It's About Trust

Getting More for Less.

Companies aren’t families.  The employer/employee relationship is governed more by economics (math) than trust.  This is at the heart of the ongoing struggle between employers and employees over return to office and asynchronous work.  Let us explain.
 
The employer wants the employee working in the office at times of its choosing and the employee wants to work wherever and whenever she chooses, so long as she gets her work done.  In fact, surveys reveal employees are willing to take a material reduction in compensation to preserve flexibility.  Academics and research organizations have begun to study the impact of remote work on productivity.  Studies show workers are generally as productive when working from anywhere and/or asynchronously as they are when working from the office.  In some cases, these studies argue employees are more productive and in others they show a slight decrease in productivity.  Stanford economist, Nick Bloom, a foremost expert on remote work, points out that while there may be some modest level of decreased productivity (especially when fully remote), overall profitability may increase due to savings in real estate costs (e.g., the enterprise may be more profitable).  He also, correctly, points out the substantial benefits to the climate by reducing the carbon footprint associated with commuting.  There’s also an argument to be made that employees are healthier, both physically and mentally, when given more flexibility.
 
Given the benefits of a providing employees with more agency over their work, why are so many employers working to undo pandemic freedoms?  It’s about trust and economics.  Specifically, the employer simply does not trust that its employees are doing their best work when working remotely and/or asynchronously.  It gets back to the transactional nature of the economic relationship.  It relates to the disconnect between executive and employee compensation and economic motivations.  Executive compensation is largely tied to measures of productivity.  It is widely regarded as beneficial to the enterprise and its shareholders to have leaders’ comp so aligned.  This gives leaders a variety of levers to pull in achieving their compensation objectives, in showing increases in productivity.  One such lever is to drive more production from employees while not increasing the cost of labor.  The employees are assets, yes, but they’re also a unit cost in the production of goods or services.  How is employee compensation disconnected from that of corporate leadership?  Well, aside from the fact in most companies’ executive comp is wildly higher than that of the average employee, employees also have far less control over their compensation.  They have fewer levers to exercise in acquiring economic advantage.  But the idea of creating leverage, of discovering value, is not lost on the employee.  One way to view the newfound freedom employees have enjoyed since the pandemic is in terms of the agency it created for employees to exercise economic advantage.  Take the employee who kept her high-paying San Francisco job but sold her small bay area home and moved to Boise, ID.  She likely made a very attractive trade.  And the employee who is now free to do other things during the day and work at night has made similar gains that would not have been possible prior to the pandemic.  When considered in the context of the compensation interests of the parties, executive and employee, the struggle makes more sense. 
 
Shifting the employer/employee relationship from economic to trust-based is not easy (maybe impossible).  In fact, we’re starting to see employers pull purely economic levers to compel employees back to the office, including increased compensation and more opportunity for growth.  Indeed, these actions portend a step backward, away from a place in which employers give employees more agency.  Many have hoped for a new future state of work in which the employee enjoys much more flexibility.  Maybe we’re moving in the direction of an entirely new model of work, one that embraces remote and asynchronous work over the traditional model.  Maybe we’re close to a time when all workers are trusted to do their best work, no matter where they may live or if they show up to a physical place.  Maybe the four-day work week will become standard.  Maybe.  But this would require a huge shift in trust, in addition to changes in corporate transparency and compensation models such that executive and employee compensation are truly aligned (not talking about the nominal levels of stock/upside participation that allow a company to promote alignment when not really providing any material benefit to most employees).  People often talk about how the new generation of leaders will embrace hybrid and remote work, how they’re less committed to the office.  This may be true.  Yet I confess to being a bit skeptical that young leaders, upon gaining their seat at the boardroom table, will abandon the historical practices which enable the few at the top to maintain outsized compensation which is derived the old fashioned way.  Sure, there will be outliers, already are.  But the fundamental trade in the transactional relationship of employment will always be about getting more for less.