Management as a Liberal Art Research Institute

The Future of Knowledge Work

Karen Linkletter Ph.D.

PUBLISHED:

September 16, 2024

In the first installment of this series, I discussed the historical philosophical debates about the nature of knowledge. In Part II, I’d like to discuss the concept of knowledge work and where we might be headed in the future.


Peter Drucker used the term “knowledge work” to describe the shift in the American economy from industrial manufacturing to service sector organizations. In America’s industrial society of the first half of the twentieth century, technological advances were driven by production needs. Knowledge was applied to work. In the early 1900s, knowledge focused on making people more productive. Frederick Taylor’s work in scientific management and others’ studies of motivation aimed at making human beings more efficient producers of physical goods. Later, processes would be automated using new technologies. 


By the end of the twentieth century, the nature of work had changed. Manufacturing employment was declining, and Drucker’s “knowledge work” was ascending (Drucker, 1993). People used their education and minds, not just their bodies, to produce. And, in many cases, they were not producing goods, but instead they were producing services. This resulted in a shift from applying knowledge to work to applying knowledge to knowledge. Work, which for centuries had been defined through physical effort, sweat and calloused hands (and had, by the way, been disdained by the upper class in many societies historically) was now the domain of the educated elite. To Drucker, this represented a massive historical, social, and economic shift that required a multi-pronged response. 


Knowledge work in the late twentieth century presented new management challenges. Drucker’s early writing focused on the management of industrial workers who physically produced cars or other goods (Drucker, 1954). These employees worked in organizations with levels of management from the production floor to the executive offices. Traditionally, manual workers were viewed as needing direct oversight of the manufacturing process to ensure production quantities and quality. The new knowledge workers were no longer employees needing direct supervision. Instead, they were independent, possessing specialized knowledge in areas outside of management’s expertise. Knowledge work was self-contained and portable, yet required access to organizations to be effective. 


As we shall see, we perhaps are facing a similar tectonic shift in the nature of work in the post-COVID pandemic world that seeks to understand the nature of work. In Drucker’s era, the shift to knowledge work involved a massive reconfiguration of the nature of “labor.” In a post-capitalist society, knowledge was now just as important an input as labor and capital. In our post-COVID society, we are struggling to find the terminology to describe the future of knowledge work in organizations that must be resilient, less focused on structure, more creative, and open to new ways of seeing knowledge work.


Following the COVID 19 pandemic, many organizations are having difficulty with getting knowledge workers to return to the office. Workers in many ways are even more independent than in Drucker’s era, as they possess technologies and skills that allow them to work almost anywhere and collaborate with others outside of a physical centralized workspace. In many cases, contemporary knowledge workers no longer need physical access to organizations to be effective; the rate of new business starts increased dramatically during and immediately after the pandemic, as employees who were laid off or unhappy in their positions decided to go out on their own (https://hbr.org/2024/01/how-the-pandemic-rebooted-entrepreneurship-in-the-u-s#:~:text=Data%20from%20the%20OECD%20show,doors%20than%20before%20the%20pandemic.). Remote work has become increasingly common and yet it presents new challenges to organizations with respect to data security and privacy issues. The portable nature of knowledge work has only become more exaggerated, and while it may seem self-contained, it is in fact less so than it has ever been. Knowledge is easily shared, a fact that increasingly exposes information and data to hacking and other security breaches. 


During the 20th-century knowledge work was inherently different from manual labor in terms of the aspect of motivation. While Drucker in the 1950s made the case for a plant community where workers could find status and function within the manufacturing organization, he came to the realization that industrial labor, with its increased routinization, could not provide this kind of fulfillment (Drucker, 1950). Industrial workers needed to be treated with dignity and given opportunities to make a contribution to the mission of the organization. While the work itself may not necessarily be stimulating, blue-collar workers could find status and meaning through understanding their role in furthering the mission and purpose of the organization. On the other hand, knowledge work typically was motivating in and of itself; knowledge workers needed little motivation to actually perform their work. However, the challenge was to align knowledge work with the organizational mission and to prevent siloing of specialized knowledge areas (Drucker, 1993). Thus, while knowledge workers may motivate themselves to perform tasks, they may not necessarily do the work that the organization needs to further its goals, unless they understand the larger organizational mission.


