A Look at our Changing Workplace
The topic of #QuietQuitting caught my attention. It’s undeniable that we’ve had many changes to the workplace in recent years, particularly since 2020, and the relationship between US workers and companies is in transition. Companies that anticipate change with either customers or employees and adapt are the ones that survive and thrive.
On a podcast, Mark Cuban pointed out that if his companies don’t continuously adapt to relate to new groups, they will lose them as new customers or employees. Night after night he has to fill seats for Dallas Mavericks games so he can’t isolate himself from cultural currents, but can any executive do so for long? I’m an optimist so I tend to trust in people’s intentions, but even a cynic has to see that if they fail to understand the drivers of this wave of employee expression they may put their business at risk.
One interesting take on Quiet Quitting and related trends is we are hearing the voice of a new generational cohort, ‘Gen Z’. Most large social issues over the last century have required a new generational cohort coming of age to call it out and deal with it. One of the most interesting comments I heard is that Gen Z does not see work-life balance or mental health as optional or a “nice to have”. I grew up in a culture that said, “defer your life until you make it”. I respect that a new generation may have a healthier perspective.
New Generational Cohorts and the History of Social Change
Each generational cohort has formative events for which they are later remembered (and skewered). Baby Boomers had flower power, civil rights, and Woodstock, and then was criticized for quietly going to work for the man. Gen X (my team) came of age with Reagan and an economically and militarily resurgent America. We’ll probably be remembered as materialistic rather than individualistic, but Gen X had major influence shifting employers to focus on merit and results rather than conformity and outdated social expectations. This brought about changes from relaxed dress codes to greater acceptance of lifestyle, racial, ethnic, and gender diversity. Generation Y, aka Millennials, came of age through 9–11; Western conflicts with the Muslim world; and Columbine and subsequent mass shooting incidents. They also grew up immersed in a connected world where everything was accessible from anywhere.
Enter Generation Z into a workplace and civilization that is recovering from the impact of Covid-19 and facing pressures that have been rising for a decade. The big ones can’t be denied and include globalization and the loss of formerly protected markets; increasing population; mass surveillance and identity and privacy threats; climate change and rising storm damage; and technology adoption and automation.
I don’t want to quote Mark Cuban too much🤣 but in another podcast with Adam Grant on business and entrepreneurship, he said that it is a healthy adaptation for all workers to take the mindset of a free-agent professional athlete. Being assertive with work-life balance is part of that equation, it’s being responsible to number one! Like the in-demand free-agent, workers help their employer win at the top level as long as the terms are good.
I’ve witnessed this generational shift in how we perceive our value. My dad identified significantly with his employer. His generation often internalized their employer’s brand as a proxy for their value, as often they built their entire career there. Independent or freelance work was akin to being unemployed. As companies shifted responsibility for benefits and retirement, then job training, then careers to the employee, the rational reaction is for an individual to perceive and build their value independently from their employer. Personal branding is a rational response to this evolution of the “job” market.
Technology has also opened up the means and locations through which a person can build their value. From remote learning to remote work as well as gig and freelance opportunities, today there are many ways that a person can build their personal brand untethered from an office. I am posting this article on medium.com, a great example of this new economy.
I recently wrote an article on user-driven identity and personalization. I see it as a missing component to further enable this concept of everyone being a free agent and able to represent themselves and build their brand across all electronic boundaries. Related to this article, I also built a social media dataset on the workplace and an analytics app to get insights from it. I’ve included some output from it here and I’ll explain more in an upcoming article.
Most similarity to the term "Workplace"
Rank. Word
1. mentalhealth
2. mentalhealthmatters
3. workplacewellness
4. training
5. wellbeingfrom word vectors trained on 25,000 recent workplace tweets
There is a legal issue to resolve between personal branding and the current state of employer confidentiality and disclosure rules. In the case of quiet quitting, I haven’t yet seen a business react legally to an employee advertising that they are limiting their hours or commitment, but I’m sure a challenge will come. Building a personal brand or even speaking out from an individual perspective while a statutory employee can get into a legal gray area. Companies have pushed non-disclosure, confidentiality, and intellectual property agreements pretty far in recent years. Some businesses may adjust these policies in the face of public backlash, but some may also seek to make an example of #quietquitters.
