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The Future of the Office

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The Future of the Office

Work from Home, Remote Work, and the Hard Choices We All Face

Wharton School Press,

15 min read
7 take-aways
Audio & text

What's inside?

How to return people to the office is as important as whether to do so.



Editorial Rating

9

Qualities

  • Well Structured
  • Concrete Examples
  • Engaging

Recommendation

Companies are deciding whether to bring staff back to the office, go fully remote or create hybrid workplaces. Peter Cappelli warns that this decision requires considering significant variables that could affect retention, productivity and corporate culture. He cites baseline and current research, and explains the trade-offs of various models. Though COVID-19 forced many firms to have only remote workers in 2020 and 2021, today every firm and employee can determine whether remote or onsite works best for them. Cappelli outlines options, risks and rewards in this robust look at the issues you must ponder to determine where your workforce – or you – should work.

Take-Aways

  • Tech companies are rethinking keeping staff in the office.
  • During the pandemic, companies opted for temporary closures with no plans for long-term remote work.
  • Working remotely has potential costs.
  • Linking employee location to pay is not viable.
  • Craft a two-tier hybrid work model or a unique set-up for your firm.
  • Most companies will adopt a hybrid model.
  • Take advantage of post-pandemic opportunities to change the office status quo.

Summary

Tech companies are rethinking keeping staff in the office.

New 2005 college graduates selected Google as the number one place to work because of the extras it offered. At the time, Google gave employees food and personal assistants, and it let them bring their dogs to work in order to boost retention, increase creativity and improve staff interactions. Many companies regarded similar policies as best practices until the pandemic struck.

In spring 2021, Google shifted to a hybrid work model, announcing that some employees could permanently work remotely, while others could do so part-time.

“Working from home could change more about office work than anything in a century…and we have to choose fast.”

Post-pandemic, many employees want to keep working remotely, but not all employers concur. The three options available today are to return to the traditional in-person offices, shift to a fully remote workforce or create a hybrid approach. Generally, employers prefer the first option, employees the second, and the third offers a happy medium that may not fully satisfy either bosses or employees, but serves the interests of both.

“This could be the moment to redefine what work means for employees and how it fits into society.”

The pandemic fomented monumental change. Employees proved they could be productive at home, and companies survived. While working remotely has not become the new normal, the way companies move forward will define the workplace of the future. Giving employees the choice of working remotely or in an office is a momentous change.

During the pandemic, companies opted for temporary closures with no plans for long-term remote work.

In March 2020, companies operated as if COVID-19 restrictions would end by Memorial Day. Companies focused on having employees work at home as a short-term solution rather than taking steps to consolidate remote work into their normal procedures. Companies made impromptu decisions to cope with the pandemic’s ever-changing parameters.

Some companies, such as Marriott International, furloughed 66% of their corporate employees for two months. Some corporations that depend on onsite workers (such as Amazon and Walmart) initially offered bonuses to staff members who stayed onsite and unpaid leave for those who didn’t. As shutdown orders continued into June, such corporate generosity ended. Microsoft stunned the industry by closing its offices until the summer of 2021.

Many employees reported improved relations with their managers during this time. That could be due to seeing less of them, or it could show the benefit of companies ordering supervisors to reach out to remote employees.

In May 2020, 50 million people in the United States said they had been unable to work during April due to COVID-19. As a result, remote employees put in extra effort to help their firms stay viable. The percentage of remote work versus onsite work in various industries correlates to the number of white-collar jobs in those sectors. In terms of the number of hours people worked, surveys taken during the pandemic show conflicting results: some at-home employees reported working reduced hours while others indicated increased hours.

Microsoft found that Zoom meetings increased in number but decreased in duration. The company also reported an increase in evening and weekend work.

“The lack of privacy, of personal space, and of quiet are all reasons employees tend to hate open office plans.”

The idea of working remotely is not new. From the 1970s to early 2010s, the size of offices shrank by 33% as workspaces became more modular, enabling companies to downsize at will. In 2009, 40% of IBM’s staff worked remotely at a real estate savings to the company of $100 million.

Tech companies moved to more open-plan spaces with no private offices or desks, relying on shared “common” tables to increase collaboration. The notion that greater proximity leads to greater team work proved untrue. Instead, workers wore headphones to block the noise of their nearby colleagues. The idea still persists, however, because enforcing that fantasy turns out to be cheaper for employers than delineating separate offices.

Working remotely has potential costs.

In 2000, researchers considered how working virtually might affect employees and their performance. Remote staff had problems when their colleagues remained in the office. Employees who weren’t in-office missed vital information, social interactions and potential promotions. When managers don’t see employees, they tend to assume those people lack commitment. 

“If you want to climb the corporate ladder, the path to the top is still greased by proximity to those in power.”

If you work in a hybrid situation, consider why the company gives you that opportunity. A corollary is considering who will return to the office. The more you work remotely, the more likely it is that your relationships with your colleagues will deteriorate. To cement relationships, especially with managers, remote workers report that they agree to inconvenient meetings, take on projects they don’t really want to do and make more personal sacrifices than their in-office coworkers. Working remotely curtails mentoring and other learning opportunities because team communication suffers. With remote workers, project completion times runs longer.

“Remote teams have more conflicts within the team…because of communication challenges.”

Consider what you do within your company. Do you work independently or on a team? If you are an individual contributor, working remotely may be easier for you than for others who work on projects or teams. Beware, however, that companies usually transition such jobs to contract positions.

Employees who want to work remotely must know who to report to and what your routine will be. If you have an inexperienced boss, working remotely may enable you to avoid micromanagement. However, if you’re involved in a complex project, you need a boss who ably and willingly navigates the company’s information channels and makes sure you are informed.

