CEO decision: How to hybrid

The question perplexing CEOs of small and midsize businesses is not going “back to work” but how to go forward in the new reality of the hybrid workforce. It was a much simpler workplace pre-pandemic when everyone, except for a select few remote employees, was expected to be in the office Monday to Friday, 9-5 (MF95). COVID-19 quickly scattered everyone who could to work remotely and with that the work-from-home (WFH) genie was out of the bottle. Bringing people back to the office in the short term involves questions of safety and CDC guideline adherence as the pandemic winds down, but a year from now, well after the all-clear has sounded, CEOs will have to make policy decisions about “How to Hybrid.”

In April 2020 as we hit the bottom of the Corona Curve and were in the early stages of “The Pause,” we wrote about “Realizing a New Reality” on the other side of the pandemic and what that would mean. Analysis of our April 2020 survey showed that 91.8% of CEOs had implemented some type of work from home solution. This immediate and radical change forced 15 years of behavior change in 30 days. Work from home along with rapid changes for “tele-everything” (medicine, education, food delivery, business), business travel, no touch transactions and the acceleration of digital transformation have changed what will be the new reality of post-pandemic work and life.

Talent Wars 2.0

The soon-to-surge, post-pandemic economy has already reignited the talent wars. The battle is the same — hiring, recruiting and sourcing employees — but the battlefield is radically different.

The Q1 2021 CEO Confidence Index report revealed that 66% of CEOs will be increasing headcount in the year ahead, five points ahead of the 61% recorded in Q4 2019. Even those not increasing headcount must continue to source new employees as existing people are being aggressively recruited away. Unemployment remains above pre-pandemic levels and continues to fall, but in verticals and markets beyond the reach of COVID-19, the battle rages more intensely than before.

Foundational to this new battlefield is the question of remote work. Prior to the pandemic only 2% of small and midsize businesses functioned in a fully remote model. Our latest data reveals that number may go as high as 7-8%. The distinction between a remote worker — someone who is hired with the intent of working fully remote — versus the flexibility of a hybrid worker, who can work either in the office or from home, has created a new class of worker. For many potential and existing employees, remote or hybrid working is not just an option, it has become a requirement.

• Retention: Carried over from the previous battle, employee retention remains the foundation of a hiring strategy. You can’t be losing people while trying to add new ones. Few people jump ship in the middle of a storm, but once the seas calm, they will look for other options. Headhunters are aggressively hunting heads with promises of a more dynamic, healthy and flexible work environment. WFH flexibility is now suddenly a critical element to retention. A recent Microsoft study suggests 41% of employees are considering changing employers in the year ahead — double the number from 2019 — and another 46% are likely to move because they can now work remotely. Generationally, Millennials and Gen Zs have always sought work flexibility — now it’s been validated, experienced and become as important as job status and income to them. They want to be measured based on what they do, not where or when they do it.
• Hiring: Recruiting has replaced hiring as the default strategy. In thriving verticals and businesses, the full package of job, income, potential, benefits and now flexibility needs to be finely tuned to the demands of the market. Flexibility has become the new black in recruiting. “A” players have always had choices — on this battlefield, “B” players do too. The projected economic surge sparking the next multi-year growth cycle will only exacerbate the demand for talent forcing the new hiring mantra: ABR (always be recruiting).
• Sourcing: The advent of the virtual work environment has presented a new sourcing solution. No longer limited to the best people within driving distance of the office, those organizations willing to hire a fully remote worker can now find the best people regardless of where they live. This new battlefield will demand new virtual sourcing tactics and messages along with the cultural acceptance of fully remote employees in a traditionally office-based environment.

This also creates alternatives for workers. No longer tethered to their geography or tied to the MF95 world, they can look anywhere for work exponentially expanding their opportunities. Just as the rise of the internet massively expanded choices for consumers, the pandemic has created a whole set of opportunities for work and lifestyle choices, further pressuring employee retention and the importance of getting WFH policies right.

How to hybrid

The big decision facing all CEOs is how they will approach their WFH policy. Some will choose to return to the traditional MF95 world while others will remain fully virtual. The majority will seek to find some balance of office and WFH. Certain aspects of work like collaboration, problem solving or innovation have proven to be more effective in the office. Planning sessions, corporate culture or alignment events and team building exercises are also much better in person. But individual task completion, personal project work and much of the day-to-day responsibilities can be done as productively — if not more so — remotely.

Culture becomes both a victim and beneficiary of the new paradigm. Culture was a major factor in the prior talent war. The only unique element of any business, culture is the gravitational force that keeps good employees, rejects bad ones but also radiates into the community attracting new employees. On the new battlefield, culture is hard to maintain and harder to improve in a WFH workplace, yet its importance is even more profound. Culture is dominantly absorbed through observation. With fewer human-to-human interactions, CEOs will be challenged in the hybrid workplace to find ways to communicate, reinforce and reward culture, creating an even greater competitive advantage as culture feeds the human need for belonging. Weak cultures will dissolve into workers working with little to no attachment to the company, making the job transactional.

Ultimately WFH is a performance management issue. Physical attendance does not necessarily equate to productive work. Unproductive workers are just as unproductive at home as they are in the office. If anything, being seen in the office versus the invisibility of WFH provides a shield for the unproductive. Setting clear goals and objectives then holding workers accountable for them is critical in all scenarios. Eliminating or minimizing physical attendance as a subjective criterion will create cleaner performance assessments uncovering the unproductive and illuminating true contributors.

Heading into 2022 CEOs will have to clarify their WFH policies and guidelines. They will need to be cascaded down the organization with clear policies for managers to follow. The challenge is that the majority of CEOs have never had to make this decision before. Except for the 2% who were already virtual, everyone lived in the MF95 work world. Alternatives and options are starting to emerge, but the new reality for the post pandemic workplace is just starting to be sorted out with no best practices or solutions available.

Unfortunately for CEOs there are no right answers available today. Only they can decide what’s right for their organization. But what’s very clear is that all wrong answers will be punished by turnover as the battle for talent has shifted power from the employer to the employee.