It has been almost three years since the pandemic catapulted remote work into the limelight: not just as a trend, but as the future of work. During the pandemic, companies were forced to embrace remote work with much reluctance, but with surprising success. Remote work tore down borders and time zones, snagged the best talents, and resulted in greater productivity, growth and innovation. A report by Owl Labs in 2021 surveyed 2,050 full-time workers in the U.S. and found that 90% of respondents that worked from home during the pandemic said they were as productive, or more, working remotely when compared to the office. Ernst & Young surveyed more than 16,000 employees across 16 countries and revealed similar sentiments: the majority of respondents agreed that a new mix of onsite and remote work would increase the company’s productivity (73%) and creativity (75%).
Employers competed for talent by raising pay and were quick to yield to employees on preferred work conditions. The new norm of work had placed bargaining power in the hands of workers. Hiring good talents grew increasingly tough, job-hopping became a trend and quiet quitting was the rage.
Fears of a recession amidst a tight labor market are now making companies rethink how they operate. The World Economic Forum has painted a gloomy outlook with 63% expecting a global recession this year, while the World Bank has predicted global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993. As recession fears mount, companies are laying off workers to reduce costs and pulling the brakes on hiring. The tech industry is facing a new reality with a string of massive layoffs. Amazon has announced plans to lay off more than 18,000 employees, and Google has cut 12,000 people from its workforce. Microsoft is letting go of 10,000 employees before the end of March this year, while Meta has cut 13% of its staff (more than 11,000 employees).
High-profile CEOs are demanding to see workers back in the office. Elon Musk famously told Twitter employees that not showing up in the office amounted to a resignation. Starbucks ordered corporate employees within commuting distance to return to the office at least three days a week. Apple CEO Tim Cook mandated that workers return to the office at least three days a week to restore “in-person collaboration”.
With behemoths announcing job cuts and expecting employees back in offices, other companies are following suit. Employees who were 100% or partially remote are reassessing their situations, with some realizing that they will have to do what it takes (including going back to the office) to keep their current jobs, or risk being made redundant in the face of a looming recession.
Will this signal the end of remote work?
Employers with unused and expensive office space are seeing empty offices as a huge liability and will attempt to force people to return to their offices. Furthermore, remote working involves security challenges that require new IT and software purchases. While remote work allows for greater flexibility, there is also an increased risk of cyber threats such as unsecured wi-fi networks, phishing attacks, malware, and hacks which can lead to data theft, productivity losses, and huge downtime costs. To counter this, there is a need for companies to invest in cybersecurity solutions which may increase upfront costs. (Though many companies are likely to have accounted for these costs in the course of the pandemic.)
As the economy slows down and cost-cutting measures become a priority for most companies, the benefits of remote work may be conveniently glossed over by cost-conscious organizations. There is no easy answer as to whether organizations should be bearing the financial costs of remote work. What is clear, however, is that allowing employees to work remotely or do hybrid work has huge benefits for companies that cannot be ignored.
Many companies are looking for ways to keep the work going without increasing pay. And remote work is emerging as a win-win alternative for both employers and employees. According to an analysis by Global Workplace Analytics, remote work could save US companies $500 billion annually in real estate, electricity, absenteeism, and turnover and productivity, which works out to more than $11,000 an employee per year.
A McKinsey survey reported that 87% of U.S. employees are embracing the opportunity to work remotely if offered. In another recent Return to Workplace Report, flexibility is the most empowering benefit for employees as it gives them more control over their work-life balance. Remote work flexibility allows employees the option to work remotely rather than take a day off from the office to attend to personal or family needs. Such flexible work arrangements are so much-appreciated that employees are willing to accept lower salaries in favor of remote work flexibility. A local survey by IPS (Institute of Policy Studies) on 2,000 Singaporeans and PRs revealed that workers will find a new job if they are required to return to the office when their preference is for greater work flexibility.
Companies are now delicately balancing workers’ preferences for greater autonomy on where and how they want to work versus a back-to-office mandate. They are now seeing the value in hybrid work arrangements and how it contributes to the greater psychological well-being of employees. Furthermore, a hybrid approach allows an organization to hire talent from anywhere in the world, which gives companies a competitive advantage to navigate new markets while continuing to drive employee engagement and productivity.
In preparation for the possibility of a recession, many companies have insisted that employees return to the office, only to reverse that decision after realizing that they will lose some of their best talents. (Twitter has asked some fired employees to return to work last November.)
Employers must understand that offices should no longer be viewed as “productive places for employees to produce output”. Remote work has cemented its role in the workforce, and proven that (more) productive work can be produced.
A slump in the economy will hardly hinder the climb of remote work. In my humble opinion, it might even accelerate the rise of remote work in the next decades.
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It’s about rethinking traditional employment archetypes. Can we progress from an economy built on full time employment habitually enslaved by unemployment fears, to one where individuals have greater autonomy and are self motivated to do work that inspires them? And as a result, benefit the economy as a whole?
You can’t own full time employees. But you can build a winning team with talent management companies. As businesses demand more, external talents are emerging as the sure forerunners of an agile workforce. At Chance Upon, we partner businesses to get a head start over competition by creating collaborative work between companies and the right talents.
The facts and figures presented in this report are accurate as of the date of writing 7 Feb 2023.