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In 1937, economist Ronald Coase, who would later receive a Nobel Prize for his work, wrote a ground-breaking study on why and how companies grow. The crux of his argument was that organizations existed in the space between transaction cost and the cost of scale. A half century later, another economist, William G. Ouchi, elaborated on the point made by Coase, noting that where institutions are more efficient in overcoming the cost overhead of performance ambiguity through institutional goal congruence, the more likely they are to grow in size and complexity.

In today's job market, where traditional measures of job performance and mission adherence, and even the boundaries of the organization, are in flux, it is inevitable that, as Cathy Merrill noted, "office cultures,...(those) established practices, unspoken rules and shared values, established over years in large part by people interacting in person," will be not only more difficult to build, but difficult to sustain. In this circumstance, the new virtuality of the workplace is not the source of this change but the product of it. Work-related "face time" has been declining for years. An employee's peers may be in another city or another nation. Job duties are coordinated across time zones, and offices have been progressively replaced by cubicles and, now, anonymous work stations.

Ford Motor Company once set the standard for the world in manufacturing by transforming iron ore, sand, logs and other raw materials, into finished automobiles, all at the automaker's River Rouge facility. Yet, now the company sources several thousand automobile components from several hundred suppliers, spanning the globe. The company's workers are as likely to be in Hermosilla, Sonora, or Natchez, Mississippi, as Dearborn, Michigan. For "knowledge workers", this transition is even more dramatic, making it difficult to even define the company, let alone adhere to a company-driven culture.

While Merrill's caution about the changing relationship between employees, and between employees and their employer, is valid, the work world is changing. While, as with online retail, the COVID pandemic may have accelerated the change, that change is both inevitable and permanent. The smart employer needs to find a new way forward, because there is simply no going back.

From: The Future of Work

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