Our Recent Posts



For economic reasons, numerous jobs will be carried out by intelligent software or machines rather than by humans in the future. The differentiation made in this regard will not be so much between physical and cognitive work, but primarily between routine and non-routine work.

I. Creating new structures in the company

The established companies, in particular, will have to think about whether they are able to satisfy the new requirements of the market. More than 40 per cent of the CEOs of companies operating worldwide assume that there will be significant changes in their companies in the next three years.192 One company or another will like the aluminum industry in the US have to redefine its focus of operations because of the lack of demand for their products. This also includes the creation of new business structures.

1. In-house organization

In the future, in addition to the traditional division of a company into departments such as sales, supply chain, production, research and development (R&D) and finance, it will be the IT department that will gain considerable importance. Under certain circumstances, this will require internal reorganization, because a differentiation must be made between data analysts and traditional IT specialists. The results of data analysts and data scientists are indispensable for many other departments, so an interface must be established that ensures that information is passed on without delay to the offices responsible internally, if possible. Ultimately, the area of big data will acquire more importance. But it is not only the departments that will have to be better connected. Companies will have to focus on their core competencies and will outsource other work in a cost-effective manner.194 That includes production and services. A professional connection between companies and their external providers – not only within the company – will be a basis for success in the digital world. Especially in big companies, the number of different levels has to be reduced; smaller organizational charts are necessary. Every unit between the working group and the person who makes the final decision costs a lot of time and money and so may have to be eliminated. The divisions need to be flexible and independent to react quickly to the customers’ interests in Industry 4.0. The internet of things offers a direct connection between the computers of the customer and its suppliers or service providers. An old pyramidal hierarchy level is no longer capable of satisfying the needs relating to this flexibility. A possibility could be the change in leadership in a certain working group if another employee has better technical knowledge in the special domain.

2. Changes at individual working places

Not only the in-house organization, but also the single working place will be the target of numerous changes. Cloud computing allows access to internal data from everywhere, while digitalization enhances the use of automatic data processing and makes it easier to make quick decisions. The cross-linking of single employees by new technologies allows easier communication and enables a better exchange of information. Therefore, the relevant facts necessary to make decisions and the results of big data

analyses are collected by the right contact person. This leads to more autonomy of the individual employee. This form of dematerialization saves a lot of time that employees could use for other tasks. As already mentioned, intelligent assistant systems can simplify or even perform a part of the employees’ daily work. This applies to individual physical and cognitive working steps to the same extent. Especially foronerous activities, the automatization of working steps is a benefit for employees. Sometimes, an effective collaboration with a robot or a system is possible only if the employee is trained. As a result of the technical development, such training can be flexible with respect to place and time.

3. Virtual working groups

In a study published by the Academy of Management, the authors describe a virtual team as a ‘group of people who work independently with shared purpose across space, time, and organization boundaries, using technology to communicate and collaborate. As such, virtual teams allow organizations to bring together people with the best expertise, regardless of where they live.

The advantages of such working groups are that information comes directly and is compiled and reflectively considered supra-regionally by experts in the field. Since the integrated employees are interconnected, it is to be assumed that information can quickly be procured because

an uncomplicated exchange of information is possible at any time. The cross-border expertise and the good connection of the employees thus leads to optimal work products.203 Furthermore, it is to be assumed that the employees in question can share the work, so a suitable substitute is available if an employee is ill. The employees no longer have to work together at the same time and at the same place in order to exchange information relevant to work or to coordinate processes. Consequently, it is possible to work in an effective and coordinated manner, even when the work is performed in different time zones. It must be noted, however, that members of a virtual working group very often have no personal contact with their direct colleagues. Particularly in the case of home office work, communication is possible only via technical devices, which can lead to the isolation of the employees and to less creative ideas. Moreover, cooperation works better if the members are able to communicate seamlessly with each other both in terms of language and content. As a side effect of these new working groups, the hierarchy level in the company will change.

