The Future of the Office

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

Peter Cappelli

• Editore: Wharton School Press
• Anno: 2021
• ISBN:
  9781613631362
• Argomento: Business
• Categoria: Human Resource Management

A GLOBE & MAIL BEST BUSINESS BOOK OF 2021 The COVID-19 pandemic forced an unprecedented experiment that reshaped white-collar work and turned remote work into a kind of "new normal." Now comes the hard part. Many employees want to continue that normal and keep working remotely, and most at least want the ability to work occasionally from home. But for employers, the benefits of employees working from home or hybrid approaches are not so obvious. What should both groups do? In a prescient new book, The Future of the Office: Work from Home, Remote Work, and the Hard Choices We All Face, Wharton professor Peter Cappelli lays out the facts in an effort to provide both employees and employers with a vision of their futures. Cappelli unveils the surprising tradeoffs both may have to accept to get what they want. Cappelli illustrates the challenges we face by in drawing lessons from the pandemic and deciding what to do moving forward. Do we allow some workers to be permanently remote? Do we let others choose when to work from home? Do we get rid of their offices? What else has to change, depending on the approach we choose? His research reveals there is no consensus among business leaders. Even the most high-profile and forward-thinking companies are taking divergent approaches: --Facebook, Twitter, and other tech companies say many employees can work remotely on a permanent basis.
--Goldman Sachs, JP Morgan, and others say it is important for everyone to come back to the office.
--Ford is redoing its office space so that most employees can work from home at least part of the time, and
--GM is planning to let local managers work out arrangements on an ad-hoc basis. As Cappelli examines, earlier research on other types of remote work, including telecommuting offers some guidance as to what to expect when some people will be in the office and others work at home, and also what happened when employers tried to take back offices. Neither worked as expected.In a call to action for both employers and employees, Cappelli explores how we should think about the choices going forward as well as who wins and who loses. As he implores, we have to choose soon.

Chapter 1

The COVID-19 Experience

What We Can (and Can’t) Learn from It

In April 2020, an ABC News correspondent committed what under normal circumstances would be a career-ending move. Like many TV reporters during the pandemic, he was doing a segment from his home. When the camera pulled back from a close-up, however, it revealed that he was not wearing pants. A few people noticed, they tweeted about it, the segment went viral, and then everyone knew.

He responded by saying that he was actually just multitasking and already had his gym shorts on, which is where he was going right after that segment. He treated it as a joke, making fun of himself. Fortunately for him, most Americans thought it was funny, perhaps because they, too, did not bother wearing pants in the many Zoom meetings in which they suddenly found themselves, and his star rose.⁵ It was a signal that the norms about working from home had changed.

The circumstances of working from home during the pandemic were certainly unusual. It is crucial to learn what we can about how things worked, though, because that experience is what is driving the interest in keeping it going. The reports from the trenches indicate that it went surprisingly well, arguably remarkably well, as described in this chapter. The work-from-home experience during the pandemic could well be better than what studies found in earlier periods, in part because we have much better video communication.

In the United States, the most important pandemic before COVID-19 was the so-called Spanish Flu of 1918, which killed 50 million worldwide (compared with 17 million from World War I). One-quarter of the US population got the flu, and roughly 675,000 died from it—six-tenths of 1% of the population, including my grandmother. As of June 2021, this percentage is roughly four times more than the US population that has died from complications of COVID-19.

What changed as a result of that pandemic that might give us some clues as to what might persist after the COVID-19 experience? It saw many of the same decentralized responses and local battles between the public health concern of shutting down with quarantines and business concerns with keeping things open. Many cities imposed ordinances requiring that masks be worn in public: San Francisco fined first-time offenders $5, and subsequent offenders a substantial amount. New York City enlisted Boy Scouts to hand out warning cards to people they saw spitting.⁶ There were also protests against these regulations. Extensive efforts during the pandemic to discourage people from kissing and shaking hands had some effect, but it did not last long. Neither did the fear of urban areas where infection risks were greater. Cities boomed when it ended. The Roaring Twenties followed.

The most important long-term effect of the Spanish Flu happened in the labor market. The infection disproportionately affected men, killing far more men than women and leaving others with lingering disabilities. This outcome created opportunities for women, especially jobs in factories that had been the preserve of men.⁷ As with the COVID-19 pandemic, businesses that relied on face-to-face interactions, like restaurants and hotels, were hit especially hard. But they came back. What we did not see then were offices operating remotely.

How Expectations Changed during COVID-19

The ramp-up period from taking COVID-19 seriously in the United States, roughly early March 2020, to the shutdown orders later that month was quite short. Before the shutdown orders were issued, the public discussion suggested that it might take 14 days to “stop the spread.” Employers had very little time to plan, but it also did not seem all that important because it was not supposed to last long. In many places, the beginning of the pandemic was viewed as something that would be over soon, like an extended snowstorm.

When those state and municipal shutdown orders first came, though, they were for much longer than anticipated—not weeks but months. Still, we generally thought that we would be more or less back to normal by Memorial Day.

