Abstract
Trust is the foundation from which boards and executive leadership should base discussions on the future of work.
The first question should be “Do we trust our employees to have the right behaviours when working from home or from any other remote location? If the answer to that is yes, then the governing framework for flexible working is easy to build. If however the answer is no, or I don’t know, then it becomes more complicated. Either way there are a number of considerations to have around the governance of an organisation with flexible working. Risks and opportunities, performance management, cyber security and culture are just some of those considerations.
Key recommendations
- Clarify and communicate what is going to happen to work structures swiftly, challenging traditional views and supporting flexible working models
- Involve people in developing the change vision
- Re-examine the company’s purpose and values to support cultural cohesion and trust. Emphasise manager’s role in communicating and reinforcing values
- When working remotely, encourage employees to take dedicated meal and exercise breaks
- Schedule daily check-ins with direct line managers for employee feedback, coaching and performance management
- Trust should be an integral part of the organisations culture
The pandemic changed how we live and work in ways that will change behaviours long after it is over. Organisations and governments around the world managed rapid changes that had started already but now needed to happen straight away. Online shopping, entertainment, work, health and socialising became the norm within a few weeks.
These changes in consumer and workforce behaviours are here to stay, with myriads of risks and opportunities.
It is increasingly clear that going back to what was before the pandemic is not an option and most organisations are planning to continue with some form of hybrid/blended/flexible working alongside changes to how they deliver services and/or goods. Organisations and leaders are clear that work structures post Covid will be hybrid, now the focus is on deciding the details of what that looks like.
Boards and executive teams around the world have to find and implement new working structures more aligned with what has been necessary during the pandemic. Employees everywhere are getting noticeably impatient with not having clarity of whether it is back to pre-pandemic work structures or if they will be able to continue working flexibly. Most employees might leave their current employer if they don’t get the flexibility they want.
Boards and Executive teams need to urgently start a process to clarify what is going to happen to work structures. Boards may need to challenge traditional views on work structures and strongly support flexible working models to ensure fulfilling stakeholder expectations and not lose competitiveness.
The following process, if prioritised, can help boards and executive teams handle changes to work structures swiftly.
- Acknowledge and understand the need for change
- Communicate the need
- Involve people in developing the change vision
- Develop detailed scenario analysis
- Agree and communicate change plans
- Implement change plans
- Evaluate progress and celebrate success
Boards should be concerned with:
- Sense of urgency
- Ensuring Executives have the right focus with new work structures prioritised
- Asking for scenario analysis to consider risks and opportunities
- Setting clear timelines
- Making decisions
- Set the tone from the top
- Ensuring tone from the top also becomes tone from the middle
- Oversee timely communication and implementation
- Ensure policies around work structures are developed and implemented
Hybrid work probably requires a new operating model and strategy that encompasses flexible work policies, inclusive space design and innovative technology solutions. The modern workplace requires companies to meet new employee expectations, connect a more distributed workforce, and provide tools to create, innovate and work together to solve business problems.
Such fundamental changes to work structures demands time and effort from everyone in the organisation. The board should ask for ongoing assurances that the agreed plan is being followed and ensure the governance framework is adapted accordingly.
This means creating new policies and procedures, updating risk registers and risk appetite, manage technology changes and needs etc. As such, this should have been handled when lockdowns started however, many organisations viewed the remote working as temporary measures and were looking for a “back to old normal” in all ways. This means that most organisations only now make the decisions and corresponding adjustments for flexible working.
In making such adjustments, boards and executives need to recognise that to be sustainable and effective, policies and procedures need to account for both capability and culture. Technology will possibly initially be viewed as the biggest challenge in implementing flexible working structures, while acknowledging that “soft” issues—employee collaboration, talent management and development and keeping a strong culture—are equally challenging.
Balancing the opportunity and the risk
Opportunities span over a few areas but the most frequently discussed by boards and executives are:
More power per employee
Factors such as office size, and location become less relevant, and employees can expand their impact throughout the wider organisation easier.
Access to a broader talent pool – and the ability to deploy people more effectively
By relaxing geographic constraints, remote work dramatically increases the number of potential candidates a company can draw from. Over time, this allows companies to gain access to skills that are not available in local talent pools.
