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Workplace Development Programmes in the Learning Environment of the Knowledge-Based Economy– Fresh Questions and ChallengesPaper presented at the Nordic Research
Conference Tuomo Alasoini, Docent IntroductionWorkplace development has been a focus of interest for government, labour market organizations and researchers alike in many industrialized western nations since the 1970s. Interest in workplace development was boosted at that time by an increase in job dissatisfaction, absenteeism, labour turnover and industrial action, all of which were viewed as signs of the crisis of Taylorism, Fordism or mass production. In many countries, programmes were launched with the aim of improving the quality of working life, humanizing work or promoting labour-management cooperation. In the 1980s and 1990s, the focus of the programmes increasingly expanded to improving the productivity, competitiveness and innovativeness of companies as well. The interest shown by governments and labour market organizations in workplace development programmes has varied, depending on the period and the country concerned. In Germany and, especially in Sweden, where government and labour market organizations have funded workplace development more than anywhere else since the 1970s, the volume of programmatic development has fallen distinctly in recent years. In certain other countries, for instance Finland and Ireland, programmatic development did not begin until the 1990s. Meanwhile, Anglo-American countries, with the partial exception of Australia, have never given this much effort. Despite certain common trends, programmatic workplace development has developed differently in different countries, equally where theoretical approaches, programme designs and institutional arrangements are concerned (Business Decisions Limited 2000; Gustavsen et al. 2001; Naschold 1994). The institutional environment in which companies operate and in which labour, labour market and R&D policy are implemented has had considerable impact on approaches to workplace development in practice. The institutional environment is made up of many historical and cultural layers. The content and form of workplace development approaches has been most affected by who the key collective actors are and how their mutual relationships are structured. The key collective actors are usually companies and company networks, research groups, labour market organizations, governments and various funding bodies and authorities in charge of working-life, technology and regional development. In Finland, Germany and France, for instance, government or government agencies have held a key role as initiator and coordinator of development programmes, while this role has been played by the axis between the labour market organizations in countries such as Norway, Denmark and Ireland. In Sweden, the UK and Italy, meanwhile, the engine has been various regional actors in recent years. Aim of the PaperThis paper takes a closer look at some fresh questions and challenges faced by programmatic workplace development which are generated by ongoing economic change. This change, called in this paper as the ‘transition to a knowledge-based economy’, will probably have considerable impact on enterprise organization, methods for workforce utilization and qualification requirements. The discussion about these issues has so far been sporadic, however. This paper begins by outlining essential features of the change now in progress from the point of view of explicit-tacit knowledge interplay, then goes on to discuss their implications for workplace development programmes, especially in the context of Nordic labour markets. The aim is to not to provide a comprehensive analysis of the ongoing economic change and its impacts, but rather to take on some relevant topics for further discussion and inquiry. The Knowledge-Based Economy – Interplay of Explicit and Tacit KnowledgeThere has been a great deal of discussion in recent years about whether the technologically most advanced industrialized nations are changing over – or have in fact already changed over – to a new type of economic growth. Specifically, the debate has gained momentum because of the economic growth and rising productivity which continued unabated in the USA throughout the 1990s without any significant inflationary pressure (e.g. OECD 2000). In discussion on this subject, a number of labels (such as the ‘digital economy’, the ‘new economy’, the ‘information economy’, the ‘knowledge-based economy’, the ‘knowledge-intensive economy’, the ‘network economy’, the ‘weightless economy’, the ‘learning economy’, etc.) have been applied to this new phase. The ‘knowledge-based economy’ is a label, which captures quite well the main features of this new phase of economic development from the perspective of corporate operating environments:
