Due to trends like digitalization, individualization, and increasing diversity the work environment is changing rapidly and constantly. Companies adapt to these changes with new organizational structures and new forms of working. Becoming more agile, innovative, and adaptive are the goals of these new work transformations (Bruch & Berenbold, 2017). New work environments are characterized by fluid structures, virtual teams, and cooperation in networks. It becomes apparent that all organizational levels and all organizations are affected by the new world of work (Bruch & Schuler, 2015).

Managing the new work transformation is not a choice but a reality in today’s organizations – and one of their greatest challenges. Awareness of this insight in corporate practice has increased in recent years. Key questions, however, remain unanswered: What do companies need to be successful in the new world of work? And how should leaders orchestrate the new work transformation?  

A recent study at the Institute for Leadership and Human Resources Management at the University of St. Gallen investigated changes in the work environment empirically. We surveyed 19,000 employees and leaders from 92 companies. Key insights were that only 25% of companies already work in the new world of work, i.e. people in these organizations extensively use new forms of work such as virtual or fluid teams, mobile work, desk sharing, or idiosyncratic deals (figure 1, Bruch, Block, & Färber, 2016).

Another striking result deriving from the data is that only 6% of the surveyed companies perform well in the new world of work, i.e. only about a quarter of the companies that transformed their world of work. Based on the experiences of these so-called successful pioneers, success factors of the new world of work can be derived. Purpose-oriented leadership, also called inspirational leadership, turned out to be one of the most important success factors.

1 Purpose-oriented leadership in the new work transformation

Against the backdrop of changes in the working environment, more and more discussions have arisen in research and practice as to what role leadership still plays. Some even suggest, to get rid of leaders. New leadership approaches have emerged which consider these new developments. The common feature of the different and only partly new leadership approaches is that new forms of working are associated with less control, stronger freedom of employees and less with classical hierarchical leadership (Bruch & Berger, 2016).

New leadership approaches encompass empowering leadership (encourages the development of follower self-management and autonomous decision-making), ambidextrous leadership (the leader switches between results-oriented behaviour and intellectual stimulation to foster both efficiency and creativity in different situations), and shared leadership (leadership roles and influence are distributed among team members). Moreover, there are concepts of leaderless organizations, which argue that businesses do better without managers. These approaches imply that informal and decentralized forms of leaderships replace classical leaders, which provide clear visions, goals, and strategies.

It should not be forgotten though that new forms of leadership are strongly based on an indispensable foundation: a common sense of purpose in the company (Bruch & Berenbold, 2017). Our empirical insights clearly suggest: If this is missing, more freedom, fluidity, virtuality and network-like working as in the new world of work tend to lead to overwhelming, loss of performance or even serious damages such as exhaustion, the acceleration trap, or destroyed trust (Bruch et al., 2016). Purpose-oriented leadership is therefore even more important in the new world of work. While classical management functions can largely be substituted, the role of the emotional and meaning related side of leadership gains more importance than ever. This notion is corroborated by our empirical finding that companies with high levels of purpose-oriented leadership do much better in the new world of work while companies who lack this sensegiving form of leadership experience a decrease in performance and people related outcomes (Bruch et al., 2016).

Leaders’ sensegiving and emotional behaviours lead to employees’ perceptions that their work is meaningful, serves a higher purpose and that work plays an important role in their lives (Hollensbe, Wookey, Hickey, George, & Nichols, 2014; Pratt & Ashforth, 2003). A shared understanding of meaning unites employees, generates a common orientation of daily actions, promotes a sense of togetherness and increases productive energy. Ultimately, a shared understanding of meaning increases organizational performance (Bruch & Vogel, 2011).

What do inspirational leaders do in practice? Moreover, how does their sensegiving look like? Inspirational leaders develop and communicate an image of a future for a collective with the intention to persuade others to contribute to the realization of that future (van Knippenberg & Sitkin, 2013). They manage the balancing act between increasing individualization and the retention of employees through creating a shared group identity. Hence, leaders’ sensegiving is based on a common objective, meaningful inspiration and developing and communicating a desirable vision of the future. The importance of management by objectives through monitoring and control becomes less important in the new world of work.

2 Purpose-oriented leadership becomes both more complex and more important in the new world of work

In the new work contexts, work is not only faster but also more flexible and thus requires heterogeneous network structures, open forms of cooperation with external partners or increased adaptability of employees to constantly changing conditions and tasks.  Work becomes decentralized, familiar structural boundaries dissolve. This leads to a significant increase in speed in companies. Firms who become overly energetic can fall into the so-called acceleration trap – one of the central obstacles to leaders’ sensegiving and employees’ sensemaking (Bruch & Berenbold, 2017).

Several studies by the Institute for Leadership and Human Resources Management at the University of St. Gallen have repeatedly shown that around 50% of all companies are in the acceleration trap (Bruch & Kowalevski, 2012; Bruch & Menges, 2010). It is a widespread phenomenon. New forms of work make it even more likely that companies fall victim of the acceleration trap (Bruch & Berenbold, 2017). The acceleration trap manifests itself in three forms of overheating: It occurs when large parts of the employees feel that they have too much work in comparison to the available capacities (overloading), pursue too many activities or projects at the same time (multiloading) or operate constantly at the stress limit (perpetual loading).

