Business Briefing: Economic Updates and Industry Insights
ADI IGNATIUS: Iโm Adi Ignatius.
ALISON BEARD: Iโm Alison Beard, and this is the HBR IdeaCast.
ADI IGNATIUS: All right. Alison, I feel like in this age of flexible work, thereโs still a lot of disagreement as to whether we need to be in the office or not.
ALISON BEARD: Yeah, I completely agree. I think within organizations thereโs debate between managers, employees, I think different organizations are implementing different policies, and no one knows exactly what the right thing to do is.
ADI IGNATIUS: Right. But they feel strongly. I mean, there are the managerial purists who feel like you got to have people in five days a week with this assumption that, โIf we canโt watch them, theyโre not working.โ Itโs a trust issue. Andy Jassy, the CEO of Amazon has everybody coming back five days a week. I donโt think itโs trust for him as much. Heโs a data guy, but there are things that you canโt measure, but that he just feels strongly or enhanced when youโre in the office. Thatโs the things we talk about of collaboration, of spontaneous interaction that is good for culture and is good for innovation. You got people who feel very strongly about that approach.
ALISON BEARD: Then you have people who feel equally strongly about the other side. As you know, I am a flexible work fanatic. You are at the office right now on a Wednesday when weโre supposed to be, Iโm home, donโt tell anyone. But you also have companies like GitLab, which are all remote. Everyoneโs flexible. No one comes to the office, they bring people together a couple of times a year, and theyโre doing fabulously. They have many workarounds to make sure that collaboration, that spontaneous interactions still happens.
ADI IGNATIUS: Thereโs then a third option. Hybrid is complicated, and I think a lot of companies feel that they arenโt doing hybrid as well as they could. Look, I thought the data was clear in the past that people were more productive working at home than they had been working in the office. I think some of the early data sets have shown that. More recently, it sounds like thatโs not necessarily the case. I think more and more companies need to think about, โAll right, how to get hybrid right in a way that works for management, and it works for employees.โ
Joining me in this weekโs podcast are a couple of specialists in the field. Peter Cappelli, a professor at Wharton School and director of its Center on Human Resources, and Ranya Nehmeh, who is a senior HR strategist. Theyโre the co-authors of the HPR article, Hybrid Still Isnโt Working, and of the forthcoming book In Praise of the Office, The Limits to Hybrid and Remote Work. Ranya and Peter, welcome.
RANYA NEHMEH: Thank you. Itโs great to be here.
PETER CAPPELLI: Thank you.
ADI IGNATIUS: At one stage, the data I thought seemed to show that remote workers were actually more productive than those in the office. Now, in your article you cite some recent studies that seem to show the opposite. So, Peter, maybe Iโll start with you. Where are we? Are workers more effective working remotely? Or in a physical office environment?
PETER CAPPELLI: Well, I mean, just to back up just a tiny bit. It depends on what kind of work weโre talking about. I think the big thing that we have not quite got our hands around yet is that after COVID when we were going remote, we were able for the first time to disentangle the office context from office work. So, what does office work look like? And it was always done in an office.
So, we really had no idea about what the nature of office work really is. And one of the things I think that we have learned is that a lot of office work requires not just interaction with other people, but kind of a social exchange. So, I ask you for some help with something and you do it because I sit next to you, and then you can ask me because I owe you a favor and I know the person in accounting and I call that person up and thatโs how things get done, right.
So, I think the initial studies were done on individual contributors. These are people like patent attorneys, call center people, who donโt interact with anybody in their office and they could be on Mars and it probably wouldnโt matter. The more recent studies are ones that are looking at interactions and theyโre showing not such great outcomes. Lower productivity, more or less across the board I think in these more recent studies.
So, it depends what youโre talking about. There are people who donโt need to be in the office and probably never did. And then, there are those for whom the social relationships really are, how they got things done when they donโt see each other. Thatโs struggling.
ADI IGNATIUS: So, at our office at Harvard Business Review, Harvard Business Publishing, we havenโt required people to be back in the office because weโve never quite been able to finish this sentence, โYou need to be in the office becauseโฆโ
And there are these intangible things that sort of sound right, spontaneous interaction and collaboration, but itโs hard to prove. And if workers are skeptical and theyโre not inclined, itโs just hard to finish that sentence and say, โYou need to be in the office because we know it will have these results.โ But, I mean, are you suggesting that some of these intangibles really can be measured, are being measured and are showing a clear trend?
