The last few months have been flooded with news of companies taking advantage of the shifting economy to mandate stricter policies around returning to the office. The latest examples of this are two highly influential organizations — Starbucks and Disney — with both CEOs citing a return to the office will increase collaboration and connection among employees. It’s no surprise that these declarations are coming at a time when the press cycle has been overloaded with announcement after announcement about mass layoffs, especially within the technology sector. However, this attempt to reclaim authority and control over employees risks damaging future returns.
While it’s easy enough to argue about the long-term benefits of a hybrid work model, solidified by a recent study from the International Labour Organization, what is even more concerning is how decisions like these, designed to shift the balance of power, can create lasting damage to organizations from a reputational and hiring standpoint.
For anyone willing to dig into the research, the evidence is clear. How you treat employees during tough economic times carries with it enduring business repercussions. In the short term, it may feel like a victory to get employees more in line with how executives wish to run their organization, but the long-term implications can be severe. Just ask the airlines, who are coping with headache after headache related to short staffing, or the retail and hospitality sectors, who can’t find enough employees to fill necessary shifts throughout the day. The similarity between these sectors was a rapid knee-jerk pandemic response which caused thousands to be laid off during COVID, resulting in personal pain and financial loss. In the long term, this has made it incredibly hard for these organizations to try and rebuild their employee populations.
Last year, the balance of power arguably swung in favor of employees. With nearly two jobs for every eligible worker, employees had the opportunity to pick and choose where, and how, they showed up to work. Now, with rumblings of an economic recession and inflation causing budgeting concerns, there has been a rebalancing of power between employees and employers. But executives who think this is now the ideal time to reach into their old playbook to reestablish the control they enjoyed pre-pandemic risk two things that will harm their future returns.
The first is the loss of differentiating talent that wants to live and work in a digital economy, not an office cubicle. Despite the sensational headlines, there are still many work opportunities available. Good employees will always have an opportunity to move on, and during a recession, an organization puts itself at financial risk by losing its most critical talent.
The second is the gains in output and performance that occur when the right work is done — in the right place. Rather than focusing on what we once knew, or believed, would foster strong performance (i.e., working in an office), we have three years of data to show how to truly affect better performance from employees. Optimizing for increased productivity not only gives employees more opportunities for success but also gives organizations the safety net they need during uncertain times.
Forward-looking organizations recognize and support work arrangements that balance flexibility with output and connection. These companies do three things that ensure they are successful:
- Make decisions based on data and evidence, not perception.
- Involve employees in the process of creating effective work habits.
- Place the chief human resources officer (CHRO) and people analytics team at the heart of driving this work.
By putting aside the playbook of the past and following these three steps, CEOs will be in a position to activate the high-performing digital workforces that will deliver returns today and into the future.