Learning is a multifaceted process which is possible to deal with only in a very simple manner in the following. The term ‘multifaceted’ refers to the fact that learning can take place on different levels (individual, group, organization, network), can be of different levels of profundity, may focus on different kinds of knowledge, etc. From the latter point of view, learning could be viewed in the following way (Lundvall 2000, 127): Know-what refers to knowledge about ‘facts’. Know-why refers to knowledge about principles and laws of motion in nature, in the human mind and in society. Know-how refers to skills, or the ability to do something. Know-who involves information about who knows what and who knows how to do what, as well as the ability to cooperate and communicate with different kinds of people and experts. ICT is most effective in supporting the learning of know-what and know-why. Key tools in both of these kinds of learning are the ability to read documents, participate in training and access databases. At its best, ICT may bring about a revolution in the dissemination of this kind of explicit, codified knowledge. ICT allows explicit knowledge to be transferred quickly and at low cost from one place to another and from one user to another, regardless of physical distances. For instance, the Internet and the other Net technologies (intranets, extranets) can help solve the traditional trade-off in information economics between the richness and reach of information, since it makes for rich information with a broad reach (Evans & Wurster 1997). Learning know-how and know-who requires different tools, however, since the knowledge they require is of a different nature. It is based on learning by doing and learning by using, and on shared experiences generated through social interaction within different types of groups and networks (learning by interacting). This type of experience-based knowledge can be called tacit knowledge. Unlike explicit knowledge, tacit knowledge cannot be codified into speech, writing, diagrams, instructions or standards; rather, it is anchored in values, feelings, beliefs, cultural symbols and mental models. It is difficult, not to say impossible, to replace the significance of individual or collective face-to-face interactions in the sharing of tacit knowledge and articulating it as explicit in an organization, even if rapid development of interactive multimedia applications combining text, image and sound offers increasingly advanced communication potential. Virtual forms of working and work organization might at best supplement, but never totally replace, self-managing teams with close physical and social contacts, for instance, as a forum for learning (De Santis & Fulk [eds.] 1999; Jackson [ed.] 1999; Malhotra [ed.] 2000). A highly developed ICT infrastructure is an important factor in support of individual and collective learning from the company point of view. Its importance derives not so much from its increasingly advanced potential for acquiring, processing, storing or transferring explicit knowledge, however, as from the way it can be used to support knowledge-conversion processes in the organization, based on interplay between explicit and tacit knowledge. This interplay is the foundation for innovation and, accordingly, the key competitive strength of the organization in the environment of the knowledge-based economy (Nonaka 1999; Nonaka et al. 2001). The following two sections take a closer look at what this kind of perspective on learning entails for enterprise organization and workforce utilization and for qualification requirements. Trends in Enterprise Organization and Workforce Utilization in the Knowledge-Based EconomyIn the post-war decades, it was typical of major companies to strive for advanced vertical and horizontal integration. Horizontal integration was often connected with diversification, i.e. seeking growth by expanding into new sectors. Vertical integration, which was characteristic of the Fordist production model, was a means to internalize possible market risks in different phases of the value chains. The globalization of competition, supported by the liberalization of trade and the deregulation of markets as well as the development of ICT have, however, signified an end to the trends of horizontal and vertical integration of production. An increasing number of companies have chosen in recent years to focus on a narrower segment of products and services and of the value chain, around which they build their core competence. Horizontal disintegration is associated with the fact that when operations become globalized, there is less need for companies to balance their cash flow over economic cycles by betting on different industries; instead, balance can be sought through exploiting differences in regional markets. Another important reason for the increased horizontal disintegration is that amid tougher and more open international competition, companies find it hard to achieve and maintain competitive advantages in several sectors or several product or service segments at once. The role of ICT in the process of horizontal and vertical disintegration is twofold: on the one hand, ICT speeds up the product and service focusing by promoting globalization (see above); on the other hand, it speeds up vertical disintegration by reducing transaction costs. ICT helps to rethink the production economic logic of organizing the value chains by creating new possibilities to split and reshape them into new business areas. A good example of this kind of radical change during the recent years is the spreading of e-commerce along with the rapid development of the Internet (Evans & Wurster 1997; Lillrank 1998). The ruling principle behind the organization of value chains in the knowledge-based economy then becomes horizontal coordination rather than vertical integration (Schienstock 1999, 27-31). According to the new organizational logic, value chains are split into several parts, with different companies in charge of the parts. From the point of view of the core companies in the chains, this means more outsourcing of functions and new types of dense interaction, whether virtual or not, across corporate