Report: New value propositions for the future of work
Over the past two years, organizations have adapted to a new reality: The only certainty is uncertainty. Luminary Labs has reviewed nearly 100 resources to outline mid-range and longer-term considerations, as well as competitive implications, for attracting and retaining talent, enhancing productivity, and accelerating innovation — with the goal of informing mid-size organizations and larger employers’ strategic decisions regarding people, places, and processes.
We already know that 2022 will be a year of continued learning and experimentation as organizations navigate unexpected barriers, flex around moments, and embrace possibilities in the messy middle. There is no shortage of near-term prognostication in business media; this report is designed to serve as a pragmatic antidote.
To better understand current conditions and plan for the months and years to come, we’ve taken a high-level look at the role of the office, hybrid work dynamics, and corporate-labor relations.
In this report:
Workplace design. New hybrid and flexible work models place a high value on in-person connection, collaboration, and culture-building. To make these models work, physical workplaces should be intentionally designed around those priorities.
Real estate investment. Instead of scaling back on buying and leasing, many large employers are going all in on commercial real estate. Top tech companies are making opportunistic bets on the future of in-person work, and in industries where place matters, real estate is hotter than ever.
Organizational culture. Strong organizational cultures don’t build themselves. Adapting cultures to new hybrid models will mean carefully examining values, supporting upskilling for employees at all levels, and defining structures that enable both flexibility and accountability.
Changing lifestyles and talent personas. The large-scale transition to hybrid and remote work is changing daily and weekly routines, including commutes and out-of-town travel. While some of these adjustments may be temporary, lifestyle changes have led to longer-term decisions (including migration) that may fuel lasting shifts — and create a need for new customer personas and talent profiles.
Persistent labor shortages. While the “Great Resignation” is impacting all types of workers and companies, quits are much lower in high-wage, white-collar industries. But other factors are contributing to labor shortages — and recruiting will be a challenge for the foreseeable future.
New value propositions. If attracting and retaining talent is difficult now and unlikely to get easier, organizations will need to think about what really matters to employees and prepare to offer meaningful benefits. Companies that get flexibility right will be at a competitive advantage.
PART 1
The role of the office
What is the office for?
Across roles and sectors, people and organizations showed remarkable adaptability in the early days of the coronavirus pandemic. In spring 2020, more than half of all full-time employees in the U.S. were exclusively performing their jobs remotely. But some jobs — from scientific research and facility management to manufacturing, healthcare, and hospitality — simply can’t be done at home, and not everyone wants to work remotely or can accommodate work activity inside their home. By fall 2021, only 25% of full-time employees were still working from home exclusively; many companies had returned to in-person work or embarked on new hybrid work experiments. (Gallup)
Across the board, workers have expressed a desire to retain the flexibility they gained during the pandemic, even as organizations return to something closer to “normal.” (Future Forum, McKinsey & Company, Harvard Business Review, Microsoft) Hybrid experiments — and new approaches to flexible work — have prompted renewed examination of what types of activities are best conducted in-person. If a team’s on-site days are limited, what should they prioritize during their time together? The answer is different for each team, and often depends on culture, values, and pain points.
During the first six months of 2020, Microsoft’s company-wide shift to remote work resulted in its U.S. employees’ internal communication and collaboration becoming “more static and siloed, with fewer bridges between disparate parts.” (Nature Human Behavior) But it probably wasn’t entirely due to the extreme circumstances of the pandemic: Even before COVID-19, a Google study found no lack of productivity or well-being among members of distributed teams, but those employees felt it was more difficult to establish connections. (Inc., Google) Despite record productivity gains in 2020, pandemic disruptions and the shift to remote work have raised concerns about relationship-building — and the innovation, creativity, and culture benefits that come along with cross-functional collaboration. (Federal Reserve Bank of San Francisco, National Bureau of Economic Research) Many companies have found it difficult to virtually replicate the network-building and casual conversations that happen naturally in office settings. (The Atlantic)
Designing for 2023 and beyond
If offices are valuable spaces for connection, collaboration, and culture-building, then how might that impact plans for physical workplaces?
