A Hard Rain’s A-Gonna Fall
Goldman Sachs are back in the news this week as they have something of a mutiny on their hands about their ‘Return to Office’ mandate. It seems that about half of their employees ignored the instruction to come back into the office and stayed away.
This is significant. GS CEO and Fat Boy Slim cosplay enthusiast David Solomon had been hard-core about their office-centric model, calling hybrid working ‘an aberration’. In the past, GS have paid handsomely but extracted their pound of flesh, so you would have expected a high level of compliance. The view is that people who join GS are motivated to get rich and will do whatever they are told they need to do to get up the hierarchy and get the filthy lucre. That’s why they put up with 100 hour work weeks.
What’s changed? Clearly, people’s priorities have shifted during the course of the pandemic. They’ve also seen there’s another way of doing things, that you don’t need to be in the office all the time. In fact, profits at GS have gone UP during this period, so what’s the justification for going back to full-time in the office?
If GS can’t get people back into the office 5-days a week, no-one is going to. The combination of carrot (unimaginable wealth) and stick (fear-driven culture) that has been so effective in the past is no longer as potent.
We still don’t know how this will play out in the longer term but it does seem that those with valuable and easily transferable skills are pushing back. Will GS find it hard to recruit talent in the future? It seems their offer has been diminished and they are no longer one of the top destinations, for some graduates, at least.
I doubt this will mean Solomon will be spending more time with his ‘wheels of steel’ because a lot of GS business is due to inertia and by the time this hurts them, he’ll be pulling down his pension. However, there’s a lot of companies out there that could find ignoring this shift in what employees want and insisting on full-time in the office could be a fatal mistake.
Back to Black
Data on the Return to the Office is somewhat mixed. Occupancy data from Kastle Systems in the US show rates have returned to 40% of pre-pandemic levels, whereas the Pret Index (based on sales in the chain’s outlets) is back up to 57%. I’m more inclined to trust the former as Pret may be benefitting from the closure of many of their competitors (both chains and independents).
A study by Stanford shows that employees expect to reduce their time in the office by about half, which supports my view that there is going to be a lot less time spent in city centre offices than people think.
Following the early surveys, a consensus emerged that people would be in the office for 2/3 days a week. However, I think this was probably an overstatement of what employees really wanted. I believe many ticked the ‘2/3 days’ box because they thought that would be acceptable to their managers but they actually intended to make it 1/2 days (in fact, I’d say that across the board the intention was 1 day less than indicated, for a significant number of responses).
I think we’ve probably peaked at 40% and I expect to see a decline going forward, even if offices are ‘re-imagined’ as alluring magnets for employees. There’s a few reasons for this:
1) Deep, focused work is better done away from the office. It’s about 50% of knowledge work at the moment and is going to increase.
2) As we go forward, we will get better processes and tools for working in a distributed way. There will be a shift to async working, there will be less need to be present (virtually or IRL) at the same time.
3) Every meeting where someone is connecting remotely is a remote meeting. The majority of meetings will become remote and there’s nothing more frustrating than schlepping into an office to do Zoom calls you could have done at home.
4) The commute really sucks. I had to travel in rush hour when I went skiing and it was a deeply unpleasant experience. Everyone looked miserable, it was tiring and that was before we had to force ourselves into a tube train because service reductions meant we couldn’t afford to miss it.
That’s without considering the quality of life improvements that flexible working delivers, or the greater motivation from having autonomy over your schedule and work.
The future is here, it’s distributed (or hybrid or flexible or whatever) and it’s not going away.
Any Time, Any Place
I’ve recommended following Chris Herd, CEO of First Base, before and he has put another great thread up about remote work.
Of course, Chris is biased in favour of remote work (it’s the market his company serves) but I find the logic of his argument compelling. Once organisations start to move down the road to remote, starting with some flavour of ‘hybrid’, what’s to stop them?
The benefits of remote work are:
Real estate costs can be reduced or removed
Talent pool becomes massively expanded (potentially global)
Barriers for minorities removed (which includes women, carers, minority groups, people with disabilities, neuro-diverse) - also expanding talent pool.
Better quality of life for employees
Move to async working improves productivity and creativity
Greater flexibility of operation
More resilient operational structure
Reduced environmental impact
Sure, there are challenges and other costs to support a remote structure but they are dwarfed by the upsides. Once you start enjoying the benefits, why wouldn’t you want more of them?
Chris often uses the example of Retail’s shift to online. All analogies have their limitations (I don’t think we’ll see an Amazon-type juggernaut emerge in the office space) but what is clear is that those retailers that were unable, unwilling or lacked the resources to adapt have disappeared.
The more successfully organisations embrace remote, the more effective they will become and the greater their competitive advantage. I think they will simply out-compete those who lag behind. Even the likes of Goldman Sachs need to pay attention. The very market that they worship will be the arbiter of success here. It would be highly ironic if they ignored it.
Two Tribes
Whilst the market will determine which organisations win out, it is the market for talent that will really drive the change.
Employees have very different expectations of what they want from work today compared to before the pandemic. We know they are willing to trade pay for flexibly and autonomy (I.e. remote working), that they are rejecting toxic cultures (biggest factor by far causing resignations), that they are pushing back on exploitative work practices (from grads at GS rebelling against 100-hour work weeks to fast food servers on zero-hours minimum wage contracts telling their bosses to shove it).
Unfortunately, the expectations of many bosses haven’t changed at all and now there’s a huge divide between the two. Is it going to be flexible working or ‘back to the office’? As Harry Hill liked to say at the end of ‘TV Burp’, there’s only one way to solve this - FIGHT!
This is going to get ugly. In a tight labour market like we have now, there’s only going to be one winner but never underestimate the desire of owners of capital to tilt the playing field back in their favour. There will be lobbying for more reductions in labour rights and welfare support in an attempt to force people to accept poor working conditions.
But I think there’s been a sea-change in attitudes. We’ve all been through (and are still experiencing) a trauma and we’re changed as a result. We’ve seen behind the curtain and we’re not afraid of the Wizard of Oz anymore. People know it doesn’t have to be like this and are determined to find another way.
In some ways, this shift goes some way to decrapifying work. It offers people the chance for a better way of life, if they have the will and the power to seize it. However, it’s still a minority that have grasped this opportunity, so there’s still plenty more work to be done to Decrapify Work.
We’ve seen massive change is possible in a very short space of time. I believe the tide has turned and is running in our favour. Like the best Pirates, we must make the most of these rising tides and favourable winds and secure our fortune. What else we can achieve is only limited by our imagination and our courage.
Are you up for the fight?