“The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.”— Winston Churchill
“Engaging the hearts, minds, and hands of talent is the most sustainable source of competitive advantage.”— CEO Quantum Workplace
“There’s no magic formula for great company culture. The key is just to treat your staff how you would like to be treated.”— Richard Branson
“To win in the marketplace you must first win in the workplace.”— Doug Conant, CEO Campbell’s Soup
“Always treat your employees exactly as you want them to treat your best customers.”— Stephen R. Covey
“There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow.”— Jack Welch
“Customers do not come first. Employees come first. If you take care of your employees, they’ll take care of your customers.”— Richard Branson
“In the current volatile and uncertain environment, engaged employees are an essential component not just for success, but perhaps for survival.”— Nigel Paine
Today, we are living in a very weird business world. You may have noticed this. Remote work by employees seems to be going very well in most cases and has become a preferred arrangement by increasing numbers. Then there is an almost explosion of “contingent workers” – self-employed, independent contractors, and freelancers. Figures are a bit hard to reconcile here but it appears that over one-third of the workforce today is “contingent”, not employed in the usual sense.
Now we have vaxx mandates that are forcing workers of all kinds to choose between the vaxx and their jobs. Employees must agree to be vaxxed or be fired, while contingent workers may be effectively “fired” via increasingly-rigid workplace vaxxed-only restrictions.
Just to further muddy the water, many employers are pushing hard for a nearly-full return to the office. Worker pushback is building. What is going on here?
COVID did it
For sure. It gave a huge number of workers – both employed and contingent – an opportunity to reconfigure their work-life. Many did, successfully. Many are very reluctant to return to the grind of long commutes, cube-life, and often mindless office routines like typical meetings. Bosses of course want people back in the office so they can do what bosses have always done. No people to boss, no need for traditional bosses?
It seems so.
We should note here that nothing less than the earth-shaking COVID changes and disruptions over an extended period could have created the current work and workplace situation.
Habits take a considerable amount of time to change and become permanent, as noted in an earlier post. If COVID had been just a few-months-long blip, it would have been natural for most folks to return to the good old work and workplace. But things have changed – big time – for many workers. Not so much for too many bosses yet, unfortunately.
Who is going to win here: workers or bosses? My bet is heavily on the workers, and here’s why.
Workers have changed; employers, not so much – yet
Jennifer Liu writing in make it presents this conflict as “’The Great Wait’ to return to offices”:
“In much of corporate America, January 2022 is the new Labor Day 2021 as the target date for a widespread return-to-office movement. As of late August , 66% of organizations were delaying office reopenings due to Covid variants, according to a Gartner survey of 238 executive leaders. Many big names including Apple, Amazon, Google, Facebook and Starbucks have postponed their return plans into the new year during a period some workplace consultants are calling ‘The Great Wait.’”
“When his office reopens, … he’ll be expected back three days a week, but he and his colleagues must change their in-office days each week. He says this is to discourage people from consistently working Mondays and Fridays from home. He says supervisors seem unwilling to accommodate any flexibility, such as his request to work in-office two days a week instead of three, or the requests of some colleagues who actually want to return in-person full-time.
“’Morale is low,’ he says, but he’s not sure finding a new job elsewhere is an option. The tight labor market, where there are more open jobs than people to fill them, isn’t benefiting everyone equally.”
“Workplace leaders began predicting a mass resignation in early 2021 as vaccination efforts ramped up and economic recovery improved. Some 65% of employees are looking for a new job right now, according to an August poll of 1,007 full- and part-time U.S. workers conducted by PwC. That’s nearly double the 35% of workers who said they were seeking new work in May. Already, millions have quit their jobs during this summer’s so-called ‘great resignation.’”
The Harvard Business Review tackled the problem from a manager’s viewpoint (surprise) in: “Don’t Force People to Come Back to the Office Full Time”:
“A big challenge for firms that want a full-time return to the office is the extraordinary tightness of labor markets. Hiring and retention are incredibly hard. Talented workers can collect multiple offers if they want to switch jobs. And many people really like working from home.”
