The upsides and downsides of working from home (WFH) have been hotly debated ever since COVID-19 descended on us at the beginning of last year. For all the discussion, there has been remarkably little consensus on what the long-term implications are: Is WFH here to stay as part of the new normal? Will city centres empty out, as firms fail to renew leases on downtown offices? Are “branch” offices in the suburbs the future of work? Does WFH suit some businesses better than others? The jury is still out on all of these issues. Yet some employers, particularly those in the finance industry, suggest the long-term role of WFH has been overstated, and that the office will continue to serve as the centre for work activities. In late February, Goldman Sachs CEO David Solomon made it absolutely clear where his bank stands, “I do think for a business like ours, which is an innovative, collaborative apprenticeship culture, this is not ideal for us. And it’s not a new normal. It’s an aberration that we’re going to correct as soon as possible.”
Solomon’s choice of words makes it clear that he sees his firm’s policy on working arrangements as a critical part of the company’s brand. How can you have an apprenticeship culture if your people never see each other? He was referring to a “class” of about 3,000 new recruits, who wouldn’t get the “direct mentorship” they need. Solomon is not alone in voicing his sentiments. In September last year, JP Morgan’s chief executive Jamie Dimon said that working from home has had a negative effect on productivity. Meanwhile, in the entertainment sector, Netflix boss Reed Hastings has also been forthright with his thoughts saying, “No. I don’t see any positives. Not being able to get together in person, particularly internationally, is a pure negative.”
Differing viewpoints
Other firms might feel less encumbered by their brand, but may have other concerns about WFH to give them pause for thought. For example, from an HR viewpoint WFH is likely to transform a company’s culture, employee engagement, and the way the work gets done. While individuals may feel more productive working from home, managers have questioned their collective ability to get things done as a team, business unit, or other functional group, which can impact productivity.
The effect of WFH on productivity has been widely discussed in the financial services sector. In August last year, Bloomberg reported that client relationship managers in Hong Kong and Singapore were struggling to bring in new business as they were unable to travel to meet potential new offshore clients. Although regulators have been relaxing requirements for face-to-face meetings with new clients, some bankers still prefer to do know-your-customer checks in person.
Other sectors have been more directly affected. The purchase of Hong Kongissued insurance policies by mainland Chinese customers has ground to a halt, as this requires transactions in person. Wealth Management Connect – the long awaited scheme which allows residents of Guangdong Province, Hong Kong, and Macau to buy certain investment products from financial institutions across the Greater Bay Area – has also been delayed. The People’s Bank of China has announced that the scheme is essentially ready but will have to wait for the borders to reopen.
While remote account opening in mainland China is permitted on a limited basis, most users of Wealth Management Connect will have to physically open investment accounts in the jurisdictions where they want to invest. Despite the rapid digitisation that has taken place under COVID-19, tried and trusted procedures are still preferred in certain cases.
Meanwhile, a number of high-profile business commentators have questioned how far WFH is really affecting productivity. After all, the world has been quietly changing for some time now. Online only interaction with overseas clients has been the norm for years. And while travel curbs may stop relationship managers from onboarding new clients, it gives them more time to nurture their existing customer base. This pivot in emphasis may prompt some HR teams to consider providing learning and development programmes that are more focussed on servicing existing clients.
One crucial activity which applies to practically all industries, but which has been put on hold due to COVID-19, is the networking event. Industry body cocktails, awards dinners, and annual conferences are all on hold, though some continue as virtual events. If their absence leads to a slowdown in the pipeline of new customers, it is unlikely to have a visible effect on the top line for months. Thus the business impact of WFH may not become evident until, we hope, the public health situation is in clear retreat.
Those who have always been sceptical about the value of networking events might feel vindicated if COVID-19 restrictions make little discernible difference to their business. But the hard to measure impact of face-to-face interactions – whether with clients or colleagues – is central to the WFH debate. What effect does this lack of interaction have on team morale and productivity?
Innovation and creativity
While the COVID-19 crisis has shown that technology tools enable people to stay connected from places as diverse as a yacht or a kitchen table, economist Nicholas Bloom, a senior fellow at the Stanford Institute for Economic Policy Research, believes in-person collaboration is necessary not only to ensure productivity, but also to drive creativity and innovation. He claims his recent research has shown that face-toface meetings are essential for developing new ideas and keeping staff motivated and focused.
In 2015, in the Quarterly Journal of Economics, Bloom extolled the benefi ts of working from home based on a randomised control trial he conducted on 1,000 employees of Ctrip, a Chinese travel company. The experiment was so successful that Ctrip rolled out WFH to the whole fi rm. However, the WFH study incorporated several stipulations, including employees were only allowed to work from home if they had a home offi ce, the room could not be a bedroom, and nobody except for the employee was allowed in the room during the workday. Furthermore, the experiment specifi ed that employees should work from home four days a week and spend the fi fth day in the office.
When working from home, people will have noticed that the sort of spontaneous interactions that can occur when walking past a colleague’s desk tend not to happen online. The sharing of gossip or venting about a work frustration seems fi ne in a brief informal exchange, but one might be reluctant to do so over a video link or a chat application. Much can be lost here because, as we all know, gossip can provide valuable updates and insights. Connections can be made and new ideas can be generated. Signifi cant studies have spoken to the importance of innovation for the sustainable success of any organisation. Unfortunately, most companies do not have a metric for innovation that guides processes.
This sort of invaluable knowledge sharing is in danger of being lost. Webinars are fi ne for getting a formal idea across to an audience, but the informal interactions and exchange of insights that happen in breakout sessions and during coffee breaks are not easily replicated. Where are the virtual water coolers? Which business units are interfacing with each other, and where are the skills deserts? There are workarounds for many of the challenges raised by WFH, but the absence of informal interaction between colleagues may be one of the most signifi cant challenges for the HR profession.