4. Matrix structures

The increased interconnection and internationalisation of companies changes not only the traditional internal company structures, but also the need for the establishment of cross-company and cross-border units. Many companies already use so-called matrix structures today. They are characterised by the technical supervision and the disciplinary supervision of the employee being treated separately. As a rule, the authority to give technical and related instructions is given to different individuals who are not employed within the same establishment or the same company. This means that supervision structures that are independent from the employing company can be introduced within a group with cross-border activities. Increasing digitalisation makes this possible. Owing to the interconnection of individual companies, such unitary structures usually result in increased productivity due to improved communication and exchange of knowledge. Moreover, group standards can be enforced more easily across countries. Depending on the content of the relevant contractual provision, the disadvantage of a matrix structure is that the integration of an individual employee into an establishment no longer plays any role. In Europe, this can lead to representation of the employee by several bodies, a right to participate in several internal bonus schemes and to an increased protection against unfair dismissal for the employee. With regard to some internationally operating groups, the question arises as to what national law governs the employment contract.208 Even if private international law provides some solutions, the legal uncertainty should be counteracted in advance by way of a governing law clause in employment contracts.

5. International collective labor agreements

Parallel to the creation of matrix structures, some predict the introduction of harmonized collective labor agreements by internationally operating groups. The goal would be to establish uniform rules for all employees worldwide, for example, with regard to working hours, advanced training options or business trips, in order to create a level playing field. As simple as this idea may sound, its implementation will be complicated. Although there are binding agreements under international law regarding fundamental issues, such as the prohibition of child labor, forced labor or compliance with unitary standards with regard to occupational safety, the addressees of such agreements are generally only countries, for example, for International Labor Organization (ILO) standards. There is no harmonized collective labor law either on the international or European level. This is due to the different systems of national labor law. In some countries, certain topics are unregulated by labor law, whereas a regulation by collective agreement would be invalid in other countries because of corresponding statutory regulations. There is thus a great degree of legal uncertainty for companies, which is why only transnational collective agreements (TCAs) come into consideration as instruments for regulating group-wide issues. However, there are no binding, quasicategory provisions but only minimum standards can be specified by way of these TCAs. The valid implementation of the TCAs depends on national law

6. Outsourcing of jobs

The increasing globalization and digitalization of society and the huge range of services offered by independent contractors on the internet render it easier for companies to relocate fields of activity or service sectors to other regions (outsourcing). In addition to production facilities, call centers or

warehouses are situated in low-labor cost countries or weaker economic areas. Awarding contracts for software and programming services to foreign freelancers is also a typical example of growing outsourcing practice in the digital sector. In the US, for example, there are about 1.5 million jobs

that have disappeared in the production sector because of the cheaper production possibilities in China. Another form of outsourcing or a ‘special virtual working group’ is joint ventures. Globalization results in stronger operational and strategic cooperation between two competitors,

even if that leads to the disclosure of their core competences. However, it is not only the bigger companies that are responsible for outsourcing jobs. Employees will ask for more autonomy and will be focused on many different career paths – sometimes in very different branches or countries – rather than having a 9-to-5 job. The global trend is that Work 4.0 will take place outside traditional employment structures with a rise in self-employment. Highly qualified young employees, in particular, like their independence and will focus their work on the development of creative solutions for a changing client base. The digital worker of tomorrow will no longer want to work in hierarchically structured companies and to do the same work every day. They will be less dependent on only one employer. The previously described range of all kinds of independent services will lead to another problem: what legal system is applicable in cross-border cases? Private international law has some solutions, such as that the applicable jurisdiction is the place where the service is provided or where the ‘employer’s’ permanent address or the worker’s residence is. International courts of arbitration are a good way to avoid problems such as that of jurisdiction or the long duration of legal proceedings. One huge problem with the ‘gig’, ‘sharing’ or ‘work-on-demand’ culture, however, is the sharing of the economic risk between employer and employee. In the past, in some countries it was customary that the risk was borne primarily by the employer. If there is not enough work or if the employee stays at home because they are sick, the employee must be paid at least until the termination of the employment relationship. The same applies to any poor performance by an employee. The costs for the social security tax (contributions) for the employees may be shared between employers and employees, too. In Western developed countries like Germany or France, these incidental salary costs are very high and a reason why some companies will avoid traditional employment in the future. In Italy, for example, the ‘Jobs Act’ that came into force in 2015 is introducing greater flexibility and lower costs for standard employment to avoid outsourcing and to achieve a certain increase in the number of freelancers who

are not protected by social security systems. These risks are not shared in this way in the work-on-demand culture. The independent workers generally become responsible for their own social security in the future. For example, such an external service provider who is too ill to work does not have to be paid, but simply does not receive any newer orders. The entrepreneurial risk has thus shifted in the direction of the freelancer. However, the award of contracts to independent contractors is a legitimate expression of a modern economy, which has certain advantages for both parties.

  • LinkedIn
  • Facebook

©2018 by B-AIM