The Future of Work

By Greg Gonzalez, May, 2002

The Crystal Wrecking Ball
Management guru Tom Peters declared in Time magazine that “90% of white-collar jobs in the U.S. will be either destroyed or altered beyond recognition in the next 10 to 15 years.” Indeed, the end of the last millenium and the beginning of this one saw an unprecedented technology-driven upsurge in mergers, partnerships, and shake-outs, the consolidation of international trade regions, and new technologies that erase the boundaries that divide a global workforce. Companies enter and leave markets where old friends become rivals, and old rivals become friends. They engage in “coopetition”, and look for increasingly higher levels of workers in overseas labor markets. Considering the world in which we now live, his prediction doesn’t seem that far-fetched.
Peters, and prognosticators like him, paint a hopeful picture of work and workers of the future; however, questions still remain as to what happened to the brave new world of work that so many seers have foretold in the recent past. What happened to the promise of being able to work and collaborate effectively with anyone, anywhere, anytime? And of virtual companies that have no office to come in to? Why do many – even engineers – still work in a paper-bound world? Why do the majority of geographically distributed teams typically under-perform? What happens to financial security as more companies hire more contingent and contract workers, and less full-time employees?

These questions and others were explored in the Symposium on the Future of Work sponsored by the Alliance for Innovative Manufacturing (AIM) and the Center for Work, Technology, and Organization (WTO), in conjunction with the Center for the Quality of Management (CQM). AIM is a campus-based joint venture initiated by Stanford's Graduate School of Business, the School of Engineering and corporate partners to promote the exchange of manufacturing-related ideas and techniques between academia and industry. WTO is also a campus-based venture that generates, synthesizes, and compiles knowledge on the relationships between work, technology, and organization, and disseminates that knowledge through the intellectual community that it fosters. CQM is a nonprofit consortium of 114 companies and academic affiliates focused on mutual learning and quality improvement from a management perspective.

The Research Gap
“You would think that researchers would be flocking to understand how and why work is changing, but they’re not!” exclaimed Steven Barley, Charles M. Pigott Professor of Management Science and Engineering and the Co-Director of WTO. In setting the context for the day’s discussions, Barley went on to say that theories and models of organization are proliferating in academia with little grounding in an understanding of the work and work practices they purport to organize. In fact, he points out, work theories and processes do not lend themselves well to the “one size fits all” approach. If it’s going to be really useful, it must be based on a good understanding of the nature of the specific work being performed. We could, he claims, develop better technologies (and get them adopted more quickly), better management practices, and better organizations if we knew more about work and work practices.
A good case in point was offered by Diane Bailey, Assistant Professor in Management Science and Engineering, in her presentation, Technology in the Engineering Workplace. “[Some] scholars argue that explicit, technical knowledge is not as dominant in engineering work as engineering schools think it is,” she told the gathering. She went on to say that these scholars believe the engineering process is tilted heavily towards social interaction, with tacit knowledge playing a larger role than explicit knowledge. However, her studies have indicated that engineering work and technology use is much more complex, with a middle ground between the “hard” and “soft” knowledge.