PETER CAPPELLI: Yeah. I mean, itโs hard to measure white collar work, so itโs hard to see before and after because we werenโt looking at it trying to measure it before. But you can see pretty obvious issues. For example, with onboarding, and this is the nature of the beast. If you are an experienced worker, both Ranya and I work remotely largely, right? But we also know that if youโre a new hire in the organization, you need people around you to help you.
So, it is this kind of, is it in the interest of the organization for you to be there? Yes. Is it in your personal interest once youโre experienced? No. But part of the problem now is average job tenure in the US anyway is four years. So, we have an entire cohort of people in organizations who have only known the remote or hybrid world, and they really donโt know how things are working. And it takes some longer, at least one of the places I spoke to, it took about two months longer they thought for people to become functional. Okay, two months longer, every time youโre hiring people in now, thatโs a big number, right?
ADI IGNATIUS: I remember some people saying that initially remote work seemed to work, but I remember some people saying, โYeah, but there is a reservoir of trust and understanding among people who had worked together who are now remote. But when that dissipates over time, youโre going to lose that, and then these advantages will disappear.โ Iโd love your take on what you think remote work has done to corporate culture and collaboration and some of these things Peter and I were just talking about.
RANYA NEHMEH: Well, I think first and foremost, one of the biggest issues is that you canโt really manage remote or hybrid workers the same way that you managed in-person teams. So, office culture really depends on proximity, it depends on formal cues, on spontaneous collaborations. And in hybrid setups, you really need to design those behaviors intentionally.
So, you cannot effectively manage teams of remote or hybrid workers using the same method that you relied on when all employees were in the office together. So, what we found, for example, is that collaboration and learning really tends to suffer. Employees are really focused on meeting their individual KPIs. And because of that, itโs really at the expense of helping their colleagues or working on collective tasks.
So, typically, people will finish their tasks unless they had a personal relationship with the employee asking them, then in which case, they were more inclined to respond sooner. So, this again also poses a problem for new hires who sometimes donโt get the help that they need. And this is really a manifestation of the absence of social ties.
PETER CAPPELLI: We have such short memories, but during COVID, we were surprised that anything worked, in offices that the wheels did not fall off. People were really happy and grateful to be in the office and to not have to beโฆ I mean, to be home rather than being in the office and risk infection, to have a job at all. So, it was remarkably better than what we expected.
And I think part of what happened is we just rolled with that and never really adapted to the fact that there was something unusual about the COVID experience that might not continue on afterwards. So, as Ranya is saying, โOkay, now how do we manage people when the crisis is over?โ We never thought about that. We just let it roll.
ADI IGNATIUS: So, tell me if this is fair. It seems that the article youโve written seems to say that the ideal work setup is the one we did before COVID where people were physically together. But the article youโve written is to try to help people understanding that you may not have enough office space if you downsize during COVID to even accommodate everyone all at once, and your workers might not be ready to come back and you risk kind of a revolt if you just said everybodyโs got to be back five days a week. Is that fair? I mean, do you think the best setup is the one we had before when we started working remotely in a hybrid way?
PETER CAPPELLI: I would say best for whom is always the question, right? So, what weโre discovering now is your experience and sometimes your most valuable employees who have the leverage would like to be at home more, and they have often kids or theyโve moved to someplace fun and they really want to be remote.
And CFOs realize that if you could cut your office space, this could save us a lot of money. For most other folks, theyโre more productive in the office and for some of them, not most, but for some, they really feel that theyโre missing out on the social connections. We have more social isolation with remote work. And again, for the new hires, they really need to be around people.
So, the question is always better for whom. The answer here is that employers and management have all the marbles, so they can make the decisions and they could manage differently to make hybrid work. They just donโt seem to be doing it.
RANYA NEHMEH: Those companies who really are going to remain remote or in a hybrid work arrangement, the only way forward is really to stop pretending that hybrid will fix itself as well and to really start to fix how we manage hybrid in a more effective way. And yes, it will require more intention and more effort and more rules to have them in place, but this would be the best way for to really balance also employee and organizational needs and interests.
