Human Capital Intel - 10/8/2024
New leadership playbook | RTO without the regrets | Disability lawsuit over remote work | Buy, rent or build talent?
Welcome to the latest edition of Human Capital Intelligence. As always, we would love to hear from you at ken@stibler.me with news ideas, feedback and anything else you find interesting.
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By Ken Stibler; Powered by Reyvism Analytics
What’s Working:
Traditional management misfires on the return to office test
Two weeks ago HCI discussed the ill-timed, and likely ill-fated, decision by Amazon’s CEO to bring all the workers back into the office 5-days a week. If you’re like me, you’re probably as tired of zoom calls as you are of this debate, yet it doesn’t look like the RTO fights are going anywhere.
Beyond the narrow debate over where and how we do work, the continued fight, and massive mishandling of RTO initiatives, provide some insight into the changing leadership landscape.
Transparency, Trust, and Data-Driven Decision Making
Amazon, a notoriously data-driven company, used broad and unsubstantiated claims about in-office’s effect on productivity. Without data to back up the assertions, skeptical employees had a base to critique the plan as just a grab at the whims of the CEO.
Now, shareholders have higher visibility on decisions, giving them greater scrutiny of both the decision making process, and outcomes. Leaders should be prepared to have their decisions and opinions challenged, and have strong answers ready if they want others to buy into them.
Loosening levers of employee control
A separate report on RTO plans shows that CEOs have been using a two track system of in-person preference for promotions to try to pull, rather than push, people back to the office. This approach has largely failed as many employees already looking for ways to slow down their progression, or avoid more responsibility, were content with the reduced pressure and better balance that came from this arrangement.
Post-covid, promotions, titles, and the promise of greater responsibility no longer hold the power they once did. Outside of office social ecosystems, social pressure has fallen while burned out managers create a symbol of what many employees desire to avoid. Plus, a combination of adversarial entitlement and greater average awareness of inflation means less satisfaction with net neutral salary increases.
Not only is the promise of promotion not working as well as it once did, the manner in which decisions become reality is breaking down. Whether because of burnout, a lack of engagement, or bigger priorities, managers are not enforcing policies. It’s widely expected that pockets of remote work will continue to live on at Amazon as the middle doesn’t enforce or report the real state of RTO.
Rising expectations
It’s not just a truism, employees do want more while trying to provide less than they did. Turning every reduction in perceived freedom or increase in perceived employer control into a fight. In this way employees are more engaged with workplace politics than ever before. Again a combination of greater transparency around things like layoffs, salary inequities, and managerial bad behavior (there are entire social media pages with millions of views from younger employees - here, are, some examples).
Covid changed the social contract as employers and employees were thrust together in difficult ways. This has lead to a situation where workers trust their companies and leaders less than ever, but still expect to have their voice heard. Increasingly RTO - which lonely isolated employees are softening on - isn’t about the office but about broader issues of respect, responsibility, and autonomy. Things that employees have been clamoring for years while corporations pursued more surface level and easier perks.
A combination of basic leadership and good parenting
The implications for leaders looking to pursue RTO - or any other unpopular policy - are simple: strong evidence for decisions, clearly communicating the what and why of change, and hearing input from those downstream of decisions ahead of time.
While RTO itself isn’t easy, the real difficulty is the growing gap between employee and employee beliefs, preferences, and incentives. For CEOs, the instinct to get defensive of their authority with “my way goes” and “they don’t need to know the why” misses the point.
From the slackers to the A players, the assumption of benevolent managers is gone. There is no going back to how employees used to be in 1990, and the only way out of dealing with difficult people is automating work - which makes executives nervous in a different way.
But if neither side feels like they have the responsibility or incentive to change, internal conflict - whether striking over in office mandates, or just quietly avoiding work - is destined to be the new normal.
The next generation of engagement needs novelty, clarity, and leadership
Data on declining workplace engagement is nothing new to the point were many leaders have gone numb to the crisis on their hands. Yet, as employee disengagement becomes more strongly correlated with tenure, traditional models of employee engagement are clear faltering.
The industrial era's promise of long-term job security and predictable career paths has given way to a landscape where flexibility, purpose, and alignment with personal values take precedence. For instance, the rise in healthcare burdens has prompted some forward-thinking companies to intervene directly, helping employees manage medical debts, which in turn enhances engagement by addressing not just workplace needs but life needs.
