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E200 | The Impact of Hybrid Work on Employees and Employers with Peter Cappelli

What does the future of your office look like? Are all of your employees back to work yet? Or do you have a hybrid approach to working? 

That’s the question today’s guest, Peter Cappelli, Professor of Management at Wharton School, and director of Wharton’s Centre for Human Resources, has been researching. 

Why do we go to offices and what don’t we like about them? In the wake of the pandemic, our thoughts around offices have changed dramatically, with more employees than ever before keen to adopt a hybrid approach to work. 

But having zero offices and fully remote staff simply doesn’t benefit employers (or employees), yet according to the Financial Times, the UK is one of the last countries where offices have returned to ‘normal’, so what gives?

In this latest episode of Mind Your F**king Business Podcast, Peter shares his thoughts on AI, the decline in employee training, and why it’s so hard to hire in the current market. 

On today’s podcast:

  • Will college pay off?
  • The hiring conundrum
  • Training in the workplace
  • The remote working conundrum
  • The future of the office


The future of the office with Peter Cappelli

Peter Cappelli is the George W. Taylor Professor of Management at The Wharton School and Director of Wharton’s Centre for Human Resources. His latest book is The Future of the Office: Work from Home, Remote Work, and the Hard Choices We Face. 

Will college pay off?

Before writing his latest book on the future of offices, Peter studied how college works and how it feeds the labour markets, and whether it was worth it. Because in the US, despite the high cost of attending university, only 40% of students graduate on time. Going to college and graduating from college, says Peter, are two very different things. 

“The average American college education costs about four times more than the OECD average. And the average American parent pays eight times as much as the average parent in an OECD country.”

The problem is, if you don’t graduate, it doesn’t look good. But how important is a college education to getting hired?

The hiring conundrum

Well, says Peter, after the recession of 2008, employers were complaining they couldn’t find anybody to hire, so he looked into what was happening – why was there a lack of available talent?

And he discovered that the issue was technology – after the .com boom, with the flood of applicants for every role, employers moved their hiring process online, relying on technology to help them find, sort and recruit new people. 

Recruiters weren’t using their intuition to find the best people, they were using technology to sift CVs for them, predetermining the selection criteria beforehand i.e. a college degree, and three years experience, etc, and automatically rejecting anyone who didn’t have these things. And despite thinking these requests were standard requirements, so few people met the mark, that recruiting became a struggle. 

Still, employers are reluctant to admit this new way of recruiting does more harm than good. Despite making it easy to apply for roles, there’s no wiggle room in the hiring funnel, meaning both sides of the equation are struggling – job seekers can’t get hired, and employers can’t find top talent. 

“The applicants figure it’s all going through a computer screen anyway, I’m not sure I can guess what they’re looking for. And so they don’t have any incentive to customise it because the software doesn’t read the cover letter. And then the employer says, Well, they didn’t customise it, so I don’t want to hire them. Then you’re in this downward spiral.”

And then, to make matters worse, both sides are ghosting the other – applicants apply and don’t hear back, and employers who want more information request it, but the applicants don’t respond because it takes too long. 

Training in the workplace

Workplace training is invaluable to both employees and employers. For employees it’s how they develop and grow into the next role, and for employers, it’s how they realise the potential of each employee. 

Historically, people were paid less when they first started and were trained up, gradually getting paid more as they became more valuable. But companies have ceased doing this. 

“Employers have backed away from training in a big way. And part of the reason is because they don’t think people will stay around. And to some extent, that’s true. And the reason they leave, certainly one of the main reasons is because they don’t see any way of advancing partly because they’re not getting trained. It’s a self fulfilling prophecy.”

The remote working conundrum

Why has almost every country apart from the UK and the US gone back to office work? What are the drivers preventing employees from going back to the office full time? 

“What is so novel about it is the employee experience. So that’s where we talk about: why do employees want this? Would this be good for them? Wouldn’t this be wonderful, etc. And what we’re not thinking about much is does it work for the employers? And what might work for the employers?”

Because if it doesn’t work for the employers, then it’s not going to happen. Employers don’t do things for their employees simply because the employees want it, says Peter. 

So why does the UK still have the most people working remotely (24%)?

One reason touted is that it’s cheaper for the business to not have to pay for office space. Another is that employees have more autonomy with a better work life balance when they’re left to get on with their work:

“Well, we assume we know the answer, but it’s probably not what we think. We assume it’s just because they don’t like the commute, right? But not everybody has a difficult commute… I think a lot of what people liked about it was that they’re managed differently, with more hands off less micromanagement. And the bosses are more inclined to say, look, I don’t care when you do this. But here’s what you need to have done. By the end of the week.”

During the pandemic, companies had no choice but to allow employees to work remotely. But research showed, and still shows, that even with the option to work in a hybrid model, if you volunteer to work from home, your career suffers on every dimension that can be measured. Promotions are slower, wage increases are slower, people’s commitment is lower, identification with work is lower. And this is because there’s a lack of human connection. 

“If you are an employee, you probably will pay a price if you are working remotely and your colleagues are in the office. I mean, it’s not too surprising, right? Because if you’re hanging out with the bosses you’re gonna get more attention, if they’re thinking about promoting somebody, or giving somebody an interesting assignment, they’re gonna give it to the person that they see every day.”

The future of the office

So what is the solution? Unfortunately there is no clear cut answer, says Peter. 

“I think we haven’t been very creative on the employer side of trying to figure out what we could do that might help employees. And that might help us recruit, and that might help us retain, even if there’s no big clear savings the way there is with taking your office away.”

This isn’t a debate that is going to get answered quickly. It’s been debated for the last 100 years, says Peter – how do you better manage people to get the most out of them without irritating them to the point of demotivation?

“There are a bunch of reasons why we continue to manage people in ways that don’t look efficient, and that we’ve demonstrated with a lot of research don’t work particularly well. Yet we continue to do them.”

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