Financial services provider TIAA had a jump-start when planning for the post-pandemic return of employees to its New York City headquarters. Before the public health crisis upended life, TIAA was already redesigning its midtown Manhattan location to create more areas for collaboration and less assigned seating to reflect employees’ use of the space.
The COVID-19 pandemic sparked even bigger changes. TIAA created a hybrid work model that allows about 85 percent of its 16,000 employees to perform their jobs remotely at least part of the time. Schedules will reflect employees’ roles, business requirements and personal needs. TIAA’s office in Charlotte, N.C., was already being renovated to provide greater flexibility, and now the company is considering how to adapt its four other major hubs.
“The pandemic catalyzed us to think about work in different ways, for us to think about space and flexibility and how they can work together,” says Andy Habenicht, TIAA’s senior vice president of associate experience and solutions. “We’re going for an approach that gives us the best of both worlds.”
The pandemic dealt what is likely a serious blow to the five-day, 9-to-5, in-office workweek that has underpinned work life for nearly a century. Flexibility had been seeping into the workplace, but now it’s flooding the corporate world as companies have discovered that remote work didn’t slash productivity and employees valued the arrangement. To be sure, such onsite businesses as hospitals, hotels, retail services and manufacturing plants are less impacted. But even so, according to research from the Society for Human Resource Management (SHRM), 70 percent of employed Americans would prefer to work remotely on a full-time or part-time basis if given the option, and 35 percent would accept a salary reduction in return for that flexibility. Also according to SHRM’s research, nearly 20 percent of employed Americans who would prefer to work from home in some capacity would start looking for a remote position elsewhere—and 7 percent would quit their job—if their employer did not give them the option to work remotely.
The Revolution Has Begun
Employers are taking such threats seriously. Nearly 60 percent of corporate leaders said they would let employees work from home occasionally, and 49 percent said remote work would be OK on certain days, according to a March survey by research firm Gartner. The changes are likely to have a profound effect on corporate real estate. Nearly half of companies surveyed said their overall footprint could contract up to 30 percent within the next two years.
“This is as seismic a change as we went through in the first and second industrial revolutions,” says Steve Hatfield, a principal with Deloitte and global leader for Future of Work. He says companies have been slowly shifting toward more flexible scheduling, though the pandemic accelerated the move. “The pandemic uncovers that the model we’ve been using is geared toward shift workers on an assembly line,” he says.
Companies such as Facebook, Spotify, VMware, Twitter and Reddit have already given employees permission to work from wherever they choose, though some have imposed certain limits. In addition, more companies are searching for directors of remote work to manage the hybrid approach; Facebook hired someone for that job last year.
While the transformation is occurring, many companies are still uncertain how to reorganize their existing offices and are avoiding major commitments while the situation is still in flux.
“The clients are not looking to spend a whole lot of money to change the current environment,” says Janice Fellows, studio design principal at Ted Moudis Associates, a design firm. Companies want more time to study how many people will be in the office and how the space will be used before making large investments, she says.
There are other, more immediate concerns. In the near term, employers want increased safety protocol guidance from government officials with regard to masking, physical distancing and unvaccinated employees. “It’s an interesting dilemma,” says Phil Nickolenko, vice president of corporate services at TIAA, which won’t ask employees back until January 2022 at the earliest. “We have a host of attorneys looking at requirements across the board in states where we have a presence.”
Corporate executives’ anxiety extends to how hybrid work will affect company culture, especially when diversity, equity and inclusion are at the top of everyone’s minds in light of the killing of George Floyd and others, as well as the pandemic’s effect on women’s careers. Some fear that the approach will create a two-tiered system of employees and that leadership, even if only subconsciously, may favor those who spend more time in the office, while those who work remotely will be out of sight, out of mind.
Such thoughts are not unfounded. One study by Stanford economists concluded that employees who worked remotely reduced their rate of promotion by half even though they were more productive than those working in the office. The research, which was published in 2015 in The Quarterly Journal of Economics and followed employees who worked at a travel agency in China, has found a new audience amid the move to hybrid work.
Company executives fear that hybrid workplaces can create “A” and “B” teams. Dropbox’s CEO wrote last year that “Hybrid approaches may also perpetuate two different employee experiences that could result in barriers to inclusion and inequities with respect to performance or career trajectory. These big-picture problems are nonstarters for us.” That’s why the company adopted a “virtual-first” model in which employees primarily work remotely and use the office for meetings and special occasions.
There’s a fear that women especially will be hurt by the move to a hybrid workplace because their need to address family responsibilities will make them more likely to work from home than their male counterparts. That could give men an advantage in the workplace simply by being more visible and available to corporate executives. The concern is especially acute as the pandemic has already derailed the careers of millions of women who have stepped back from their positions to care for their families. The recession caused record job loss, and women were disproportionately impacted. According to an analysis by Gallup, 2.3 million women left the workforce in the year ended in February compared with 1.8 million men.
“We always have to be aware of the unintended consequences of programs designed to help people,” says Sian L. Beilock, president of Barnard College, a women’s school in New York City. An expert in psychology and education, Beilock says if an office is primarily populated by men, it could send a signal that women aren’t welcome. “We take cues about whether we belong from our surroundings,” she adds.