ADI IGNATIUS: Letโs talk practically then. So, if a lot of companies are in this situation and maybe theyโre not even sure what the ideal thing is even for themselves, but they figure weโre in a place where we need some sort of hybrid solution. And I think some of the hybrid solutions are terrible, I mean, or some of the compromisesโฆ Thereโs nothing worse than a hybrid meeting, right? When some people are in the office, in a conference room and other people are phoning in and maybe some of them have their video off. I mean, thereโs nothing worse than that. So, maybe letโs talk practically, and we could even start with the virtual meetings. I mean, if you have to go hybrid or you want to go hybrid, what are some thoughts you have on how to make it work better for most companies?
PETER CAPPELLI: One of the worst things about hybrid as you say, but also remote in general is meetings remotely donโt work particularly well. The number of meetings appears to be up a lot. The amount of time spent in meetings also appears to be up a lot. The frustration of meetings appears to be up a lot. Now, so what do you have to do? We have to put some rules around meetings, which we have not done, but itโs easy to do: rules about how many people should be in the meeting.
And what I heard from people is that itโs easier to make meetings bigger because all you have to do is just add people to the list and they want to be on. So, you add them, you donโt have the constraint of the office space anymore. Iโm sorry, the roomโs not big enough. We canโt put 100 people in here, right? But you can put 100 people on a Zoom meeting. Itโs pretty simple to do.
The other thing we heard is that meetings go longer and they need post-meeting meetings. And I was asking people, โWhy do you need post-meeting meetings?โ โBecause people donโt know whatโs going on in the meetings.โ โWhy not?โ โWell, theyโre doing other work.โ โWhy are they doing that?โ โWell, my cameras are off.โ I mean, why you should have a rule or a norm that cameras are off in remote meetings seems to me crazy. But that seems to be widespread that cameras are off. So, people are doing other work, theyโre not paying attention, the meetings are not productive. So, limit the size of meetings, limit what you can do with meetings and what you should do elsewhere. Make sure the rule is cameras on, start there.
RANYA NEHMEH: We see fully remote companies like Atlassian, they require cameras for example to be on during meetings, otherwise you just donโt attend the meetings. And they also track and review meeting effectiveness regularly to ensure that theyโre worth having. Also, other companies, for example, like GitLab, they have hundreds of pages of guidance on remote work behavior including expectations for what is considered urgent communication, how to respond, how to collaborate and so forth. So, you really have to be intentional again about behavior. So, you donโt leave it to chance. You need to write it down, you need to enforce it.
PETER CAPPELLI: Yeah, I think the best example of that, the thing that is maybe most important that youโre hearing from companies now is people just donโt show up for the in-office requirements and hybrids. So, we tell them, โBe in there two days a week,โ and they just donโt come.
So, one of the surveys we saw, 73% of employers said they have real attendance problems or they coffee badge, which means I come in, I swipe my badge, I get a cup of coffee, I go home, Iโve met the requirements. And one of the problems there is if you let everybody pick their own day to come in, then you come in and thereโs almost nobody there on that day. And so, then you say, โWhy am I here?โ
And then, as you pointed out, you often end up with a meeting thatโs virtual even though youโre in the office and you say, โWhy am I here?โ And then, they donโt come the next week, and then nobody takes attendance. And then, soon, we fall the race to the bottom, nobodyโs there. So, hybrid is failing Iโd say most prominently because people just donโt come.
ADI IGNATIUS: So, your point about people turning off their cameras actually I think gets into an interesting debate. The motivation for that was, yeah, maybe youโre not having a great day, maybe youโre notโฆ So, put your camera off, which is fine. It sounds like a nice thing. But it also, you do that when employees have the leverage, right? And I think thereโs now a sense among CEOs, maybe weโve been too accommodating to employees and to peopleโs feelings of not feeling quite right. So, letโs accommodate them.
There was something you said earlier that said, employers could do whatever they want. I mean, the leverage has kind of switched. And if you say, โYouโre back five days a week,โ youโre back five days a week. And if people quit, maybe thatโs fine.
Do you agree that the power dynamic maybe has shifted where employers have more power and have the ability to, as you say, lay down some of these rules that you think would be beneficial?
PETER CAPPELLI: Yeah. So, let me just maybe slightly alter it here. I think the issue is my independence and choices affect my colleagues and we havenโt recognized that. So, if I get to pick the day, I want to come in, but it doesnโt suit anybody else. We just let everybody pick their own days, and then it doesnโt work, right?
