There is a war developing as organizations struggle with whether they can build a winning culture with a virtual workplace. Our ever-connected world now allows us the ability to be remotely connected and productive from home offices. This shift to virtual provides employees flexibility, work/life balance, and cost savings.
Seems like a winning strategy doesn’t it?
There is now emerging some interesting workplace trends stories about major companies that are having difficulties with innovation, teamwork, and productivity and are announcing their plans to rollback work from home initiatives and begin to bring their teams into the office.
Will this work?
First, some background.
According to Global Workplace Analytics, here are the important facts to consider regarding the trends in the virtual workplace:
- 50% of the US workforce holds a job that is compatible with at least partial telework and approximately
- 20-25% of the workforce teleworks at some frequency
- 80% to 90% of the US workforce says they would like to telework at least part time. Two to three days a week seems to be the sweet spot that allows for a balance of concentrative work (at home) and collaborative work (at the office).
- Fortune 1000 companies around the globe are entirely revamping their space around the fact that employees are already mobile. Studies repeatedly show they are not at their desk 50-60% of the time.
- On average, a telecommuter is college-educated, 49 years old, and earns an annual salary of $58,000 while working for a company with more than 100 employees. 75% of employees who work from home earn over $65,000 per year, putting them in the upper 80th percentile of all employees, home or office-based.
- Regular work-at-home, among the non-self-employed population, has grown by 103% since 2005.
- 3.7 million employees (2.8% of the workforce) now work from home at least half the time.
- The employee population as a whole grew by 1.9% from 2013 to 2014, while employees who telecommuter population grew 5.6%.
- The workplace is fundamentally changing and the rate of transition towards an even more virtual workplace seems easy to forecast.
That is why it is interesting to note the recent news that IBM, which has had a long and storied history of virtual employment, is now consolidating their entire USA marketing force into six offices (Atlanta, Raleigh, San Francisco, New York, Cambridge, and Austin). Marketing employees will be given the choice to move to their assigned city (where their functional team resides) or leave the company.
Shaun Nichols in his The Registerblog post relayed the following information regarding the video announcement that Michelle Peluso, the VP of Marketing for IBM made to her marketing team:
Peluso pitched the move not as a cost-slashing or staff-cutting measure, but as a way to improve the performance of Big Blue's marketing machine so it can take on Microsoft and Silicon Valley rivals. In the internal staff video, she reiterated "the need, that I felt, to bring our marketers into a smaller set of locations." Peluso continued:
I've spent a lot of time thinking about this, and a lot of time working with teams from real-estate, finance, HR, operations, the geo leaders, the marketing leaders – and starting with the US, it's really time for us to start bringing our teams together, more shoulder to shoulder.
There is only one recipe I know for success, particularly when we are in as much of a battle with Microsoft and the West Coast companies as we are, and that is by bringing great people with the right skills, give them the right tools, give them a mission, make sure they can analyze their results, put them in really creative inspiring locations and set them free. That's the recipe I have always relied on and counted on, and I know if we do that we can achieve extraordinary things.
It is not about any given individual, and I want to be crystal clear: there are so many amazingly productive people who don't work in one of these six locations, but there is something about a team being more powerful, more impactful, more creative, and frankly hopefully having more fun when they shoulder to shoulder. Bringing people together creates its own X Factor.
Suzanne Lucas, the always great Evil HR Lady, built upon this announcement and said the following in her Inc.com blog post:
Because IBM has been struggling to achieve growth, it might be time for a massive shakeup, but a blanket change like this is probably the wrong one. Why? Because it's not aimed toward individual employees.
If she truly has "so many amazingly productive people" out there, but the company isn't succeeding the way it wants to, that means it also has many people who aren't amazingly productive in their current setting. Why would you want to massively change the working style of the amazingly productive people? Why not take the time and effort to examine the workforce and determine who is helping and who is hindering?
The problem with a massive move like this is that people who are best positioned to find new work are the ones who are less likely to make a move they don't want to make. Those who feel they don't have options will be moving into the offices--which means, in some cases, physically moving their families, not just having a commute. This means you'll lose some of your best and keep some of your worst.
Making individual determinations is a long and painful process, but it's what would be best for the company. Additionally, The Register reports that if you do have to move you'll be given a "small moving allowance." Depending on what that means, an employee may or may not break even on the move.
Relocations often fail, even when people are excited about the move. A forced relocation is bound to have more failures. Is this what IBM wants?
I've long felt the best telecommuting models are those in which the telecommuters live near the office and are in the office at least one or two days a week. It allows the best of both worlds. So, I'm not going to say that IBM's old model was the ideal one, but this one isn't either.
Maybe this will save the company, but if Yahoo is any guide, a move like this seems more desperate than well thought out.
The IBM announcement is not the first by a major company struggling to reinvigorate its culture by bringing their virtual team in-house. In 2013 Marissa Mayer of Yahoo famously announced the end of working from home for the entire organization.
Suzanne Lucas reported that Yahoo HR CHRO Jackie Reses wrote the following as rationale for the decision:
"Speed and quality are often sacrificed when we work from home. We need to be one Yahoo, and that starts with physically being together. Beginning in June, we're asking all employees with work-from-home arrangements to work in Yahoo offices. If this impacts you, your management has already been in touch with next steps."
Yahoo and IBM are showing the struggles that global enterprises face in building a winning culture when people and not physically interacting with each other. Both of these companies seem to have attributed their well-publicized business issues to having a dispersed team of virtual/in-person employees. They see that employees sharing the same physical space will foster enhanced collaboration and innovation. On the dark side, they also believe that it will discourage employees from taking too much personal time during the work day.
Will the move from virtual to in-house bring a stronger culture?
The odds are not in favor of this working out well. Here’s why:
- Knowledge-based companies like IBM and Yahoo are built entirely on human capital. They need to be talent magnets and offer the most compelling reasons why the best and brightest need to work for them. Offering limited workplace flexibility will hurt them because:
- People want the work life balance that virtual work provides. In commute unfriendly towns like Atlanta where I live a virtual option can provide you with an extra two hours or more in your workday.
- We have to face facts that the open office concept can drive productivity down. Your workflow faces constant interruptions from unannounced guests to external noise. Almost everyone that I know says that their personal productivity escalates when they work from home.
- People want to be trusted. The mandated move to a have everyone be in-house is the type of “command and control” message that tells every employee that management does not see them as adults and does not trust them to get the work done unless properly supervised.
- It is applying an “all or nothing” approach to building a strong culture. There are many different options that can be explored where employees can mix virtual and in office time during the course of the business week (in essence, the best of both worlds). The decision that only in-house will work, sadly, will not work.
- One of the main reasons that IBM and Yahoo wanted to bring their employees into the office was to build a winning culture. Unfortunately, the relocations and disruptions that the in-house move will create will bring down morale and increase turnover. This is not exactly a winning recipe towards building a winning culture. Now the moves that these companies have made may be calculated risk where they know that a number of people will leave and they can then start rebuilding with a new team in a new work environment. This is a risky move where the odds of failing outnumber the ones of winning. Why? Organizations with this approach will build a negative reputation of not being flexible and not trust their employees to get the work done in creative/flexible ways. This strategy will also dramatically limit their potential talent pool to the geographic areas where their offices are located. They will miss out on great potential hires who could contribute from an outside location virtually.
I sympathize with the leaders at IBM and Yahoo.
They are both facing marketplace disruptions on multiple fronts and are looking for solutions to make their organizations more competitive. I do not see the answer being bringing their employees in-house and eliminating virtual work.
I believe they are going to see the unintended consequence of taking their culture backward.