boundaries – even to the extent of blurring them – with other enterprises in the chain and often also with clients. The core companies strive to retain responsibility for the most strategic and economically most productive parts of the chain. This usually means ‘going downstream’ in the value chain, closer to the client, with embedded and more comprehensive services and integrated solutions (Wise & Baumgartner 1999). Thus Nokia, for instance, has already outsourced most of its production and focuses on product design, R&D, and brand management (Ali-Yrkkö et al. 2000, 28). Despite the lively discussion on the reshaping of value chains in the knowledge-based economy, there has been little analysis of how these changes will affect how companies use labour. In an environment in which the main driving force of economic growth is the production and use of knowledge, a special challenge for this kind of analysis is that it should link expected changes in the labour market to those in the market for the demand for and production of knowledge (Teece 2001, 141). One of the rare attempts to do this so far is Burton-Jones’ Knowledge Supply Model (1999) which looks at a core company in a value chain, whose key production factor is knowledge. This kind of company is not interested in the workforce primarily as a source of physical labour, but as a generator of knowledge. The following focuses on some of the main hypotheses inherent in this model. From the point of view of knowledge production by an individual company, the workforce is divided into internalized and externalized producers. Functions which require mainly explicit and non-company-specific knowledge can be outsourced, while functions requiring a great deal of tacit and company-specific knowledge are kept in-house. The ‘core group’ comprises the firm’s most senior knowledge workers, who are responsible for its high-level knowledge integration functions and for planning, coordinating and controlling its activities. Such functions demand high levels of both explicit and tacit knowledge and company-specific knowledge. For this reason, the company strives to keep them committed through attractive arrangements involving ownership shares, share of profits, bonuses and fringe benefits. In the long term, the personnel of a knowledge-intensive company will consist in an increasingly large proportion of this group. The more knowledge-intensive the value chain, the smaller this core group will be, however, in proportion to the total workforce in the entire value chain. Knowledge-intensive companies may not wish to grow by increasing their own personnel, preferring to network with their clients and the other companies in their value chain. Due to inadequate functioning of the market or the company-specific knowledge required by assignments, even these companies cannot usually outsource all functions outside their core competence. Along with the growing knowledge intensity of the economy, the market for knowledge-intensive business services is, however, developing all the time. According to the Knowledge Supply Model, companies which consider knowledge their main production factor are not, typically, interested in increasing their own personnel numbers, even in order to balance out workload fluctuations, by using temporary workers, part-time workers or work-sharing. Especially in the long term, the use of agency workers or outsourcing is more attractive. The use of agency workers is made all the more attractive from the company perspective by the greater potential for benefiting from economies of scale and matching supply and demand. Knowledge-intensive companies use agency workers primarily for work which does not require high explicit knowledge or tacit company-specific knowledge. Burton-Jones predicts, however, that the use of agency workers is likely to expand to work requiring higher expertise. Work demanding high levels of explicit knowledge which is not considered by the company to belong to its core competence or which could not be merged with the core competence without excessive investments is, however, outsourced as a rule. Even highly qualified employees of core companies in value chains may find themselves self-employed or micro-entrepreneurs against their will as a consequence of their expertise not being part of the company’s core competence. The market for knowledge-intensive business services which develops around the core companies thus comprises a number of operators in different positions, such as self-employed, micro-entrepreneurs, SMEs, big international companies, different networks and so on. Their market position as knowledge producers is affected by the level of the knowledge they possess, how specific it is from the point of view of other companies, and its value for other companies. This type of model is naturally rough and abstract, but it may describe with some precision the general logic associated with changes in corporate organization and utilization of labour in the knowledge-based economy. The general trends described in this model may filter through as very divergent practical solutions in different industrial and national contexts, due to varying institutional practices. Trends in Workforce Qualification Requirements in the Knowledge-Based EconomyThe ability of ICT to significantly facilitate the acquisition, processing, storing and transfer of explicit knowledge and thus the learning of know-what and know-why has led to a situation where it is increasingly difficult for companies to construct a long-term competitive