ALL AT SEA: Leading The Liquid Workforce

New research says the future of work is gloriously unstructured. But what should you do when people need structure?

In 2016 Accenture published their annual Digital Health Technology Vision. One of five trends identified by the Technology Vision Team is the emergence of what they call the Liquid Workforce. (You can read an overview and download the trend report here.)

Liquid Workforce is a catchy name for a concept we’ve been discussing for a while. It involves several elements of the “flexible and deployable workforce”, including the absolute importance of continuous learning, and the ever-increasing redundancy of traditional position descriptions. Above all the Liquid Workforce is one free of silos. Accenture’s prediction is that organisations will be “prepared and equipped to bend and flex”, be “project oriented”, and be using working groups to emphasise collaboration while developing the capabilities of team members through skill sharing.

Accenture’s trend report does not go into detail about the driver’s pushing this development, but it does point to several factors:

• The deliberate embedding of lean innovation practices into large corporations
• Maturity of the digital workspace breaking down established distinctions between roles
• The increased use of freelancers, contractors and part-time employees, alongside flexible and remote working arrangements
• The need to attract and retain younger workers (those identified in the report as “digital natives”, a group now making up the largest age bracket in the American workforce according to Pew research cited by Accenture)

Here at CapabilityBuilder we are big supporters of flexible, agile approaches to workforce management, and advocate for a dynamic approach to career structures that are flexible at the individual as well as the organisational level. Accenture cites the example of GE’s FastWorks methodology as an example of how major corporations benefit when they behave more like startups.

However, while embracing innovation in the people and culture space (and business engineering more generally) is vital to drive innovation, it is important to learn from history and contemporary science to ensure that organisations embrace the good while avoiding some very dangerous pitfalls.

Return of the Matrix

The agile, silo-free organisation predicted by Accenture looks a lot like a matrix structure. Matrix management, a term likely to elicit more groans than cheers from frontline managers, has been around since at least the mid-1970s. For those who haven’t been in a matrix, it is basically an early attempt to break open strict hierarchies and business silos by grouping employees as required to perform various tasks, and creating overlapping and plural reporting lines up and across the chain of command.

Matrix management is an approach that has often been better in theory than in practice, because managers and employees find it too hard to implement. Managers clash over decision-making, or descend into decision by committee. Employees suffer from uncertainty over “who’s really the boss” and over what they are actually meant to be doing. Critiques of matrix management are almost as old as the theory itself, but as late as 2016 Michael Bazigos and Jim Harter, writing in the McKinsey Quarterly report that matrixed organisation is still at best a mixed blessing.

On the upside, employees in highly matrixed organisations are more likely to collaborate. They are also more likely to report that they receive praise or recognition, have a sense of voice, and that their colleagues are committed to doing quality work. On the downside, they are also less engaged and suffer the effects of poor role clarity. This in turn impacts accountability, and drags down organisational health. Poor organisational health tends to mean people are less likely to collaborate or commit to shared goals, and more likely to “deviate from workplace norms”. So the gains may be wiped out by the losses.

While the “liquid workforce” concept is less structured and more dynamic than matrix management, clustering workers freely to complete assignments without a plurality of reporting lines, the similarities are sufficient to suggest some of the ways that the future described by Accenture could undermine business performance if not handled carefully.

Alone on a wide, wide sea!

The biggest challenge for organisations choosing to embrace dynamic people systems will be to avoid the lack of role clarity and accountability identified by researchers into matrix structures. If people feel “all at sea” like Colleridge’s ancient mariner their engagement and commitment are bound to plummet. The result would be that the creative potential of a dynamic approach will be wasted.

We have argued elsewhere that in order to flourish and be creative employees need to balance risk taking with the psychological safety provided by clear structures. In pursuing a deliberate “liquification strategy” organisations must find a way to create this balance. It may well be that a slightly conservative approach is desirable, critically examining both existing and proposed systems for their strengths and weaknesses, then developing a hybrid approach.

The other issue is that liquid workforce strategies are driven, at least in part, by contracting and freelancing. At the extreme end of this process, the Accenture futurists predict that “within 10 years we will see a new Global 2000 company with no full-time employees outside the C-suite”. This tendency can be, and often is, presented as essential to achieving the flexibility companies need to be competitive, and a response to the preferences of “millennials”. To some extent these claims are true, but they can also mask other drivers, such as cost containment to boost profit margins that can actually damage businesses in the medium to long term. It is our view that the downsides, often hidden for years, can cripple businesses. This will be most acute when employee engagement is non-existent (which it must be when there are, strictly speaking, no employees), exacerbating the risks to compliance and ethics identified by McKinsey. Businesses that rely heavily on the gig economy will also suffer long-term capability shortages.

