Leadership & the Office in the New-Collar Economy

Employees (working consumers) are talking out loud and telling us everything we need to hear, are you listening?   

Since the pandemic, there has been a struggle between employers and employees over return to work (RTO).  During the pandemic, employees working in the new-collar economy, or the keyboard economy, found they could accomplish their work product and make time for family, friends and self.  The scales tipped from work/life balance to life/work balance.

Ginny Rometty coined the phrase “new-collar economy” at The World Economic Forum in Davos in 2016.  The modern economy is being shaped by technology at faster and faster rates of change, requiring a more agile and adaptable workforce.   Rometty positioned IBM, embracing this new-collar approach, by focusing on skills-based hiring and training rather than depending on four-year degrees alone.

The new-collar economy, compared to the information age, values innovation-centric and purpose-driven work over data-centric and efficiency driven work.  New skills emphasize creativity and interdisciplinary skills over technical proficiency and specialization.  The measurements of success are even different between new-collar and information economies, with the former valuing effectiveness and holistic measures (think OKR’s) compared with qualitative and productivity metrics.

So, in the face of accelerating technology, shifting economic imperatives and changing consumer/employee behaviors, how should CEOs think about office space, leadership and the future of work?

Leadership Over Management 

Employees are the new consumers.  In the post-pandemic world, particularly in the United States, those employees engaged in keyboard economy work, are weighing the cost of commuting against working from or near home.  For many during the pandemic, they found they hated their commute, which made them dislike their jobs.  Working from home for two years elevated the experience.

Office and work are now decoupled.  Work, like shop, was a noun before the pandemic.  Now it’s a verb, something workers do, irrespective of place.  The office is still relevant, but it’s changed.  Its no longer a rote meeting place.  It’s morphed into an experiential gathering.  One that requires curation, planning and evolved design.

Managers who assessed performance by butts-in-seats are passé.  Leaders need to create experiences for employees to commute, engage, collaborate and create.  On-site gatherings are the new off-site events.

Mandates don’t work.  If you are trying to gather employees for collaboration, creativity and culture, the last thing you should do is issue a mandate.   Mandates drive reactance, a psychological phenomenon where individuals exhibit resistance to rules or regulations perceived as limiting autonomy or freedom of choice.  Pro-tip… don’t hire adults and then treat them like children.  Work on leading and curating and leave the Dilbert managers behind.

Effectiveness Over Productivity 

Productivity makes sense if employees and businesses are engaged in high-demand, high-volume businesses, like manufacturing, logistics and certain parts of the tech sector where cost efficiency and time-sensitivity are prized.   More often, in the new-collar economy, we are seeing an emphasis on outcomes and key results (OKR’s) around innovation, R&D and customized solutions.

If your employees can be appropriately measured on OKR’s, then effectiveness is better than productivity.  Effectiveness is not time-bound or location bound.  Generating output that contributes to the company’s earnings is the hallmark of effectiveness.  We all know employees who expound on how busy they are, how many emails they’ve sent, and so on.  But is any of that work or any of those emails contributing to the bottom line?  The Keyboard economy is focused on delivering effective results.  Adopt OKR’s.

Choice Architecture  

What are the keys to moving from the information age into the Conceptual Age, from blue or white collar to new-collar jobs?  The answer lies in the esoteric area of behavioral economics.  While almost everyone is aware of the traditional architecture industry, which generates $48B in revenue per year, very few know choice architecture.  And they should.   Current choice architecture revenue is de minimis.

There have been four Nobel Prizes awarded for work involving behavioral economics.  Richard Thaler, from the University of Chicago, won in 2017 for his work challenging the traditional economic theory of rational choice and incorporating psychological insights into economic decision-making.

As a CEO, you already have examples of Thaler’s work at play in your company.  401(K) programs are a perfect example of a “nudge.”  Thaler, along with legal scholar Cass Sunstein, developed the concept of “nudges.”  Nudges are subtle decision-making changes that influence people’s choice’s without restricting their freedom.

Nudges are mightier than mandates.  As a leader, create focus on the need for deepened curation and engagement.  Deploying nudges rather than mandates will lead to more engaged, balanced and happier employees.

But who is charge of curating experiences?  Line managers?  HR?  Real estate?  The current answer generally is generally murky and no one standard has emerged post-pandemic.  Leading companies are developing a Chief Workplace Officer (CWO) who is facile in HR, IT and Real estate with a strong partnership with lines of business (LOB) leaders.  The CWO should also be the be the Choice Architect and Nudger-in-Chief (I made this up, apologies to Professor Thaler).   The future is accelerating faster than ever, the CWO must ensure the requirements of the business are balanced with the priorities of the employees (consumers).

Agility 

Today is the slowest day for the rest of our lives.  Seriously.  Technology is accelerating faster and faster.  Moore’s Law (chip power doubles every 2 years while cost is reduced in half) has been active for over 60 years.  The Moore’s law curve is near vertical in its exponential progression.

While technology and the world are changing at a frequency of weeks and months, real estate is still operating at frequency of 10-year increments.  The industry is old and tired and not prepared to adapt to rapidly changing conditions.  In the US, near 50% of office leases and $2T of mortgages back by CRE (commercial real estate) are set to expire by the end of 2026.  The slow-moving car crash will be televised…

Adopt agility.  Agility is the ability to move quickly and easily.  Somewhat anachronistic for traditional commercial real estate.  What are some of the best ways to act more agile?

• Think about office as a network of places; have a major hub with supporting spokes.
• Your employees are telling you everything you need to hear, you just need to listen by measuring what they do, not what they say.  Measure not only their attendance in office but the specific areas in the office where they dwell and work.
• Give alternatives… the flexible office industry is experiencing its second epoch.  Operators now realize they need to model their businesses after the hotel industry (license agreements vs long term leases) and the quality of the operations continue to get better and better.  Offer employees an ecosystem of places.  Let them vote with their feet.
• Last, but not least… do a better job onboarding.  For most companies, onboarding is a necessary evil.  What are some organizations with the best culture?  Companies like Salesforce (“New Hire Success” program) and Google are lauded for their onboarding.  But look at The Marines.  The few, the proud…  Boot camp creates an indelible, life-long fraternity.  During the pandemic, Salesforce created Trail Blazer Ranch at a 75-acre in Scotts Valley, CA.  Salesforce took a page out of GE’s (Groton, CT) and Arthur Anderson’s (St Charles, IL) playbook, where new starters would spend their first weeks together and return periodically.  How can your company do a better job at the first impression?

Written by Joe Brady.

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