advantage from explicit knowledge and such learning. In this kind of environment companies’ possibilities to protect, let alone monopolize, explicit knowledge will be weakened radically. It would therefore seem that the development of ICT creates a somewhat paradoxical situation in which the significance of tacit knowledge as a source of competitive strength for individual companies is emphasized in the knowledge-based economy. According to Lundvall (2000, 129), the more complex and densely networked the operating environment of companies change and the faster and more radical corporate change processes become, the more important tacit knowledge will become. Ståhle and Grönroos (2000, 106) claim that tacit knowledge now accounts for as much as 95% of a company’s total knowledge base, while explicit knowledge would thus account for only 5%. The rapid growth and superior financial performance of Nokia in recent years, for instance, has been analysed and explained by the company’s efficient means of creating, sharing and articulating of tacit knowledge (Kulkki & Kosonen 2001). The increased importance of tacit knowledge in production management is described by Lillrank’s (1998) Quality Broom Model (Figure 1). This postulates that quality systems or other standard operating procedures can only control fairly uniform and repetitive production processes. A company’s capacity to control processes with the aid of explicit knowledge begins to deteriorate when the uniformity and repetitiveness of processes decreases. As the expected output variety of these processes grows, companies are forced increasingly into the realm of tacit knowledge. In such a situation, process control requires a highly developed quality culture. The effectiveness of this type of management method depends on how well the company employees have internalized the corporate vision, the extent to which their actions are guided by the company’s commonly accepted values, and whether individual employees have adequate competence and tools to cope with their varying and rapidly changing work situations.
Figure 1. The Quality Broom (source: Lillrank 1998, 23). The emphasis on tacit knowledge as a source of competitive strength for a company is also reflected in the qualification requirements for employees. Tacit knowledge is accumulated through experience, such as learning by doing and using and the social interaction in teams and networks. From this point of view, tacit knowledge is thus best accumulated through continuous, full-time careers and assignments involving a wealth of interfaces, such as working in a teamwork-based, project-based and densely networked environment. There is therefore ample justification for companies to develop their forms of work organization in this direction. We can assume that the importance of formal criteria describing explicit knowledge will decrease in the recruitment of employees. In future, the most important of these will be versatile professional skills, international skills (such as language skills) and digital literacy, i.e. the ability to work in an environment which requires the use of ICT. According to Schienstock (1999, 39), companies are increasingly seeking new employees based on factors describing the work orientation – for instance, quality consciousness, reliability, precision, care, commitment, trust, creativity, openness to new ideas, entrepreneurial spirit and enthusiasm. Companies typically assume that these work orientation criteria express an individual’s potential for accumulating tacit knowledge. It is, in fact, often argued that companies are now looking for ‘nice guys’. This is not restricted merely to the technologically most advanced organizations or traditional white-collar work, but also increasingly to traditional industries and blue-collar employees (Flecker & Hofbauer 1998; Lavikka 2000). According to the most recent Finnish qualification studies, very divergent sectors now seek surprisingly similar features (Metsämuuronen 2000). The search for ‘nice guys’ increases the risks inherent in the recruitment process. It is more difficult to gauge individual people’s potential for accumulating tacit knowledge than it is to assess the level of explicit knowledge they possess. The demands placed on the work orientation of these individuals are furthermore not without potentially conflicting tensions. For instance, ‘entrepreneurial spirit’ and ‘openness to new ideas’ are not necessarily qualities which ensure that people will commit themselves to an organization’s vision or values; rather, they may tend to promote independent actions and critical questioning of existing structures and systems (Flecker & Hofbauer 1998, 115-116). Corporate management systems and organizational forms should change at the same pace as the recruitment criteria they apply if they are to ensure that these criteria are not reduced to tools for normative integration and control of the workforce, but instead remain real tools for encouraging employees to attain their true productivity and innovation potential. The increasingly knowledge-intensive economy has a built-in mechanism which reinforces social segregation; a fact referred to in the Knowledge Supply Model of Burton-Jones (1999) above also. Lillrank (1997, 82) has described this by saying that "in intellectual work, the difference between the performance capacity of individual employees can be infinite", contrary to the case in work based on physical tasks, where differences are smaller and thus somehow proportionate. It has been also proposed that the