Podcast
Podcast
- 04 Oct 2023
- Managing the Future of Work
Workplace transformation: Gallup plumbs the new normal
Bill Kerr: The return-to-work saga at Zoom, a company synonymous with video conferencing and remote work, is tinged with a certain irony. But the firm’s push to get employees back in the office at least a few days a week reflects the difficulty many organizations face in balancing remote and in-person work. It’s the summer of 2023, three and a half years into the post-Covid shift to remote and hybrid work, and there’s a growing consensus about the value of in-person collaboration. But many employees are loath to abandon flexible work. What’s the optimal mix, and how can leadership and management create the conditions for a productive new normal?
Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Bill Kerr. My guest today is Jim Harter, Chief Scientist for consulting and polling company Gallup’s workplace management and well-being division. Jim is co-author, along with Gallup Chairman, Jim Clifton, of Culture Shock: An Unstoppable Force Is Changing How We Work and Live. Gallup’s Solution to the Biggest Leadership Issue of Our Time. We’ll talk about how the pandemic has changed employees’ approach to and their expectations of work and the trade-offs between remote and in-person work. We’ll also consider the important role of employee engagement and how managers can foster it. And we’ll look at the new demands the changing landscape of work is placing on managers. And, of course, there’s the question of how all this translates into the delivery of goods and services and bottom-line results. Jim, welcome to the podcast.
Jim Harter: Hi, Bill. Thanks for having me. Great to be with you today.
Kerr: Jim, let’s begin with a little bit of your background and what brought you to workforce research at Gallup.
Harter: Yeah, our research at Gallup in the area of workforce actually started with George Gallup, our founder, who back in the 1950s was conducting some research on global polling, but also some research on centurions, folks who lived to be 95-plus, and found that the people who lived that long reported working until they’re 70-plus. But they also said they really enjoyed their work. They had a lot of fun doing their work. So it’s something that gave them some fulfillment. Our past chairman, Don Clifton, started a practice in 1969, where his goal was to study what’s right with people. There’d been so much done in the area of psychology to study what’s wrong, which is really important, but he saw this big gap, and so he started studying success inside organizations. I had a chance to work with him—and a number of us did—to build pretty massive databases. Now we have well over 100 million interviews in our database of employees around the world. But the real goal and the real purpose of this workplace research is that it has a tremendous potential impact on society. Most of the time we spend in our lives, we’re doing work. Outside of sleeping, for most of us, it’s the most time-consuming part, so it better be good, or it’s going to affect our overall well-being, and it can have a massive impact, we found in our research, on the performance of organizations. The data have never gotten old faster, Bill, during this last three years or so, because things have changed so quickly. But that’s also made the work even more interesting.
Kerr: Maybe begin by painting for us, at Gallup right now, what are some of the most prominent post-Covid workforce trends that you’re noticing, you’re starting to surface up?
Harter: Well, one is that there’s a dip in employee engagement during the first part of the pandemic. Now there’s been a slight rise in engagement, but that’s also been accompanied with an increase in stress. And in the U.S., we’ve seen significant increases in depression. So there’s a little bit of a paradox there. But there’s also ... We’re seeing an increased disconnect between employee and employer, particularly for fully remote employees, also some hybrid employees. We know that employees have seen some advantages from remote work—and that’s important to take into account and important for both employers and employees to take into account—the independence that people have experienced and different preferences for how they work. Nine out of 10 employees that are in remote-ready jobs say that they want some form of flexibility in their work. Before the pandemic even started, the most desired perk was flexibility. So it’s not a surprise that people getting that is something that’s pretty hard to give up, and a lot of that has to do with behavioral economics and this endowment effect of you get something and it’s hard to give what you have up. It’s worth a lot more to you once you have it. And that goes with flexibility.
Kerr: Bottom line, what’s your view of the future of remote and hybrid work? Are we heading back into the office? Is it going to be a heterogeneous blend? Where’s Gallup coming out on this?
