Is the future workplace really hybrid - or is that just a lazy idea? A PodText Discussion

This latest PodText discussion involves Nadia Hutchinson and Mike Klein.

Nadia and Mike first met in 1998, when Mike joined the London internal communication consultancy Smythe Dorward Lambert, where Nadia was already on the staff.

While Nadia moved into HR leadership, Mike stayed in IC - and twenty years later, they reconnected online and started a series of conversations about where there were shared opportunities to improve alignment, communication and the employee experience.

This is the first to be recorded as a PodText

Mike: Good Morning! Wanted to talk with you about trends in the workplace, and particularly, what’s real and viable and what is more hype about the current situation. Does that work?  Anything you want to add or include?

Nadia: that works well.  A big and salient topic.

Mike: For me, “hybrid” seems much to be much more hype than reality.  Sure, it’s possible to make some workplaces and enterprises hybrid, but it also feels really “cakeist” - an effort to have your cake and eat it too.

Nadia: Hybrid often means the “best of both worlds”......it is possible but organisations need to be aware that there never was and likely never will be a utopia for any hybrid model.  There will always be elements that need to be treated by exception.

Mike: As an overall approach, hybrid also has a “worst of all worlds” side to it.  It’s based on an idea that people can come into and out of the office at their own convenience, and expect all that was there (infrastructure, desk space, amenities and meeting rooms) to be available at will.  But all of that real estate overhead costs money.  It was considered a major expense when stuffed to the gills before the pandemic - is that concern suddenly going away?  Or is the hybrid “office” going to be starkly and sharply different?

Nadia:  The reality is that this model isn’t new. It’s been in operation for decades but now it is being stretched more broadly due to the realities from 2020. Real estate costs will always remain.  For me the key is that the logistics of the hybrid model need to be carefully managed to make this work for the longer term from a commercial CAPEX perspective and considering the needs and wants of the workforce.

Mike: But it can’t be managed or reviewed in isolation. I see three other models that will be active in similar sectors as hybrid: “back-to-office”, “remote” and “outsourced” which have other advantages as well as disadvantages. You mention the “logistics” of hybrid.  The scenario that sticks in my mind is that people find themselves called in for 8AM breakfast meetings to optimize the freshly-limited meeting space.  That’s school-run time.  Is that the happy hybrid solution people are dreaming about?

Nadia: Not in my opinion.  Many are now more comfortable with the “etiquette” of homeworking.  There is less scepticism that colleagues are skiving and not being productive because they are not working in a traditional office.  The concept of being more able to manage the caring responsibilities of children or older parents is now glued to the work environment. There are also those who definitely want to return to a building outside of their home.  Perhaps the world is still figuring out what the best options need to be.  For many metropolis cities, the “city life” will not return as it did.

You mention outsourcing and remote working - both will increase organically.

Mike: There has indeed been a shift - from a general wish-hope around “work-life” balance to active arrangements for each home-based employee with family responsibilities. I question whether new hybrid arrangements will address these satisfactorily.  Simply saying “you're in Monday, Tuesday and we need you for the All Hands every third Friday” doesn’t work if their kids start school late on Tuesday.  People pushing hybrid aren’t emphasizing the lost flexibility that will happen.  It’s not going to be like showing up to WeWork whenever you want.

Nadia:  It’s become more “LIFE work” balance.  The emphasis has been forced to change.  We now have to manage the household responsibilities in the house!

Mike: You have a young daughter and I have a stepson who is an early onset teenager. Neither are self-managing, I guess.

Nadia: That’s the funny thing.  My daughter,who is 8, didn’t cope well with me leading homeschooling.  She needs a proper teacher.  As lockdown has changed here in the UK and the schools have become better at online schooling,she has become very much self directed during the traditional school hours.   I just get disturbed for art supplies and questions ALEXA can’t answer, plus food of course!

Mike: Here in Iceland the schools didn’t close, but shifted to a short schedule for a while, so the questions were fast and furious for a while.  I actually love working remotely so I have a dog in this fight, I admit. I’m capable of servicing global clients from here but am often challenging people on client side who are insisting on local support.  But in the real world of business, the best or most cost-effective support isn’t always local, especially if you are based in a high cost area.  Remote is one option as you kill a lot of your overheads, even though you still have to pay comparable salaries.  Outsourcing can have higher overheads but lower salary costs. Hybrid is high overhead + high salary cost, similar to “back to the office”.

Nadia:  A couple of things I’ve been involved in discussing in the corporate is the impact this now has on corporate and employee tax liabilities and the basic bottom line of overheads.  For tax, remote workers may likely have some liability in more than one jurisdiction.  The laws as they stand are a nightmare to navigate.  For salaries, I’ve even heard execs talk about adjusting salaries for roles because the individual wants to base themselves in a low cost location. Then there is the nomadic person, who may be able to locate themselves in different places throughout the year or duration of a contract. 

Mike: I feel that one with a Dutch company, a residence in Iceland and US and EU clients.

Nadia: I’m recruiting for some roles presently and was challenged about having a person not based in the country the work is focused on.  It made me think hard about what will happen in the future.  For now I do still want local based support, not necessarily in the city that we need but definitely in the same country.

Mike: The only real issue I find in the remote world, aside from tax optimization, is time-zone compatibility.  While one can theoretically work from anywhere, any collaboration would require enough time zone overlap between business hours to allow for that, or at the very least, waking hours.  To be fair, outsourced jobs in places like India and Israel often advertise “US Hours'' but this may be too much of a work-life balance stretch for most professionals.