model for a successful company of the future is one with half a number of its present employees with twice their present level of knowledge, and which produces three times the present added value (Otala 2000, 23). These quotes describe a trend towards a more uneven distribution of work and earned income in the knowledge-based economy. The growing differences between individuals as producers of added value will cause an increasingly uneven trend in labour demand. According to Lillrank (1997, 82), there will no longer be as strong a production economy justification for equal income distribution following the transfer from mass production to the more flexible, tailored production characteristic of the knowledge-based economy, because it does not require the same reasonably homogenous mass market. This argument, however, is too simple even from the production economic point of view alone, since increasing social inequality may undermine the feasibility of the knowledge-based economy for another reason. According to Lundvall (2000, 132-133), sharp social divisions undermine the social capital of a society, which is the foundation of all interactive learning. The accumulation and articulation of tacit knowledge, in particular, is possible only through social interaction, and the main prerequisite for that is solid trust between individuals. New Questions and Challenges for Workplace Development ProgrammesThe themes of the knowledge-based economy have not featured visibly in European countries in recent workplace development programmes, whether completed or ongoing. This is indirectly evident in the fact that the companies and workplaces included in these programmes operate largely in traditional sectors (Alasoini 2000a; Business Decisions Limited 2000). Although innovative companies can be found in all sectors, it might be assumed that companies specifically in the new, dynamic, rapidly expanding sectors would be the best laboratories for testing new types of work, organizational and human resource management practices, which could be an important source of inspiration also for the traditional sectors and help support better integration between the ‘new’ and the ‘old’ economy (Prihti et al. 2000, 41-43). Experiences in Finland have, however, shown that, due to their rapid pace of change and lack of firmly established operating procedures, these companies (many of them in the ICT cluster) find it hard to commit to long-term programmatic development (Alasoini 2000b, 115-118; Kasvio et al. 2000, 140-141). The absence of these types of company may at worst lead to two legitimacy problems when we consider the role of these programmes as part of a national or regional innovation policy:
The perspective of this paper on the changes in company organization, workforce utilization and qualification requirements in the knowledge-based economy is an interplay of explicit and tacit knowledge. This perspective leads to different future visions compared with both neo-liberalist and technology-oriented discourses, often with an uncritically optimistic attitude to technological change, and discourses dealing with the ‘end’ or ‘degradation’ of work. This perspective tends to see potential for workplace development programmes in the environment of the knowledge-based economy, too, but also highlights many new, problematic issues. In the 1970s, the focus of workplace development policy was typically on problems arising from Taylorist working arrangements being taken to extremes, such as the ergonomic and psychological problems of repetitive and monotonous work and the lack of autonomy and influence. These problems were tangible and clearly delimited in both the physical and the organizational sense, and it was often possible to find fairly simple solutions to them by applying the right expertise. The solutions in question were, furthermore, neutral in terms of effects, in that they did not usually have direct employment impacts on the workplace concerned, or indirect impacts on employees outside that workplace. Even though these and many of the other ‘old’ problems of Taylorism may still be a relevant object of development intervention in many workplace, in the environment of the knowledge-based economy the starting points for workplace development programmes have become more complex, giving rise to new question and challenges on several levels:
The above questions and challenges call for the development of overall progamme and project design concepts, and the way programmes and projects are actually managed and implemented:
If workplace development programmes prove unable to respond to the new questions and challenges brought by the environment of the knowledge-based economy, it may ultimately undermine their importance as part of national or regional innovation policy. This question must be taken seriously, primarily because workplace development programmes have so far been unable to gain the status in public policy-making held by technology development and transfer programmes in any western industrialized nation. Quick-fix solutions to this ‘organization development deficit’ (Gustavsen 2000, 121) are unlikely to exist. The main means available for countering any legitimacy problems that workplace development programmes may be experiencing will be how successful these programmes are in creating new innovation concepts which their stakeholders find credible and which are capable of dealing with the above and other challenges posed by the knowledge-based economy. 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