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Wednesday, Feb 08, 2023

Why some employers won’t give in to flexibility

Why some employers won’t give in to flexibility

More and more employees want autonomy at work – and it’s become a major factor in whether they quit. Why are some companies digging in their heels against it?

Employee flexibility has been one of the biggest shake-ups in the changed world of work. In many cases, knowledge workers are now better able to fit their job demands around their personal lives – something they’ve relished, and are reluctant to surrender as employers call workers back into offices.

Workers also increasingly expect this autonomy to continue. According to a July 2022 study of 13,382 global workers by consulting firm McKinsey & Company, 40% said workplace flexibility was a top motivator in whether they stayed in a role, barely behind salary (41%). A lack of flexibility was also a major factor in resigning, with 26% saying this was a main cause for quitting their previous job. Similarly, a March 2022 Gallup study of more than 140,000 US employees, 54% of fully remote workers and 38% of hybrid workers said they would look for another job if their company stopped offering remote-work options.

The findings show flexibility has become a crucial factor in determining employee retention and attrition. Following the hiring crisis, employers are also more concerned about recruiting and retaining talent than ever. Indeed, some companies have gone above and beyond to help support workers who want flexible arrangements, introducing policies such as fully remote roles, asynchronous work and hybrid-working options.

Yet, amid these shifting expectations, there are many companies still hesitant – or unable – to accommodate these requests. In some cases, executives have demanded their employees come back to the workplace full-time, in a return to pre-pandemic ways of working. Instead of affording workers this autonomy, some business leaders have increased salaries instead. In many cases, there are reasons why this flexibility is off the table – but the question is whether the tides will turn.

The flexibility stand-off

During the past two-and-a-half years, millions of knowledge-work employees were able to remotely work productively through various pandemic-enforced lockdowns. “During the height of Covid-19, many people discovered that work can unfold very differently from full-time office settings,” explains Tsedal Neeley, a professor of business administration at Harvard Business School. “They also discovered productivity wouldn’t be affected in many cases.”

As Covid-19 restrictions eased, however, many bosses began demanding their employees come back to the workplace. While some return-to-office mandates were on a hybrid schedule, others were full-time. This was particularly the case in industries such as finance, where executives often set deadlines for bringing workers back to a pre-pandemic structure. And many companies that haven't yet required a full-time return to office are planning to do so: March 2022 research from Microsoft showed half of global business leaders surveyed have plans to require full-time in person work in the future, if they haven’t instituted it already.

"Many executives feel a loss of control, that they’re losing a structured environment in which people are physically present in the office" – Bonnie Dowling

In the case of the financial sector, these businesses are often subject to compliance regulations that can be harder to achieve in remote settings, which can explain why the return policies have been so rigid. However, “traditional and conservative” corporate culture also plays a huge part in why organisations outside finance are resisting flexible arrangements, says Bonnie Dowling, expert associate partner at McKinsey, based in Denver, Colorado, US.

In some cases, executives have decided this decades-long in-office precedent has outweighed workers’ new-found demands for flexible working. “The in-person environment was how these business leaders were raised and is what they know best, while companies have long been financially successful with that arrangement, too,” says Dowling.

Many other industries have also pushed for a return to pre-pandemic structures. Dowling explains these are often sectors that have a mix of workers required on-site and employees that can work remotely. She adds that leaders are anxious to avoid creating imbalances between teams, meaning they often encourage everyone to work in person – irrespective of whether they were able to do their job virtually through lockdowns. “Healthcare, agriculture, aviation: these are sectors in which executives want to create a level playing field. The rationale is if some employees have to be on-site everyone should, to show solidarity.”

Ultimately, Neeley says many senior executives are worried that the loss of in-person working could impact their business goals. “Leaders are saying they have to bring people back to the office at least some of the time because of workplace culture. They’re worried about the loss of interpersonal connections with virtual settings.”

Additionally, introducing flexible, remote and hybrid-working patterns, while instilling workplace culture virtually, often requires overhauling organisational structure, adds Neeley. “Changing how teams connect and implement technology on a day-to-day basis, while also serving customers and clients in a new workforce structure, is difficult. Sometimes, it’s easier for some leaders to just go back to old ways.”

Sometimes, it’s easier for some leaders to just go back to old ways – Tsedal Neeley

Alongside the challenges of ensuring employee flexibility and organisational culture, Neeley says some bosses resist accommodating workers because they fear it could impact on their leadership. “Many executives feel a loss of control, that they’re losing a structured environment in which people are physically present in the office.” This can leave them in uncomfortably murky territory about how to measure productivity in virtual settings, adds Dowling.

Fundamentally, Neeley says not affording workers flexibility comes down to trust. “Not only is it not trusting workers that they’ll still do their job away from the boss’s gaze, there is also a lack of trust in the leadership process required in this new world of work.”

A change on the horizon?

Not every company has drawn its line in the sand over the flexibility issue, of course. Dowling says there has been variation across industries, and even a bit of movement towards autonomy in those more rigid sectors, such as some financial companies offering hybrid-working arrangements. (In extreme cases, some companies have even made high-profile moves to turn their companies entirely remote, particularly within tech.)

Generally speaking, however, a divide will remain. Sectors and employers that are agile and free from decades-old practices are more likely to grant employees autonomy. For example, while an organisation in nascent stages can more easily pivot to a fully remote set-up, a multinational organisation may take longer to overhaul its corporate structure to afford workers flexibility while maintaining business goals. Changing workplace architecture can be a tall task some of these larger companies are reticent to – or simply won’t – undertake.

The problem, however, is that experts say some of the moves these inflexible companies are making may be more of a temporary fix than a permanent solution. Longer term, experts say there are signs that boosting pay, rather than increasing flexibility, may have diminishing returns. “We’ve seen through the Great Resignation that some employees can’t be paid enough to continue working extreme workweeks in the office, when they can work elsewhere with greater flexibility,” says Dowling. “Continuing to rely solely on pay to attract and retain workers will only appeal to a small and shrinking talent pool.”

As a result, some of these employers are starting to give workers an inch – even if they won’t yet cede a mile. Dowling says that even as the economic picture bleakens, the pressure to offer employees autonomy will not completely diminish. “Even as organisations begin tightening belts and adjusting growth projections, we’re still seeing employees feeling empowered to quit. If that doesn’t change, employers need to figure out how to offer more flexibility.”

Neeley believes more companies, once resistant to affording workers flexibility, are starting to make a U-turn. She cites the recent case of JPMorgan Chase, and its backtracking of a full-time office return, with 40% of its staff working under a hybrid model going forward. “We’re already seeing firms not successfully getting their employees back to the extent they wanted.”

Over time, Neeley says more firms are likely to introduce accommodating and flexible policies. “Mandating back-to-the-office with strict structures in place is no longer realistic; otherwise, everyone would’ve been back and we’d have moved on. The world of work, however, has changed.”


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