Knowledge worker motivation in the twenty-first century has become increasingly delicate as organizations face phenomena such as quiet quitting, where some employees put in the minimum effort required as a backlash against hustle culture. Particularly after the experience of remote work during the COVID 19 pandemic, many knowledge workers have been considering the importance of work-life balance, and are resisting efforts to increase their workload. In response to the phenomenon of disengagement at work, many managers have increased their level of supervision, calling for more meetings and in-person gatherings. As a result, many knowledge workers feel that their productivity has decreased and that they are being micromanaged (https://www.forbes.com/sites/bryanrobinson/2023/12/14/forget-quiet-quitting-in-2024-employees-want-employers-to-quietly-manage/?sh=4000c0386523). 


Drucker called making knowledge work productive the greatest challenge faced by organizations in the twenty-first century (Drucker, 1999). Knowledge-worker productivity was a completely new concept for twentieth-century management. And manual worker productivity was measured in terms of output quantity; knowledge worker productivity involved measurements of quality. Because knowledge workers did not function as traditional employees with direct supervisors, they were responsible for their own productivity (and knew better than their managers how to measure it). For this reason, Drucker emphasized the importance of managing oneself; knowledge workers had autonomy to decide how to work, but also responsibility for ensuring their own performance was in accordance with agreed-upon measurements. 


With the rise of remote and hybrid work, knowledge-worker productivity is today a primary concern for organizations. While many employees believe that they are more productive with flexible schedules, often working in hybrid roles, research indicates that their bosses don’t believe this to be true (https://www.forbes.com/sites/glebtsipursky/2022/11/03/workers-are-less-productive-working-remotely-at-least-thats-what-their-bosses-think/?sh=4fe1c43b286a). The subsequent increase in monitoring of remote employees, or demand for more time in the office, has strained relations between knowledge workers and their managers, exposing a rift based on a lack of trust. Interestingly, more and more people who study management are pointing to the need for more flexibility and innovation in organizations, and less reliance on rigid structures and authoritarian models of hierarchy. The pandemic has forced organizations to re-evaluate the nature of knowledge work and productivity. While human connection is important, many knowledge workers are indeed more productive when they are freed from restrictive scheduling demands and constant check ins. 


It seems clear that the trends that Drucker observed with respect to knowledge work and workers will continue to present dilemmas to organizations. As he pointed out, knowledge work presented several management challenges, and these have only increased since Drucker wrote on the subject. Recognizing that knowledge work is highly autonomous, yet needs to be aligned with a team or organizational mission, can only help highlight the importance of motivation and managing productivity. Perhaps if we go back to the roots of knowledge work and workers in Drucker’s writings, we can gain insight on how to move forward more effectively to face the future of work.


Next time: The role of discernment and wisdom in human reason


Sources

Drucker, P.F. (1950). The new society. Harper & Brothers.

Drucker. P.F. (1954). The practice of management. Harper & Row. 

Drucker, P.F. (1993). Post-Capitalist society. Harper Collins.

Drucker, P.F. (1999). Management challenges for the 21st century. Harper Collins.

Fikri, K. & Newman, D. (2024). How the pandemic rebooted entrepreneurship in the U.S. Harvard Business Review, Jan. 17 (https://hbr.org/2024/01/how-the-pandemic-rebooted-entrepreneurship-in-the-u-s#:~:text=Data%20from%20the%20OECD%20show,doors%20than%20before%20the%20pandemic.).

Robinson, B. (2023). Forget ‘quiet quitting.’ Most employees want employers to ‘quietly manage.’ Forbes, Dec. 14 (https://www.forbes.com/sites/bryanrobinson/2023/12/14/forget-quiet-quitting-in-2024-employees-want-employers-to-quietly-manage/?sh=4000c0386523)

Tsipursky, G. (2022). Workers are less productive working remotely (at least that’s what their bosses think). Forbes, Nov. 3, https://www.forbes.com/sites/glebtsipursky/2022/11/03/workers-are-less-productive-working-remotely-at-least-thats-what-their-bosses-think/?sh=4fe1c43b286a

The Future of Knowledge Work: What Drucker can teach us

By Karen Linkletter Ph.D. • November 19, 2024
Interview with Karen Linkletter at the 16th Global Peter Drucker Forum 2024  Video Interview

