Many company leaders are focused on real estate costs and employee preferences as they prepare for a post-Covid future. But these considerations are short-sighted and obscure the more important questions of organization design. Midsize companies in particular have a unique opportunity to rethink their pathways to growth in a changed world. First, understand the types of work your company does, then determine what can be done remotely and what should be done onsite. Approach this with an awareness there’s no one arrangement that will work for every single team. Then, you can make more strategic and thoughtful decisions about your company’s culture, technology, and real estate.
The CEO of a $350 million professional services firm recently reached out for consultation about his now-remote work force, which has become quite comfortable working from home. His employees are saving money on commutes and child care while getting their work done productively — in some cases more productively than before. His technical leaders are raving about the talent pools they can now recruit from since they no longer have to convince people to move from urban talent hubs to their small city. Sure, some employees are climbing the walls of their makeshift home offices, eager for the camaraderie of the office and to leave behind homeschooling. But for the most part, the company’s done just fine in the transition to remote work.
He, however, has not. He’s a self-admitted “old school” guy who loves the energy of the office. Committed to staying connected to his people, he relishes walking the halls to find impromptu conversations, stop by meetings to thank employees for their work, and ensure that the culture of collaboration he’d worked so hard to create is thriving. He told me, “You just can’t replicate that energy on a video screen.” On top of that frustration, lease-renewal windows are approaching, and his board is pressuring him to consolidate facilities and reduce expensive real-estate costs.
This CEO isn’t alone in facing the question of how to adapt to a changed world. Research suggests that 74% of CFOs expect to transition some portion of their workforce to permanent remote work post-Covid. Gallup estimates that as much as 62% of the workforce worked from home during the pandemic, compared to only 25% just a few years ago. But what criteria should leaders use to guide their decisions? In my experience working with companies on such organization-design challenges, using employee preferences or real estate savings as criteria for these decisions is short-sighted and eclipses more important factors. Midsize companies, which often have to compete for talent with larger, global corporations and whose cultures tend to be more close-knit, should take this opportunity to design their organizations for a post-Covid world. Here are five strategies to help midsize company leaders approach this opportunity thoughtfully and with an eye toward the future.
Double down on strategy first. The pandemic hasn’t just disrupted your company, but also the lives of your customers. Before you can make choices about how to design your own work, you need to step back and consider if and how the way you serve your markets must now shift. Will your customers buy your product or service differently? Do they have new or changing needs you can now meet? Have your competitors made adjustments you must follow, or have they fallen behind in ways you can take advantage of? Reassess whether or not the things that differentiated you before still hold true. While you may instinctively believe nothing’s changed, a fresh look might surprise you. To confirm your instincts, analyze your work against your strategy by dividing your company’s work into three categories.
First, competitive work, usually around 15 to 20% of all work activities, comprises the most strategically important work. Investing $1 in this work should yield a $5 return. It’s the work that directly delivers the value that distinguishes you from your competition.
Second, enabling work, which accounts for another 15 to 20% of activity, is the work that directly supports competitive work. For example, if you compete on customer service to set yourself apart, customer analytics might be your enabling work.
The remaining 30 to 60% of work is necessary work: it keeps you in compliance and keeps the lights on. Competitive and enabling work should be organized for maximum effectiveness. This is where you invest disproportionately in talent and technology. Necessary work should be organized for maximum efficiency — done in parity with others for the lowest cost possible. (You may also have a fourth category: unnecessary work that no longer adds the value it once did and can be discontinued or outsourced.)
Many midsize companies’ approach to strategy remains overly simplistic: a “mission, vision, values” list accompanied by annual financial goals, rather than a sharp articulation of what really differentiates them competitively. The opportunistic growth spurts common to midsize companies can badly obscure the boundaries between competitive and necessary work thanks to competing and changing priorities. Take this opportunity to get more disciplined and honest about your strategic identity and sharpen the distinctions between types of work before you decide where and how to locate it.