So, it is probably not just giving employees more power, which weโve done, but giving individual employees the ability to pick what works for them. That happened during COVID for understandable reasons, because everybodyโs circumstances at home were so different. But now, it doesnโt make sense to say you as an individual employee get to pick whatever works best for you. You could still have hybrid without allowing every individual their own way of doing it. I come in when I want, I have my camera on if I want. I donโt respond if I want. I mean, that just doesnโt work.
ADI IGNATIUS: I mean, there have been those and weโve certainly published articles that say, companies that allow that kind of flexibly that is an enduring competitive advantage.
PETER CAPPELLI: Unless people arenโt getting the work done. Then itโs not a competitive advantage.
ADI IGNATIUS: When people were trying to get hybrid, I remember they used terms like, โThe office should be like a clubhouse or we should organize hackathons. Letโs get people here and do something that you cannot do remotely.โ And what are your thoughts on that? Do you need to jazz things up on office days to make it really distinct from remote work days in order to create this perceived sense of value and collaboration and healthy culture?
RANYA NEHMEH: A lot of companies are doing just that, which is creating things like moments that matter. So, to really get employees wanting to come into the office rather than it being mandated, right? But one of the things that we also suggest is the importance of building these social ties intentionally. The ones that we donโt have so much of when itโs remote settings, right?
So, an obvious place to start here is really to forge connections with new hires, especially during onboardings. Cohort new hires, pair them with mentors, create a list of important people that they need to meet and make sure that you follow up on that, that they do meet those people, organize working lunches across teams, so to get people out of their silos as well. So, any program that really brings employees together, even volunteering opportunities or so are ones that really, itโs an added benefit of building personal relationships and getting people to come back maybe more voluntarily into the office as well.
PETER CAPPELLI: Yup. But I think weโre not suggesting bread and circuses, right? Weโre saying rules that would say, โOkay, when youโre doing meetings, when youโre in the office, thatโs the time to do meetings,โ right? And for people who canโt be there, thatโs a problem. But we canโt let everybody decide whether theyโre going to come in on our meeting days.
ADI IGNATIUS: And while youโre in the office, weโre going to try to organize the work that is best done in person. So, I think when Ranya is talking about purposeful things, itโs not just enticing people to want to come back because itโll be fun, but we are bringing them back in because itโs important to be there and I think thatโs what we have not done well.
RANYA NEHMEH: Exactly.
ADI IGNATIUS: All right. So, letโs get super practical here. So, letโs imagine people are listening to this, theyโre saying, โYes, yes, yes, you are speaking to me. Weโre in a hybrid situation, itโs not great. I know it can be better. I donโt know how to make it better.โ What are some practical steps that people can take for assessing whether or not their current arrangement is okay? And then, if not, how do they get from here to there? Why donโt you each take a crack at that?
PETER CAPPELLI: Yeah. Let me start with the simple stuff, and then Iโll leave Ranya to answer the harder things here. The simple things are things that your IT system could already tell you, right? And thatโs how much interaction actually is going on? How much time are we spending on meetings? Is it up or not? How many pings that is requests for help in our Slack channel get answered? Or how long does it take people on teams or some other software to reply?
And you can run a little experiment yourself, so you can actually just ask your HR people to do this. Letโs see how long it takes people to reply. Letโs ping people I donโt know and just tell them weโre trying to learn some things about interaction and see how long it takes people to reply. One of the things that was troubling that I heard from places is that, if youโre pinging me for help, if I know you, I get back to you. If I donโt, it falls to the bottom of the queue and maybe I get back to you the next day. So, you can assess how things are going initially those ways. And also, by just talking to your new hires who donโt have any stake in the current arrangement and ask them how lost are they?
RANYA NEHMEH: Assess the real problem. That would be the first step, what Peter mentioned. And as we also said is really to set clear and enforceable rules. Again, with meeting effectiveness. Also, it can be other rules like you must respond immediately if a colleague marks an urgent request as urgent, not only to colleagues that you know, but to everyone else, even people that you donโt know in order to make sure that everyone is treated equally.