That could be one of several arbitrage opportunities for forward-thinking employers. Is there a new foundation on which to value and respect employees in the context of a more arms-length relationship? Removing fuzzy expectations around loyalty or commitment, with their attached emotional baggage, and focusing solely on how best to structure roles to deliver value is a model that likely reduces agency costs. Nothing creates waste like trying to over-achieve or get attention!
Agency cost is a concept every MBA student learns in finance. The interests of an owner versus a manager (or employee) of a business are never perfectly aligned. The loss of value due to this misalignment is agency cost. However, the agency cost risk comes less from a free-lance perspective or personal branding than it does from fuzzy definitions of workflows and responsibilities. Quality management methods focus on adding value by reducing variability, not by increasing inputs or outputs.
Unless a person owns the company, it isn’t rational to ‘invest’ off-hours and emotion in it. it’s rational for people to invest in themselves, and look for the greatest overlap between that and the demands of the job. What I hear from quiet quitting is simply a reset to that rational perspective.
Indicators of a Shift in the Workplace
In the US, almost 48 million people quit their jobs in 2021, an all-time high. A July 2022 McKinsey and Co. report about 40% of workers are considering quitting their current jobs in the next 3-to-6 months. Changes brought on in 2020 due to the Covid-19 pandemic, such as remote work and accommodation for family or personal time may have been a catalyst.
Gallup says 54% of workers born after 1989 report being “not engaged” and as of September they reported the ratio of engaged to actively disengaged workers was only 1.8:1. The term ‘Quiet Quitting’ is misleading. QQ is about meeting your basic commitment but not allowing personal time and identity to be swallowed up by the job. A worker interviewed by the New York Times said she no longer adds the emotional worrying about what else she could do.
More than two-thirds (68%) of participants in a recent nationwide survey said they would quit a job if it prevented them from enjoying their life. A Fortune article reported on a nationwide survey that the top reasons reported for quitting are low pay, burnout, lack of flexibility, lack of appreciation, mental health concerns, and frustration with slow career progression.
Hours worked dropped 6.7% in 2020 then rebounded 5.4% in 2021, while average hourly compensation climbed by 8% in 2020. I crunched a lot of data from the Bureau of Labor Statistics and included a couple charts on Labor Productivity, Compensation, Employment and Time User covering the last several years. The last few years look good, but some decades-long trends have continued to decline. For example, the percentage of economic output paid as wages and other compensation dropped to 56.7% in 2020, not far from the all-time low of 55.5%.
A different Mckinsey and Co. study (“A new look at the declining labor share of income in the United States”) reported that the percentage of worker compensation to business income (termed ‘gross value added’) dropped below 56% in 2019, almost to the all-time low hit in 2013. 75% of the decline occurred between 2000 and 2016 (a drop from 63.3% to 56.7%), and the measure has been calculated since 1947 . McKinsey noted that globalization and technology adoption are two of the primary forces driving this decline.
These shifts with our relationship to employers are not just about Gen Z. The percentage of independent contractors to employed workers within an age group actually rises with age. 33% of contractors are 55 or older, yet these older workers represent less than 25% of statutory employees. 39% of independent contractors hold at least a bachelor’s degree. The employment of workers 65 and older has increased 117% over the past 20 years. Older workers often have little choice but to contract independently due to the reluctance of companies to recruit them. It’s up to proactive managers to find ways to make better use of the talent at both ends of the US workforce.
The Evolution of Business and Management
A century ago, engineer Frederick Taylor defined a method of organizing work known as “The Principles of Scientific Management”. Taylor’s methods turned huge profits, and factory workers were safer and better paid, but his methods made jobs incredibly boring and subject to intensive micro-management. This was the era of Ford’s assembly line and time-and-motion studies. Taylor said his approach would make a reasonably sharp person go nuts, stating, “The man who is mentally alert and intelligent is entirely unsuited to what would be the grinding monotony of this work.” A century later we continue to struggle with dichotomies like consistency vs. creativity or process vs initiative.
We can pick up process automation and quality management again in Japan in the 1970s. Based on pioneering work on statistical process control by J Edwards Deming, Japanese manufacturers implemented “Total Quality Management”, which engaged line workers in reducing variance. It’s the opposite of “if it ain’t broke don’t fix it”. Under TQM, workers master a systems engineering view of dependencies, causality, and sources of variability. Unlike Taylor’s methods which were always top-down, TQM engages ‘hands-on’ workers and aligns them to the interests of the business. It’s a great formula to reduce agency costs.