These factory workers were swamped by medical debt. Then their employer stepped in. (NPR)
Modern employees, particularly the younger generation entering fields like investment banking, as noted by Lazard's CEO, are bargaining for interesting, intellectually stimulating work in exchange for their long hours. This change marks a crucial pivot from traditional compensation packages to offerings that make work inherently engaging and meaningful.
Junior Bankers Want Interesting Work in Exchange for Long Hours, Lazard CEO Says. (Bloomberg)
However, novelty alone isn't enough. Clarity in organizational goals and individual roles has never been more critical. As the workplace becomes more dynamic, with hybrid models and complete remote work options, clear communication about expectations and the company's direction is imperative. This clarity helps in stabilizing engagement by aligning employee efforts with corporate objectives, thereby making their contributions feel more impactful and valued.
Employers are pouring resources into Employee Value Propositions (EVPs) — and workers may have no idea. (HR Dive)
Leadership must evolve to underpin this new era of engagement. Leaders are now expected to be clear communicators, empathetic to employee needs, and champions of the organizational vision. They must push back against the tide of engagement decline by being proactive and responsive to the changing dynamics of the workforce. Strong leadership acts as a catalyst for sustaining engagement, encouraging loyalty, and fostering a productive work environment amidst uncertainty.
Quote of the Week:
“The successful leaders of tomorrow will be those who understand that their talent dilemma can only be solved by investing in, nurturing and supporting talent through a ‘social contract’ that understands today’s employees don’t just desire, but expect a more agile, flexible working environment and a better work-life balance.”
— Nhlamu Dlomu, global head of people at KPMG International
Reading List:
EEOC opens a legal backdoor for remote work accommodations
The U.S. Equal Employment Opportunity Commission (EEOC) is suing a private company for failing to accommodate an employee's request to work remotely following a stroke under the Americans with Disabilities Act (ADA). While previous court rulings have often favored employers when on-site presence was deemed essential to job functions, the EEOC's stance in this case suggests a potential shift in legal interpretation. A win for the EEOC here would create precedent that enables individuals to claim remote work as an ADA accommodation - with all the penalties for violation included. And with a generation of workers familiar with the notion of paying for ADHD diagnoses for accommodations at school, such a precedent would lead to a flood of similar requests in companies that are pushing back to the office.
Read more in HR Dive.
Changing economy requires organization redesigns
Rapid change from all directions is forcing companies into organizational redesigns to remain competitive. A recent guide from McLean & Co. emphasizes that mere restructuring is insufficient; instead, businesses must align all aspects of their operations, including strategic planning, workflows, and corporate culture. This holistic approach to organizational design can lead to improved performance, streamlined decision-making, and enhanced employee engagement. However, the process is not without risks, as ineffective implementation can result in resource inefficiencies and decreased customer satisfaction.
Read more in the Financial Times ($).
Buy, rent, or build decision for talent
Pulling from the world of vendor selection, talent leaders are increasingly looking at hiring problems as a buy, build, or rent decision. As the labor market offers employers more exotic working arrangements, hiring (buying), renting (temps/contractors), or upskilling (building) are becoming distinct strategies to meet increasingly diverse talent needs. Each approach carries distinct advantages and challenges, with buying offering quick solutions but at premium costs, renting providing flexibility but limited knowledge retention, and building fostering loyalty but requiring substantial time and resource investments.
Read more in HR Brew.
Data Point:
80%
U.S. CEOs who say they would promote in office employees before remote ones…despite many employees seeing responsibility as more burden than reward
In Other News:
Bosses are firing Gen Z grads just months after hiring them—here’s what they say needs to change. (Fortune)
‘Human skills’ still outpace demand for AI skills, report says. (HR Dive)
Fed’s Rate Cut Is Jolting Small Businesses to Spend Again. (Wall Street Journal)
US Investment Seen Dipping as Companies Flag Election Worries. (Bloomberg)
GDP growth linked to slower labor force growth. (Bureau of Labor Statistics)
Labor market closer to pre-pandemic ‘normal’ — which could lead to steady 2025 salary budget growth, Mercer says. (HR Dive)
Companies' attitudes toward layoffs are changing — here's why. (Axios)
How people leaders can combat their own burnout before helping employees do the same. (HR Brew)
How the Next Generation of Managers Is Using Gen AI. (Harvard Business Review)
Billionaire tech CEO says bosses shouldn’t ‘BS’ employees about the impact AI will have on jobs. (CNBC)