Nadia: I agree.  It’s especially difficult for east coast USA, Australia/New Zealand and so on.  I’ve even had an outsourcer based in India say that they will only work IST (India Standard Time) as this is sufficient and any escalations will be dealt within local real time if needed. Did we become too used to 24/7 support 365?

Mike: I think this could reflect India becoming more of a premium outsourcer.  There are still other geographic/language combinations that can do away with outsourcing time zone issues.  South Africa for the UK, West Africa for France, Philippines for Australia, Caribbean for USA, etc. East Europe is very successful as a shared service region for European and even US companies.

Nadia:  I don’t see Europe and AME regions having any time zone issues. Likewise the whole of the Americas.  Some businesses have perfected the timezone working model there. I’m often on calls that include many zones spanning East coast US and Brazil across to Australia.

Mike: Outsourcing is an under-discussed issue in the future workplace discussion because we in the West have been thinking about what OUR own situations will be like.  Outsourcing is unpleasant because it brings up the possibility we won’t be in the situation.  But as the recent FT article said “anything that can be done from home can be outsourced.”

Nadia:  I disagreed with that point of view - it discounts the local knowledge required for many activities.  Case in point, if you call a call centre in another country and ask about a specific very local location, the representative has no knowledge of what you are talking about.  In some cases this can be covered by the infamous “knowledge transfer” but nothing beats real life local expertise in some instances.

Mike: I disagree with the sentiment of the FT quote but also believe there will be enough folks who agree with it to make larger-scale outsourcing part of the post-pandemic workplace solution. It might deliver less-than-optimal quality, as has been the case with many outsourced operations before the pandemic. And those of us who believe that knowledge, relationships and alignment are real business assets need to get our “assets” in gear to make that case before the decisions get made.

Nadia: One phrase - Quality is King.

Mike: What’s historic here is that we’re moving from one dominant organizational model (office-based) to four (office-based, hybrid, remote and outsourced) that all will have different routes to quality.  The algorithms of personnel, location, knowledge, brand and service will all vary widely and it may take some time for winning approaches in each industry to come through.

Nadia: The impact of digitisation is considerable.  If we don’t have internet connectivity the current way of working falls flat.

Mike: This is not a conversation we could have had in 2000 or before.  You can’t run any of these approaches with dial-up and fax machines.

Nadia: I’m laughing as I was also thinking of dial up and mobile phones with tiny green screens!  The fact that fax machines do still exist and are used in many parts of the world also makes me think.

Mike: The digital divide may be narrowing, but also deepening perhaps.

Nadia: A brilliant opportunity for the telecoms industry and all that hangs from it.

Mike: And also a great opportunity for jurisdictions willing to provide a great suite of services for remote professionals  (like some countries have subsidized international schools, developed expedited company formation, and provided easy access to socialized medicine to attract companies in the recent past). Iceland’s offering six month digital nomad visas for active professionals already.

Nadia:  Do you have examples of other countries doing that?  I know Barbados and Thailand are options also. 

Mike: Still early days.  Estonia has long been very entrepreneur friendly - whether that will help and attract freelancers is any guess.  Different US states may start competing with each other once current political dramas give way to a more normal policy making climate.

Nadia: What it does promote is a different way of thinking.  If I can work anywhere it means that culture will shift.  There will  be different “cosmopolitan” cities coming through.  It won’t just be the word for London, NY and Paris etc

Mike: New York is facing major depopulation, particularly in Manhattan.  I’m not sure whether London faces the same trend, but families that have the opportunity to maintain incomes while reducing cost structures would be at least somewhat likely to move.

Nadia: The same is happening in London.  People have realised that the space they live in is not suitable for their needs.  Everyone must have a home office and a green space etc

Mike: That brings us back to the “happy hybrid scenario”.  Ultimately, a hybrid model either locks everyone into their current city arrangements, or puts the onus on those who’ve already moved out to get back and forth to the office on their own costs. And that’s if the company stays put.  What if the company itself moves to a cheaper location?.  Will the staff relocate along with it?

Nadia: Very good point - the physical office may still exist but may be in a different location. 

Mike: That’s smart if you are going remote, but potentially explosive in a hybrid or back-to-the-office scenario.

Nadia: That then loops into the location of talent discussion.

Mike: It also loops into the general question of whether these workplace locations decisions are being made by design or default.  Hybrid is an easy default position because it intuitively combines the current hybrid mode with the previous office mode.  But it also appears to me a lazy decision because a neutral look at the combined drivers of real estate optimization, staff work-life preferences and competitive advantage or disadvantage relative to the other alternatives is unlikely to come back positive. As they say in Texas, “this dog don't hunt.

Nadia:  A financially perilous default as corporate real estate is a huge part of any economy.

Mike: For me at this point, the big question is not about what the relative merits of each of these approaches is, but how can those of us in HR, communication and other organizationally focused roles impact the debate inside our companies and in the larger professional discussion. 

Nadia: Ask the employees - do with the majority vote if the organisation can accommodate it and then communicate, communicate, communicate.  Policies and procedures may need to be adapted but that is par for the course anyway.

Mike: I think there needs to be some education first - I think a majority in many places might vote for hybrid by default and that we need to get other arguments into the discussion, like the two of us are doing here.  There are more and more articles about the future of the workplace in the media, here on LinkedIn, and on Twitter and even Facebook.  If there’s ever been a time for employee advocacy, this is it.

Want to discuss the trends in the 2021 workplace and how to navigate your business and workforces through though challenges? Schedule a free half-hour conversation with Mike Klein here. https://calendly.com/changingtheterms/30min