Company executives say they are aware of the hybrid model’s pitfalls and are taking measures to avoid them. One common practice more companies are adopting is conducting all meetings virtually, even if some people are in the office. Proponents say that approach puts everyone in the same situation. Experts suggest that team members all come into the office on the same days to build camaraderie and prevent some employees from having more time than others with decision-makers.
Spotify, for example, is keeping its offices even though it opted to become a “virtual-first” company last year. Its more than 6,000 employees are not required to visit corporate locations and can work from anywhere they choose, but the offices will be open for those who want to use them and for various gatherings and meetings.
The Stockholm-based streaming service created training programs for its new reality that help managers lead geographically dispersed teams. The programs include information on how to ensure that opportunities are offered fairly and how to spot signs of isolation and depression. The training builds on the experience that managers garnered during the pandemic, says Alex Westerdahl, a vice president for human resources at Spotify.
Westerdahl says he has read about the large numbers of people who are experiencing loneliness, stress and other mental health challenges, but he wonders whether individuals’ issues come from remote work or are a result of the cumulative effects of the pandemic.
A New Way to Attract, Retain and Diversify Talent
Technology companies are on the forefront of the movement that allows employees to choose where they live, as remote work becomes much more common. Such flexibility is often cited as a way to attract, retain and diversify talent. There’s no consensus, however, on how to compensate those who leave pricey locales for less expensive ones.
Streaming service Spotify will allow employees to maintain their salaries even if they move to a low-cost area. Ditto for San Francisco-based Reddit, a news aggregator and discussion site. Reddit says on its website, “We believe this is the right balance of flexibility and support for employees, recognizing the varied tradeoffs people consider when deciding where to live.”
According to Alex Westerdahl, a vice president for human resources at Spotify, “It creates too much friction to localize pay within countries.” He says the company benchmarks its salaries to pay rates on the coasts, noting, “If you choose to live in the middle of the country, you will be paid well.”
Westerdahl says there’s a simple principle behind the strategy: “It’s driven by retaining and attracting employees.”
Menlo Park, Calif.-based Facebook and San Francisco-based Twitter have opted to cut salaries for employees who choose to relocate to less-pricey communities, according to news reports. Neither company returned requests for comment.
Employers generally don’t reduce employees’ compensation for moving to a more affordable location, according to Brian Kropp, group vice president and head of the HR practice at Gartner in Stamford, Conn.
“There is a reputational and fairness issue,” Kropp says. “It’s not like [those who move] are having less impact. If you have two people in the same city and one person lives downtown and the other lives farther out where it’s less expensive, would you pay them less?”
Most employees don’t need to worry about salary cuts. Kropp says less than 5 percent of companies are going to allow employees to pick where they work. And only 15 percent of organizations say they will adjust remote employees’ salaries, though 39 percent are considering such a move, according to Gartner research.
Kropp says he doesn’t believe one approach to remote workers’ salaries is better than the other. However, he recommends that companies planning to base compensation on locale be upfront with employees.
That’s the policy Palo Alto, Calif.-based VMware Inc. has adopted. The company tells employees what their salary will be and gives them information about the cost of living in their desired location.
Industrial designer Shelby Barlow says she took an “almost negligible” post-tax pay cut of about $50 a month when she moved to Miami from San Francisco earlier this year. “My purchasing power increased,” she says. “I went from living in a nothing-special house to a luxury condo.” —T.A.
Lincoln Financial Group is not leaving the choice of whether to return to the office up to its more than 9,000 employees. It hired a consultant to look at the tasks required by each position to determine which jobs require employees to be onsite full time and which can be done remotely. Most employees will have a flexible schedule, though the amount of time each must spend onsite will depend on their role.
“You can’t go rogue and let people decide,” says Jen Warne, senior vice president and chief talent officer for the Radnor, Pa.-based company. “It would be challenging and hectic for the business.”
Previously, Warne says, managers decided who could work remotely, and that led to significant differences between departments. “There was inequity in flexibility,” she explains. “This is consistency based on job type.”
Flexibility and Freedom
VMware Inc., a Palo Alto, Calif.-based software company, opted to let its 31,000 employees work from wherever they choose, though it is keeping its nearly 200 offices across the globe open for those who opt to work onsite. The offices will also serve as meeting hubs that will help maintain team culture, says Rich Lang, the company’s senior vice president of human resources.
Lang says that to ensure remote employees aren’t being punished for their status, the company will track their promotions just as it measures career progress based on gender, ethnicity and race. Still, he isn’t overly worried about preferential treatment being an issue because managers have grown accustomed to managing remote workers.
And he says the new approach will help the company’s diversity efforts as it is now recruiting in places where it never has before, such as Detroit and Baltimore.
“People are pretty skilled now on how to have one-on-ones and how to have inclusive meetings on Zoom,” Lang says. “We told people to work where it works for you.”
