The risks and opportunities of hybrid working

Some form of hybrid working is now the norm, but have organisations considered the long-term threats and opportunities associated with it? Three years on since COVID-19 and UK statistics suggest that the take up of hybrid working is three times higher than pre-pandemic.

Organisations recognise that a ‘five-day office week’ is considered ‘unattractive’ by employees and are therefore having to constantly revisit their hybrid working strategy. While the world might have moved on from the COVID-19 pandemic, the world of work is unlikely to ever be the same again. An extreme set of circumstances are however evident in the UK; increasing demand for workers, coupled with more of the population opting out of work - leading to increasing immigration - leading to government concern, and leading to calls for action. 

Some form of hybrid working in now the norm, but there is a significant range in practice. JPMorgan have been among the most vocal proponents of a pre-pandemic office, requiring managing directors to work from the office for five days a week, and warning other staff that non-compliance with the required minimum three days per week might result in “corrective action”. Equally Amazon has set expectations of office attendance on a three-day a week basis and is now actively monitoring compliance with this policy.

At the other end of the spectrum, Saga are moving to radically flexible approaches where “colleagues can choose where they work best to help them be happy, healthy, and productive”, as they see the benefits of recruiting from a broader talent pool.

To what extent has the discipline of enterprise risk management been applied to the challenges faced by hybrid working and what are the long-term implications?

Gartner reported in 2022: “Despite fears that remote and hybrid work would dilute organizational culture, most employees see the large-scale shift to flexible work as a net-positive… 76% of newly remote and hybrid employees report a positive perception of the “workplace” But is this still true? As the Americans would say, ‘have we done the math’ in terms threats and opportunities?

Table 1 - Perceived threats and opportunities from hybrid working.

The number of days in the office can become a totemic issue verging on risk appetite measure for leaders and perhaps this lacks nuance. Sloan thinks it is less about whether to adopt hybrid working, but more how to do so in a positive manner for the organisation’s purpose and performance. Perhaps the lesson is that getting fixated on a specific number of days is ultimately lazy thinking. The more important consideration might be to enable the matching of the right roles, and within those the right tasks, to the right environment.

Jenny Segal, author of “On Motivation: Purpose & Hybrid Working” suggests “It can be surprisingly easy to set a good tone that encourages a positive, adult response. It is done via the little things, Letting them decide where and when they work. Trusting that they will make the right decisions…. Treat people like adults and they behave like adults. Treat them like children, and they will behave like children.”

The scarcity of top talent in financial services, low unemployment, and heavy competition for staff is causing some firms to back off and feel obliged to offer more home working to attract and retain talent. On the other hand, people have long memories and a sudden shift in employers’ attitudes driven by signs of recession may be short-sighted. This may be a case where playing the long game may be most appropriate.

Offices have their place in facilitating creative and collaborative tasks (such as problem solving) and coordinated and engaged communication (such as team meetings). Organisations need to be confident to demand of their people the appropriate level of engagement; in other words, it takes intention and effort to sustain a culture. Social contact is required to oil the wheels, ensure everyone feels involved, and knows how they are expected to behave. Weaken these ties and not only do you have the risk of talent leaving, but also increased silo working, conflict and ‘quiet quitting’.

Where does the consumer’s needs fit into this equation? Does this create a risk that consumers will receive inappropriate advice or experience poor service because home-working employees are insufficiently supervised?

Another consideration is how an organisation’s policy on hybrid working interfaces with its diversity and inclusion (D&I) programme. Employees are increasingly choosing to join, and stay with employers, based the inclusive nature of the workplace. The work-life balance equation needs to recognise employees’ personal circumstances and their ability to bring their whole selves to work. In this context, a hybrid working policy is equally a signal of intent in terms of where D&I policies have sufficient substances and are not perceived as window dressing.

Interestingly, does the hybrid working policy become another key consideration in merger and acquisition (M&A) processes - when two organisations are trying to determine their new strategy. What might happen to talent retention plans, in terms of organisational integration, if the acquiring company has adopted a more rigid stance than the other organisation? Are these factors now part of the M&A due diligence equation?

And ultimately, the question of strategic workforce planning comes up, the successor to the outsourcing question. ‘Can some of our team be remote in a high talent, lower cost environment and still be our employees?’ Whether it be digital nomad visas or just recruiting locals – the workplace has changed – how should our workforce change?

If some form of hybrid working is here to stay, how does an organisation remain agile in its approach - as its people continue to consider how they want to balance their lives? Can hybrid working enable the best of both worlds, or will it just result in a muddled compromise?

Ultimately your organisation needs to take a stance over hybrid working. But in doing so, have you made conscious management choices or evolved your position to deal with circumstances? Enterprise risk management can help in this regard by helping to carefully weigh the associated threats and opportunity and put in place appropriate controls to achieve your desired outcomes. But in doing so, have you articulated your risk appetite. What does your organisation’s approach to hybrid working say about your culture and how does this impact on your employee value proposition?

Please contact Alex Hindson or your usual Crowe contact for more information.