Research results show that a distinctive acceleration trap strongly impairs leadership and, above all, creating a sense of meaning. Firstly, executives caught in the acceleration trap do not have enough time for leadership because they have lost their focus. They primarily take care of operational tasks and try to solve daily problems. These so-called distracted managers are highly energetic but unfocused (Bruch & Ghoshal, 2002; Bruch & Ghoshal, 2004). This distinguishes them from purposeful managers who have high levels of both energy and focus.

The main problem of distracted managers is their unproductive busyness which can be described as “active non-action” (Bruch & Ghoshal, 2002; Bruch & Ghoshal, 2004). These managers do not have enough time for leadership, to make sense by themselves, and finally to develop a meaningful picture of the future. Thus, inspirational leadership and leaders’ sensegiving are reduced. Instead, distracted managers tend to adopt a management style characterized by short-termism, management and control, and a focus on fire-fighting, i.e. fulfilling urgent demands. In consideration of the acceleration trap, it is therefore important for leaders to re-prioritize and sharpen the long-term vision of the future (Bruch & Menges, 2010).

Second, caught in the acceleration trap, leaders experience high pressure to perform and informational overload, which brings them to the limit of their time capacities. This causes emotional exhaustion, which reduces leaders’ enthusiasm and capability to inspire their followers (Bruch & Kowalevski, 2012). At the same time, managers play an important role in preventing their employees from emotional exhaustion. They achieve this by clearly demonstrating the common meaning and the values derived from it. A lack of meaning increases the probability that employees no longer see themselves as part of a larger whole which decreases their organizational identification. Hence, it is important that leaders are aware of their own energy to inspire their employees.

Above arguments show that the acceleration trap complicates inspirational leadership and employees’ sensemaking. On the other hand, our empirical evidence reveals that inspirational leadership reduces the acceleration trap and gains importance in the new world of work (Bruch & Kowalevski, 2012).

The new world of work is accompanied by increased decentralization, dissolution of boundaries and fluidity. Thus, new forms of work decrease a sense of togetherness and organizational identity. A sense of community and cohesion can only be created if employees have a common understanding of meaning. Thus, to become innovative and successful in the new world of work leaders have to give sense and inspire their followers. Key figure-based performance systems and strong control tend to be counterproductive in the new work environment.

It is therefore not the question of whether we still need leadership in the new world of work but how leadership must be shaped in this context in order to use the potentials of increased freedom, flexibility and innovation and to provide meaning, inspiration and direction in order to counteract the increased danger of acceleration, chaos, and excessive demands.

3 Strategic leadership is important to shape the new work transformation

Our empirical data reveal that four factors drive performance of the new world of work (figure 2, Bruch et al., 2016). Strategic leadership and HR-management turned out to be key drivers of these success factors. Strategic leadership is the leadership of companies by the CEO and his or her top management team through strategies, structures and systems (Fischer, Dietz, & Antonakis, 2017). Fulfilling these requirements enables companies to perform better, be more innovative, and act with higher levels of energy.  

Firstly, the arguments above show that organizations have to create an inspirational leadership climate. There is strong empirical evidence that the top management team is an important determinant of such a climate through its role model function (Raes, Bruch, & Jong, 2013). It is a vital sign for middle managers and the rest of the company if leaders at the top have a vision for the company and give sense.

Secondly, organizations have to create a culture of trust between the organization, leaders and employees. Trust is the basis for the third prerequisite of success, the empowerment of employees. Organizations have to empower their members through a higher degree of autonomy and self-determination. The goal is to enable them to act responsibly and shape the company with their own resources.

Finally, companies have to develop self-competences of the employees to stay successful in the new world of work. Self-competences are also important when it comes to the empowerment of employees. Empowerment without self-competences leads to a state what we call “laissez-faire empowerment”.

4 Conclusion

In summary, the successful transformation towards new work environments requires a new working culture, in which inspirational leadership and purpose-driven leaders are key elements.  A key challenge of top leaders in dynamic new work environments is to create meaning in the entire company. An important way of co-creating purpose in the organization is to jointly develop a vivid picture of the future. At the same time, leaders must actively counteract the acceleration trap, which is more likely to occur in new work settings.

To master the acceleration trap it is important that leaders themselves regain the view of the big picture. Afterwards, they can re-prioritize tasks and develop a sense of purpose for themselves. If leaders have a map for the shifting and dynamic new world of work, they can foster a sense of purpose in the organization. Leaders’ own sensemaking is also an important factor protecting them from emotional exhaustion or burning out.

Consequently, we definitely need leadership in the new world of work. Today’ leaders need to take advantage of the opportunities of new work contexts like increased freedom, flexibility and innovation. At the same time, leaders have to involve in sensemaking, inspiring, and directing their followers to counteract the danger of chaos, excessive demands, and lone fighters.

Top executives have two strategic leadership tasks in this endeavour. The first task is the development of a new working culture with the four decisive prerequisites for success in the new world of work: Inspirational leadership climate, a culture of trust, empowering flexible structures, and finally, employees’ self-competences. The second task for top executives is to act as role models, as proactive drivers of a new mindset and purpose-driven behaviour in the organization.

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