Working from home may mean that your company will keep you continually on call.And if your company relies on “tattle” software that keeps it apprised of your every keystroke at home, you’re better off returning to the office. Being tethered to your desk offsite under constant monitoring defeats the flexibility benefits of working from home. The best option for you is for your company to define performance criteria clearly and for your manager to check in with you regularly.

“The benefits to employers from remote work…seem to be related to a high-trust approach from management.”

For sound work-life balance, your company’s culture matters more than its policies. Whether working in the office or remotely, employees relish having some control. That is one of the most important factors in lowering stress and increasing well being.

Linking employee location to pay is not viable.

Some companies that allow remote work tie employee compensation to employee location, which is a fundamentally nonsensical approach. Early in the pandemic, Facebook, Twitter and some other companies implemented this policy. Stripe, for example, offered $20,000 bonuses to staff members who moved to less expensive locations. The pandemic proved that people in IT have unique skills for which the market will pay top dollar.

Facebook had previously paid bonuses to employees who lived near its Silicon Valley headquarters. Now, employees who are approved for remote work can live anywhere, which grants Facebook a deeper, more geographically diverse talent pool.While embracing remote work could also allow companies to hire less expensive overseas workers, shifting to a totally remote workforce raises the specter of a turnstile hiring system with continual turnover.

“If you think your employees are job-hoppers now, wait until they can change employer without relocating.”

In industries in which employees are aware of what rival companies offer, job applicants push for remote work options. In 2021, new law school graduates pressed the law firms recruiting them for information about their remote work policies.

Craft a two-tier hybrid work model or a unique set-up for your firm.

You can implement one of two kinds of hybrid models. The “Two-Tier Hybrid Model” positions some employees as full-time remote workers time and keeps the rest onsite. This can result in remote workers becoming corporate “second-class citizens” – more like contractors than employees. Managing remote staff requires more effort from managers and complicates tracking job performance, but it also reduces real estate expenses and other in-office employee costs.

Even modest amounts of occasional work-from-home benefit employees.”

The second option, which proves more popular with employees, is the “Choose-Your-Own Hybrid Model,” which is logistically more difficult for companies to implement and manage. It allows employees to determine when they will work remotely or in the office. Some companies, including Citigroup and KPMG, have already implemented such a system. In some cases, companies have adopted this approach to keep up with their competitors.

“If everyone gets to work at home one or two days a week, coordinating a project becomes a much bigger challenge.”

The more options employees have, the greater the difficulty managers face in scheduling work.Problems occur when too many employees chose the same option on the same day. However, vendors are working on scheduling algorithms to make this process work better. Although coordinating flextime is initially tricky, when employees understand their firm’s methods and collaborate, it works fairly well.

Most companies will adopt a hybrid model.

A recent Conference Board survey indicated that 11% of companies expect all employees to return to the office post-pandemic, but the vast majority of the remaining 88% plan to implement some type of hybrid model. Planning a smooth transition to the model you choose is crucial. When you bring employees back into the office, tell them why, so they don’t think you’ve made a thoughtless decision based on management’s convenience. A majority of US employers surveyed by WorldatWork and Salary.com reported that they plan to be transparent with their employees about how the pandemic affected their company’s financial picture.

“Treat the return to the office as a massive organizational change.”

After you inform employees, give them “structured time” in smaller groups to share their experiences about working from home.Apply their feedback to determine what worked and what needs to change. At least initially, emphasize the positive aspects of working in-person by providing food or time to socialize. The University of Pennsylvania, for example, planned various activities, including a staff retreat and a “move-in day,” when people helped staffers move back into their offices.

“The more we can tell employees about our intentions going forward, the better.”

The majority of companies plan to adopt a hybrid model, and some have hired directors of remote work to help coordinate and define off-site work. Because hybrid models vary widely, waiting to see what other companies implement isn’t feasible because anxious employees may not be willing to wait for your decision.

Take advantage of post-pandemic opportunities to change the office status quo.

The pandemic offers organizations a chance to rethink the nature of office work, how their offices operate and what an office should be.For example, when Clorox realized remote work increased staff morale, it redesigned its planned renovations. It eliminated private offices and built more meeting rooms equipped with software to connect remote team members. Its leaders decided to vest in promoting collaboration; their renovations support that objective.  

“The pandemic has shaken us out of our office routines, which provides an opportunity to change how we operate.”

People learn organizational culture primarily by emulating other people.That can be difficult for remote workers. Only strong, onsite onboarding can provide the structure and training newly hired remote workers need. Companies that are moving their onboarding processes online to cut costs should be aware that reinforcing corporate culture with remote workers takes continual effort and in-person training.

“The more remote our new workforce is likely to be, the more effort we need to put into managing our culture.”

During the pandemic, many companies required supervisors to conduct informal weekly check-ins with remote staff, proving that social connection can remain strong if companies prioritize it. Companies must be mindful that remote workers will have fewer informal development opportunities. Whether you use an in-office, remote or hybrid approach, understand its benefits and limitations.Build the processes and practices necessary to support your employees whether they are in the office or off-site.  

About the Author

Peter Cappelli is a professor at the Wharton School and director of its Center for Human Resources.

This document is restricted to personal use only.

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    F. O. 11 months ago
    The world is changing it's like a paradigm shift from the old ways of getting things done. I guess we all need to adapt to survive.
  • Avatar
    T. T. getAbstract 12 months ago
    aaa
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    T. O. 12 months ago
    Our world has really changed much since the pandemic and the way we work has got to change too. I love remote working with the option of choosing when to go to the office. Highly informative summary with rich perspectives