Workplace:

The American workplace will undergo significant changes beyond the physical workspace. A few events have made it clear that business as usual will not cut it anymore. 

While the media is full of stories and surveys about work arrangements in response to Covid-19 and uncertainties it precipitated, I came across information signaling that the future workplace will be fundamentally different in 2021.

The winds of change have been in the air since 2008, starting with the financial markets’ debacle and the Government’s subsequent bailout to stabilize the economy, followed by a deep recession. However, Wall Street had no incentives to overhaul a system that had worked well. There was a prevailing mentality, “Don’t fix it if it ain’t broke.”  

There were incremental fixes, like installing Corporate Social Responsibility programs and appointing of Diversity officers for complying with the Government’s mandates for contractors, and visible postings of Equal Opportunity Employment and Occupational Safety and Hazard regulations. But these mandates lacked the teeth in implementation due to the weak political, corporate and societal will.  These were token actions to appease the regulators and employees.

However, several concurrent events and post-COVID-19 trends force us to reexamine how we live, what matters most, how we earn, do business, and our business’s purpose. It is meriting a critical look at how we want to shape our future in life and business.

Forces of Change

The sudden Impact of COVID-19 blindsided and jarred us into shedding complacency, sleepwalking through life and business, and cull outdated ideas. Several movements are afoot questioning how we do business, the real purpose of our existence, how we earn money, what makes it worthwhile to work, whose interests we are serving after all, and what we can do to turn around?

COVID-19 became a catalyst and fast-tracked a few things along with the degradation in our political and economic system, sending alarms among business thinkers and the population at large. Restrictions on business and interstate travel to control the spread of the deadly Coronavirus and bans on shipments disrupted supply chains precipitating the crises. Small businesses’ closings on the Main Streets resulted in massive revenue losses and joblessness. The local and state-mandated restrictions on the day-to-day life movements resulted in corporations scrambling to make alternate arrangements for carrying on work.

Simultaneously, the blatant and overt disparity in racial and gender equality in the society affected people enough to question if law and the Government will protect their rights. They embraced activism to attract the world’s attention to their grievances. Most of the activists were young and idealistic. The U.S. Census Bureau estimates that by 2028 Millennials and immigrants will outnumber the Boomers making them a force that cannot be ignored.

These events have affected the present and future workforce; the very proactive millennials who, with their education and technology savvy, are no longer willing to follow any system not looking out for their future, whether protecting the environment from destruction, financial solvency, or their work-life balance. The near disappearance of the middle class and deliberate favoritism of elites concerns them.

 Millennials (between the ages of 23 3to 38) and the generations following are ready to use their political and economic clout to dismantle the social, political, and economic systems if necessary. They espouse fairer and more just values than those of the previous generations and are not afraid to challenge the establishment.

The U.S. Census Bureau estimates that by 2028, Millennials will outnumber the boomer generation. And just as the Boomers exerted influence on the ethos and culture between the 1960s and 1990s, the Millennials are expected to use their power to shape the future. Unlike their predecessors, they care more about fairness and justice. They are willing to walk away, taking their jobs to the employers they perceive as having a good corporate culture that balances the investors’ needs, profitmaking, and employees’ needs. Their superior technological savvy makes them very attractive to employers across industries and geography, so they are unwilling to compromise. The worldwide web gives them access to jobs with decent wages and attractive benefits.

Business Response 

Implications of all this are not lost on the political think-tanks and thinkers in business. The Business Roundtable, an organization of CEOs of the top U.S.corporations, announced last year that 181 of its members had signed on the redefinition of business’s purpose, “Working for the benefit of all stakeholders, such as customers, employees, suppliers, communities where the company operates, as well as shareholders.”  It is a significant shift from the previous definition from the 1980s, which defined business’s purpose as increasing investor’s values. 

The Wall Street and American businesses adopted this 1980’s definition with zeal and enthusiasm. Investor’s value became the central focus, while accountability to other stakeholders became a lower priority. All the norms got calibrated to satisfy the single-minded focus on investors and profit maximization. Even the Government agencies became lax in oversight. Ultimately, the financial crisis in 2008 sent the country in a wild spin.

 Parallelly, globalization allowed the pursuit of maximizing profits by sending American jobs to countries with lower labor costs. However, the gains did not result in plowing profits back into the market but in enriching investors’ portfolios, causing a very lopsided class divide based on the wealth gap. The middle class was nearly decimated. The public anger erupted because even as the American worker’s productivity was gaining, their wages were not keeping pace with inflation leading to diminished life quality.