With TQM or Lean Manufacturing, Japanese auto manufacturers found the key to competing against American automakers who had large economies of scale advantages. To eliminate the cost disadvantage to smaller scale they reduced setup costs, targeted zero work-in-process inventory, and eliminated causes of rework, allowing them to turn larger profit margins than their larger competitors.
The TQM approach emphasized that the worker who is closest to the process or machine and works with the details every day is in the best position to identify and resolve issues and suggest improvements. TQM charges managers with ensuring the worker receives all information needed to stay on top of their scope of operations (what we call information transparency today). Company culture was built around worker initiative, collaboration, and problem-solving, as well as incentives for results. The related Six Sigma quality approach identified the basic process by the acronym DMAIC, for Design, Measure, Analyze, Improve, and Control. In Lean approaches popular today a BML (Build-Measure-Learn) approach is used. It’s a clear example of the overlap of concepts in the last 50 or 60 years of winning methodologies.
Today we have approaches like Lean Startup, Lean Manufacturing and Agile. As I said, Outstandingly Successful management approaches of the last 60 or 70 years share concepts of iteration, information flow, systems-thinking, and empowerment with their predecessors. Lean and Agile focus on fast, incremental cycles, delegating daily decision-making to small teams. The greatest benefits of this may have been the time and effort saved on meetings, updates and reviews! TQM, Lean and Agile define an information flow that is the reverse of the ‘bottom-up’ flows that dominate traditional companies. Daily decision-making by team members and ‘line’ workers is only possible with an unobstructed flow of timely information.
Many companies that implement agile try to do so without fully buying-in to this concept and its a big problem. In companies with power hierarchies and silos, trying to shape information flows pragmatically threatens the status quo, so it’s often subverted silently and passively. If there was one thing to fix to make jobs more rewarding at large companies, I’d vote for ongoing executive attention to ensure timely information flows and transparency.
Like the Archetypes Carl Jung found throughout human history, or the Hero’s Journey Joseph Campbell found throughout literature and storytelling, management approaches of the past century carry with them common threads of simplifying iterations; worker initiative and empowerment; and internal transparency with information flows. There are many other popular business approaches that I haven’t yet mentioned, like “The Great Game of Business” , that leverage these same common themes.
Change is the great disruptor. It’s the reason that top-down, centralized control is too slow and inflexible an approach to manage business today. In a market without changing customer preferences, or changes to suppliers, or technical innovation, or changing employee needs, management wouldn’t need to attract and retain great people! But if anything the pace of change is increasing and is permeating even slow-moving industries. Every business must engage employees to anticipate, identify, and adapt to change.
The pace of change should act in the interest of motivated workers who want to take initiative, use more of their brain, and be challenged. So why are even skilled professional roles becoming commoditized? Processes and methods to implement and maintain technology have matured, so roles involve fewer brain-stimulating tasks involving experimentation, creative problem-solving, or working across domains or functions than they did 20 years ago. Roles are defined more narrowly, boundaries across roles are higher, and business processes are defined in greater detail with little wiggle-room (think of the detailed workflow definitions for many franchise businesses today). The more specialized knowledge a role requires, the more likely the person will get pigeon-holed into narrow tasks that are unlikely to stimulate reward centers in the brain. The challenge that legendary task engineering advocate like Taylor saw is that highly regulated tasks are not for a motivated, smart person!
Legendary business consultant, professor and author Peter Drucker said there are only three fundamental business strategies: Operational Efficiency, Product Innovation, and Customer Intimacy. Faced with the increasing pace of change and loss of traditional market protections, many businesses have turned to operational efficiency in the form of commoditizing their workforce. The trouble with this is that Drucker’s other two strategies require the types of employees that turn away from too much emphasis on efficiency and rigidity.
Approaches that succeed do so not just because they fit the business need, but because they also stimulate positive reactions in our brains, increasing our sense of reward, challenge, respect, and competence. Management needs to tap in to recent discoveries in Neuroscience to connect with employees who are increasingly aware of these things.
The Neuroscience of Novelty, Challenge and Reward
University of Sussex neuroscientist Anil Seth describes our perception of reality as a “personalized hallucination”. Seth explains that who we are, including our physical being as well as brain structure, personalizes this perception of reality to make it unique from anyone else. No two employees will have the same experience, even if working in the same office at the same job for the same company, but we do share common reactions to situations.