An Engineer is an Engineer is an Engineer, Right?
Bailey went on to present the results of her study of engineers working in two sub-disciplines of engineering: structural engineering and electrical engineering, specifically chip design. Considering both are of the same major discipline – engineering – one might expect to find much similarity between them. But the results she shared with symposium participants showed interesting differences, some so striking they even got laughs. After hundreds of hours of structured observation and interviews, codification of notes, and review of over a thousand artifacts, two quite distinct pictures began to emerge.
Bailey began with a few photographs that spoke volumes. “This is Sally, and Sally is a structural engineer, …and this is her cube, which is pretty typical for a structural engineer.” From there we were taken on a virtual tour of a workspace awash with paper drawings spread over large open surfaces, shelves of dog-eared books from her school days and of manuals of building codes and standard tolerances (“…which Sally uses all the time…”). A close-up of her desk revealed hand-written calculations, an HP calculator (“…with the plotting ability, which she never uses, but it has it, and they all have it…”), and many artifacts peeking out from what looked like a substantial amount of paper. The walls and cabinet faces also were hung with paper representing phone lists, calendars, and other frequently-used information. Even the space under her desk was occupied by stacks of files, drawings and specifications. Sally’s slow 133Mhz computer, pushed into the corner of the desk, was off. On an average day, hours can pass before she turns it on.
In contrast, participants were next shown a picture of Jake’s cubicle – Jake is a chip designer. “This is really odd, he actually has a stapler on his desk… most electrical engineers hide these in their top drawer,” she quipped, drawing laughter. The virtual tour of this space was quite different. A few textbooks were on Jake’s shelf (“…I never actually saw a chip designer open one in our studies…”), and a few pieces of paper were on his desk. And the stapler. “This is Jake’s computer monitor… and this, this is Jake’s other computer monitor,” she said. In fact, in the center of his desk were two computer monitors with large screens, and not much else. She went on to explain that most of what Jake needs he keeps and uses online, including email, past work, and his phone directory. Not surprisingly, Jake does virtually all of his work on his computers. A final close-up of the floor under Jake’s desk revealed not stacks of paper files, but rather athletic shoes and a volleyball.
Digging deeper, Bailey revealed some reasons for the differences. In the end, they could be traced back to the nature of the work each type of engineer performs, and the environment in which they operate. If a structural engineer makes a mistake, it could mean a significant liability for her firm, at best, and at worst, human lives. Structural engineers very much depend on standard, accepted practices and collective experience and as such seniority, experience, and mentoring tend to play a larger role. The basics Sally learned in school still apply and have continuing value, and she uses that knowledge daily. Reliability and safety are paramount.
By contrast, if a chip designer makes a mistake, the consequences are not as large, and when problems occur they’re resolved through debugging. Jake was arguably his most marketable and current in his profession the day he graduated. Electrical engineers must constantly keep up with a flood of new technology, and their success depends on being able to effectively use an ever-changing stream of the stuff. (A truism about computer books is that they are out-of-date the second they hit the printed page.) Speed and innovation are paramount.
Sally does her work and collaborates with her colleagues, for the most part, in the office from nine to five. Jake collaborates with his colleagues electronically, even if they’re just down the hall. So, since his primary mode of communication is electronic, you might think the physical location of his teammates doesn’t matter – but it does. Even with such ubiquitous and virtually instantaneous means of electronic interaction, Jake still wants to be near his teammates. In fact, if his team were geographically distributed, odds are it would under-perform. Pam Hinds, Assistant Professor of Management Science and Engineering, presented studies that reveal inherent problems in making geographically distributed teams effective.

Technology for Distributed Teams: Humans, Version 1.0
Hinds told the assembly, “There’s a tremendous role for leadership… in terms of doing things that enable teams to learn, to get better [at working in a distributed environment].” While the right technology can help, it really comes down to human factors. In one study, a product development team with members in Canada and Mexico began to fail, with the Canadians claiming their Mexican peers were non-responsive. “At the six-month point, the Canadian team went down and actually visited the folks in Mexico… and they were shocked when they found out they didn’t have the same infrastructure, administrative support, technology, printers… they didn’t have a whole lot of things the group in Canada had, and most importantly, that [the folks in] Canada assumed they had,” she explained. In short, each location had a different context, and this was a good part of the problem.
Hinds outlined a number of factors that work against the distributed team. Studies reviewed showed that affective conflict as opposed to task conflict (think personal differences as opposed to professional differences) was more prevalent in distributed teams. Affective conflict tends to hinder productivity, whereas the right kind of task conflict can actually improve productivity. The apparent cause in these cases, she said, appears to be a lack of common ground. The extent to which a distributed team shares one culture is the extent to which it’s likely to succeed. Culture in this sense includes a superordinate goal, a shared identity (as members of one team), and common processes, tools, and understanding of each other.
So what can a leader do to combat these problems? “First impressions seems to be absolutely crucial in distributed teams,” says Hinds. People tend to decide how much they can trust their remote partners, and then view all communications after that in that context. She points out that once you get off on the wrong foot, it’s extremely difficult to make it up. There are other important factors too. “I‘m not arguing against diversity, what I’m arguing for is thinking about the diversity that you’re introducing into the team… if a team is diverse along too many dimensions, it’s going to be harder for them to find common ground.” Another way to foster success, she says, is to provide similar tools and processes at all locations, especially those that expose where a given individual or group is in a given process. For instance, software that makes it easy for someone at one location to see how far along another team member at a remote location is on an interdependent task would be valuable.
In summary, Hinds admitted, “If I had a choice, I would co-locate a team [as opposed to geographically distributing it] unless the benefits of distributing the team clearly outweighed the risks… I don’t think you’ll ever see distributed teams as effective, when compared with co-located teams, but there’s a lot you can do to improve them.”

