It has been a year since the Black Swan event of the COVID-19 pandemic started shaking industries to the core. None of us have a crystal ball and can predict the future, but we must develop our thesis and get in action.
Don’t let a good crisis go to waste.
“We’ve seen two years’ worth of digital transformation in two months.” Satya Nadella, CEO of Microsoft.
My Future of Knowledge Work thesis’s core – we are not going back to “normal,” and we shouldn’t. This post is not a quick read, and I likely will update it as my thinking evolves based on data and observations. After all, I am an operations person, and I live in a world of continually filling in the blanks where data is missing.
Why (most of us) are not going back to the old normal?
- Change that happened in organizational cultures is global. Even more conservative “office cultures” of Western Europe changed. A recent Wharton study found the percentage of companies with no flex/remote policy went from 85% down to 24%. In the US, 83% of employers now say the shift to remote work has been successful for their company, per December 2020 PWC study. The same survey found 85% of employees do not want to go back to the “old normal.”
- The average total daily commute in major US metros pre-pandemic was somewhere around an hour and a half round-trip (see Geotab data). Think from the perspective of a talent recruiter. Do you want to be one recruiting for the company in the “old normal”? How much harder will it be to recruit great people when 87% would like the new hybrid world?
- Productivity is back to pre-pandemic levels (while we wait for the Burau of Labor Statistics to release 2020 numbers, here is the UK one. That was predictable because, in any organizational change, there is an initial period of learning. Same mentioned Wharton study found 39% said they are as productive and 34% said they are more productive. Bet numbers are even more positive if we’re to talk to software developers, analysts, and other high-focus and precision professions. But, there is a BIG caveat – childcare. Parents had an extremely tough time during the pandemic. I hope when schools and daycares are all back, productivity improvement will be even more marked.
What do we need to think about changing/adapting to/addressing, and how?
Offices and infrastructure:
- Decentralization and global presence are the key ingredients to the next step in evolving the future of work. Change in the headquarters or regional offices’ purpose and size was already apparent years ago and will accelerate exponentially post-pandemic. We saw this years ago when I co-founded Robin – meeting room booking, desk-hoteling, and other office resource management platform. Companies big and small were expanding their global footprint instead of headquarters.
- Offices are not going away. The next step in the offices’ evolution is transforming into meeting, collaboration, and professional development spaces. Will offices remain the sites where most of the work happens? For the most junior employees – at this time, I don’t see how else we can make it work. For more seasoned employees – given what we have learned during the pandemic, I think the traditional office will no longer be where we will be producing the bulk of high-value work.
- I remain bullish about innovation and education hubs like Boston, NYC, San Francisco, London, Frankfurt, etc. We will continue to see companies establish offices/headquarters, BUT we will see less concentration in a couple of typically hot districts and instead see dispersion to suburbs. Our people are moving, so should we.
- 5+ year leases are out. I would be reluctant even to sign a 3-year lease unless the total cost of it is in low single-digit % of our P&L. Unlike the days when Regus ruled the short-term/shared office space market, competition in the post-pandemic market going to be hot again, and so will our optionality.
- The home office is now a necessity. I am not the only one who scrambled to turn a small empty room into an office a year ago. And not long after, we turned a room in the basement into 2nd home office. Families are moving out of large metros to somewhere they can afford extra space and daycares that don’t require a full-time job to pay for it. Single professionals did that before the families. Mid-last year Pew Research found roughly one-in-five Americans either have relocated due to pandemic or know someone who has. In my world of startups, that statistic is much more pronounced.
Talent recruiting and retention:
- Adaptability to talent migration becomes strategic strength. When I see sentiment and migration data from places like Redfin or “U-haul Index,” I embrace it. After all, I had more of the smartest people around me move out of Boston than move in. For the last 4+ years, I’ve gone as far as regularly looking up a list of net migration gainers and figuring out local labor laws, health insurance, local infrastructure, cell coverage, broadband providers, co-working spaces, and airlines with non-stop flights. Following the talent is worth the investment and often will lower the total cost. Financials I oversaw were the litmus test.
- Thanks to the early adopters of digital 1st/all-remote mode of operations, the tools, processes, and services are no longer in the early stages. The pandemic pushed SaaS companies and service providers in the space to accelerate product roadmaps at speed not seen before. A couple of years ago, it was a significant undertaking to spin up another US or international location. This is something that we can do much faster and cheaper already. Talent will drive the expansion and not the systems and bureaucracy.
- Compensation for existing employees will depend on your culture, and new hires may need to be in a different compensation structure. The period of change will require some flexibility. You may make some folks angry and some happy. What are common trends? I don’t have any adequate studies in my possession. Still, companies I respect and follow are paying local market, cost of living adjusted, or grandfathering (for now) compensation on the books, as they expand their geographic footprint.
Leadership and management:
These two areas will have to evolve a lot. In a way, everything I wrote about to this point is trivial, compared to change we must take on with leadership and management. What are the core areas for professional leadership growth?
- If servant leadership wasn’t part of the culture before, it will. The more senior the person, the bigger their mission is to unblock those under “their wing.” It will be a significant attitude change for many of us. What is our mission? What is blocking my people? Who or where I go to get the solutions for my people?
- Trust and enablement of autonomy need to be the new focus of managers. The old “walking the floor” or “follow the script” management was already breaking down with the knowledge workers. The more effective mode of communicating expectations, providing support, and giving employees the leeway to get results using their best judgment will increase employee engagement and lead to better results.
- To err is human. Google and Harvard studies found the highest performing teams were those that had psychological safety. Colleagues felt safe taking risks and being vulnerable in front of each other. This will become even more important in an environment that is a lot more asynchronous. Great read on the subject is this Harvard Business Review article “High-Performing Teams Need Psychological Safety. Here’s How to Create It.”
- Company culture is a sum of all people in the company. Maintaining the company culture is the most severe concern of managers in the new normal. Booze, foosball tables, game consoles, and other superfluous stuff doesn’t create or maintain the culture. I would argue it divided the team into demographic groups and fostered terrible habits. Shared mission, employee engagement, professional development – these are some of the elements of the cultural “glue” that will keep it all together.
- Trust, not tracking tools, drive productivity. I realize some may take the shortcut/crutch and try to use “productivity intelligence” tools. I won’t list any of them here because I don’t believe or support that approach. Those who feel tracked and “spied on” have lower productivity and will jump ship at the 1st opportunity. There are no shortcuts to good management.
- Because of new skills required and likely flatter organizations, many managers will need to move to individual contributor roles. We will need to re-evaluate professional development tracks and focus our people on developing expertise and depth in producing the work product instead of the management track. Too often, we created management roles for promotion tracks instead of expertise depth roles. We will be better because even pre-pandemic 82% (per Gallup study) lacked the necessary skills to do the job well, and about 50% of the employees left companies due to their managers. In the end, we may end up with happier teams and longer tenures.
In closing, I am excited about where we are going post-pandemic. Geographic dispersion will put us closer to our customers, closer to new and more diverse talent, and get us out of our bubbles. More flexibility with where we work will reduce time wasted in traffic, increase optionality for where we can live. I am also hopeful that the movement of talent will force states and municipalities to focus on infrastructure to attract said talent.
There are many unknowns and risks, but I choose to believe progress is a virtuous upward cycle. Onward and upward!
Photo credit: Dan Machold