Stanford economics professor Nicholas Bloom has identified four implications for the hybrid office: size, location, design, and technology. Organizations can’t easily reduce their physical footprints if the office is meant to be a space for synchronous gathering. (Charter Workplace Summit) And while COVID-era migration to the suburbs has created a “donut effect” on metro area populations, city centers are still the most accessible place for commuters. (National Bureau of Economic Research)
Even if the amount of space and the location of the office stay the same, many organizations will need to consider layout changes that emphasize collaboration space over heads-down work; that may mean soundproofing hybrid meeting rooms, installing phone booths for calls with remote colleagues, and carving out open lounge areas for casual gatherings. (Charter Workplace Summit) Google’s updated workplace layouts include floating desks, presentation booths, reservable collaboration areas, and outdoor spaces. (Architectural Digest) Technology will never be perfect, but it has rapidly improved — and will likely become even better. The number of patent applications that reference “working from home” has exploded since the start of the pandemic. (American Economic Association, Chicago Booth Review)
Opportunistic bets on in-person work
Big tech companies such as Google, Amazon, Facebook, and Salesforce are buying and leasing millions of square feet of office space in cities across the United States. In many cases, the spree is a continuation of expansion plans that began before the pandemic. (Mercury News, Crain’s Chicago Business) But some of the deals are opportunistic bets that people will — eventually — want to gather in the same place at the same time. In Manhattan, where companies have been slow to return to in-person office work, big tech companies are taking advantage of market conditions to secure additional office space. (CNBC) In a statement on “investing in America,” Google CEO Sundar Pichai said “Coming together in person to collaborate and build community is core to Google’s culture, and it will be an important part of our future. So we continue to make significant investments.” (Google) The tech giant is planning the second-largest residential development in Silicon Valley history, with offices, shops, restaurants, and 7,000 residences. (Mercury News)
In some industries, innovation is concentrated in geographic clusters. The automotive industry is still centered in Detroit, financial services are still in New York, and the oil and gas industry is still in Texas. In another example, life sciences innovation largely exists within “highly collaborative ecosystems” that are dependent on proximity to research institutions, funding sources, and other innovative companies. (RBC Capital Markets) In an industry where place matters, commercial real estate is hotter than ever. Infusions of venture capital have helped spur demand for lab space, and the amount of lab space under speculative development isn’t enough to meet that demand — especially in core clusters such as Boston, San Francisco, and San Diego. (Bisnow) Boston’s concentration of medical centers and colleges — including MIT and Harvard — have helped make it a global hub for life sciences. With billions of investment dollars pouring into the city, developers are converting older properties into lab and office space for biotech and pharmaceutical companies. (Wall Street Journal) Higher demand for lab space and lower demand for office space are inspiring commercial real estate investors to shift their focus to biotech campuses in supply-constrained regions such as Boulder, Colorado. (Daily Camera) North Carolina’s Research Triangle saw $4 billion of biotech investment in 2021, buoyed by regional economic development efforts and augmented by speculative real estate development. (News & Observer) And other regions want in on the action: Austin, Dallas, and Houston are making a Texas-sized investment in creating the next research triangle for biotech. (STAT)
Long-term real estate investments can be about more than acquiring physical space and planning for growth. Creative use of real estate considers a company’s position in the broader community, as well as how physical spaces enhance the employee experience. What would make the office feel welcoming and accommodating? That used to mean a ping-pong table and beer on tap, but looking ahead, truly valuable amenities will make employees’ lives easier — think proximity to transit, on-site childcare, and other services.
PART 2
Hybrid work dynamics
Adapting to new ways of working
The big bet on hybrid work seeks to capitalize on the best of remote work (productivity on individualistic work, less time commuting) and the best of in-person time (creativity, innovation, networking, and culture-building). (Stanford Business, National Bureau of Economic Research) But strong organizational cultures don’t build themselves. Whether companies are conducting business in-person, remotely, or some combination of modes, culture starts with values.
