As the World Churns
The future of work may be driven by what economist Joseph Schumpeter called "creative destruction," the process in which companies that quickly and effectively innovate tend to drive others out of business. The result is often a turbulent but thriving economy. Schumpeter, who died in 1950, has become a "new superstar," according to Business Week, because many of his ideas jibe with today's economic environment.
Some observers use the word "churn" to describe the process of creative destruction, which seems to have sped up in recent years. Author Kevin Kelly writes, "This notion of constant churn is familiar to ecologists and those who manage large networks. The sustained vitality of a complex network requires that the net keep provoking itself out of balance. If the system settles into harmony and equilibrium, it will eventually stagnate and die." Churn seems to occur within as well as among large companies, which often hire workers even while engaged in layoffs.
If the rate of churn is indeed rising, and continues to rise, it may well change features of the labor force. One aspect of this change might be higher turnover rates. The Economist magazine recently pointed to the example of California, distinguished by a large high-tech sector. "The state has created jobs faster than the rest of the United States, but its labor market is also more volatile. The median job tenure for Californian workers is only three years. Almost half of them have been with their current employers for two years or less, and only a fifth have been with their employer for more than ten years (compared with a national average of a third)."
A second aspect might be an increased reliance on the so-called contingent workers. In California's Silicon Valley, up to 40% of the workers are employed in part- time, contract, temporary, or self-employed work. This compares with 25% to 30% of workers in the U.S. as a whole, reports Fast Company magazine.
What might be the implications of a more volatile workforce? First, companies may need to place greater emphasis on programs that help bring employees up to speed quickly. For example, they might put more resources into orientation programs that acquaint a new employee with corporate missions, values and rules. Firms might also need to develop sophisticated e-learning systems that help new employees tap into the knowledge base of more experienced colleagues.
Second, in order to reduce turnover among skilled and talented employees, companies may make greater use of employment contracts. HR Magazine recently reported, "In the past, employers usually limited job-related guarantees to candidates for executive-level positions. But today, employers are more likely to offer special provisions for lower-level positions as well." This could be the beginning of a long-term trend.
A third implication might be a backlash against corporations. Economic churn could cause widespread dissatisfaction among employees, especially if they feel forced into contingent work that provides them with fewer benefits or less security than they believe they need. On the other hand, if organizations such as staffing agencies make nontraditional arrangements increasingly attractive, then many future workers might come to prefer contingent work to full-time, permanent work.
Fourth, organizations may stress employee creativity as never before. In a high-churn economy, innovation is often the key to success. Not only will companies need people with a high "creativity quotient," they will need to train these people to handle new innovation technologies such as digital simulation and rapid prototyping machines. Michael Schrage, author of Serious Play, suggests that a new economic paradigm is at hand. He writes, "Yesterday [companies] had to manage prototypes as a scarce resource; tomorrow they will have an embarrassment of riches." One of the biggest challenges of tomorrow's workplace may be learning how to give employees the skills to cope with and leverage this new abundance.
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To read the article "Career Evolution" in The Economist, see
http://www.economist.com/displayStory.cfm?Story_ID=277491
To read about four books on the changing nature of work, see
http://www.economist.com/displayStory.cfm?Story_ID=561662
For more on Schumpeter, see Charles Whalen's "Today's Hottest Economist Died 50 Years Ago" in Business Week, December 11, 2000.
Some observers use the word "churn" to describe the process of creative destruction, which seems to have sped up in recent years. Author Kevin Kelly writes, "This notion of constant churn is familiar to ecologists and those who manage large networks. The sustained vitality of a complex network requires that the net keep provoking itself out of balance. If the system settles into harmony and equilibrium, it will eventually stagnate and die." Churn seems to occur within as well as among large companies, which often hire workers even while engaged in layoffs.
If the rate of churn is indeed rising, and continues to rise, it may well change features of the labor force. One aspect of this change might be higher turnover rates. The Economist magazine recently pointed to the example of California, distinguished by a large high-tech sector. "The state has created jobs faster than the rest of the United States, but its labor market is also more volatile. The median job tenure for Californian workers is only three years. Almost half of them have been with their current employers for two years or less, and only a fifth have been with their employer for more than ten years (compared with a national average of a third)."
A second aspect might be an increased reliance on the so-called contingent workers. In California's Silicon Valley, up to 40% of the workers are employed in part- time, contract, temporary, or self-employed work. This compares with 25% to 30% of workers in the U.S. as a whole, reports Fast Company magazine.
What might be the implications of a more volatile workforce? First, companies may need to place greater emphasis on programs that help bring employees up to speed quickly. For example, they might put more resources into orientation programs that acquaint a new employee with corporate missions, values and rules. Firms might also need to develop sophisticated e-learning systems that help new employees tap into the knowledge base of more experienced colleagues.
Second, in order to reduce turnover among skilled and talented employees, companies may make greater use of employment contracts. HR Magazine recently reported, "In the past, employers usually limited job-related guarantees to candidates for executive-level positions. But today, employers are more likely to offer special provisions for lower-level positions as well." This could be the beginning of a long-term trend.
A third implication might be a backlash against corporations. Economic churn could cause widespread dissatisfaction among employees, especially if they feel forced into contingent work that provides them with fewer benefits or less security than they believe they need. On the other hand, if organizations such as staffing agencies make nontraditional arrangements increasingly attractive, then many future workers might come to prefer contingent work to full-time, permanent work.
Fourth, organizations may stress employee creativity as never before. In a high-churn economy, innovation is often the key to success. Not only will companies need people with a high "creativity quotient," they will need to train these people to handle new innovation technologies such as digital simulation and rapid prototyping machines. Michael Schrage, author of Serious Play, suggests that a new economic paradigm is at hand. He writes, "Yesterday [companies] had to manage prototypes as a scarce resource; tomorrow they will have an embarrassment of riches." One of the biggest challenges of tomorrow's workplace may be learning how to give employees the skills to cope with and leverage this new abundance.
====================================================
To read the article "Career Evolution" in The Economist, see
http://www.economist.com/displayStory.cfm?Story_ID=277491
To read about four books on the changing nature of work, see
http://www.economist.com/displayStory.cfm?Story_ID=561662
For more on Schumpeter, see Charles Whalen's "Today's Hottest Economist Died 50 Years Ago" in Business Week, December 11, 2000.