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PA OPINION

Navigating the unintended consequences of the hybrid office

Despite working from home being described as an “aberration”, hybrid models of remote work are likely to persist in the wake of the pandemic. At the start of the pandemic, many of our clients raised concerns around loss of productivity and increased operational risk – concerns which, happily, have not materialised. Instead, the impact tends to be felt more keenly at a personal level, as working days extend, and some of us juggle home-schooling and work, or battle the effects of isolation and lack of human contact.

Now that financial services firms have proved that working remotely is feasible, the next question is whether the continuation of more flexible working is desirable, and to what extent?

We are still seeing a huge disparity in the response of financial services firms to the COVID-19 pandemic, with some advocating to remain fully remote and others a swift return to the office. Many have accepted that working from home is now expected for the majority of their people and are beginning to align around the concept of a “hybrid office” for the future. HSBC has confirmed plans to cut office space by 40% and Lloyds Banking Group by a fifth.

However, there will be potential unintended consequences of continued home working, some which could take a heavy toll on culture and organisational dynamics. These include:

  1. The removal of learning opportunities. With formal training representing only 10% of learning, on the job training in the form of shadowing, or just being around other more experienced colleagues is vital. Without careful consideration given to replicating informal learning opportunities, the development of a generation of workers could be negatively impacted.
  2. Entrenchment of social disadvantage. Hybrid working could see the creation of two-tier workforces, with an increased perception of unfairness. Those who regularly work from the office may be perceived as good corporate citizens, with those who work from home seen as less engaged, or less interested in career advancement. For those with childcare responsibilities (often women) this could have a particularly negative impact.
  3. Reduced creativity and spontaneity. Reduced informal connectivity opportunities are likely to increase the silo-mentality that functionally structured teams can already hold, reducing join-up and opportunities to achieve great things through serendipity. This removal of opportunity for informal conversations reduces psychological safety and the willingness of some colleagues to challenge the decisions of others.
  4. Big brother mentality. We are still seeing some nervousness in financial services firms to trust their people to work effectively from home. This, coupled with changes from the regulators to support lines of defence to operate effectively in a distributed environment mean that many are considering technology that can help them to understand productivity, monitor risk and measure performance. There is a careful line to tread between thoughtful measurement of outcomes and what is perceived to be monitoring of individuals which can negatively impact morale and productivity.

That there is a potential downside of hybrid working is no surprise. After all, the tradition of co-located working has been developed over hundreds of years and is supported by more recent thinking around agile teams - and those working in financial services today have come of age within this system.

COVID-19 has afforded us all a fantastic opportunity to unlearn the habits we have formed over years, and to re-learn the natural benefits of remote working. Here are four areas to focus on to ensure your hybrid office is a sustainable success:

Physically distant, but socially close

We are likely to remain physically distant from our colleagues most of the time, so we must learn how to remain socially close. With increased physical distance there is more room for misunderstanding. Twelve months of home working in the COVID-19 crises has shown that the workforce will pull together and put in the hours regardless of location, but trust between colleagues may have been eroded in the process.

Firms need to identify ways to proactively create opportunities for informal engagement and social networks. These “building social capital” relationships are key to building trust within an organisation, breaking down potential silos and creating a sense of identity for tribes within your organisation. This means investment in more regular social events, and senior sponsorship of informal interest groups. Manufacturer 3M have demonstrated this approach effectively, with a grassroots community of over 1,000 employees meeting virtually on a regular basis to practice mindfulness, supplementing this with sessions led by their internal occupational health nurses.

Ensure leaders practice what is preached

A common theme from our work across financial services is that certain roles, and certain seniorities within the organisation are more likely to return to full time office working and are more psychologically attached to older patterns of work. So, there is a risk that they do not role model the behaviours that support successful hybrid working.

If distributed working is going to be successful, it is essential to examine your existing culture and the role of leaders in architecting it. If offering greater flexibility is perceived to have a negative impact on individuals and their careers then it won’t result in real change. This means that leaders also need to work from home, if that’s the new standard practice, and adopt new digital technologies to enable new ways of operating. They should encourage teams to take decisions about when and where they work, in order to be most effective. Citigroup’s CEO has shown a good example of this mandating ‘Zoom-free Fridays’ where video calls are banned to combat fatigue. When such initiatives are mandated from the top, and demonstrated effectively by senior executives, they can be far more impactful.

Identify what you want to achieve, and measure it

The benefits that distributed working can bring to an organisation are easy to quantify. Impacts on real-estate footprints and even productivity can be seen on a spreadsheet. The dis-benefits are harder to measure, and in some cases may not become apparent until much later on, for example, the negative impact that a lack of in-person learning opportunities may have on the talent pipeline.

Therefore, it is important for leaders to spend time at the outset identifying what it is they want to achieve with hybrid working. They should build on experience gained during the pandemic (a framework for assessing these changes is outlined here) and what risks they will need to mitigate. Through the identification of effective measures, leaders will be able to keep abreast of these impacts, and make adjustments to policies, structures and processes where necessary to achieve full realisation of the benefits of the changes, and avoid unintended consequences.

Make a commitment to revisiting your commitment

Remote working isn’t going anywhere after COVID-19, so decisions made now should not be considered set in stone. We all recognise that the world is changing rapidly, and financial services firms should not expect to install a new set of policies (around flexible working, hours of work etc.) now without planning to revisit them in the future. As expectations of employment and working life continue to change, re-shaping the way we work is something that we will need to pay attention now and into the future.

While COVID-19 has been devastating for many, it has presented us with an opportunity to make a hugely positive change to how and where we work. Maximising the benefits from hybrid models of remote working will require commitment and effort from within the organisation. Letting go of old habits and continuing to learn new ways of working will ensure financial services leaders are able to grasp a new, and positive future of work.

Contact the authors

Contact the financial services team