Accept that there’s no one-size-fits-all answer. Now that you’ve prioritized the work relative to your strategy, you can consider questions of where and how to locate those activities. Key factors to consider include the impact the work has on customers, how much collaboration the work requires (both within teams and cross functionally), and what kind of talent is needed to do the work with excellence. Avoid short-sighted, binary choices here — for example, remote or onsite. They tend to over-index on employee preference as a dominant criterion, resulting in extroverts in remote-friendly individual roles advocating for onsite work, and introverts engaged in team-based work begging to stay home. The optimal answers will likely vary across departments or regions.
Activities that are typically done by individual contributors, like analytics and reporting, claims processing, and call center work have successfully transitioned to remote work, despite the common belief that they needed to be done onsite. Other project-based activities, like product development, client service delivery, and strategic planning have effectively employed a blend of in-person and asynchronous collaboration.
Company leaders should set high-level parameters for departmental and regional managers to use in proposing what works best for their groups. For example, “Leaders must be readily accessible to their teams whether onsite or remotely,” or, “The location of work must never hinder effective cross-functional coordination.” Those proposed plans can then be integrated to ensure that across the organization, there’s a focus on consistency, fairness, and performance requirements.
Finally, it will be important for your human resources team to make sure there are resources in place to address any upskilling or talent needs the plans reveal.
Design for the social connection you need. Many midsize companies pride themselves on their tight-knit cultures. Veteran employees who’ve grown up with the company for years, even decades, often say things like, “We’re a family here.” And like it is for the CEO who called for help, the fear of losing that culture in remote work is real. Further, many talented employees choose smaller companies over large, corporate jobs precisely because of that closeness.
Midsize company leaders should exploit the advantages of their size. First, they can be nimbler with remote work than large, global corporations, offering prospective talent levels of flexibility that big companies can’t. Second, remember that a deep sense of connection and belonging isn’t just a byproduct of onsite work — your company values should be every bit as impactful when you’re in each other’s presence as when you’re not. The deep sense of purpose, intolerance of bureaucracy, and more intimate connection between leaders and followers that often characterize midsize companies can be sustained even when working remotely.
Once you’ve determined the degree of collaboration and social cohesion each body of work needs, you can determine how to create that connectivity. This is a great place to engage employees in the work. Many smaller companies have moved to always-on video conferencing and regular virtual happy hours and social gatherings, and leaders have significantly increased their one-on-one time with those they lead. Where possible, teams are gathering in person with appropriate social distancing to talk about work and non-work-related things. If you’ve felt the cohesive bonds of your culture weakening over the last 10 months, don’t instantly assume remote work is the entire cause. There may be other factors straining cohesion now that the pandemic revealed but didn’t create.
Pay down your technical debt. Technology has enabled deeper connection among teams, but for smaller companies, it’s been choppy at times. Many midsize companies are carrying significant technical debt, having failed to upgrade technology systems during periods of intense growth. The pandemic has exposed legacy data servers, clumsy core processes and internal collaboration tools, and outmoded customer relationship or financial management tools. Naturally, the absence of effective technologies can make remote work more difficult to employ consistently across the organization because all of the “bubble gum and duct tape” workarounds are onsite. Many leaders simply play the culture card, claiming that for their culture to remain special, people have to be onsite — it’s a tempting way to avoid accumulated technical debt. This transition to a new type of workplace is the perfect opportunity to get serious about bringing your technology up to speed as fast as your budget will allow.
Make your real-estate decisions last. Rather than using lease renewals or cost-saving opportunities to drive your real estate decisions, use the organization design choices above to completely rethink your facilities needs. If you discover that you have a greater need for collaboration space than you’d previously understood and that future growth will depend on greater interdependency between teams, then perhaps you need workspaces with more collaboration rooms than individual offices or cubicles. If you anticipate a highly varied use of onsite work, then perhaps hoteling or other flexible workspace arrangements work best. There are many workplace design options to meet your company needs, and those choices are best made when preceded by sound strategic and organization design choices.
For midsize companies aspiring to continued growth, the possibilities of a post-Covid workplace offer unique opportunities to rethink the pathway to get there. Don’t let short-term thinking get in the way of taking advantage of the long-term benefits awaiting your organization.