lower pay rises and fewer promotions than those who spend their days in the office, dripping honey into the appropriate ears.

Neither is the rise of the virtual organisation a universal development. In emerging economies, the office is still a novelty and young people are clamouring to work in them.

It may seem hard to understand to westerners with generations of travel-weary commuters in their family tree, but if you are the first person in your family to move from a village to the city, an office job is alive with exciting possibilities, as well as being a potent symbol of personal success.

Human beings also want to be led. Even in the flattest and most egalitarian of structures, there is always a pecking order. For all its inclusiveness, John Lewis's much-vaunted employee-ownership model still requires managers to run the business and staff to do the legwork. 'People don't want democracy,' says Seale. 'They want to be connected with a leader who gives them clarity, prioritisation and structure.'

Leaders need to stand apart, even as they say: 'We're all in this together.' In her book Lean In, Facebook COO Sheryl Sandberg let slip that she retains that most traditional symbol of corporate power, a corner office.

So the prospects for at least some of the familiar aspects of the old Arkwrightian corporate model may not be quite so bleak as painted. The workers of tomorrow will still be humans, with irrational, conflicted, needy, confused natures. Work is our village. It's where we preen, bond, gossip, fight, flirt, love and hate - in short, it's where we live.

Yes, things are changing, but the advocates of the brave new, networked world should remember that work is not the only - or, arguably, even the most important - thing we do when we are at work.

IS THE PLC ON ITS LAST LEGS?

In the UK, many success stories have happened a long way from the stockbroker's screens. From John Lewis to Alliance Boots to Virgin Atlantic, there are plenty of alternatives to the listed company and its quarterly reports.

And that's just it: constant pressure to achieve bumper profits growth and chunky dividends on the one hand, increasingly onerous regulatory burdens on the other. It's forcing accomplished CEOs to toss old-fashioned good strategy out of the window. Cynthia Carroll, recently departed boss of mining giant Anglo American, lambasted shareholders for their short-termism. Those who want a divi increase while a new mine is being prospected need to 'get out of oil', she said.

Innovation is suffering too. A study by finance professor Shai Bernstein at the Stanford Graduate School of Business looked at the patenting patterns of 2,000 public and private companies in the US and found that new citations fall by about 40% after an IPO. And after the recent Facebook IPO, in which banks used 'pump and dump' tactics and the share price almost halved, sane investors will be scratching their heads.

So what's in it for anyone? Companies, employees, bosses, investors - all are being dragged through the mire and the public is left seething over what it sees as bloated executive pay. Against this backdrop, it's no surprise that firms are looking increasingly for finance through crowdfunding, appealing directly to hobbyist investors and VCs for that all-important early shot in the arm.

- Additional reporting by Michael Northcott

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