Many companies spent time rethinking their values in 2020 and 2021. LinkedIn CEO Ryan Roslansky recommends codifying and sharing a vision — and when shifting to a new way of working, that means re-onboarding everyone. (Charter Workplace Summit) At Quora, documentation is important for both onboarding new employees and maintaining a hybrid or remote-first model; it’s easier to explain, examine, and adapt culture when it’s explicitly written down. (Charter) Pre-COVID experiments with hybrid work at IBM and Best Buy were initially successful but were eventually abandoned because new hires didn’t buy into the team’s approach. (New Yorker) If companies are truly committed to sustainable hybrid and flexible work, they will need to intentionally build and maintain a culture that aligns with it. And companies that don’t already have employee engagement managers may need to add new roles that ensure positive workplace experiences. (WorkLife)
Effective management has always been key to employee engagement, and hybrid work makes management skills even more essential. But middle managers are struggling: In one survey, they scored two times lower than other respondents on sense of belonging and work-related stress. (Future Forum) Managers may need support and training to lead with empathy and a coaching mindset. Performance management may be more challenging in hybrid environments with distributed teams, since it’s harder to tell when employees are struggling if there are fewer informal, in-person interactions. Those managing remote employees or teams distributed across time zones will need to master asynchronous communication and mentorship. (The Atlantic) New management playbooks should consider how to nurture talent with fewer or different types of touchpoints.
Employees at all levels will need help navigating new ways of working. Companies should be clear about what makes a hybrid employee successful; that may mean looking at skills and job requirements with fresh eyes. (PAIRIN)
Balancing flexibility and accountability
The hybrid conversation is actually multiple conversations: productivity (what you do), staffing (who does it), and culture (how you do it). Different hybrid models may emphasize different factors. (Harvard Business Review) When it comes to developing a broader philosophy on flexibility, there are additional considerations: location (where you work) and time (when you work).
While many hybrid experiments have clearly defined location parameters — often limited to the states or countries where a company can legally operate — some employers have not articulated guardrails for time. But employees want clear hours for collaboration and an expectation of when to be online, with flexibility outside of those hours. (McKinsey & Company) “Coordination hours” or “availability hours” are emerging as solutions for ensuring adequate time for meetings and real-time communication; outside of those hours, employees have more flexibility to manage their own schedules. (Charter) Those guardrails can enable collaboration, but there are trade-offs: At Slack, setting core team work hours meant rethinking meetings. With limited time for synchronous conversations, meetings are only for “discussion, debate, decision, and development.” (From Day One forum) Company-wide principles and guidelines bring welcome structure to hybrid work, and — perhaps counterintuitively — actually enable greater flexibility and autonomy. (Future Forum, Harvard Business Review) Human resources teams may also consider segmenting their employee audiences by roles and personas, recognizing that some may desire more guardrails — or greater flexibility — than others.
Across roles and modalities, companies will need to establish present-day baselines for productivity and other success metrics while constructing a vision for what they hope to achieve in the new world of hybrid and flexible work.