Greater employee productivity, autonomy – and responsibility
Reduced or no commuting time, along with fewer interruptions, can increase productivity while offering greater personal flexibility. Both results can enhance employee satisfaction. As virtual interactions become more of a norm, remote working can also offer more chances for developing talent to shadow colleagues in customer and high-level decision-making discussions—activities that accelerate learning.
Reduced costs for infrastructure and workplace services
Companies can streamline fixed costs such as offices, utilities, and workplace services (including cafeterias, security, and transportation). While a portion of such savings will inevitably be offset as companies help employees adapt to working from home, those costs will likely be dwarfed by the potential savings.
Greater business continuity, enhanced resilience
As the pandemic has amply demonstrated, a decentralised workforce provides built-in business continuity and greater resilience when dislocations or crises erupt. This is not the last world-wide crisis we will have and organisations embracing flexible work structures will be more resilient when that happens.
Although flexible working presents many opportunities, sustaining a model with remote working comes with risks. It is possible to mitigate most of them, but such measures need to be an integrated part of the transition to remote working, whether under a full-time or hybrid approach. The top risks needing board considerations are:
Erosion of culture and relationships
With no chats at the water cooler, after-hours socialising, or impromptu problem-solving interactions, cultural cohesion and trust can suffer, especially for newer hires. It’s easy to forget that these informal channels and mechanisms are often vital sources of change and innovation in organisations. Local staff may lose a sense of what is going on in their local office and community. Even if these effects have not yet manifested themselves, they can nonetheless potentially affect individual and company performance in many ways.
Furthermore, while remote work holds the promise of increased diversity through access to a wider talent pool, it may result in less inclusive outcomes if the company has not considered specific measures to ensure inclusivity in the new work structure.
Mitigation measures: Companies can reduce the erosion of trust and social bonds by thoughtfully re-examining their purpose and values and making sure that the actions they take reflect and reinforce those values—such as for inclusive communications strategies that help everyone feel heard and respected.
Because managers of virtual teams play a significant role in their employees’ exposure to company culture, it is very important to emphasise their role in communicating and reinforcing values. The “tone from the middle” needs to be the same as the “tone from the top” and Boards need to ensure this is happening. The best way to do so is by individual board members having some direct contact with different employees throughout the organisation. Increased employee feedback reported up to the board on a regular basis should also throw up any potential brewing issues.
Wellbeing and mental-health issues
Less face-to-face interaction may yield unintended psychological effects. Even before the pandemic, some companies recognised that remote-working arrangements can instil an “always-on” mind-set that can increase risks of employee burnout and mental-health issues.
Mitigation measures: Companies can counter these risks by encouraging employees to take dedicated meal and exercise breaks and by supporting them in taking steps to engage regularly with colleagues. The board should ensure there is a policy in place around adhering to working hours and not sending work emails out of hours or over weekends except in an emergency. Needless to say, that the board members themselves should also adhere to that policy to set the tone from the top.
New employees, onboarding, development, and performance management
For new hires, the lack of in-person mentoring can lead to difficulties settling in. In addition, among less experienced or less motivated employees, the gap between high and average performers can grow significantly without regular in-person connection and support. For less experienced employees especially it will be hard for them to learn remotely, that is generally best done being in the physical environment with colleagues around them to learn from.
Mitigation measures: Scheduling daily check-ins with direct line managers or experienced colleagues, assigning employees a buddy for support, scheduling time for team introductions, and providing access to a library of work resources, will all help onboarding and development of new employees.
It will be necessary to transition from performance-management methods that focus primarily on quantifiable results to ones that also reflect qualitative outcomes and results. Quality, not just quantity, is a determinant of success; and metrics for remote workers should reflect that fact.
To preserve sound performance-management practices, managers can set explicit outcome-based performance goals and schedule formal check-ins with employees for feedback and coaching.
Difficulty adapting to new ways of collaborating
For previously co-located employees, the transition to online management practices may be difficult. Although digital collaboration tools have improved, the inability to read body language can make virtual communication and coordination difficult. Many boards struggled with this initially and it was a steep learning curve for many board members, some of whom had not yet embraced online board packs.
Mitigation measures: Digitising processes and workflows so that standards are embedded in the way work is performed can minimise some of the limitations of virtual interactions. Ensure meetings and expectations of meetings are managed well. Ensure establishing ground rules and a clear set of shared objectives that are transparent to all.