The pursuit of profit maximization also resulted in a governance practice, making do with minimum required resources, resulting in job losses for a large class of workers while overburdening the remaining workforce to increase employee productivity.  Presently, employees are fearful of losing jobs and paychecks and overly stressed managing the work-life balance.

The public perception of the disparity of gender-based pay, implicit bias against hiring minorities, immigration policies, and unfair tax burden carried by the middle class came into intense focus as the four-year election cycles rolled around.  These have become a political football between parties in their public town-halls and debates.  Media and American businesses noticed and began to feel uncomfortable that the widespread uprising of activists garnered support not only in the USA but also elsewhere in the world. They feared that unless we revisit our purpose, we may become the target of the public’s wrath, the very people representing the ultimate market for the American good and services.

Activism amongst the investors and the general public led people to vote with their expendable dollars away from the businesses deemed unfair or unethical. They used social media to air their grievances and organize boycotts of goods and services that supported unfair business practices and political partisanship. They publicized their Political Action Committees’ donations exposing the political allegiances of companies. It was beginning to dawn that if the buying power shrinks in the domestic market, there will be no Main Street market. If the Main Street shutters businesses, eventually there would be no businesses to invest in! 

As if to hammer this point home, the Coronavirus restrictions forced many companies in shutting down or declaring bankruptcies, raising fears of potentially a deep economic depression; one that could be worse than the one in 1929!

The focus is on shaping the future for sustainability and devising policies for all stakeholders, not just a selected class. It is also on competition through innovation, and so even on Diversity in the workforce. It has been already established that Diversity contributes significantly to generating new products and services to boost investment returns. 

The urgency is not lost on anyone not mired in old fashioned thinking.  The Business Round Table members have reviewed the philosophy and practices of governance for charting the new course.  Some skeptics doubt that the new definition will broaden business accountability and potentially more government regulations and interference. They are saying that it is mere fluff rather than substance. Still, their viewpoint seems more bluster by those unwilling to give up the privileges.

Bringing equity and providing fair pay and benefits irrespective of gender, race, color, or sexual preference has become of paramount interest. The hiring policies and tools establish a level playing field by introducing Artificial Intelligence and Neuroscience based recruitment tools to evaluate candidates’ potential rather than experience. The traditional advanced education will still matter, but corporate training will also become important since technology is changing at warp speed, and the workforce has to keep up with changes. 

Reporting on Human Capital

The Security and Exchange Commission (SEC) has established new guidelines for human capital reporting from all public companies beginning with the last quarter of 2020. It requires reporting beyond the number of employees and executive ranks and compensation, including the number of open positions, the time it takes in filling those positions, the number of critical roles, and positions filled from inside. It will also require the companies to report the turnover rates in talent deployment and critical functions and temporary and seasonal employment.

The new SEC reporting would require scores on Employee engagement, Leadership trust, and the type of training offered to employees and the leadership alongside the cost of employee training and development, the total workforce costs, and the ROI on Human Capital.

Report on Diversity and Equity would ask employees by gender, age, race, national origins, pay equity, and the number of people with diverse backgrounds in leadership. Independent auditors would review this reporting based on recommendations of the ISO (International Standard Organization).

Early Federal Initiatives for Diversity and Inclusion

Biden Administration has announced the White House Gender Policy Council’s formation to develop policies to advance America’s mission toward building the nation back better. Jennifer Klein, CEO of Time’s Up, a non-profit, and Julissa Reynoso, Assistant to the President, will co-chair. Susan Rice, the former Attorney General in the Obama Administration, will serve as an advisor in formulating and coordinating the Government policy for women and girls to open access to economic opportunities, healthcare, education, and national security to level the playing field.

Workers’ Response to the Future Workplace

While all these initiatives are being considered, the most critical and immediate question is what will the future office be like? Will it be decentralized, work from anywhere or home, facilitated by the technologies that allow seamless collaboration between management, team leaders, and individual members? Or some hybrid with hub and spoke satellite offices partly to work from home but hold consultations or meetings in a formal setting.

The Workers’ opinions vary about what works best for them. Parents with young children find being in the same place 24/7 stressful, whereas some think that office is a place to work without distraction and socialize with colleagues. They miss the camaraderie and a place to go to every morning. Many individual contributors enjoy the freedom from the daily commute and unproductive driving time. 

The surveys on working from home report higher productivity. And, having some flexibility allows better management of work-life obligations to some.

While the final configurations are being worked out, one thing is sure; at least in the foreseeable future, working out of home is the best course until Americans build immunity through immunization. And for the other initiatives by the businesses, business oversight organizations, and the Whitehouse, only time will tell.