Harter: Our data are showing pretty consistently that people have settled into their preferences and, actually, their behavior in terms of where they’re working. About 30 percent of people are fully remote, which is a huge jump from pre-pandemic. Most people are in more of a hybrid mode, similar to what you said that Zoom is suggesting now, where there’s some blend of in-person time. We found when we studied the data and studied engagement levels and other outcomes like that for people in remote-ready jobs, two to three days in the office—depending on the amount of collaboration, the in-person collaboration they need—that seems to be optimal. But there are also factors that matter even more than how often we’re together in person. And we found that coordination and predictability about when people are together is really important and often overlooked. People don’t always coordinate with their coworkers. And we found that only 13 percent of people say they actually discuss when they’re going to be in the office with their coworkers. And that’s the one activity that is most highly related to employee engagement among the different ways people decide where they’re going to work.
Kerr: Does your research suggest that it’s mostly about people’s lives being improved, in the sense of they can save on commuting time and they’re able to maybe better help with their kids or something? Or are they also pointing toward workplace advantages? “I could be more productive at home.” What’s the mix of those factors behind employees wanting to hold onto it—that endowment effect?
Harter: The top three are avoiding the commute, because people feel that they can get right to work. Also their own personal well-being; they cited being better for their family. Generally, when you ask people about what their preference is, whether it’s onsite or in person, productivity does come up. For the people who are doing more remote work, they learned a lot about how much of their work can be done independently. And there’s others that are more asynchronous collaborators, where they do some work independently, and they then bring it together with their team and find that combination. There’s definitely a component and a learning element in all this that I think employers should pay close attention to, and that’s that people have learned different ways of working. But the other side of it is, it’s not just about the individual, Bill. It’s about the team that they’re on. Being together is a commitment to the team, and it’s also about what brings value to customers.
Kerr: Did your research ever ask questions along the lines of, would you be willing to give up 10 percent of your pay in order to have the remote flexibility, versus being in person? So some way of quantifying the trade-offs that individuals experience?
Harter: I’ve seen other research that has done that. It comes down to somewhere around 8 to 10 percent difference in pay that they’re willing to give up for more flexible work. And so it is significant. And so this increased independence, increased freedom, has tremendous value to people from a psychological perspective.
Kerr: So far we’ve been describing everyone as just people. But one of the things your research and the Culture Shock [book] brings out is the heterogeneity across categories of workers. So I’d like you to first tell us about splitters and blenders, and then we can also spend some time on age and generations of workers and similar. But tell us a little bit about the underlying variation.
Harter: We segmented employees by asking them, in the best possible life, would their work and life be separated, where they do their work and then separate that from the rest of their life? Or would they want their life more blended, where they have work and life blended throughout the day. And interestingly, it was an equal 50-50 split across individuals in whether they preferred the splitter or the blender approach. And it was interesting that, when we looked at that across various demographic groups, there were some slight tendencies of more in one category than another, but there’s an abundance of people who wanted to be blenders and abundance who wanted to be splitters, regardless of even age generation. Even among some of the really young people, which you might assume that, because they know work and life are blended through technology, that some of them want that split as well, a good proportion of them. And one of the follow-up pieces of research we did is, we asked people what they actually are experiencing now. And when there is a disconnect between what they prefer and what they’re experiencing, we see significantly higher levels of burnout, significantly lower levels of engagement, and higher intentions to leave the organization. So there are some real consequences to not knowing that, and it’s a simple thing to ask somebody. Teammates need to know about each other as well so that we can respect one another. The other thing, Bill, I’d add to that is, both groups can be highly engaged and productive. So it isn’t like there’s one solution that fits everybody. But we have to know about those preferences, and those preferences can often change during someone’s lifespan, in terms of the things they’re going through and how many different family activities they have going on and all that.