Of course, here you would also have to provide guidance as to what constitutes urgent and perhaps companies can also require employees to designate certain hours each day when theyโre available to coworkers. Then, thereโs also more actionable points that we had mentioned, things like how to measure performance. You can add KPIs that include things like responding in a timely manner, to requests for help, mentoring, assisting new hires, peer support. So, all of this can be added in your KPIs and can be used as factors to determine bonuses, merit, raises and promotions.
Something else also that we were looking into is career planning and advancements. So, how can managers make decisions about career advancements when they canโt really easily observe how remote workers get along with their colleagues or their subordinates and their peers. So, companies that are already doing this like, GitLab or Shopify are using 360-degree peer feedbacks to assess interpersonal and leadership skills.
PETER CAPPELLI: Yeah, just on that, when one of the most troubling things I think we heard was the sense that people were getting promoted based largely on their individual contributor scores because the people above them couldnโt see how they interacted with other people. They never had to really run anything that they could observe.
And so, people who are individual contributors were more likely to become managers, which is not ideal. I would say the other thing personally is to think about this as an organization change exercise, right? And that means, you have to start with the burning platform story. Why do we have to do this? Which is something that I heard fairly often from people. Things are fine, why do we have to think about changing?
Well, if you think theyโre not fine, you have to demonstrate to them why theyโre not fine and not simply which people are assuming that the problem is management doesnโt trust you. And so, they want you in the office where they can watch you. That should not be the reason. The reason should be about collaboration. But you have to be able to demonstrate to employees, look, we looked at this, we saw how long this stuff is taking and this is a problem, and we got to deal with it. You got to have make the case for it. And then, itโs a standard organization change issue after that.
I would start with meetings, which are the easiest thing to set rules about virtual meetings, right? Not that hard to say meetings shouldnโt be this big, cameras have to be on, start with agenda, things that always wouldโve made sense. We didnโt do them before. But boy, we really need to do it now.
ADI IGNATIUS: Youโve said that every company is different and that you can have different requirements, different rules, but that you should have rules and you should stick with them. That said, do you have a sense from the research youโve done or that youโve monitored? Is there an ideal number of days in the office? Are there some basic best practices? And you just mentioned maybe a couple for how to run virtual meetings, but is there an ideal number of days in the office? Are there some things that should just kind be table stakes or basic approaches if you want to get hybrid, right?
PETER CAPPELLI: The worst situations to have rules and not enforce them, which is whatโs happening now, right? So, we have mandated anchor days and people donโt come and we donโt do much of anything about it, that just undermines the whole organization.
RANYA NEHMEH: I mean, I think in terms of also the number of days, I donโt think that we can really say whether thereโs two or three. Thereโs no one size fits all, and I think every organization needs to see what works for them. However, in terms of, for example, the anchor days, what we see is that sometimes thatโs left the decision of how many days is left entirely to each local manager. And this leads to a lot of inconsistencies in the implementation.
So, if I decide to show up to the office Monday and Friday and my colleagues I work with very closely show up on Tuesdays and Thursdays, it may be weeks before we see each other, right? So, this naturally affects then the relationships that we have with our colleagues. Then instead what youโll see is more isolated offices and isolated teams. So, this is something really to consider as well.
ADI IGNATIUS: So, one of the problems with companies who arenโt satisfied with the situation they have now, but are having trouble moving forward is, weโve touched on this a little bit, but a fear that talent will leave, talent will mutiny if the policies dramatically change. Whatโs the best way to handle that tension? I mean, youโve talked about sharing data, although I think some of that might seem a little abstract that you talked about. How do you handle that tension? Or how do you evolve away from that rigidity thatโs kind of crept in since peak COVID?
PETER CAPPELLI: Yup. Well, let me just make a practical point. People always threaten to quit in surveys when, in fact, they donโt quit, right? So, the relationship as I recall, between intention to quit and actually quit is about 8% or something like that. And part of the reason is you got to have a place to go. So, I think thatโs part of it. And I think too, weโve got to have to remember theyโve got to go someplace, right? Nobody smart quits, and then starts a job search after that. So, they got to go someplace. And it doesnโt seem to me that thereโs evidence that remote work is expanding. The debate is really about how slowly it is shrinking back.