Cybersecurity vulnerabilities
Many employees have access to highly sensitive company information, such as revenue and profit margins and personal employee and client records, so a blended working environment multiplies data-security and cyber risks. For those reasons, certain industries, including healthcare and banking, may be precluded from considering adopting even a hybrid remote-working model for certain roles.
Mitigation measures: Organisations should tighten up end-user training in areas such as threat awareness and possibly impose tighter device-security protocols. This is an area that is part of the many considerations around generally digitalising organisations more. Boards should ensure they have technology skills in the board room so they can sufficiently challenge digitalisation plans and also be willing to consider the potentially significant resources needed for that. Machine learning-based artificial intelligence–based surveillance of networks and end points is another important cybersecurity measure that boards and executives should consider.
Home-office limitations
Many employees may lack the ability or means to work from home effectively.
Mitigation measures: Employers may want to invest in providing infrastructure capabilities, such as high-speed internet access or shared workspace “pods” close to employee home locations, for dedicated work sessions or to ensure privacy.
Reducing office space
Boards should enquire about office space and the need for offices, or not, going forward. However, they should also ensure the executive management has considered office space as part of the strategic outlook for the organisation in general. As more companies relinquish significant portions of their office space, the accumulated impact could potentially lead to office shortfalls down the road. Even as companies retain space with a hybrid model, they will likely want to take advantage of more flexible office space models.
Mitigation measures: Companies might consider increasing their use of short-term leased space; for example, they might eliminate half of their office space and reinvest in a much smaller, more localised, piece of temporary space to meet burst capacity needs when needed. The boards should ensure that the governance, risks and technology frameworks
are suitable for appropriate oversight of staff in and out of potential offices. Issues for boards to concern themselves with are:
- Policies and potential changes to employment contracts to formalise and normalise changes in the working model.
- Is there a plan to develop existing talent to support a more independent, self-directed working style with clearly defined outcomes.
- Plans to accelerate digital utilisation and general technology across the organisation.
- Is there an effective communication plan suitable for the new way of working in place?
Summary
There are a number of key governance issues that organisations need to be keenly aware of. As with any change it can be hard to implement but this change to a more flexible way of working is something more than half the world population, the women, have been asking for since the mid 50-ties. Recently, and before the pandemic, the pressure for this has also arisen from Millennials and younger generations. We are now in a place where this change should be able to happen relatively seamlessly if the boards and executive management are prepared to fully embrace it.
They should be setting the tone at the top and driving the change, ensuring the tone from the middle being fully aligned. To truly make this change successful, the board and executive management also need to drive the cultural change. Humans have a natural resistance to change, even when the change is a positive one. The board and senior leadership need to recognise that remote working is something that employees will need to adapt to, and this may take some time. Clarity and transparency around what work and what doesn’t will be essential as the new way of working beds in.
A culture of problem-solving is great, and one of the benefits of a remote workforce is its potential for you to tap into the best talent, wherever they’re located. But when it comes to working remotely longer-term, designating a directly responsible individual to make decisions and ensure that debate leads to action can be key. Combining the best elements of ‘consensus’ and ‘hierarchical’ cultures could deliver what is needed. Clarity of who is ultimately accountable for delivery will be an important part of ensuring everything gets delivered by all the teams.
Team accountability and a flat operational structure with self-managed teams is possible but needs a social culture and level of leadership maturity to be able to work effectively. In Scandinavia for example, organisations tend to have relatively flat structures, flexible working structures and operate at high productivity in less hours. This however is also influenced by the general culture of the countries with a relatively high social consciousness and work ethics. This could be something for organisations to aspire to as it can give higher degrees of job satisfaction, productivity and employee wellbeing. This however is even more built on trust within the organisation.
Trust in the employees doing the right thing and making the right decisions, trust that the leadership team and board makes decisions that are best for the broader group of stakeholders and the world that we all live in. Trust within the organisation is a must for flexible working frameworks to function properly. If any executives or team leaders do not have trust in the employee’s integrity and work ethic, then working remotely and flexibly will be hard to do for both parties. Trust should be an integrated part of the culture and it can be helpful for the board and executives to bear in mind the trust equation:
Focusing on high levels of credibility, reliability and intimacy (confidentiality) whilst minimising self-orientation/EGO across the organisation, generally pays off in terms of levels of trust.