This will occur in two ways. Organisational memory will erode, causing wasted, repetitive effort and making it harder to respond quickly to customer needs or market trends. A further result of this will be short term goal setting. If employees are working from contract to contract they will either not know about or worse actively trash earlier innovation efforts, and will focus on producing easily achieved immediate results, even if these won’t be sustainable or contribute well to strategic objectives. Also, workers will not have the structures they need to develop and refresh their core skills, let alone expand them. Over time this effect is likely to ramify across the whole workforce, making it increasingly hard for companies to recruit people with the skills they need to stay ahead of the innovation curve.

Fortunately these traps can easily be avoided by a planned approach that emphasises continuous learning, individualisation and agile feedback.

Power to the People

In its trend report, Accenture’s Technology R&D team identify continuous learning as central to the success of dynamic organisations. They advocate for the emergence of continuous training as a core organisational competency. Placing continuous professional development (or CPD) at the heart of what you do is vital for refreshing and expanding capability. It is also a key driver of employee engagement and retention.

The trend paper includes outlines of 100-day and 365-day plans for developing the skills and capabilities necessary to transition to “liquid workforce” practices. These plans focus on expanding training capabilities (and better targeting), but also use strategic and product planning projects to build new types of capability incrementally, and better use of workforce analytics. In placing people at the heart of your business, building capability incrementally, experimentally and collaboratively, and creating synergies between internal specialities (particularly HR and data scientists) these plans represent current best practice in people innovation. We highly recommend them. (You can download the plans separately but we recommend reading them in the context of the full report.)

While this sort of strategic approach to building flexible people systems is essential, it is not sufficient.

People also need role clarity and a sense of place. Traditional position descriptions and functional silos (i.e. teams built around single functions or disciplines) are incompatible with dynamic workforce structures. However something needs to replace them, rather than dispensing with the whole concept. We of course advocate the use of customisable role profiles that structure role expectations in terms of continuous growth and breadth beyond basic technical competence. These work best when individuals, supported by managers and HR consultants, can customise their profiles by importing activities or competencies from other roles. If you’d like to learn more about role profile methodologies download our “Six Tools for Frontline Leaders” paper here.

The dynamic people models advocated by Accenture, our own role profile approach, and other tools such as end-to-end workforce analytics will all be vital if you are going to adapt to a future without outmoded hierarchies. If you are going to embrace this future without falling into its various traps, you will also need to evolve alternative structures that can provide the balance people need.

The Liquid Structure?

Too little deliberate experimentation has occurred to say for sure what such a structure will look like. Indeed, in keeping with the adaptive, dynamic nature of the future, there is likely not one solution that will work for every organisation, or work all the time. Continual adaptation and experimentation will be as important in business engineering as in every other part of your business. But we can suggest one approach that has emerged in some academic settings that could be just the key.

Academics traditionally work in discrete “disciplines” (philosophy, mathematics, law, and so on), and these retain their legitimacy since organising theoretical work without them is difficult without losing expertise. However in recent decades institutional barriers between disciplines have broken in pursuit of collaborate approaches to research and education. Interdisciplinary research is now increasingly normal, organised around thematic research centres, formal research clusters, cross-disciplinary conferences and journals, and collaborative teaching. These new forms exist alongside and in symbiosis with traditional disciplines, where academics engage in foundational research and specialised instruction. Moving between the two elements is essential in maintaining specialised knowledge while applying it to real world problems.

Something similar may be done in business or government. Rather than abolish discipline-specific work units, experiment with turning them into home bases for people, where their professional development can be managed and their performance can be measured, and from which they can be deployed short or long term on “missions” to multidisciplinary project or product teams. People will know where they belong, and to whom they “really” report, while having a safe place from which to sally forth in the exciting new work of “liquid working”.

Accenture notes that with the increasing use of casual and contract workers, businesses will need to better manage their relationship with these workers and include them more clearly in workforce planning. The discipline-cluster approach to home base work units could facilitate this by expanding your concept of professional development. As workers develop their expertise they should begin not only mentoring and training colleagues (a key element of a sophisticated development process, as Accenture recognises), but also learning from and contributing to professional communities beyond the organisation. One element of this expanded approach could be to contribute to formal or informal networks from which contractors or freelancers are drawn, sharing in-house knowledge (breaking down the tight hold on IP that is increasingly outdated in the open source age). Meetups, open MOOCs and hackathons are just some of the vectors through which this could be done. Not only will organisations benefit from the two-way exchange of learning, it will have a more stable and better skilled workforce, and a less rigid barrier between “in-house” and “freelance” staff perfectly suited to the age of the liquid workforce.

So let’s dive in. The water may be warm, and since we know where the rocks are we can take the plunge with confidence.

Originally published at capabilitybuilder.com on February 6, 2017.