The initial responses from employers focused on the finances of a temporary stoppage and not on how to keep working. Marriott International, part of the hard-hit hotel industry, announced that two-thirds of its corporate staff would be furloughed—a layoff with the expectation of recall—for two months, still receiving 20% of their pay. Remaining employees took a 20% pay cut. Other corporate employees took temporary leave.⁸

Companies like Amazon and Walmart that continued to operate, and where almost all employees were on-site, were initially quite generous to employees. They offered employees bonuses and the option to stay home (albeit without pay) if they were afraid of contracting the virus at work. Around June, though, most of that generosity stopped. Whether it was because the employers could see that continuing this indefinitely was going to be expensive or because of some other reason is not clear.⁹

By the end of May, it was clear that the pandemic was not in retreat, but there was some expectation that it might lift in the summer of 2020. Some employers targeted Labor Day for “reopening.” But Microsoft shocked the business community by announcing that it would not reopen its offices until the summer of 2021, almost a year later. One of the wake-up calls from Microsoft’s experience was how school closings made it impossible for many working parents to get child care and return to the office, even if it was safe for them to do so. The spillover effects with family issues had never been so clear.

Because we had no idea of the length of the pandemic and associated shutdowns, few organizations thought about it as a learning exercise. As a result, they were not keeping track of how things were going, in part because everything was done so quickly and often on the fly.

It’s also true, unfortunately, that only a few organizations had a good idea about employee job performance before the pandemic. Organizations do track financial performance and overall business outcomes, both of which were often good in the pandemic. But as to what is happening at the level of the individual employee, we probably know less about that now than we did a generation ago. As a quirky example, some surveys find employees reporting that relationships with their supervisors actually improved during the pandemic. Was that simply because they saw them less? A more positive explanation is that some companies mandated that their supervisors check in with all their remote subordinates, which would appear to be more actual contact than they had in the office.

The pandemic and associated shutdown was bad news for almost all employees. One estimate indicates that 20 million people in the United States lost their jobs just in the first month of the pandemic.¹⁰ By May 2020, a staggering 50 million people—almost one-third of the labor force—reported that they had been unable to work during the previous month because of the pandemic,¹¹ although many of those remained “employed.” Gross domestic product fell by 3.5%; however, some estimates suggest that the loss compared with where the economy would have been without the pandemic was more than double that amount.¹² Keeping their jobs, and their organizations afloat, provided a lot of motivation for employees to work hard.

A Gigantic Shift

Government statistics report that at the peak of the pandemic, 35% of employees worked completely from home.¹³ If we ask what proportion of employees whose jobs could have been done remotely ended up working from home, the figure is over 70%. This was not what we are now calling a hybrid model. Employees were not choosing whether to work from home. Most everyone whose job allowed remote work and was not “essential” was at home. Unlike in the Great Recession, women were hit harder this time, owing to demands from child care, the need to educate children at home, and more. Overall, 2.4 million women, versus 1.8 million men, dropped out of the labor force between February 2020 and February 2021, which means they were without a job and not looking for a new one.¹⁴ This is a reminder that remote work does not solve all work-life issues.

I was part of the shift to remote work. I went to my office exactly once during the pandemic, and then only to pick up mail.

Not surprisingly, the amount of remote work that happened across industries was driven by how many white-collar jobs they have. Survey results from a February 2021 Harris poll show that the experience of employees varied quite a bit. Twenty-three percent reported that their hours were cut, for example, but 15% said that their hours increased during the pandemic.¹⁵

A novel entry in this survey is “furloughed,” which is something short of a layoff. Eight percent of employees were furloughed as opposed to 11% who were laid off. Furloughed employees have not been separated from the company, and there is an expectation of return. A few companies paid furloughed employees something while they were waiting to be recalled, and the US government allowed those employees to collect unemployment insurance during the pandemic. All told, about 20% of employees were out of work.

There are a great many surveys of employees and their experiences during the pandemic, but one of the most detailed was conducted by Adecco. It surveyed 8,000 full-time office workers early in the pandemic who report that their jobs were altered in important ways, typically by working remotely, across countries. These workers tell a very positive story, with most reporting improved quality of work and of life and well-being. One of the few attributes that got worse was relationships with colleagues.¹⁶

One of the complications in generalizing from reports that work-from-home had a positive performance is that on-site employees and essential service workers also appeared to perform well during the pandemic, which would seem to suggest that maybe it was rallying around the employer in the crisis that was driving positive outcomes.

The results might also be different depending on when the performance was measured. Did performance drop once the novelty wore off? We know that US companies backed off from some of the support they provided early in the pandemic once it became clear that the shutdown could go on for a very long time. Having said that, many surveys report similar results, suggesting that performance was no worse and on average was arguably better during 2020.

When asked the more basic question as to whether they thought the whole work-from-home exercise had been a success, employers in a PwC survey were more likely to say so than employees, 83% versus 71%.¹⁷ An assessment like this may well depend on expectations, and employers may have anticipated it would be worse for business than the employees thought it would be for them personally. It is difficult to have imagined in March 2020 that we would have a stock market boom during a pandemic year.

A further complic...