The Purpose Of An Economy
Paul Krugman | The New Work Compact | Factoids | Elsewhere
Quote of the Moment
The purpose of an economy is not to make bosses happy.
The New Work Compact
[Adapted from an earlier essay, one that lays the groundwork for my recent foray in Revisiting Ikigai.]
Social psychology is fairly unequivocal about what drives people in their work lives. Yes, people need a livelihood, but the desire for autonomy, purpose, and mastery form the central ties we have with our work. And immediately adjacent to that is our aspiration to gain the respect of those we respect, because we are social beings.
My sense is that the new work compact between employer and employee will have to find common ground between the company’s need for speed and the employee’s willingness to speed for need, the natural tendency of people to work hard if they find meaning and purpose at work.
What is clear is that if business leaders hope to make the business go faster, they need to start by going slow: figuring out how to get people reconnected with their own motivations. And giving people more autonomy means loosening the connections in the business while perhaps making more of them. Social psychology has shown that creating more connections in a network is the best way to increase the speed of new ideas and behaviors spreading, and that is a precondition for innovation.
Amazon CEO Jeff Bezos is well-known for his belief that consensus is a hazard and not a benefit. In his view, gaining consensus slows the company down, taking time and energy away from experiments and validation. That means weaker — not stronger — connections in the networks, although perhaps more of them.
This is another dimension of the fast-and-loose form factor of business. The new job of the leader isn’t telling people what to do or how to do it. Instead, leadership is instilling a culture in which people can find meaning in their jobs and therefore re-engage with their work — a culture based on helping people learn enduring skills, founded on a model of open and fluid cooperation and dispensing with the damaging fictions of slow-and-tight business, like illusory long-term employment.
Rather than expecting employees to subordinate their interests to a company’s long-term strategic plan in exchange for make-believe job security, leaders need to make a commitment to put the long-term interests of employees on par with those of the company. The new leadership is based on a short-term compact of cooperation, not pretend loyalties.
It seems that twentieth-century work compact — long-term if not lifetime employment, steady advancement, and job security — has been partially invalidated by the need for corporate flexibility and agility, such as the need to be able to move a manufacturing line of business from one city or country to another. This is another meaning of the distributed and discontinuous workforce.
Rapid innovation means that an idea can lead to pulling a team together quickly, and that team is likely distributed in space and time and working across other projects, with a charter to take initiative and act. This relies on what is called “swift trust,” the apparently universal human capacity to quickly form project teams without a great deal of social trust building in situations that involve closely defined roles and are staffed with professionals, like a Broadway play. In such circumstances, joining a project isn’t a job; it’s a gig with an understood expiration date.
Reid Hoffman, the founder and chair of LinkedIn, co-authored a Harvard Business Review article called Tours of Duty: The New Employer-Employee Compact, in which he makes the case for time-limited employment ‘tours’ which are longer than a short-term project but of defined duration:
The time has come, we believe, for a new employer-employee compact. You can’t have an agile company if you give employees lifetime contracts — and the best people don’t want one employer for life anyway. But you can build a better compact than ‘every man for himself.’
The authors suggest that tours might last a few years, after which time the company and the employee would decide if they were up for another tour or whether the company would instead help the individual find something else to pursue and work with them to find their next tour of duty at another company. Paraphrasing their thesis, this would exchange the empty promise of lifetime employment for the company’s commitment to help the employee toward lifetime employability.
From these efforts, and by clearing out the obstacles to moving fast — by removing barriers that slow innovation, block new connections, and obstruct deep connection to partners and customers — companies will gain the new levels of productivity needed to succeed in today’s sped-up world.
The new business leader needs to provide a vision, attract and motivate great people, instill a culture where people can do their work, and work to keep the company innovating at every level.
Yes, business leaders will still have to balance risk and investment, control and autonomy, security and innovation. But the new landscape of business has amped up the competitive force to such a degree that testing out novel perspectives, like Hoffman’s tours of duty, is no longer a luxury but a necessity.
The leader must be willing to be as innovative as any other person in the company, as both a signal to others and as a point of leverage for the company’s adaptation to the fast-and-loose world of business.
A New Constitution
The workforce has transitioned in less than a generation into operating in a distributed, discontinuous, and decentralized way, partially out of the preferences derived from the so-called consumer web experience outside work and the sociological impacts of new communication technologies, but also as a result of the changing work compact between the employee and the employer. These changes are deep and lasting: We won’t be going back.