New experiences are critical to brain vitality. Even slight modifications to a daily routine can trigger our brain to connect new neural pathways and can reinforce the strength of our memory. Neuroscientist David Eagleman, author of the book “Livewired”, explains that our brain generates pleasure and reward with new experiences and challenges, and our perception of time actually slows down in novel or challenging situations. Our ability to recall details from memory is enhanced as well.
Eagleman has hypothesized that new situations drive creation of new neural pathways, and by raising overall brain activity likely strengthens all memory functions. With novel experiences we capture richer, more detailed information, which somehow reinforces and helps integrate our memories. Not only does our memory improve, but we get more pleasure from it too. Dr. Aaron Heller of the University of Miami reported results of his research that when subjects in an environment explored new topics as opposed to sticking with routine, they more often reported feelings of happiness or pleasure. Novelty, initiative, and challenge are neurological triggers that stimulate our brains, build new neural connections, improve our depth of memory, and generate feelings of pleasure and reward, employees are simply asking for a regular dose of that.
On the flipside, there is the value of repetition in developing competency, and for business, for ensuring consistent execution. There’s the 10,000 hour rule that Malcolm Gladwell wrote about in his book “Outliers”. Professional athletes repeat motions for hours a day to develop “muscle memory” that allows them to focus their mind on strategy when competing. This practice and repetition obviously also applies to skills at work.
As with many heuristics, the 10,000 hour one is repeatedly misapplied and over-emphasized. Empirical data shows that the gifted make themselves known long before 10,000 hours, and that 10,000 hours can do little for those of mediocre talent, poor focus, or low initiative. the state of corporate recruiting is a great example of over-emphasis of repetition of the trivial, at the expense of evaluating talent for the potential value they bring. Recruiting pressures a mastery of buzzwords, an SEO approach to resume distribution, and subscribes to a false heuristic that someone who has done the same skill for the longest time is the most valuable candidate. Faced with unprecedented uncertainty and change due to global forces, we are in a period where companies need to be much smarter in how they assess talent and how value is delivered.
Meeting the Needs of the Spectrum of Workers
Assumptions, urban legends, and false heuristics tend to increase when we have too much data coming in and not enough time to process it. It results in confirmation bias or selection bias- our tendency to latch onto the most readily available and simplifying conclusion. In “Thinking Fast and Slow”, Nobel-winning social scientist Daniel Kahneman described the dichotomy of decision making that exists within us all- intuitive and assumptive, or observant and empirical. Appealing to a diverse employee market with shifting priorities requires a questioning of assumptions and consideration of new approaches- classic requirements for a period of thinking slow.
The objective of filtering and screening candidates is to cull an unmanageable number of candidates to a manageable number, but the objective of the business should be to close job offers with the most valuable candidates. That is a clear conflict of interest. In any decision or prediction process there are two error types: Type I (alpha risk) is a false positive conclusion, while a Type II error (beta risk) is a false negative conclusion. The question is, who at your company is evaluating the risk of increased Type I or Type II errors in the recruiting process?
Steve Jobs was famous for taking an unconventional approach to hiring and seeing a skill or trait in someone that he and sometimes only he saw as the key differentiator for value in that position. Jobs built the worlds most valuable company by applying a broader perspective to the value a person can bring. This can also be applied to restructuring the work of employees, which I think #QuietQuitting is calling for.
From reviewing quiet quitting through articles, economic data, and social media analytics, I don’t see one demand or one type of employee commenting on the workplace. It spans the spectrum. When someone says “I’m no longer over-committing to my job”, it could be they are asking for management support to take on the big challenges, just asking for some recognition for the sacrifice.
Most employees are likely aware of the changes the company is facing and the forces that are affecting our economy. They are asking management for straight talk about it. When they fail to do this it provides an impetus to take those frustrations outside the company. The greatest respect an employer can show an employee is to talk straight about the challenge and then delegate a degree of creative problem solving to them. I don’t think any reasonable person would quit a job if shown this type of respect.
Another takeaway from QuietQuitting is that businesses need to attract and retain competent workers who may not live and breathe for the company. They may not give you the ‘I’m all in’ vibe and sit in the front row at employee engagement meetings, but how often is that vibe sincere or in the best interest of the company? Take advantage of the opportunity to carve out an arms-length relationship based on delivery of value. For managers there’s fewer meetings and less emotional effort in dealing with this type of employee, it’s simply about needs and results, it’s a win-win.