Kerr: In this middle, where a lot of companies—including Harvard Business School—can find itself, of trying to increase the on-campus, at-office time, is there something that the employees are most wanting or expecting in that kind of environment? And you earlier mentioned the coordination, that everyone needs to be locked into some similar days. Is that the key part, or are there other aspects?
Harter: Well, pre-pandemic people were asking for flexibility, and now they have it. And now we do need some coordination. In-person time does matter. We can have higher innovation. We can have those random conversations with people that wouldn’t have had otherwise. We can solve problems more quickly. We can have fun in different ways than we would and have spontaneous meetings that we don’t have to plan everything out and have back-to-back video calls to get things done. I was with a group a while back where we solved a problem in 10 minutes that we may not have even thought about solving because we just happened to be together. It does rest on employees to prioritize beyond their own personal needs, but also that starts with the manager. And managers explain about 70 percent of the variance in employee engagement. And so managers need to take the lead in having those conversations with people and being connected with people on a regular basis so that they can make the right decisions and so that employees do look beyond just what’s good for me—which, I think, for most people, that’s where they came out of the pandemic, and the learnings there was, “This is what works for me.” But it’s also a commitment to their team and to the outcomes of the organization.
Kerr: A great segue to talk about the manager and multiple research perspectives have emphasized the squeeze or the challenge that the past three and a half years have placed on managers and trying to connect into remote employees in-person. Are there some tips or tools that you can help us to use to get the best out of the employees, both in-person, remote? What can a manager do best to enable this situation?
Harter: Managers need to have at least one meaningful conversation with each person they manage at least once a week. That’s the primary role of managing. It’s moved away from more fully administrative and fully delegatory managing. And this trend had started before the pandemic, but now it’s really accentuated with all the remote and hybrid work—that they have to be in touch with people. So we dug deep, Bill, into what happens when somebody does say they had an extremely meaningful conversation with their manager. One was, they got some recognition for the work that they’re doing. You’ve got to not only know how someone likes to be recognized, which only 10 percent of people do, but you’ve also got to know something about the work they’re doing to make it authentic. So the weekly cadence is really important, and that weekly cadence can be 15 to 30 minutes if you do it on a regular basis. If you don’t, you got to back up and backtrack, and you’re not on top of issues. The coordination with, collaboration with, coworkers can happen much more effectively, and that’s something that happens in a meaningful conversation. Goals and priorities, discussions about goals and priorities happen in meaningful conversations. And employees having a discussion with their manager about their strengths and how their strengths can be aimed at the purpose of the organization and the ultimate outcomes that the organization’s trying to get to, and their own development can be a really important component of a meaningful conversation. It sounds like a simple answer, and it is, in essence, in that one meaningful conversation a week gets you there and increases engagement all the way up to 80 percent, when globally it’s at 23 percent. So that’s a big bump just from one activity. But there’s a lot to figure out in terms of getting that activity right for people.
Kerr: Well, I want to go back to the first stat you threw out in that, which is that only 10 percent of us get the recognition right. To understand that, can we share a little bit more even pre-pandemic about the inability of managers to understand the types of recognition employees crave?
Harter: When we go into an organization for the first time, and it’s a standard employee engagement item, we ask, “In the last week, have you received recognition or praise for good work?” And you get about a fourth to a third usually of people who can strongly agree with that. One, ask someone how they like to be recognized. Two, pay attention to how they’re performing. And make sure you give them recognition when they do good work. But it just gets overlooked. We either think innately that people don’t need it as often as they might or that they already know they did a good job when they did work. And a lot of times people need to be reminded that it was something different than somebody else could do. People think, “If I did it, everybody can do it, right?” It’s not always the case. So getting back in someone’s mind what they have done recently that has been helpful to the organization not only motivates the individual, gives them a dopamine burst for that, but it also reminds the whole culture about what good work is.
Kerr: Great. And you also highlighted the connection of this to employee engagement. What have you learned in terms of linking employee engagement to business outcomes? How important should we place this?