“Employees want to work from home 2.5 days a week on average, according to our monthly survey of 5,000 Americans. Desires to work from home and cut commuting have strengthened as the pandemic has lingered, and many of us have become increasingly comfortable with remote human interactions. The rapid spread of the Delta variant is also undercutting the drive for a full-time return to the office any time soon.”
“Indeed, our June and July surveys revealed that more than 40% of U.S. employees would start looking for another job or quit immediately if ordered to return to the office full time. Not surprisingly then, Goldman Sachs just announced big salary increases of 30% for new hires. If you want employees back in the office full time in 2021, you have to pay for it.”
HBR reports also that “Among the millions of firms that tried remote work since the pandemic struck, fewer than 20% plan to have them return to the office full time after the pandemic ends.” and concludes, very conveniently for purposes of this post: ” So, think twice before ordering employees back to the office five days a week. Don’t be the next Harvard Business School case study of a managerial disaster”.
Despite my years of absorbing the wisdom and whatever from HBS, I think that they have mostly missed the real story here. They never do this, do they?
The real story is workforce changes and lagging employer responses
COVID was a huge game-changer. Employees and contingent workers have mostly changed to a new work-life world. Too many employers are still trying to figure out what to do and how to do as little as possible. Winners: workers.
Not all workers of course: mainly office workers. You know, the non-essential ones that got sent home when COVID hit. Wonder why so many employers want these non-essential folks back in the office.
There is another extremely important aspect to this story: contingent worker growth and the gig economy. The gig economy is broadly defined as products and services offered by freelance or self-employed individuals – independent professionals, temporary contract workers, independent contractors or consultants. Note that the majority of these non-employed workers are location-independent – able to work from almost anywhere.
How many such workers are there? Statista offers some amazing data and projections: roughly 65 million today, and projected to grow to 90 million by 2028. We are looking at some really big numbers here.
To put these figures in perspective, the U.S. Bureau of Labor Statistics (BLS) has the civilian labor force, which includes non-institutionalized, non-military individuals of age 16 and older, at about 161 million in October 2021. This is roughly 62% of the civilian non-institutional population of 262 million (or 79% of the total U.S. population of 332 million). There are 100 million not in the BLS labor force, about 6 million of which are actively looking for work according to the BLS.
Nearly 40% of the non-institutional (and age 16 and over) population not available for work? Don’t know about you but this makes absolutely no sense to me. Unless there are a lot of folks who have given up eating, which is rumored to have become increasingly costly.
Table 1. Labor force data from the Bureau of Labor Statistics (BLS)
Contingent (non-employed) workers are the story here
The BLS labor force covers employed workers. It does not include about 100 million non-employed workers, many of whom must be contingent workers. A recent report by Staffing Industry Analysts pegs the contingent U.S. workforce at 51.5 million. I was not able to reconcile this estimate with Statista’s estimate of 65 million “freelancers”, but it’s close enough for government work.
Just to make things even more confusing, there are roughly 25 million “sole proprietors”, an IRS tax designation, who may work for clients and customers as an independent contractor and receive pay under an IRS Form 1099-MISC. Because sole proprietors expose their personal finances to lawsuits, many are switching to LLC’s and standard C corporations. More than a few of these work as freelancers.
The bottom line here is that there is a huge and growing population of “non-employed” but probably active workers out there. Contingent workers. Location-flexible employed workers may well join these if their employment conditions are not attractive enough. Many will be among an employer’s best people since they will be most likely to have solid confidence about striking out on their own. Mostly office workers.
Who are “office workers”?
The U.S. Bureau of Labor Statistics (BLS) does not classify workers in terms of office workplace. No surprise. Best alternative I can find is the BLS workforce category “Management, Professional, and Related Occupations” group, but augmented in a clever way by the Department of Professional Employees (DPE), a coalition of 24 national unions. The latter uses educational attainment – at least an associate degree in an academic program – as a surrogate for professionals in other BLS occupations groups such as “Sales and Office Occupations”.