Employees who have taken advantage of the company’s offer to work from anywhere are aware of the potential risks, such as not having enough face time with management and missing out on high-profile assignments. Still, industrial designer Shelby Barlow jumped at the chance to move to Miami, where she can rent a luxury apartment with a water view and a pool for $1,550 a month. In San Francisco, she was paying $1,600 for only one room, and various situations with roommates forced her to move three times last year.
“I never felt I could get settled,” Barlow says. “The expense of it started to feel suffocating.”
Barlow says she and her manager had multiple conversations before her move, to establish expectations and a communication schedule. “I’m not fearful,” she says. “I think VM[ware] will support me. This is an opportunity for me to advocate for myself.”
Rethinking Real Estate
Some companies are offering their remote employees an opportunity to embrace co-working spaces. Schneider Electric, with more than 135,000 employees, closed 27 of its small offices in 2020 and plans to shut as many as 20 more this year. The French company with U.S. headquarters in Boston had been thinking about streamlining its real estate for years, and the pandemic pushed it to accelerate the process. “Real estate was on everyone’s mind,” says Karen McClellan, director of the company’s real estate.
She says managing the small offices was already taking an outsized amount of her time and that the time spent on it was only expected to grow as the company implemented the necessary COVID-19 safety protocols. Early this year, Schneider inked a deal with Upflex Inc., a New York City-based network of co-working spaces, for its employees in seven locations.
“We don’t always want employees to work from home,” McClellan says. “We think there’s value in collaboration that happens in the office.”
Theresa Agovino is the workplace editor for SHRM.
Marshaling a Remote Workforce
Darren Murph has a rare position: He’s director of remote for Gitlab, a completely virtual software developer with 1,300 employees. Few companies have such roles, though the move to hybrid work is expected to make jobs like his much more common.
Prior to joining GitLab in 2019, Murph spent more than a decade overseeing remote transformations in the marketing, communications and supply chain industries. In 2010, he set a Guinness World Record for the most posts by a professional blogger (17,212 for engadget.com). He recently spoke to HR Magazine about his role.
What does your job entail?
I work at the intersection of culture, operations, people, talent branding, marketing and communication. I collaborate with all functions of the business to support GitLab clients and partners seeking guidance on mastering remote workflows and building culture. I champion GitLab’s all-remote culture and initiatives through content creation, interviews, webinars, case studies, podcasts, and partnerships with organizations and universities. I work across the company to ensure that GitLab team members acclimate well to remote, and I share our learnings with those outside of the GitLab organization.
How do you create and maintain a company culture when all your employees are remote?
Building a culture across a company where there are no offices requires intentionality. While technology and tools are enabling companies to operate efficiently in a remote setting, it’s important to focus on documenting culture first, then using tools to support. In co-located companies, it’s easy to let culture be shaped by office decor, the neighborhood in which a company’s headquarters is located or the loudest voice in the room. It’s not a usable strategy in a remote environment. In a remote team, there’s no office vibe, hip coffee or Spotify playlists that decide the culture. Culture is the barometer of how well values are adhered to and reinforced in an organization. Therefore, culture can only be maintained if values are prescriptively articulated and visibly reinforced through elements such as discretionary bonuses and linking promotions to values.
Aside from institutions such as hospitals or warehouses, can all businesses operate remotely? Or is remote work better for certain industries?
Industries that produce digital outputs (software, design, advertising, marketing, editorial, etc.) are most amenable to remote work, as everyone is on the same playing field by default. However, all industries can enjoy some benefits.
How can management ensure that remote work is successful?
Effective remote leadership requires absolute executive sponsorship. Even apathy equates to sabotage. The key is to realize that remote work is not about where any individual works; it’s about how the work gets done. It is fundamentally about rearchitecting all workflows to be effective in a location-agnostic setting. A quick litmus test: “Does this workflow only work when everyone is in the office?” If the answer is yes, that workflow must change. Leaders who refuse to recognize the sea change in workplace flexibility will see heightened levels of attrition, with top talent fleeing to more-flexible organizations that invest in and support remote work.
Unlike GitLab, most companies are adopting a hybrid approach where individuals will spend some time in the office. How will that affect the director of remote’s job?
Hybrid organizations need a director of remote work even more. All-co-located and all-remote [environments] have only one playing field to administer. Hybrid has two or more unequal playing fields. Those organizations will need a senior leader who constantly balances myriad experiences and works to find equitable solutions and benefits for all. Hybrid is extraordinarily difficult to do well. By default, these organizations will end up with an “A” team and a “B” team, breeding dysfunction and toxicity.
How can you ensure that the people who primarily work onsite don’t receive preferential treatment as a result of getting more face time with leaders?
By keeping the executive team out of the office, even if the office reopens. If executives remain in-office, it’s likely that all workflows will revert to office-centric, thereby thwarting the efficiency of remote workers. But keeping executives out of the office sends a clear signal that the office is not the epicenter of power and career development. This requires a tremendous amount of intentionality and rigor, reinforcing the reality that all-remote is a fundamentally more inclusive and equitable design than hybrid-remote. The last thing you want is people coming into the office primarily to rub shoulders with the right people and playing politics to advance their careers, further ostracizing their remote colleagues who are prioritizing community, family and location. —T.A.