Expanding equity and reducing bias
Well-designed hybrid models have the potential to create workplaces that are more inclusive and equitable. Marginalized people and caregivers often desire more flexibility, including work-from-home options. (Harvard Business Review, WFH Research) In particular, many women of color have felt the need to change themselves to fit the context of an office; marginalized employees have reported a stronger sense of belonging when working remotely. (New York Times, From Day One forum)
The same is often true for international teams working across locations and time zones: Virtual meetings give distributed attendees equal space and access. And after two years of online conferences, organizations are recognizing the accessibility, diversity, and inclusivity benefits that come along with removing geographic barriers. (Nature Biotechnology) Instead of forcing decades-old norms and one-size-fits-all models, hybrid experiments offer a chance to make the workplace better for all employees. (Future Forum)
Of course, hybrid work is not without equity risks. Presenteeism bias and proximity bias are major concerns. Remote workers are less likely to be promoted than their in-office colleagues, even if they are more productive. (Inc.) And nearly half of employees say they would come into work on some or all of the days their manager does — even if that would go against their employer’s hybrid working plan. (WFH Research) If hybrid work is uncoordinated, the gap will widen between those who go into the office every day — often white male employees — and those who desire greater flexibility. (Charter Workplace Summit) For many companies, inclusion will be a competitive advantage; creating equitable experiences and retaining a diverse workforce will require consideration for the needs of caregivers, people of color, and others who no longer see full-time in-office work as an attractive option. (Future Forum)
The changing nature of work and life
The large-scale transition to hybrid and remote work is changing daily and weekly routines. Rush hour may be dead, but traffic is worse than ever. (Washington Post, New York Times) That may be because car ownership is up, and transit ridership is down. (Smart Cities Dive, Bloomberg) More people are running errands in the middle of the day or ducking out to pick up kids from school, thanks to remote work and greater work-life transparency. (Wall Street Journal) Workcations — traveling and working at the same time — are common now, and Airbnb says Monday and Tuesday are its fastest-growing travel days, as people tack on “shoulder days” to weekend trips. (Axios, Travel Pulse, Kalibri Labs, Twitter: Brian Chesky)
While some of these adjustments may be temporary, lifestyle changes have led to longer-term decisions for many workers. Remote work made suburban home and vacation home ownership possible for urban renters, prompting some people to accelerate their migration plans or deepen commitments to places. (U.S. Census Bureau, Money) While recent signals point to a less frenzied residential real estate market, home purchases and life changes made during the pandemic will likely fuel long-term shifts for families and communities. (Barron’s, New York Times Magazine) Over time, evolving lifestyles and routines may result in the need for new customer personas and talent profiles.
PART 3
Corporate-labor relationships
Labor shortages are here to stay
The number of Americans voluntarily leaving their jobs reached an all-time high in November 2021. (New York Times) While the “Great Resignation” is impacting all types of workers and companies, a large portion of people leaving the workforce are older workers age 55 and older. (CNN Business) And the “Big Quit” is more like the big job-hop: Low-wage workers are leveling up to better jobs with better pay. Contrary to popular speculation, quits are much lower in high-wage, white-collar industries such as finance, real estate, and the broader information sector. (The Atlantic, Washington Post, The Big Picture)
Some executives and influencers contend that talent reshuffling among white-collar and younger employees is a backlash against workism, a referendum on “jerk bosses,” or perhaps a desire to align their personal values with their organizations’ values. (The Atlantic, New York Times, Charter Workplace Summit) Even before COVID-19, burnout was a rising concern. Prior to the pandemic, feelings of burnout were less prevalent among fully remote workers than those who do not work from home; during the pandemic, the opposite has been true. (Gallup) While many are hopeful that hybrid work will improve engagement and well-being, some employees report feeling “emotionally exhausted.” (BBC) In reality, it’s too early to tell the impact of hybrid models — and after two years of living through a global pandemic, everything feels exhausting. We do know that burnout is trending separately from the “Great Resignation,” and the deprioritization of work is a global trend that has been building for decades. (The Atlantic, Bloomberg Businessweek) Prolonged burnout is cause for concern, even if it doesn’t result in resignation: Lack of employee engagement can harm companies as much as labor shortages. (Business Insider)
Across sectors, many employers faced recruitment and retention challenges in 2021. All signs point to labor shortages persisting well beyond the “Great Resignation.” Americans are aging and population growth is slowing; these demographic shifts have resulted in slowing economic growth, growing labor shortages, increased spending on healthcare, and a shrinking tax base. (Luminary Labs, Washington Post) Some businesses are turning to robots to deal with labor shortages, but paradoxically, the rise of automation is helping to fuel a shortage of highly skilled, high-income workers. (Bloomberg, Bain) Pandemic-era immigration policy and visa delays are also contributing to labor shortages. (Business Insider, NPR, Washington Post) Many companies are raising wages to attract talent, contributing to concerns about rising inflation and a “wage-price spiral.” (Wall Street Journal, Wall Street Journal) But the news isn’t all bad: In a hybrid world, “talent is everywhere.” Remote work options may democratize workers’ access to opportunities and diversify the talent pool for companies that can’t source enough skilled workers locally. (Microsoft)
New value propositions
If attracting and retaining talent is difficult now and unlikely to get easier, organizations will need to think about what really matters to employees. Compensation, benefits, and policies will be important draws, and a company’s culture and values will also be differentiating factors.
