Return to Work: Long-Term, Strategic Impacts That Boards Need To Think About Now

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In many respects, the current decisions about remote work are far more difficult than when the pandemic began, and are driven by numerous considerations.

The how, what, when and where of return-to-work alternatives are clearly the purview of the management team. However, management decisions made now will have long-term, strategic impacts on individual companies and on whole industries. Boards should be thinking about and asking questions of management to understand the potential impacts.

In many respects, the current decisions about remote work are far more difficult than when the pandemic began. In March 2020, the decision to shut down offices—where it was possible to do so—was easy; the world faced a pandemic that no one understood. It was in everyone’s best interests to shut down to save lives and try to understand what we faced.  Now, we are grappling with myriad questions: When should we return to the office? How many days a week do we want our office-based employees to be physically together? How much flexibility can be offered to employees about their work-from-home arrangements?

There is a broad variation in the approaches that organizations are taking within specific industries and, perhaps, most markedly, between different industries. Within the financial services industry, several institutions are requiring their employees to be back in the office now on a full-time, five-day-a-week basis while others are not requiring their employees’ return to work for months—and, even then, will offer significant flexibility in remote vs. in-office work. That variation in approach is evident in other industries as well. And recently due to the Delta variant, some large organizations, such as Microsoft, have reversed course and decided to delay the return to work until later in the year or until 2022.

There are numerous considerations that drive these decisions, among them:

• Competitiveness in attracting and retaining talent: Most companies have surveyed their work forces and found a significant variation in the desires of their employees. Some employees can’t wait to be back in the office while others have come to appreciate the flexibility of remote work. Based on a recent NACD study, almost one-third of employees will decide whether to leave their current position based on the flexibility of the return-to-work arrangements.

• Alignment with values and culture: The values and culture of an organization should guide these decisions. A company that develops its employees in an apprenticeship model may determine that remote work is inconsistent with the culture. Other companies whose employees tend to work more individually may opt for more flexibility. For those organizations choosing full-time remote work, how will new hires be integrated into the culture of the organization?

• Impact on productivity: While working from home may increase individual productivity, innovation and team productivity are more difficult to achieve without in-person interaction and collaboration. Even the casual hallway conversations, which are only possible in a physically occupied space, enable communication and can spark collaborative value. Can those interactions be replicated in a purely remote environment?

• Health and safety: As employees return to an office environment, the physical space may require re-tooling to achieve appropriate social distancing and air circulation.

• Management capabilities: The new environment creates challenges for all levels of management. In those cases where job function differences may allow for flexibility, how will managers make decisions about who can work remotely and who cannot? How will managers develop remote workers or identify under-performing workers? How will compensation and promotion decisions be made across a population of remote or semi-remote employees? Managers will need new tools to ensure they are fairly evaluating performance and making optimal decisions for their employees and the company.

• The “S” in ESG: As key stakeholders, how will employees respond to these decisions and how will clients and counterparties perceive the impact of these decisions on their interactions with the company?

As board members, we need to be concerned with the long-term implications of management’s decisions. How will the variation in approaches to remote work impact a company’s ability to attract and retain talent? For instance, most companies have strategic commitments to become more digital; if technology firms offer more flexibility, will a company be able to draw the technology talent required to accomplish its strategic technological objectives? How will different approaches to remote work impact gender diversity objectives?

A recent study by McKinsey and LeanIn found that women are re-evaluating their professional and personal paths in response to the stresses of the pandemic. Can companies address the new requirements of female professionals? How will remote work decisions impact the culture and productivity of the organization for long-term sustainability? Unlike the pre-pandemic era, companies now face complicated and challenging decisions that will have strategic implications for their businesses.

Questions for board members to ask management:

• What is the rationale for the return-to-work decisions?

• How do these decisions reflect the culture and purpose of the organization?

• How is the approach being communicated to stakeholders?

• How much flexibility will be granted? Given the potential need for flexibility, how are managers throughout the organization being supported in the decisions they make?

• What situations might cause a shift in the future? What plans are there to look back at decisions made?

• What are peer organizations and organizations from which talent is drawn doing?

• How is management thinking about the long-term impacts of these decisions?

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