The Specifics of Management of the Knowledge Worker

By Ryan Lee • November 7, 2024
Nowhere is management theory demanded more than in managing the knowledge worker, and yet nowhere is management theory more inadequate in addressing a field’s issues than in knowledge work. This is the point Peter Drucker posited in his work Management Challenges for the 21st Century (1991), and to resolve it he came up with six factors that determine the productivity of the management worker. Among these, his final point that management workers “must be treated as an ‘asset’ rather than a ‘cost’” by any given organization is an important concept1. While it only gradually emerged within management theory over the century, it is crucial for any employer and any government to understand and apply if they are to retain a competitive advantage going into the future. Historically, management theory has been about improving the output of the worker through banal efficiency: how to increase the production of steel per head, how to increase the production of cars per hour, how to minimize deficient products, etc. In all these considerations, the worker is a disposable resource. When he is hired, he is set to a particular task that is typically repetitive and thus easily taught, and when he is not needed because of shortcomings in his work, company difficulties, or automation, he is laid off. Referred to as “dumb oxen”, workers were seen in management theory as machines to have productivity squeezed out of. The shift from a majority manufacturing to service-based economy during the first half of the twentieth century changed this dynamic to some extent. The American postwar economic boom introduced the office worker as a common source of employment. This trend continued throughout the conglomerate era of the 1960s and was helped by the decline of the American manufacturing industry in the 1970s. Now in a stage dominated by service and knowledge work, the American economy must approach management differently. The aforementioned cost-asset shift is a demonstration of why this is so, as Drucker’s emphasis on the knowledge worker’s autonomy means that they wield control, not only within their job but over who they should work for as well. This in addition to the high-capital nature of knowledge workers means that the old management theory approach to labor as disposable will backfire catastrophically for any company that tries it with their knowledge workers. It is also important to remember the demographic trends of the United States, and more so the world, in considering why the cost-asset shift is vital. For all of human history until some fifty years ago, population was considered to be in tandem with economic power, given larger populations yielded larger labor forces and consumer markets. Economic growth was thus also correlated with population growth, demonstrated by the historic development of Europe and the United States and the more recent examples of the developing world. Consequently, the worldwide decline in fertility rates, and the decline in population numbers in some developed countries, signals economic decline for the future. In the labor market, smaller populations mean fewer jobs that produce for and service fewer people. Although the knowledge worker has grown in proportion to the total labor market, these demographic declines will affect knowledge workers as well, meaning employers will have a vested interest in retaining their high-capital labor. To enforce this, the cost-asset shift will have to come into play. The wants and needs of the knowledge worker pose a unique challenge in the field of management. Autonomy, for the first time, can be regarded as a significant factor affecting all other aspects of this labor base. What good does a large salary provide a knowledge worker if they don’t feel that they are welcome at an institution? How would they perceive that their work is not being directed towards productive pursuits at their corporation, especially given the brain work and dedication given to it? Of course, the fruits of one’s labor has been a contentious issue in management ever since compensation and workers’ rights became a universal constant with the Industrial Revolution, but this is augmented by the knowledge worker’s particular method of generating value. Given that Drucker poses their largest asset and source of value as their own mind, they will intrinsically have a special attachment to their work almost as their brainchild. Incentivizing the knowledge worker is also only one part of this picture. Per Drucker, the knowledge worker’s labor does not follow the linear relationship between quantity invested and returned. The elaborate nature of knowledge work makes it heavily dependent upon synergy: the right combination of talent can grow an organization by leaps and bounds, while virtually incompatible teams or partnerships can render all potential talent useless. And the human capital cost of the knowledge worker, both in their parents and the state educating them and in cost to their employers, is astronomical compared to all previous kinds of labor. In conclusion, the needs and wants of the knowledge worker must be met adequately, especially in the field of management. Management must almost undergo a revolution to adapt to this novel challenge, for the knowledge worker is the future of economic productivity in the developed world. Those employers that successfully accommodate the demands of this class of talent will eventually reign over those that do not accept that this is the direction economic productivity is headed.  References Drucker, P. F. (1991) Management Challenges for the 21st Century. Harper Business.