A new crop of companies are championing “people-first” principles in a bid to win talent. (People-First Jobs) At some companies, human-centric policies are both an incentive to join and a reason to stay: Patagonia has been providing on-site childcare for decades and boasts a 100% retention rate among employees who are new moms. (Business Insider, LinkedIn Talent Blog) When it comes to supporting caregivers, there’s plenty of room for improvement: Among parents who receive childcare benefits, three-quarters said those benefits don’t meet their current needs. (Charter and Vivvi)
Getting hybrid and flexible work right can pay dividends. Flexibility — including when and where work takes place — is now a core benefit, ranking second only to compensation among factors that knowledge workers value. (Future Forum) Even Amazon, Walmart, and Starbucks are offering greater flexibility to low-wage workers. (Quartz)
Increasing pressure of persistent labor shortages may up the ante: The four-day workweek could go from novel experiment to competitive advantage. (LinkedIn) More than 50 tech companies already post openings on a dedicated job board for remote, four-day workweek opportunities. (4 day week.io) To be sure, a shorter workweek won’t be feasible for many companies and roles, but it could be a tool to attract and retain particular types of talent or provide greater flexibility for employees with unique personal circumstances — whether it’s a new parent who wants to onramp after family leave, a caregiver with responsibilities for adult parents, or a graduate student conducting research.
Reducing burnout and creating more space for life outside of work may mean rethinking America’s always-on hustle culture. (New Yorker) In Europe and Canada, the “right to disconnect” movement is gaining momentum, and some U.S. companies are establishing tools and guidelines that prompt workers to unplug after hours. (LinkedIn, Wall Street Journal)
Some investors are betting on a future in which people don’t work for companies at all, but operate more like freelancers who monetize their skills in novel ways. (Andreessen Horowitz) In many ways, the “project-based economy” is already here for some organizations and specific roles — and the shift is requiring new values, frameworks, skills, and training. Executive sponsors and project managers must ensure that new initiatives have a clear purpose and align with the organization’s overall strategy; contributors and partners at every level will need to apply agile methods, adaptive techniques, and transparent communication to their work. (Harvard Business Review)
RECOMMENDATIONS
Key questions to ask in 2022
This year is the time to experiment with new models and ask thoughtful questions — while scanning the horizon for what’s coming next. To prepare for 2023 and beyond, organizations can consider these ideas:
The role of the office. Organizations should evaluate their approaches to flexible work by deciding on desired outcomes (for example, increased productivity, increased innovation, increased connectivity, or increased retention), establishing benchmarks, and measuring progress. How is the company’s physical space designed to support those outcomes — and the organization’s overall values? How might future plans for physical space flex in response to ongoing measurement?
Hybrid work dynamics. Of course, the design of the office is contingent upon the people who work there. What makes on-site, hybrid, or remote employees successful — and how is that success measured? How will the organization support employees with training and opportunities to share evolving best practices? What does “flexibility” mean at your organization? What are the guardrails and guidelines that enable flexibility — and meet business needs? Are the guardrails the same for everyone, or do different talent profiles and personas need different things? What happens if established boundaries are challenged?
Corporate-labor relations. In addition to identifying opportunities for professional growth, upskilling, reskilling, and lateral moves, how might people analytics and pulse surveys find culture issues and red flags at the team and company level? How might the same surveys uncover opportunities and solutions to enhance belonging? How might analytics be used in service of recruitment? (For example, could LinkedIn profile views identify casual interest from prospective hires, or could a database of dream candidates be matched with projected job openings?)
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