Research — 22 Mar, 2022
5 business practices likely to change in the future of work
Introduction
The spread of COVID-19 and the resulting impact on traditional work methods have forced organizational leaders to take a long, hard look at how business is done — what's essential, what's holding us back, and what we may be forced to give up or change. Piggybacking on the initial shock of COVID-19 was a large-scale labor shortage, and a parallel rise in movements that critique the modern workplace, highlighting the changing viewpoints and preferences of the employees who are doing the work.
While some of these shifts may be temporary, others will be permanent, driven by a renewed understanding of what operational efficiency and productivity actually look like, as well as increased demand to provide a positive employee experience. This report examines five changes to traditional business practices that 451 Research predicts for the future of work.
What will the future of work look like? That's the question on many business leaders' minds — a question made even more critical amid disruptions caused by the pandemic. A watershed moment has been reached in how we define business operations, as business leaders consider how to best support a more heterogenous and agile set of workforce practices, such as remote and hybrid work models, agile planning, continuous performance management, and the end of the 9-5 workday.
Some of these changes will be driven by employee demand to support broader talent management strategies, while others will evolve as a necessity for business leaders looking to keep up with their vendors and peers, or to get ahead of their competition. Embracing these changes will require cultural, operational and technological shifts that will play out over a period and, thus, may have a return on investment that is difficult to grasp. Failure to embrace and champion these changes, however, could set organizations behind their peers, and introduce friction across a variety of efforts in business operations, workforce strategies and beyond.
This is not an either-or situation. The prioritizing of employee productivity, development and retention more highly than strategy and vision simply means that the corporate strategy and vision, moving forward, will be more informed, and shaped by those investments in the employee experience. Ultimately, these are end goals, and improved employee engagement should help drive businesses toward those top three priorities and allow them to take a more employee-centric view of their vision and strategy.
451 Research performed regression analysis on data from our Voice of the Enterprise: Workforce Productivity & Collaboration: Employee Engagement 2021 survey, and found that more than half of the top drivers of employee engagement relate to an employee's sense of purpose and their value system. What employers were trying to do in the early days of the pandemic in terms of supporting their employees focused on areas like workplace safety; employee wellness; and diversity, equity and inclusion, or DEI, initiatives. Those efforts will remain but will extend to include purpose-driven engagement endeavors that deepen employees' sense of fulfillment, community and more.
In the early days of the pandemic, many organizations were essentially trying to keep their head above water in terms of their response plan. The initial goal was to get to a minimally viable way of supporting remote and hybrid work while keeping employees safe. As folks began returning to work, new variables popped up, logistics challenges emerged, and the talent supply depleted.
The impacts of COVID-19 and adjacent challenges are still being felt, and likely will be for some time. For planners, this means we no longer have the luxury of annual planning cycles. There are too many variables at play for organizations to plan that far into the future with any degree of certainty. Organization agility is paramount, and, in part, that depends on a more agile and fluid planning cycle. For some businesses, a quarterly plan is sufficient, but others may need to plan month to month.
Those looking to shrink their planning cycles must examine their corporate performance management for the technical prowess to do so. For starters, scenario modeling and analysis will be critical to providing the requisite visibility needed to build a plan that accounts for all the variables in play, while showcasing different scenarios and the spectrum of outcomes that can be expected or planned for.
From a strategic perspective, leaders must also mitigate the core planning struggles that permeate the organization. According to our Work Execution Goals & Challenges 2021 survey, the top struggle faced by organizations in strategic planning is aligning priorities across the organization (32% of respondents). Modular platform approaches to planning can help account for this with additional opportunities for planning participation across various departments, but the planning culture and ownership will need to be more inclusive to fully solve this problem.
Another casualty of increased organizational agility and responsiveness will be the annual performance review. Especially as organizations shrink their planning cycles, employee performance, skills and engagement must be evaluated and accounted for at a faster clip. This is primarily to meet those aforementioned priority goals of employee development and employee retention, but it also helps business leaders visualize how their employees can be utilized to drive value — using additional clarity around skills and experience to form stronger teams and improve efficiency and productivity.
When asked what would most improve the way they manage employee skills on a team, team manager respondents listed "matching employee skills to business goals/outcomes" as the top response (56% of respondents) in 451 Research's Voice of the Enterprise: Workforce Productivity & Collaboration, Employee Lifecycle & HR 2021 survey. A more continuous approach to performance management provides additional visibility into those skills and their maturity and, with the right organizational structure, can help the line-of-business manager connect skills to broader goals.
Beyond operational improvements, there is also a compliance driver for this shift. In late 2020, the SEC adopted amendments requiring public companies to disclose metrics around human capital in much greater detail. Some of the metrics include data on DEI efforts, employee engagement, employee attraction/recruitment, development, retention, and health and safety. These will be necessary reporting metrics for public companies to investors, but their demand could increase across all companies as employees look for visibility into company culture and employee experience before taking a job. Streamlining performance management and its metrics helps facilitate and ease this change.
Where possible, depending on industry and work type, we expect remote and hybrid work models to remain in place permanently for many businesses. Before the COVID-19 outbreak, about 49% of respondents to our Work Execution Goals & Challenges 2021 survey said they worked from home or remotely from another fixed location that was not their company's office for at least some part of their week. However, when asked how much of their week they prefer to spend working remotely when business returns to normal, 77% said at least some of their week. Employees clearly want to work remotely.
This change in scenery is also driving employee satisfaction and engagement. When asked what workplace shift in response to COVID-19 had the most positive impact on them as employees, 45% of employee respondents in our Employee Lifecycle and HR 2021 survey said "the ability to work remotely." This was the top response. If the operational savings were not enough to drive permanent support for remote work, businesses will also need to consider the employee impact. Having no remote or hybrid work option could hamper recruiting efforts in industries where it has undoubtedly become the norm.
Second only to remote work, the ability to work flexible hours was cited by 19% of respondents in the Employee Lifecycle and HR 2021 survey as being the workplace shift in response to COVID-19 that had the most positive impact on them as employees. With the decentralization of employee groups thanks to digital transformation and remote work, there are many cases where the 9-5 workday will essentially go extinct. The technology exists to support better asynchronous communication, employees list it as a benefit, and it also opens opportunities for DEI in the ability to better support working parents, caregivers and those with other obligations.
Beyond that, it is probable that the five-day workweek will also crumble — especially for knowledge workers. France famously mandated a 35-hour workweek more than two decades ago, and some citizens are even arguing the case for a 32-hour workweek. Iceland recently completed a five-year study concluding that there is "a strong correlation between shorter working hours and increased productivity among wealthy nations." In early 2022, a U.K. trial is set to kick off with 30 companies testing out the four-day workweek. The idea of a truncated workweek is certainly gaining traction, and we could soon see the five-day week resigned to the recent past.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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