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Metzler meets Fraunhofer - 8.1.2020

Fraunhofer discussion on Work 4.0

There is much talk about the fourth industrial revolution, with digitization destroying large numbers of jobs, the complete demise of certain occupations and the economy and society undergoing extensive structural change. Everything seems to be in flux – just like digital workplaces, which are no longer tied to a specific time and place. Whether in the office, on a train or working from home, our laptops and smartphones are constantly at the ready. Work 4.0 and New Work seem to be possible virtually anytime, anywhere – with all the attendant advantages and disadvantages.

Dr. Stefan Rief, Director and Head of the Organisational Development and Work Design Research Unit at the Fraunhofer Institute for Industrial Engineering (IAO), and Michael Klaus, personally liable partner at Metzler Bank, who is responsible for human resources, discussed the contradictions inherent in Work 4.0.

Klaus: Dr. Rief, everyone is talking about Work 4.0. How can it be defined? And what is the difference between Work 4.0 and “New Work”?

Rief: Work 4.0 is the more comprehensive term. It includes elements of New Work. In simplified terms, New Work is about shaping work well, in other words, in a meaningful, motivating and sustainable manner, for instance by making use of the possibilities offered by digital tools and technologies. Ideally, Work 4.0 includes these aspects, but it also focuses on the quantitative and qualitative changes to the substance of work and the changing competencies resulting from digital technologies such as platforms and artificial intelligence.

Klaus: If I had to name a key difference between new and old ways of working, for me it would be the increased efficiency resulting from the use of modern communication media and communication technologies.

Rief: For me, it’s also the breathtaking pace of change. The pace is fastest in technology – driven by digitization, followed by the resulting changes in business models, products and services, for example in medicine and mobility. Ultimately, this is changing our lives and our society – the rise and impact of social media is a perfect example.

Klaus: New technologies enable engineers in different time zones to work on a project virtually round the clock – an incredible efficiency gain. However, such efficiency gains are being negated to some extent by rising legal requirements and over-regulation. Many of our labor laws originated at a time when the majority of jobs involved physically hard work, often in dangerous conditions. Back then they made sense. Anyone who worked eight hours in a coal mine needed an uninterrupted break of eleven hours. By contrast, a corporate lawyer who reads an e-mail from a client shortly before midnight should be able to resume work before 11 a.m. the next morning without breaking the law.

Rief: The freedom to choose when and where we work that is associated with New Work will be used particularly intensively by highly skilled and talented young people with sought-after qualifications. At the organizational level, we will do much more of our work in agile project teams and cross-organizational ecosystems.

Klaus: Yet the downside is that the boundaries between work and private life are becoming increasingly blurred. Being constantly available via smartphone, a sense of never really being able to switch off, leading to self-exploitation and the associated physical and mental consequences, are likely to be the biggest danger for the generation of “digital natives”. However, I’m sceptical that we can effectively prevent burnout – today’s equivalent to miners’ lung disease – simply by recording working hours as prescribed by the European Court of Justice. On the contrary, companies’ duty of care towards their employees will become more significant.

Rief: I would also like to see the benefits of New Work being used not just to improve work-life balance; they should also be harnessed for continuing professional development and truly lifelong learning, enabling us to maintain or rediscover our ability to learn and our interest in new topics, technologies and alliances.

Klaus: Digitization will certainly create many previously non-existent jobs and new vocational and academic training courses. One example is the new data science course at Mannheim university. However, I’m concerned that on balance the increasing automation of manual tasks and the use of artificial intelligence will reduce jobs.

Rief: Some research into the development of employment in the context of digitization assumes that the impact will be a zero sum game, while other studies anticipate job losses. It’s still too early to make a proper judgement. However, it’s already clear that, at times, there will be a radical shift in the tasks and activities that make up individual jobs and that we’re facing a considerable need for further training. To stay successful, we need to take on a role as creators.

Klaus: I anticipate that the biggest changes will be in sectors that require relatively little human creativity, in other words, tasks that can be described relatively easily and are repetitive and monotonous.

Rief: Change will be felt most clearly at the middle qualification levels. Jobs that involve a large amount of information processing and data analysis and preparation will also change enormously. In this area, self-learning systems can help identify and present connections.

Klaus: So-called white-collar jobs are increasingly affected by that as well.

