New Work in practice: When it works - and when it doesn't


New Work seems like a magic word that creates new products and professions. There are new-work coaches, new-work skills, and a new-work mindset. However, many companies lack a clear definition and measurable goals that new work methods are supposed to pay off. A simple questionnaire from organizational psychology helps.

Patrizia Müller is the HR manager of a bank with 1100 employees. Once again, the CEO has increased the pressure. He wants agile transformation, now. "Corona gives us the chance to transform to more New Work," he urged. ING has led the way, he said. At its competitor, all organizational units have been working agilely since summer 2019 - it calls itself "Germany's first agile bank."

"We have to manage that, too," the CEO demands. The consultants who pitched for the change project have no doubts. They talk about where they have already successfully introduced New Work, but flounder when they are asked to explain the goals of the measures. To the HR manager, it sounds as if agile should simply lead to more agility. She feels that she has slipped into the role of brakeman. But she has applications from agile competitors in her inbox. Top executives are coming forward who, after five levels of management have been slashed, only want one thing: to get away!

Stories like this are happening a lot in Germany right now. The above example has been distorted to ensure anonymity. But I know from many conversations with managers that it is a pretty good reflection of how change processes work in companies. Top management calls for more agility, whereupon HR managers and change managers try to find out what is actually meant by it. In Germany, agility is often associated with "new work," which has long since become a trendy term. There are new-work evangelists, new-work soft skills, new-work coaches, new-work mindsets and much more. The magic is simple: just put "New Work" in front of the root word and you create a new product or profession. Even the Hamburg-based parent company of the business network Xing couldn't escape this magic and renamed itself New Work SE. But how does New Work succeed? How do you get started? And what is New Work anyway?

The arbitrariness of the term not only makes practical work difficult, but also scientific support. This was one of the reasons why the SRH Berlin University of Applied Sciences, together with partners, initiated the New Work Barometer (another magic word that we hope will attract attention). The aim of the barometer is to scientifically investigate the development of the term New Work and the use of various measures with an annual market survey.

459 company representatives and consultants took part in the current survey. We presented them with four different definitions of New Work (see "Definitions of New Work" below). Among them, New Work SE's understanding received the lowest approval ratings. The company states that it wants to shape the future of work in the interests of people. The understanding of Frithjof Bergmann, who introduced the term New Work into the literature and thus designed a social utopia as an alternative to capitalism and communism, also scored poorly. In contrast, the New Work Charter received very high approval ratings. Behind it are five working principles drawn up by the Nuremberg-based think tank Humanfy. The definition that New Work involves measures that increase the psychological empowerment of employees received a similarly high level of approval.

Psychological empowerment
This is an interesting finding, because psychological empowerment has become a key issue in research and practice on the topic of New Work. The concept helps to understand why New Work measures fail or succeed.

As shown in the opening example, many companies focus on their structures. They introduce agile project management or eliminate hierarchical levels. They "empower" the structures of their organization, so to speak, but not necessarily the people who have to work within these structures. People interpret their work environment very individually. While one employee appreciates the lack of hierarchies in an agile organization, her colleague may feel lost and quit.

Numerous examples show that not all people benefit from New Work measures. The U.S. online shoe retailer Zappos, for example, is considered a pioneer of holacracy, an organizational structure based on self-organization - but even here, not everything went smoothly. After introducing Holacracy, CEO Tony Hsieh offered a severance deal to any employee who was unhappy with the new system. 18 percent accepted the offer, while 6 percent cited Holacracy as the reason. Among other things, they cited "ambiguity and lack of clarity around career, compensation and responsibilities" (read "What's the Holocracy Hype?", Harvard Business manager January 2017).

Instead of structural empowerment, companies should focus on psychological empowerment during their transformation. This is composed of experiencing meaningfulness, self-determination, influence and competence in the workplace.