So, I donโt think itโs such a big concern. But I think you have to tell the employees why youโre doing it. I think part of the reason they are so irritated about efforts to pull it back is they donโt see why, and they believe the reason is just that management doesnโt trust them and has to watch them. So, I think that matters a lot and I think there are things we can do to give people more flexibility. For example, a simple one which seems completely obvious to me is let people, instead of taking sick days, work from home when theyโre sick, right? And that saves the company money too.
Maybe more discretion with respect to paid days off that you can take on your own. But the idea that we have to have people together, and Iโm sorry if your dog has a playdate on Wednesday, but everybody else has got to be here. So, I think the individual accommodation, we really do have to pull back, unfortunately.
ADI IGNATIUS: Thatโs a New Yorker cartoon. Iโm sorry if your dog has a play date on Wednesday, but we need you in the office. I mean, there was that study before COVID that everyone cited a million times. Nicholas Bloom and others of, was it Ctrip? The Chinese travel company that it seemed to show that I guess itโs sort of individual contributors could be very efficient working from home. But they didnโt get promoted as frequently as people who were kind of physically in the office. If thatโs true, and if that continues to be true, that sounds like it would be a good thing to share with employees. Itโs not intentional, it just sort of happens and weโre not defending it, but it is the reality and something to think about.
PETER CAPPELLI: Yeah, I think thatโs right. I mean, this issue about what is presentation bias. Well, if youโre in the office, you just have more access to information and more opportunities to shine and more opportunities to grab attention. Before COVID, there were actually a bunch of studies done on remote work, the context was different. Generally, the remote worker was elsewhere, and most of the colleagues were in the office, but everything was worse for those workers. Everything. Promotion rates, pay rates, satisfaction, job satisfaction, everything was worse if youโre out of the office and your colleagues are there. And that is important to remind people.
RANYA NEHMEH: Thereโs one study also that was very interesting from Gallup in 2023, they actually said that only 12% of employees strongly agreed that their organization has a hybrid work policy that works well. So, talking about promotions and career advancements, employees see that. They do, in many cases, they see that this is really happening. So, we have not yet. And thatโs why, hybrid is still not working perfectly.
PETER CAPPELLI: Thatโs a great point. And one follow up on that, a year or so earlier, I think it was Gallup as well, did surveys of employees who uniformly reported that they understood the need to come back to the office. The problem is, the longer you keep them out, the less theyโre going to say that, right? So, part of the management problem is weโve gone five years since COVID without telling people what the goal was. And if the goal is, look, we really need people to be back in the office. They wouldnโt be so bent out of shape about it. If you wait five years to tell them, then theyโre irritated.
ADI IGNATIUS: All right. So, just to end, I want to ask each of you again for our listeners, something they can do right now to feel like theyโre moving the needle or starting the process of getting their hybrid experience right. Whatโs something you could just do right now that starts you on this process?
RANYA NEHMEH: I think communicate. Itโs very important I think for the organization to communicate very clearly, very transparently what they have in mind, whatโs working, whatโs not working? Involve employees. Itโs always different when everyone is informed and involved.
ADI IGNATIUS: Okay, Peter.
PETER CAPPELLI: Rain in meetings, everybody hates them now. So, itโs easy to make an improvement, right? Just constrain the amount of time. The meetings can take place, make sure peopleโs cameras are on, limit the number of people there, have an agenda.
ADI IGNATIUS: All right. That was fantastic. Ranya, Peter, thank you. Youโre onto a really, really great topic. I think it matters to a lot of people as the data, as youโve said, the data shows, nobody is happy with where we are right now. So, I hope this contributes to getting us in a good place. So, thank you for being on IdeaCast.
PETER CAPPELLI: Thank you.
RANYA NEHMEH: Thank you.
ADI IGNATIUS: That was Whartonโs Peter Cappelli and HR strategist Ranya Nehmeh. Together, they wrote the HBR article, Hybrid Still Isnโt Working.
We now have more than 1,000 IdeaCast episodes, plus many more HBR podcasts, to help you manage your team, your organization, and your career. Find them at hbr.org/podcasts or search HBR in Apple Podcasts, Spotify, or wherever you listen. Thanks to our team, senior producer Mary Dooe; associate producer, Hannah Bates; audio product manager Ian Fox; and senior production specialist Rob Eckhardt. And thanks to you for listening to the HBR IdeaCast. We will be back with a new episode on Tuesday. Iโm Adi Ignatius.
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