Rief: Extensive automation of routine office work will soon be possible. Such tasks will basically vanish into machines. However, the scale of substitution will decrease as the proportion of real knowledge-based work – by which I mean analytical and conceptual tasks – rises. Instead, such tasks will be complemented by digital tools.

Klaus: Agile working is currently “in”. However, I don’t believe that in the foreseeable future it will be possible to use agile methods for specific tasks where highly specialized yet limited capacity has to be made available and coordinated at exactly the right time in order to meet clear responsibilities. In other words, wherever highly process-oriented working methods are needed to deliver highly accurate results with the lowest possible error tolerance, there are limits to agility. Where do you see the limits to agile working?

Rief: Per se, I don’t see any sector-specific limits to agile working. Basically, it means that if employees take on – and are allowed to take on – far more responsibility for their decisions, developments and the progress being made with the work are transparent and visible to everyone. Therefore, the decision-making competence of teams can respond faster to changes in local conditions. Moreover, iteration is an integral part of this method. I feel the limits are more linked to personality: not all employees want to take on such responsibility.

Klaus: The baby boomer generation is retiring, younger workers are choosy and in short supply. The labor market is in upheaval and companies have to pitch to attract potential employees. At the same time, skilled workers over 50 find it difficult to get new jobs. Is that contradictory?

Rief: Yes, and what’s even more contradictory is that the drive to extend people's active working lives is being stepped up. However, that contradiction will soon be resolved by workers with sought-after qualifications. For example, there are not enough young data scientists – and admittedly not enough older ones either – but that can be addressed by the need for training and continuing development. The companies that start to tackle this contradiction in their HR policy and people development before others will be able to benefit earlier from specialists in their business.

Klaus: Are schools, universities and vocational training preparing the next generation of workers adequately for the rapid changes in the world of work?

Rief: Yes and no. Evidently, there’s always room for improvement, but on the whole, I think we cannot simply wait for today's schoolchildren, apprentices and students. We have to spend far more time on today's workers and offer them the opportunity to gain new skills. This is an area where greater use could be made of the possibilities offered by New Work. Why not dedicate one day a week to skills enhancement? Why not use sabbaticals far more often for learning and provide financial support or tax relief to encourage this? An OECD report assumes a high proportion of retraining and skills enhancement measures over periods of months or even more than a year. In various successful organizations, some working time is set aside for innovation. Perhaps we need to think about setting aside time for learning.

Klaus: Creativity is a key attribute in the digitized world of work. Ingenuity, creativity, the ability to do something completely new and unexpected, thinking outside the box: in my view these are the bastions that will most likely withstand the relentless competition from AI for longest, especially if they provide scope for constructive use of artificial intelligence.

Rief: Curiosity, a passion for experimentation, readiness to learn, ability to communicate and doubtless technological understanding and skills, in other words, specialist knowledge, are core competencies.

Klaus: In our digital age, programming or at any rate virtuosity in dealing with digital technology could become a cultural skill without which it is difficult to imagine getting a demanding job. Similar to reading and writing at the start of the modern era. Looking at the role of women in the economy in the digital era, I see a danger that the modest progress we’ve made in appointing women to management positions could be reversed unless there is a fundamental change in the under-representation of women in STEM subjects. 

Rief: Yes, it’s a great pity that women are under-represented in STEM professions. Here, universities and other institutes of higher education need to pay more attention to how courses are presented and how to make them more appealing to young women. Above all, it is particularly important to have new role models, especially in the corporate sector. Thankfully, there are more and more successful women like Anja Hendel, who heads the Porsche Digital Lab, Jennifer Morgan, co-CEO of the technology company SAP, and Aya Jaff, who taught herself programming and founded the Codesign Factory. At just 21 she has become the female star of the German tech sector.

Klaus: Thank you for the discussion, Dr. Rief.

Metzler meets Fraunhofer – Neue Arbeitswelten

Dr. Stefan Rief studied architecture and urban planning at the University of Stuttgart. At the Fraunhofer Institute for Industrial Engineering IAO, Mr. Rief is head of the research department for organisational development and work design.

Metzler meets Fraunhofer – Neue Arbeitswelten

Michael Klaus joined Metzler in 1991. He became a member of the Partners’ Committee B. Metzler seel. Sohn & Co. Holding AG in 2005. In addition to the Capital Markets business segment, he is responsible for Human Resources, Corporate Communications and is in charge of the North American real estate business.

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