After what could be two full years of working at home, there is a growing disconnect between employees reluctant to return to their desks and executives pushing to get them back — and that is exacerbating the challenges businesses are having attracting and keeping people in a white-hot labor market.
While many companies are offering greater flexibility to compete for scarce talent, some HR experts worry this could lay the groundwork for retention problems in the future.
“It’s a complicated problem, and it’s something companies are coming to terms with as this Covid crisis extends further and further,” said Andrew Challenger, vice president at the executive outplacement firm Challenger, Gray & Christmas. “For the most part of the last year, companies were saying we just have to get through this and it's going to be back to normal. And now that this feels endemic, they're saying if this is for the long haul, they have to think about what their company’s going to look like as a remote workforce.”
For the most part of the last year, companies were saying we just have to get through this and it's going to be back to normal. But now this feels endemic.
Workers themselves have already made the physical and mental shift. Recruiting software platform iCIMS found that almost 1 out of 4 job applications submitted last year came from out-of-state candidates, and that number remains high today: As of July, roughly 1 in 5 candidates were applying for out-of-state jobs. An August snapshot illustrates the extent of churn taking place: iCIMS found that job openings are up almost 70 percent and hires are up by 57 percent, while the number of job applications have ticked up a mere 2 percent since January.
Jewell Parkinson, chief people officer at iCIMS, said the company has seen the rising demand for remote and flexible work play out among its own employees. “It’s increasingly an expectation from the workforce,” she said. “We did a series of focus groups with employees and that was when we heard loud and clear, in essence, that people have adapted to that.”
There are other indications that workers expect to stay in their home offices for the foreseeable future: Best Buy said in its quarterly earnings report that sales grew by 20 percent compared to last year, attributing the increase in part to people both working and consuming more media at home. “There has been a dramatic and structural increase in the need for technology,” CEO Corie Barry said in a release.
A survey conducted by online newsletter theSkimm found that more than 1 in 5 millennial women said they would rule out working for an employer that banned working from home in the future.
In a CNBC interview on Wednesday, Salesforce CEO Marc Benioff observed that the popularity of remote work among rank-and-file had caught corporate chiefs by surprise. “Not as many employees are coming back into their offices locally as any CEO expected,” he said. “You’re really starting to see some very low attendance numbers in offices because employees are so productive at home.”
“The truth of the matter is CEOs acknowledge that productivity has gone up. People are working more and it’s more productive. People want that. People want the flexibility to work from home and work in their own way,” said Dave Carvajal, CEO of Dave Partners, a recruiting firm focused on the tech industry.
But, he added, chief executives were often reluctant to cede that measure of control, even when remote work was demonstrably productive. “We’re kind of in a transition phase. A lot of CEOs, they’re operating under older models. … There's this notion that when the cat’s away, the mice will play.”
In addition to more autonomy, today’s mobile workers are making companies adapt to their time frame. Labor market competition has increased to the extent that HR departments have much less time to determine if a prospective hire is a good fit. “The stakes are so high and the playing field is so competitive right now … companies can no longer afford to dilly-dally,” Carvajal said. “There’s no room for incompetence in recruiting and in hiring.” With top candidates often entertaining multiple offers, Carvajal said he tells his clients that hesitating means losing out.
“What we found is to really compete for the talent in the marketplace, we had to accelerate our ability to be much more efficient in the hiring process,” Parkinson said.
“This is a big test for middle management,” said Laurie Monteforte, spokesperson for Ladders, a jobs site that focuses on employment with salaries of $100,000 and higher.
From March 2020 to July, Ladders observed an enormous increase in high-paying jobs available remotely. Ads for media, marketing and design jobs that could be done remotely shot up by nearly 1,000 percent, going from less than 2 percent to nearly 20 percent of all jobs in that sector. Remote project and program management positions boomed by roughly 800 percent, accounting and finance remote job postings rose by 750 percent and HR and legal jobs that can be done remotely increased by nearly 550 percent.
That surge in competition is a huge challenge for growing businesses.
R. “Ray” Wang, founder and CEO of Constellation Research Inc., said having a dispersed workforce prior to the pandemic gave his Silicon Valley-based firm an edge in hiring. “We’ve never been constrained by geography. I think it’s been helpful in that regard,” he said.
But now, as remote work becomes the norm, Wang said it has been taking him about twice as long to fill positions compared to pre-Covid. “The job market is so tight that there’s massive competition for highly compensated individuals,” he said — which also ups the ante for keeping employees on board.
“Vendors tend to poach our employees because we have a good well of expertise in the space,” he said. “People are looking for highly specialized individuals.”
In conversations with clients, Wang said that many report high turnover among new workers. “Retention rates are very low,” he said, estimating that only about half of his clients’ pandemic-era hires were still with their respective firms.
Given the rushed pace of hiring, some HR pros say this isn’t surprising, especially among firms that don’t have a clearly articulated vision of how remote or hybrid work will take place in the future.
“We’re seeing employees walk away from companies that are entirely rolling back their remote work policies,” said Rhiannon Staples, chief marketing officer at Hibob, an HR technology company. “I don't think forcing people back to the office will equate to employee engagement and satisfaction.”
Staples said the onus is on executives to reconsider how they cultivate loyalty in the absence of regular face-to-face interaction. “I think what we're going through in business requires managers to think differently about how they evaluate and communicate with employees,” she said. “It requires a new skill set.”
Challenger suggested that the remote nature of the work itself makes retention an uphill battle for HR departments. “You can be on Zoom for eight hours, but when it’s all work agenda items, there aren’t those little conversations about family and those personal moments you have,” he said. “People just aren't connected to their companies when it's just the work itself.”
In addition, people working from home have fewer barriers to job hunting, Challenger said. “There's no friction for people to explore new opportunities. You don't have to sneak in a suit to change into to go off to an interview in the middle of the day. You can always find time to talk to other companies.”
But Challenger also issued a warning for workers. The current labor market cycle isn’t going to last forever, and when companies need to tighten their budgets and pare down head count, the least-visible could be the most vulnerable if managers don’t feel a bond with them.
“People are more replaceable when they’re remote. You’re not as connected to them as human beings,” he said. “Companies will feel even less loyalty to their employees in the future.”
But for the foreseeable future, with workers in the driver’s seat and ongoing Covid waves thwarting a reversion to “normal,” businesses may have little choice in the matter but to continue letting people work at times and in places of their choosing.
“It’s central to how we’re positioning ourselves,” Parkinson said. “In my experience, any attempt to further limit or restrict or be rigid with where people work or how they work, that’s actually a hindrance to continue to retain talent,” she said.
“The workforce is going to dig its heels in and insist on it. … This is not a flash in the pan,” Monteforte said. “It’s going to change everything.”