The concept comes from organizational researcher Gretchen Spreitzer of the University of Michigan's Ross School of Business. People who feel psychological empowerment see meaning in their work (meaningfulness). They perform their tasks autonomously (self-determination) and feel they can make a difference with their work (influence). In addition, they perceive themselves as competent (competence). All four conditions must be met for a successful transformation. It is not enough for companies to allow their employees to work autonomously, but for people not to feel at ease in the self-organized environment and to feel incompetent.

If psychological empowerment succeeds, it has a lot of positive consequences. Studies show that employees then perform better and are more satisfied at work, and that they are also more willing to innovate and take action. They are less likely to suffer from depression and prefer to retire later rather than earlier. Even the environment benefits - employees behave more sustainably in their companies. 

If New Work measures are to have the desired positive consequences, they must lead to psychological empowerment. This does not happen automatically. In the New Work Barometer, we asked participants how they rated their organization's performance over the past three years compared to other organizations. Then we compared companies that used a particular New Work measure with those that did not. The results are quite surprising. For example, there were no differences between companies that used agile project work with the Scrum method and those that did not. The same applies to the use of design thinking, the use of mobile technologies and working in open office concepts. This shows: What works brilliantly in some companies can go wrong in others - success depends, as so often, on the circumstances.

Two influencing factors
In my research, two factors have emerged on which it depends whether a New Work measure actually leads to psychological empowerment - and thus to better performance, satisfaction and all the other positive consequences. The first factor is the personalities of the people who work in an organization, and the second is the context in which they work (see box "How New Work Works").

In one study, business psychologist Jan Koch and I presented a group of students with a job ad that promised agile project management. Another group received the same ad, only this one described traditional project work. We then surveyed how much psychological empowerment the participants expected from the employer and how attractive they found it.

Project employees from companies participated in a second study we conducted. We assessed the degree of agility of their teams, again surveyed psychological empowerment, and measured attachment to the employer. In both studies, we examined an important personality trait of the participants - so-called sensation seeking. This indicates how strongly someone values new, complex and exciting experiences in everyday life. Such experiences occur significantly more often in agile projects, as they are associated with autonomy and flexibility instead of hierarchy and routine.

The same pattern emerged in both studies. Agile project work led to more psychological empowerment, and thus to more perceptions of employer attractiveness and retention, especially among those people who showed high levels of sensation seeking. Conversely, this means that people who like routine, simple and unexciting work are not likely to benefit from agile project management.

The context
Context is also important to whether or not a New Work effort succeeds. It starts with the size of the organization. On the management blog, I once read the powerful phrase: "A flat organizational structure sounds romantic until you put it in place and your company grows." In other words, it makes a big difference whether 100 or 100,000 people are expected to self-organize - the second scenario is likely to be considerably more difficult.

Another contextual factor is the nature of the work. According to research, distributed - rather than hierarchical - leadership is successful when there are complex, interdependent and creative tasks to solve. This is the case when many people have to pool their different knowledge to come up with new, original answers to the problems at hand.

However, the most important role in the context of New Work is played by organizational culture. New Work measures are often accompanied by democratization and decentralization. Cultural norms and values can facilitate or impede these changes. The power distance in the organization is crucial: Are there top and bottom, or is the company more egalitarian in orientation? Are employees allowed to criticize their superiors in a public discussion, or is this taboo? Are those who can show the best figures promoted, or those who best motivate their employees?

Organizational psychologists distinguish between three types of cultures: passive-defensive, aggressive-defensive, and constructive. In passive-defensive cultures, it is important not to do anything wrong and to behave according to convention. To give an example, employees in such cultures typically have all decisions reviewed by their superiors. In aggressive-defensive cultures, employees perceive themselves as competitors. Bosses expect perfection from them and exert strong control. Constructive cultures are characterized by performance orientation, self-actualization and cooperation.

It may come as little surprise that organizational researchers prefer the third type of culture. Unfortunately, the other two are widespread - and they are not easily changed. Corporate cultures have grown, in some cases over decades, and often operate unconsciously. In aggressive and defensive cultures, as well as in those with a high power distance, New Work has little chance. Here, top management must first try to bring about a cultural change. The greatest resistance is to be expected in middle management. This group often has the feeling that it stands to lose more than it gains from New Work. For good reason: When hierarchy levels are eliminated, they are the first to be affected.