The Wisdom and Continuing Relevance of Peter Drucker

By Michael Cortrite Ph.D. • November 7, 2024
What is wisdom? The dictionary says it is knowledge of what is true and right coupled with just judgment as to action. Jennifer Rowley reports that it is the “ability to act critically or practically in a given situation. It is based on ethical judgment related to an individual's belief system.” (Rowley 2006 p. 255). So, wisdom seems to be about deciding on or doing an action based on moral or ethical belief in helping other people. This clearly describes Peter Drucker and his often prescient ideas For the 100 th anniversary of Peter Drucker’s birth, Harvard Business Review dedicated its November 2009 magazine to Drucker. In one of the articles about Drucker by Rosabeth Moss Kanter (2009 p. 1), What Would Peter Say? Kanter posits that, Heeding Peter Drucker's wisdom might have helped us avoid—and will help us solve numerous challenges, from restoring trust in business to tackling climate change. He issued early warnings about excessive executive pay, the auto industry’s failure to adapt and innovate, competitive threats from emerging markets, and the perils of neglecting nonprofit organizations and other agents of societal reform. Meynhardt (2010) calls Drucker a towering figure in Twentieth Century management. He says no other writer has had such an impact. He is well-known to practitioners and scholars for his practical wisdom and common sense approach to management as a liberal art. Drucker believed that there is no how-to solution for management practice and education. Doing more of “this” and less of “that” and vice versa is not how Drucker suggests managers do their work. Rather, Drucker relies more on morality and the virtue of practical wisdom to solve problems related to organizations. The virtue that Drucker talks about cannot be taught. It must be experienced and self-developed over time. A good example of this is Drucker’s Management by Objectives (MBO). Drucker does not give technical advice on how to initiate MBO. Rather he wisdomizes his moral convictions that integrating personal needs for autonomy with the quest of submitting one’s efforts to a higher principle (helping people) ensures performance by converting objective needs into personal goals. (Meynhardt, 2010). Peter Drucker published thirty-eight articles in the Harvard Business Review (HBR) and seven times won the McKinsey Award presented annually to the author of the best article published during the previous year in HBR. No other person has won as many McKinsey awards as Drucker The former editor-in-chief of Harvard Business Review, Thomas A. Stewart, quotes Peter Drucker; “The few of us who talked of management forty years ago were considered more or less deranged.” Stewart says that this was essentially correct. Harvard Business Review's very mission is to improve management practice. Stewart says this mission is inconceivable without Drucker’s work. Drucker’s work in management planted ideas that are as fruitful today as they ever were. Stewart posits that each year, managers discover extraordinary and immediate relevance in articles and books that were written before they were born or even before their parents were born. Stewart (2016) tries to answer the questions: Why does Drucker’s work endure? and Why is Drucker still relevant? First, was Drucker’s talent for asking the right questions. He had an instinct for being able to not let the urgent drive out the important, for seeing the trees, not just the forest. This allowed him to calmly ask pertinent questions that encouraged clients to find the proper course to take. Secondly, Drucker was able to see whole organizations. Instead of focusing on small particular problems. Ducker had the ability to find the overarching problem as well. Stewart uses Drucker’s 1994 HBR article, The Theory of the Business to make this point. Many people were trying to analyze the problems of IBM and General Motors by looking for root causes and trying to fix the blame. Drucker, on the other hand, argued correctly that the theories and assumptions on which they had managed successfully for many years were outdated. This article is as relevant today as it was in 1994 because Drucker took the “big picture view.” And no one else has ever been so skillful at describing it. Thirdly, starting in 1934, Drucker spent two years at General Motors with the legendary Alfred P. Sloan, immersed in the workings of the automaker and learning the business from within. This allowed him to talk with authority, but he has always stayed “street smart and wise.” This mentoring helped give Drucker the gift of being able to reason inductively and deductively. He could infer a new principle or a theory from a set of data or being confronted with a particular problem; he could find the right principle to apply to solve it. Drucker’s first article published in HBR, Management Must Manage, challenged managers to learn their profession not in terms of prerogatives but in terms of their responsibilities, to assume the burden of leadership rather than the mantle of privilege. Many in the management/leadership field probably found Drucker to be “deranged,” but in 2024, this is important advice for leader (Stewart 2006). Just a few more of Drucker’s ideas that seemed well outside the mainstream when he proposed them but are standard practice today include: Managing Oneself, Privatization, Decentralization, Knowledge Workers, Management by Objectives, Charismatic Leadership Being Overrated, CEO Outsize Pay Packages, and Enthusiasm of the Work of the Salvation Army (Rees, 2014). Clearly, Drucker remains relevant! References: Kanter, R. 2009. What would Peter say? Harvard Business Review. November, 2009. Meynhardt, T. 2010. The practical wisdom of Peter Drucker: Roots in the Christian tradition. Journal of Management Development Vol. 29. No. 7/8. Rees, M. 2014 The wisdom of Peter Drucker. Wall Street Journal. Dec. 12, 2014. Rowley, J. 2006. Where is the knowledge that we have lost in knowledge? Journal of Documentation. Vol. 62, Iss. 2. 251-270. Stewart, T. 2006. Classic Drucker. Editor Thomas A. Stewart. Harvard Business School Publishing Corporation.
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