Table 2 below summarizes this estimate of “office workers”. This is really a bunch of folks: over 88 million, or about 60% of the total workforce of 153.5 million in 2020. These are employees who could join the contingent workforce if not given strong incentives to remain employed.
Table 2. An estimate of the total U.S. office-based workforce in 2020.
Enforcing a relatively complete back-to-the-office mandate may not be generally regarded as a good thing – especially by some of your best people. It is easier than ever today to bail and earn an adequate living as your own boss.
Pushing for back-to-the-office for nearly all may just provide the final incentive for these workers to leave. Seems like a very risky move to me. The Great Resignation driver.
Many employees have changed; many employers have not
The long remote-working experience and work-life adjusting that has taken place as a result of COVID has resulted in permanent changes for a great many workers. Permanent as in not going back to the old-job-past. Ever.
Recall the Harvard Business Review survey findings (above) that “Indeed, our June and July surveys revealed that more than 40% of U.S. employees would start looking for another job or quit immediately if ordered to return to the office full time.”. That’s 40% of somewhere between 50 and 100 million employees. Think of how costly it will be to replace even a small fraction of these people.
LinkedIn in a recent article on the “Great Resignation” linked to another article from the World Economic Forum (WEF) that reinforced these findings: “Survey: 40% of employees are thinking of quitting their jobs”:
“In a report called The Next Great Disruption Is Hybrid Work – Are We Ready?, Microsoft found that as well as 54% of Generation Z workers, 41% of the entire global workforce could be considering handing in their resignation.”
Here is what seems to be the most important finding, via Microsoft:
“Similarly, a UK and Ireland survey found that 38% of employees were planning to leave their jobs in the next six months to a year, while a US survey reported that 42% of employees would quit if their company didn’t offer remote working options long term.”
“New work trends. Based on surveys with over 30,000 workers in 31 countries, the Microsoft report – which is the latest in the company’s annual Work Trend Index series – pulled in data from applications including Teams, Outlook and Office 365, to gauge productivity and activity levels. It highlighted seven major trends, which show the world of work has been profoundly reshaped by the pandemic:
> Flexible work is here to stay
> Leaders are out of touch with employees and need a wake-up call
> High productivity is masking an exhausted workforce
> Gen Z is at risk and will need to be re-energized
> Shrinking networks are endangering innovation
> Authenticity will spur productivity and wellbeing
> Talent is everywhere in a hybrid world”
“’Over the past year, no area has undergone more rapid transformation than the way we work’, Microsoft CEO Satya Nadella says in the report. ‘Employee expectations are changing, and we will need to define productivity much more broadly – inclusive of collaboration, learning and wellbeing to drive career advancement for every worker, including frontline and knowledge workers, as well as for new graduates and those who are in the workforce today. All this needs to be done with flexibility in, when, where and how people work.’”
This is a call for major changes in work and the workplace
Employers of course mainly define and structure both work and workplace. Employees are becoming increasingly involved in this process, but only starting from a very low level derived from past practices.
The hugely-changed employee (and contingent worker) world is here and will persist. Over 100 million workers in the U.S. are affected by these COVID-driven changes. Employers then are in serious catchup mode for the most part.
The WEF article concluded with an indication of what will be required going forward:
“A hybrid future. In looking for ways to navigate their way through all this change, employers should hold fast to one word, the report says – hybrid. An inflexible, location-centred approach to work is likely to encourage those 41% of people to leave and find somewhere more to their tastes. Those who are thinking of going to live somewhere else, while maintaining their current job, might also find themselves thinking of quitting if their plans are scuppered.”