Since transformations - and this also applies to New Work - are often accompanied by strong side effects, managers should carefully weigh up the costs and benefits before starting a change project. Companies and individual divisions may also be spared from New Work if the criteria are not met.

What managers should do

A number of principles can be derived from the research to increase the likelihood of a successful New Work transformation. These are aimed at organizational developers and executives.

  1. A busy consulting scene has developed around the topic of New Work. Many specialize in a particular measure - but their product may be less needed than they claim. In our barometer, we found that for some measures there are significantly more consultants than companies who want to practice them (for example, holocracy, sociocracy, or workshops on sense-making). Please do not trust any consultant who wants to make you believe that he has discovered exactly the right measure for you from the outside! If you want to find out what the new working world in a company should look like, you first have to talk to those who are supposed to work in it.
  2. Don't make structures or methods the goal of your New Work transformation, but the psychological empowerment of the employees. If you are successful with this, you will also achieve secondary goals such as more performance or less turnover.
  3. There are many paths to psychological empowerment, and every organization brings different prerequisites. Take time to analyze them. The box "Distribution of New Work measures" on the left shows the 33 measures in our barometer and their distribution in German-speaking countries. Use the list to check which measures could benefit your employees the most.
  4. Make decisions based on data. Measure the psychological empowerment of employees. Use the "Measuring psychological empowerment" questionnaire. Take care of colleagues who have low scores and who work in key areas of the business first.
  5. Get to know the personalities, skills and needs of your employees and find out which measures best suit them. This is the only way to ensure that your employees are motivated and supportive of the changes. The same applies to New Work: people will only dance at the party if the music suits them.
  6. Analyze where in your organization the prerequisites for New Work are met. This is the case in areas where there are complex and interdependent tasks to be solved and the creativity requirements are high.
  7. Approach the topic of New Work without ideology and act consistently. Save the money for New Work if the prerequisites are not met or it does not fit the organizational purpose. New Work must serve the company, not the other way around.
  8. Check whether a measure is successful. Measure psychological empowerment before and after and see if the values have changed. Compare the results with those of a control group.
  9. Don't introduce New Work in an authoritarian way, as in the opening example. A CEO knows what work environment will help him or her the most - but not necessarily what others in the organization need. Make those affected stakeholders and let employees help shape the process.

Time and again, the media present the same companies as success stories for New Work. The usual suspects include Zappos, the software company Haufe-Umantis or the Internet telephony provider Sipgate. Sometimes holocracy, sometimes elected leaders and always agility redeem their promise of salvation. Managers of such companies were not to be missed at any HR congress before the pandemic. At the end of their presentations, they showed pictures of enthusiastic employees. What was missing: How did turnover develop as a result of the New Work measure? How did the sickness rates develop? What about staff turnover? But these are the crucial questions.

Such individual cases build up pressure. In hardly any of the presentations I attended was a company missing that had failed properly. Depending on the mood, either Nokia, Kodak or Quelle was mentioned. And because no manager wants to end up like Quelle, some then decide head over heels to promote New Work in their company as well.

Psychological expertise research knows a crucial difference between experts and novices. Novices start work immediately: They get started and fail. Thrown back to their initial state, they start again and fail again. Experts, on the other hand, first analyze the problem: the initial state, the target state. Then they look for the right steps to achieve their partial and final goals. Become an expert on the subject of New Work. The path is more complex than you might think, but if your goal is the psychological empowerment of employees, you can't go far wrong. If it all worked out, you may also get a new job title as a reward. New-Work-Hero is already taken by a Berlin-based consultancy. But you can certainly think of alternatives.

The author Carsten C. Schermuly is Vice President for Research and Transfer at the SRH Berlin University of Applied Sciences.
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