As a direct consequence, business leaders need to step up and work to create a new compact, similar in spirit to Reid Hoffman’s, although perhaps different in details and orientation. At the least, we can’t lead effectively or increase worker engagement and passion by pretending this is still the twentieth century.
Creating an new constitution for the business, one that makes explicit the historically unspoken elements of organizational culture, is essential for creating trust today, since the old norms have been invalidated and the new norms are still not completely formed. Getting clarity on this is likely to be at least as important as executing against business strategy in the decade ahead.
Business has moved to a new operating model in which agility, innovation, and resilience are paramount, and this will lead to a shifting role for leaders and increased decentralization and autonomy for individuals, groups, and functional areas. This new constitution needs to balance each individual’s need for purpose and meaning with the imperative for the business to deliver value to the customer.
The new job for the leader will require a new take on leadership, one grounded in the new world and not the old, and it will certainly require greater vision, empathy, and innovation than ever before.
Factoids
Nearly half of all U. S. pregnancies are unintended.
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Before the pandemic, the average American adult spent about 0.28 hours per day, or more than 100 hours a year, on work-related travel. (Since not all adults are employed, the number for workers was considerably higher.) By 2021, that number had fallen by about a quarter.
[...]
It’s not hard to make the case that the overall benefits from not commuting every day are equivalent to a gain in national income of at least one and maybe several percentage points. That’s a lot: There are very few policy proposals likely to produce gains on that scale. And yes, these are real benefits. C.E.O.s may rant about lazy or (per Musk) “immoral” workers who don’t want to go back into their cubicles, but the purpose of an economy is not to make bosses happy.
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Ford is contributing to the escalation in the EV battery arms race with its F-150 Lightning extended range version with its 1,800-pound, 131kWh battery — about the size of a Volkswagen Beetle. | Andrew J. Hawkins
Elsewhere
I enjoyed this discussion of various team members’ personas, The Tricky Business of Leading Teams, by Julie Benezet:
In mapping what people believe about who should do what, conflicting assumptions emerge that have not been said out loud before. Once said, tension grows as the group struggles to disentangle the conflicts. Baked into this process are many awkward moments. There is a reason why people obstruct progress. Chances are they are unaware of their resistance, much less the reasons for it. That’s where leaders earn their pay.
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In The Wages of Overwork, I feel that Anne Helen Petersen is gearing up for a book:
Working more days than you and your employer have agreed is the appropriate number as a salaried employee? Overwork culture. Normalizing communication outside of standard working hours — while keeping the understanding that you should also be available and communicative during standard working hours? Overwork culture. Adhering to these norms because they’re your best insurance against precarity? Overwork culture.
It’s quite a teardown of the cult of overwork (although it retains a whiff of valorizing it).
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I enjoyed the tack taken by Sapna Cheryan and Therese Anne Mortejo in The Most Common Graduation Advice Tends to Backfire. Basically, follow your passion leads to suboptimal outcomes, and breaks along gender lines [emphasis mine]:
We asked hundreds of undergraduate students which majors and careers they would choose if they followed their passions and which majors and careers they would choose if they prioritized salary and job security. We found that when it came to pursuing male-dominated fields like computer science and engineering, gender gaps were greater when students chose to follow their passions, with men disproportionately choosing those fields. We also found that gender gaps in selecting future occupations were smaller when we asked people of both genders to prioritize nurturing and emotionally supporting other people.
That is, if you encourage women and men to follow their passions in selecting a major or career, there is a big gender gap. If you encourage them to make money, there is less of a gender gap, with more women skewing toward traditionally masculine fields. And if you encourage them to nurture and support other people, there is also less of a gender gap, with more men skewing toward traditionally feminine fields.
Are we suggesting that women shouldn’t pursue their passions and should enter fields that they don’t really care about just to close gender gaps? Of course not. For one thing, traditionally feminine work is important, and society needs people who are passionate about it and want to pursue it — including men.
But what strikes us, based on this and other research, is that for many young people, passions seem to be based in large part on internalized societal expectations about what is appropriate for their gender rather than complete and accurate information about what, say, studying computer science is really like.
Is suspect that some well educated workers desire high autonomy in their careers, but many Americans would much rather have stability that was forsaken in the 1980s and 1990s.
Does stability and (high levels of) autonomy have to be at odds with each other? I thnik not necessarily. The difference between ‘well educated’ and other workers when addressing autonomy is fictitious too, in my opinion. It is dependent on how autonomy is defined for different roles in an company. That way both autonomy and stability can be attained.