The gray areas of WFH culture

Welcome back to the Evolving Workplace Newsletter, where we will explore the changing nature of teams, collaboration, and the future of work.?

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Earlier this year, we saw the biggest U.S. bank failure since 2008 when Silicon Valley Bank collapsed over just a few days. Economist and author Noah Smith breaks it down on the Ezra Klein Show , but what ultimately happened was, there was a big bank run—compounded by these factors:?

• SVB didn't take into account the risks of a high-interest rate environment.
• Less than 10% of accounts at SVB were F.D.I.C. insured, meaning customers were concerned about getting their money back.
• Most customers were in tech, an industry that has been severely impacted by layoffs and higher interest rates.
• Panic + Social media = Danger. Bank withdrawals turn into runs quickly when psychology kicks in. Panic has an exponential growth curve as each actor who starts to panic becomes a new mouthpiece about the perceived danger. Social media has made this much easier as SVB’s customers could take to Twitter and convince their followers to pull their money. As Ezra Klein says, “all you need for a bank run is for people to believe in a bank run.”

These are all problem enough, but I want to focus on the role of remote work —cited as a major contributor by many SVB employees and pundits. Initially, SVB embraced remote work, saying, “If our time working remotely has taught us anything, it’s that we can trust our employees to be productive from wherever they work.” Yet, at the same time, SVB listed remote work as a risk in their 2022 annual report, citing IT and productivity issues, according to Emily Peck in her Axios article, SVB employees blame remote work for bank failure .?

I think it’s very likely remote work did play a role, but not because remote work is innately good or bad. I think folks at SVB underestimated the importance of informal emergent norms and behaviors for their business, assuming they had robust procedures for all scenarios.?

Bringing this back to remote work, the good news is that formal rules work (more or less) whether you’re in the office or not. The problem is that no system of rules is perfect—there will always be something that was overlooked or assumed too unlikely to be worth spelling out in the S.O.P. Organizations rely on human judgment and informal dynamics for the gray areas and for unexpected scenarios. In other words, at SVB it wasn’t remote work that was the problem, but the impact remote work had on SVB’s culture.

We learn culture by addressing what people say and do.?

This brings me to the work of Edgar Schein , the father of how we (and certainly I) think about workplace culture. Schein sadly passed away in January of this year, but his learnings on culture endure.?

Ed divided organizational culture into three levels: artifacts, espoused values, and underlying assumptions:

Artifacts are the shallowest level: what people can see, experience, and read. The next level down is values, which are the shared reasons behind members’ behavior? within an organization. And finally, there are the assumptions or underlying beliefs that determine why members perceive, think, and feel the way they do.

Millions of years of evolution has determined how we interact with, establish, and are shaped by culture. Despite a few years of shifting technology, culture remains (and works) exactly the same.

What has changed is the mechanism that we have to receive cues. Now, we make decisions about how we want to work, without always considering how the constraints around how we want to work shape what information we receive about culture, like in remote work, for example.

Different cues are filtered out when we work remotely versus in person, and these filters aren’t uniform. This may be as simple as how we perceive body language in persons versus over zoom. There’s bias in what we choose to receive and how we choose to receive it. It’s not necessarily intentional, but it means that certain types of information are more likely to not be transmitted. So, in effect, we are training people with a biased sample of culture.?

So what does this have to do with SVB?

I can file reports and do analyses from anywhere, but the question is: where in the organization do we find conversations like: “Hey, how well are we hedging against high interest-rate risk?” or probably it’s more likely form:

Employee A: Pretty soon point rates are going to start coming back up, and when they do, I’d hate to be over-exposed on long-term bonds…?

Employee B: *spits out coffee* Wait, don’t WE hold a lot of long-term bonds?

Employee A: …oh $#!&!

Organizations have to build formal processes and KPIs as safeguards against collapse, but we also know that humans never design perfect systems. We can never know all the variables, and context is always changing. So no matter how well we build a system, there will always be blind spots.?

Edgar Schein’s culture triangle is based on the study of organizational structures in person, structures that influence every aspect of a successful business. When we shift to remote work, it takes intentionality and planning to transfer all levels of the triangle.?

Culture is good for gray areas.

“Softer” stuff, the little interactions within an office environment, are often taken for granted, but these small conversations lead to a non-trivial portion of issues getting caught. When we take the informal out of the discussion, there is greater pressure on the system to work perfectly. How do we retain the informality of cultural gray areas in remote work??

When we move into the unknown, formal processes and rules can lose their meaning and relevance. Culture gives us an opportunity to deal with the unexpected, to serve as a rudder to maintain the same course in uncharted waters.?

What can leaders do?

A culture exists in every organization no matter what we do—the question leaders need to ask is whether the culture in place is the right one. SVB would have benefitted from a culture with high engagement and sense of ownership paired with open dialogue and of course psychological safety. In many of the companies I’ve been working with, all of those have been directly (negatively) impacted by remote work. If that’s the case, leaders need to spend the time and effort to find ways to re-foster those, either by changing the nature of work processes or more directly engaging with culture itself. Of course I think the relationship between employer and employee underpins all of that (for more on that: employee value proposition )—but I’m biased.?

At the very least, starting a discussion about what culture we need and how well that aligns with what we have is a key first step.

The world is changing, and so is the workplace. Subscribe to The Evolving Workplace Newsletter to learn more about the changing nature of teams, collaboration, and the future of the workplace, or connect with me via email: [email protected] .?