No Hobby
Hinds’ findings found support in the symposium’s panel discussion for the day, featuring the management team of San Jose-based Xilinx, Inc. (maker of Field Programmable Gate Array (FPGA) chips) discussing their recent merger with Colorado-based RocketChips, Inc. (maker of analog and Application-Specific Integrated Circuit (ASIC) chips, especially for wireless applications). The topic for this discussion was how one firm handles the new everyday problems of working and managing across the boundaries that arise from mergers and acquisitions, including organizational boundaries, as well as boundaries that arise from geographic distance.
RocketChips has offices in Minnesota, Iowa, and Texas, and Xilinx has design groups in San Jose and Ireland. Thus, the resulting combined design group represents a successful distributed team that, in the end, must work together to produce a flawless result. Erich Goetting, Vice President and General Manager of the Advanced Products Division, explained that their success in merging RocketChips into Xilinx was the product of a well-thought-out vision. Xilinx saw the great potential for next-generation chips that could integrate both analog wireless processing and programmable, discrete technologies onto one chip, and in their research, RocketChips emerged as best-of-breed. He explained that there was an excellent fit, with no real functional overlap. More importantly, Xilinx was looking to buy intellectual property – their collective expertise – rather than RocketChips’ patents. In short, they really wanted their people – a world-class team that was up and running.
So why didn’t Xilinx just develop the capability to design analog and ASIC chips on their own? “This is not a hobby… they have to do it at an Olympic gold medal caliber,” says Goetting. Indeed, those on the panel who were originally from RocketChips described how Xilinx made it clear during the courtship that they wanted and valued that expertise. They said Xilinx also made clear their deep-seated values of respect for the individual and of teamwork. Of all their suitors, Xilinx was the one that really “walked the talk,” said Ray Johnson, the former CEO of RocketChips and now the Vice President and General Manager of the new Communications Technology Division.
There were other aspects of the marriage that helped. Both companies used most of the same best-of-breed tools and had similar development processes. In the end this planning and vision, coupled with establishing trust between the members of the new distributed team by making those first impressions great ones, Xilinx set itself up for success.

Contract Work
To round out a picture of work in the 21st century, Barley presented his work Contractors on the Job: The Realities of Co-Employment. Contract and contingent employment has been growing almost 10 times faster than employment overall over the last decade, and here in Silicon Valley, as much as a third of workers are employed on a contract or contingent basis. Barley explained that a firm hires contract workers for skill acquisition, to manage headcount, to screen potential employees, to ramp up a project quickly, and to make it easier to kill a project about which a firm is uncertain. Such use affords a great deal of flexibility in rapidly changing markets, making it easier to protect its regular workforce from periodic fluctuations in the company’s human resource needs. While the firm may pay a higher hourly or weekly rate, it may not cost much more than an employee, when taking into account the flexibility and savings on hiring, training, benefits and payroll taxes.
But there’s another interested party in the contract work equation – the IRS. After the landmark Microsoft case that saw hundreds of contract workers re-classified as employees, the IRS has made its interests and presence felt. The fact that so much of tax law and of IRS enforcement is ambiguous complicates things. So much so that the majority of work contracted is done so through a third-party brokerage firm that pays payroll taxes and social security for the worker, and thereby shields its customer from the potential liabilities of hiring a contract worker. Firms that hire contractors often take a number of seemingly trivial (and at times seemingly bizarre) steps to ensure those contractors are not perceived as employees. This runs the gamut from banning contractors from company outings to requiring that they be escorted to the bathroom.
For those firms that use contractors, hiring managers face a dilemma. They need and use contractors, typically as members of a group that must function as a cohesive team to be effective. At the same time, they must also take steps to ensure these contractors are not perceived as being part of the company. Because of this new approach to employing talent, firms have developed systems that are contradictory. They need to distinguish contractors from permanent employees, but the very act of doing so makes it difficult to integrate contractors into the teams on which they are placed – and creates a two-tiered employment system. In addition, employees can feel resentment toward contractors, especially if the contractor plays an envied role or uses a new, cutting-edge technology. This presents additional challenges for the hiring manager.
There are advantages for the contractor too. Firms often come to rely more heavily on contractors’ skills than they anticipate, hence they may have a hard time letting them go. Sometimes, if a contractor has special skills which are in short supply and which are vital to a key function, a contractor may work continuously for the firm even while it is laying employees off.

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By the end of the symposium, it was clear from the breadth of topics and detailed presentations that the future of work will benefit from further study. As Barley said in closing, “Sometimes you can’t see the forest for the trees. We’ve been looking at some leaves, and hope to eventually pull back and examine some branches and trunks.…”