- Remote work may be the largest modern shift in employer-employee relations
- Current tight labor markets have accelerated the trend, perhaps permanently
- These unanswered questions will determine the future of our economy
The trend of changing office work environments is real and significant. According to a recent study conducted by McKinsey¹ that surveyed 100 C-suite executives, 90% of respondents are planning a post-COVID world where employees work in-office less than 80% of the time. Prior to the COVID pandemic, that figure sat at 1%. The issue is not a simple one, nor one where there is a great deal of confidence on the eventual outcome of the foreseen arrangement. As well, as hiring is a two-way street between those searching and looking for jobs, it is still unclear how this new work environment is going to be looked upon as a benefit much like insurance coverage and vacation days. We believe it will take a significant trial-and-error period before companies fully understand and can commit to an arrangement appropriate to its firm or industry. As investors, we also must ask ourselves what positive economic or industry trends are likely to develop as a by-product of the projected “new normal.”
Every company that is considering the above-described evolution for its people is asking themselves one primary question: Will this change help/hurt our business? As important, every industry is asking themselves (or should be) an even bigger question: How will at-home work impact our customers long-term? We would make the argument that this shift (which we assume to be relatively permanent) is the most significant sociological shift in the employer-employee dynamic in modern history. When facing a new economic paradigm, we believe the best approach is to ask questions as criteria for analysis as the trend plays out. Below, I have listed questions we are asking ourselves (both as investors, employers, and advisors to business owners):
- What industries will benefit long-term from more people working from home?
- What are the negative implications of stay-at-home work?
- Will economic growth accelerate or be challenged by more people working from home?
- How will commercial and residential real estate needs change?
- Will work travel return to pre-COVID levels?
- Will company cultures evolve (positively or negatively) once a hybrid work schedule is adopted?
- Will career ascendancy/promotions be easier or less attainable without stronger intra-office relationships?
- Will creativity/innovation suffer or be enhanced?
- Will new hires expect a hybrid work schedule?
- If hybrid work is reliant on technology for connection, will certain segments of the labor force be left behind?
- How will instances of fully remote work impact population growth or decline in certain areas of the country?
- What new industries may form?
- Are current labor market issues (excessive job openings) skewing employee leverage with employers?
- Will career decisions shift in young people as a clear division forms between careers that can be done from home and those that cannot?
We believe it is critical for all of us to be open-minded on how this change will impact the world as we move past COVID (hopefully soon). Any employer/employee/industry/investor unwilling to accept the massive change ahead or embrace the unknown, is going to miss out on an economic shift that will have massive beneficial or destructive but likely long-lasting ramifications.
- Alexander, Andrea; et al.; What executives are saying about the future of hybrid work; McKinsey & Company; May 17, 2021; https://www.mckinsey.com/business-functions/organization/our-insights/what-executives-are-saying-about-the-future-of-hybrid-work