The Transformation of Work Organization, Skill Formation and Employment Relations in Knowledge-intensive Work: a Comparative View

Scholars of employment relations in the U.S. argue that a "new deal at work" is replacing guarantees of long-term employment in core sectors of the economy with market-driven employment relations.

Changes in employment can be understood from two different theoretical perspectives that focus on organizational change and occupational change respectively. The organizational perspective focuses on market-oriented organizational restructuring, the rising importance of dynamic networks across organizational boundaries, and the value added through knowledge. The occupational perspective, meanwhile, focuses on scientific progress, the increasingly technical nature of work, and the growth in professional employment. These two perspectives are distinct, but should be taken together. In studying career structures, for example, the organizational perspective leads one to talk about career advancement within organizational hierarchies, while the occupational perspective gives attention to a worker's accumulation of skills.

Below I summarize some results of my empirical research on the transformation of work in Germany and Japan. This research was based on participant observation at a sample of various knowledge intensive workplaces in the IT, consulting and financial services industry.

First, work in knowledge services is more project-based, temporary, and customer-oriented, and it has a flatter structure. Employees are becoming more mobile, but this mobility is shaped by the networks of people and organizations that develop around particular work projects. Within such projects, knowledge is generated at the front line, and companies then figure out how to bring that knowledge into the organization.

Second, work in knowledge services has strong implications for knowledge and skill formation. Yet we must keep in mind that knowledge and skills have many different dimensions. Knowledge may be theoretical or contextually related to a specific product or customer. Technical skills remain important in many areas, but are accompanied by a rising demand for analytical skills necessary to applying those skills and engage in problem solving. Collaborative work in projects also requires social skills. And results-driven, project-oriented work requires a growing level of organizational skills and self-management. Finally, creativity is an essential element needed to put knowledge to new use.

Third, what are the sources of learning these various types of knowledge and skills? Sources include formal learning institutions, such as schools or government, organizations and their orientation programs and rotation systems, projects, and biographies or the individuals' particular sets of experiences and talents. While institutions are important in imparting theoretical knowledge, they are generally not very important for all the rest of the knowledge and skill types. Rather, projects appear to be the most important. Meanwhile, social skills are often associated with biographies.

The sources of learning suggest a growing importance of mobility beyond single organizations. Mobility does not mean that employment is necessarily market-driven. Mobility may be between different forms of employment, from project to project, from job to job, and between work and learning. In other words, mobility remains embedded within and coordinated by social networks.

These trends have strong implications for employment policy. Committed workers do not necessarily learn the most. Communities of practice constructed within the context of organizational networks are sources of skill formation. Incentives for skill investments also lie in networks. Non-standard employment for certain stages of skill development introduces mobility as a source of learning. And employment benefits that follow mobile workers counteract the negative effects of mobility.

Q: Japan would appear to be strong in cultivating inter-organizational networks, but weaker in cultivating skills centered on particular occupations and professional identities. Can you comment on where Japan is adapting to these transformations in employment and skill formation?

While Japanese keiretsu were seen as tight and stable relations, dynamic networks are being lauded for their fluidity and spontaneity. Organizational relations are loosening, which means there is more bottom-up decision making and greater responsiveness to the market. While some leading Japanese companies have exemplary work practices, many Japanese firms will have to adapt their internal structures to make use of these new sources of knowledge.

Q: How would you evaluate the German occupational system and its supporting mechanisms and institutions?

The skills that need to be developed are outside of the institutional realm. Germany created several new occupations for the IT industry, but had to scrap them and remake them as the industry changed rapidly. The first people completing their training in these occupations are appearing today, some seven years after the reform started. This time lag is a serious issue, even if the German system has strengths in established industries. Germany also has one of the strongest protections against firing workers, and does not sufficiently support flexible forms of employment. It is therefore regarded as being overly regulated and not as a positive case for Europe. Changes in employment regulation are needed, as well as a social safety net for those who are in between jobs. Overall, mobility must be made less painful.

Q: Do you have advice for training Japanese executives?

There is a need to train workers in high skill technical work in order to encourage the development of the knowledge industry. In the long run, employment forms and practices must be developed. There are innovative employment practices in Japan, but they are not generalized because the older industries have a lot of power. Recruit, for example, gives its employees grants to retire early and start their own businesses.

Q: If diversity is key to innovative employment practices, what is the role of the manager? In terms of your research method, it seems your sample is too small and you may be in danger of over- generalizing.

The role of management can be described in one word: networking. Our sample was not representative, but was selected based on specific theoretical criteria. We looked at companies with different types of services, operations, and management. Labor economists who use statistical analyses cannot detect the changes or trends my study identified.

Q: We want to keep our workers in our organizations because we have invested in them. It appears that you put too much trust in mobility. Also, shouldn't workers apply what they have learned to projects and not vice versa?

People keep in contact with each other after they stop working together. We are moving to a situation of loose ties, which creates new knowledge. You learn more from people you are loosely affiliated with ("the strength of weak ties"). Projects are good for front line, contextual knowledge, which is what precisely matters to customers.