Tuesday, 1 February 2022

Technology Has Changed the Worker-Firm Relationship



By Juerg Kronenberg, Partner, Bain & Company Middle East and Andrew Schwedel, Partner, Bain & Company New York


The Covid-19 pandemic has profoundly shifted the way workers interact with their firms. While some workers are starting to return to the office, the new equilibrium is unclear. Most firms will adopt a hybrid model, but exactly what this looks like—and what it takes to succeed—remains murky.


Even before the pandemic, the traditional worker-firm relationship was morphing. The gig economy, born during the 2007–09 financial crisis, allowed workers to take on multiple piecemeal jobs to make ends meet. It surged in prominence over the last decade.


Together, the rise of work-from-home and the gig economy have loosened the boundaries of the firm, making the ideas of a workplace and a worker more fluid. Today, advances in communication technology and the emergence of new digital platforms are allowing firms to shift an increasing share of work outside of their traditional boundaries, reducing costs and improving flexibility.


From the perspective of workers, however, these changes are a mixed blessing. Can remote and gig work be mutually advantageous? The answer is complex.


First, consider gig work, also known as contingent labor (including temporary workers, contractors, and freelancers). While some workers take on contingent roles out of choice, they tend to be the select few in higher-skilled, higher-paid roles. The majority are lower-skilled workers who take these roles out of necessity when permanent roles are not available. And these lower-earning contingent workers experience a meaningful gap in job satisfaction when compared with permanent employees with a similar income. 


Digging further into job satisfaction, we found that contingent workers are relatively more satisfied with their flexibility, but relatively less satisfied with their job stability and relationships with colleagues. 


For firms, the appeal of contingent work varies based on the type of work. Higher-skill contingent workers are valuable when the firm needs access to specific expertise, and it’s either too difficult to entice someone into a permanent role, or they are only needed for a specific project. Firms tend to rely on lower-skill contingent workers when there’s a desire to shift to a more variable cost base, for greater responsiveness to volatile demand.


But loyalty and commitment flow both ways. The hidden cost of this strategy may be a workforce, particularly a front line, that is less inspired and less willing to invest in delighting customers or going above and beyond in their duties.


Next, consider the long-term outlook for remote work. The pandemic demonstrated that many workers can perform far more of their duties remotely than anticipated. To explore the maximum potential for continued remote work, we examined around 2,000 underlying activities across approximately 900 occupations and identified the share of tasks that could be performed from home, given the current state of technology.


Our findings conform closely to the story of the pandemic: White-collar workers in knowledge and administrative jobs, alongside teachers, performed most of their responsibilities from home. And those in manual and service jobs, alongside healthcare workers, either continued going in as essential workers or found themselves out of work. For knowledge and administrative roles, remote work has a high likelihood of sticking beyond the pandemic. 


Even if the lion’s share of white-collar work can be done remotely, that doesn’t necessarily mean it should be. There are two factors to consider: the impact of remote work on productivity, and the desires of the workers themselves.


The impact of working from home on productivity seems to vary from activity to activity. Research from prior to the pandemic suggests that activities requiring a high degree of collaboration or significant interdependence tend to be more productive when performed in person. The challenge is that these activities represent a growing share of white-collar workers’ jobs.


Firms also need to consider what their workers want. With no daily commute, remote work saves employees time and money. Working from home also allows employees to have more time with their families and greater flexibility in how they spend their day. But there are significant downsides as well: Workers can feel cut off from their workplace social life, lack apprenticeship, and struggle to manage the boundary between work and personal time.


The sustained sense of isolation and lack of meaningful connection with colleagues may be increasingly weighing on workers. Connection and trust are critical ingredients for effectively operating complex businesses. The big question is whether companies can maintain connection and trust without the physical connection that offices provide.


Shared office space helps firms feel more like a community and less like an impersonal marketplace. When working remotely, it’s particularly difficult to reproduce the informal and unplanned interpersonal interactions of everyday office life. For many firms, the success of remote work during the pandemic has come at the cost of the cultural capital and goodwill that colleagues have built up over the years. Over time, especially as new recruits join, maintaining culture and connection may become increasingly difficult—although there is plenty of room for experimentation in this space.


As the rise of contingent and remote work loosens the boundaries of the firm, there’s a risk that workers come to view their relationship with their organizations in a purely transactional light. As a result, the bonds of trust that form the connective tissue of the firm are in jeopardy of fraying.


None of this is to say that it’s impossible to maintain a strong and cohesive organization while increasingly relying on contingent and remote work. But examples of sustained success at scale are few and far between. 


Forward-looking leaders can start by creating a shared vision and values. The best firms sustain a distinctive character, underpinned by a set of unifying values, even as they scale. It requires a thoughtful combination of leadership role modeling, peer-to-peer activation, formal incentives, and a shared corporate mythology. As remote and contingent work grow, creating informal bonding opportunities for remote workers will be critical. Leaders will also need to engage contingent workers and partners. To succeed, firms will need to harness significant innovation and creativity—but those that can crack the code stand to gain a significant competitive advantage.


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