A pay cut for remote workers is probably not a great idea either
Reuters reports that some Silicon Valley employers are experimenting with pay cuts for employees who decide to stay with remote work:
“Facebook and Twitter also cut pay for remote employees who move to less expensive areas, while smaller companies including Reddit and Zillow have shifted to location-agnostic pay models, citing advantages when it comes to hiring, retention and diversity. Alphabet Inc’s Google stands out in offering employees a calculator that allows them to see the effects of a move. But in practice, some remote employees, especially those who commute from long distances, could experience pay cuts without changing their address.”
Publisher HRDive agrees: “Pay cuts for remote workers? Not so fast.”:
“’This return to work is not going to look the way that it did prior to the pandemic for most organizations,’ Hartmann said. ‘They want to keep that idea of remote work and flexibility if they can. They think it’s right for their cultural situation.’ Extension of remote work has gone beyond being a safety protocol, she continued, as employers face the threat of attrition. HR industry observers have dubbed the current wave of organizational attrition, marked by increasing retirement rates and job changes among skilled workers, the ‘great resignation.’”
COVID-19 sent all but “essential” workers home for over a year in many cases. These were “office-based workers” for the most part. There is now a major push by more than a few employers to bring nearly all of their workforce back to the office. But this workforce has changed dramatically and probably permanently. Back to the office is just not going to work for many.
ZeroHedge on November 12, 2021, reported another big jump in job quits: “”:
“But perhaps the most interesting highlight of today’s JOLTS report was neither the openings nor the hiring activity, but rather the number of quits, which for the second month in a row soared to an all time high, jumping in September by 164K to a record 4.434 million. The quits rate increased to a series high of 3.0%, from 2.9%, as quits increased in several industries with the largest increases in arts, entertainment, and recreation (+56,000); other services (+47,000); and state and local government education (+30,000). Quits decreased in wholesale trade (-30,000). The number of quits increased in the West region.”
“As a reminder, this ‘take this job and shove it’ indicator is generally seen as a real-time proxy of how marketable employees think they are, as they tend to quit jobs and look for higher paying occupations when the job market is red hot. And since it tends to lag peaks in job openings modestly, the surge in quits was probably not all that surprising.”
ZeroHedge on November 15, 2021, noted the slow rate of return in New York City:
“According to Partnership for New York City, only 28% of Manhattan office workers were back in the city on an average workday in November. ‘Of Manhattan’s one million office workers, 28% are back. And of those, only 8% are back full time,’ said Kathryn Wylde, who heads Partnership for New York City. By Jan. 30, employers expect about half of workers will return to the office on an average weekday, with 57% in the office at least three days a week while 21% remain remote. The highest average daily workplace attendance is real estate, with 77%, followed by financial services (27%) and law firms (27%).”
Inc. magazine looked at the practical side of attracting employees back: “How to Attract Employees Back to the Office”:
“In the wake of the Covid-19 pandemic, many of us have gotten used to working from home. Employees got a taste of what it would be like to have no commute and more free time. While some struggled to cope with the sudden decline in human interaction, many found at least some silver lining in working remotely.”
“Some companies have found the remote work model to be wildly successful; people are more productive, the company is saving money, and no one seems to miss the communal lunch breaks or in-person team building events.”
“But others are eager to get teams back into the physical office as quickly as possible, and with more and more Americans becoming fully vaccinated, concerns about Covid-19 won’t be standing in the way much longer.”
“This presents a dilemma. If your company wants to return to a traditional office model, but your employees want to stay working from home, what’s the right play? If you take a strict “come back or you’re fired” type of stance, your employees might just leave for one of the millions of businesses that now work remotely full time.”
“So what can you do to naturally attract employees back to the office?”
“Accept and Cut Your Losses. One of the first things you need to realize is that some people will prefer working from home, period. About 70 percent of workers would prefer working from home to working in a traditional office. Among workers aged 35 to 44, the figure is 81 percent.” “There’s not much you can do to convince these people that coming back to the office is a good idea that will benefit them. If you take a hard stance or if you push too hard, the most steadfast members of your team may leave to join the ranks of a fully remote organization. Are you prepared to deal with those losses?”