Harter: The first thing we had to ask ourselves is, what elements predict performance and are actionable in organizations so they can make a difference? And we’ve now conducted 10 iterations of meta-analysis, which is a study of a lot of studies, and that’s across 112,000 business units. And we’ve linked employee engagement elements to outcomes like profitability, productivity, customer service, which is really important right now, because we’re starting to see some deterioration in customer service. Retention rate is also very important to organizations right now. Safety. So accidents on the job are lower when engagement is high. Quality of work is better. Overall well-being for employees is better when engagement is high. It’s always important, but even more important during tough times, because it creates some resiliency in the culture that leads to positive outcomes and helps organizations hold their own when times get tough.
Kerr: And what have been some of the keys that you’ve identified beyond the weekly meetings—the direct meetings of managers, employees—that organizations do to boost this engagement? What are some of the biggest levers that are out there?
Harter: Yeah. So while 23 percent of people globally are highly engaged in their work—about 34 percent in the U.S. are—when we study organizations that really put the best practice in place, they’re at 70 percent-plus. When you get to that level, you really have some consistency in your culture that will allow you to get through issues like we’ve seen in the last three years. What do organizations do? One, they connect it to their strategy. So they have a really well-defined organizational purpose and strategy, and they make it really clear to employees—leadership does—in terms of why engagement helps them achieve that strategy and that purpose for their organization so it’s really clear why they’re doing it. Second, they have really good communication throughout the year about why they’re focusing on engagement, how it’s linked to other parts of their business, like their performance management, like their learning and development. So it’s more integrated into the culture of the organization. Third, they have really good manager upskilling, so that they can effectively have those weekly conversations with people in the right way, so that it doesn’t feel awkward, so that it feels natural, and so it builds on the business objectives of the organization and the individual’s well-being as well. And then fourth, they have high accountability. So managers know this is part of their job. Their job isn’t just to do administrative work. It’s not just to delegate. It’s actually to inspire people and to develop people and to make sure that people know what their job is, what’s expected of them, get them what they need to do their work, recognize them when they do good work. I’m inspired by the fact, Bill, that this is very doable. And even the problems we’re facing right now can be achieved and can be overcome if we put the right practices in place.
Kerr: And as you highlight in there, incentives are important in any organization. And so continuing on this theme, the Culture Shock research, what does it suggest or hint at in terms of how performance metrics and management incentives need to be revisited for the post-pandemic era?
Harter: I think most decisions that organizations make need to fit into how they relate to three different outcomes that are important in almost every job. Probably every job. The individual’s own productivity. So they’ve got to have some kind of metric on how the individual’s performing, themselves. Second, how well they collaborate with their team. When we’re at a distance, we’ve got to know that collaboration is going right so the handoffs happen effectively, and that’s going to be different depending on the job and how much in-person collaboration needs to happen, versus more asynchronous. And then third—a really big one that we’ve seen drop as of late with this more distance that we’ve seen between employee and employer—is customer value, and whether your customer is an internal customer or a direct external customer.
Kerr: Can you stay on that customer [value] deterioration? I think many of the listeners, their ears have perked up as they’re hearing that one, in particular. Tell us, whether an example or some statistics, a little bit more of what the research is showing there.
Harter: So we’re seeing a pattern where people feel less connected to the mission or purpose of their organization, particularly fully remote employees and some hybrid employees, as well. And when people feel less connected to the mission or purpose of their organization, you see them say in our surveys they’re less likely to say that they feel responsible for the quality of service customers receive. So they start pointing the finger at somebody else, because there’s more of a distance between them and their organization, which then translates into a distance from their customer. And if you do a graph of what’s happening with employee engagement, map that right up against what’s happening with customer satisfaction from the American Customer Satisfaction [Index] study out of Michigan, they almost perfectly align. And there’s been a drop in customers perceiving that they’re getting the service they expected to receive. That can all be solved for, but the drops in people feeling responsible for the quality of service customers receive have been particularly among young workers and older fully remote workers. So young workers are beginning to have more of a mentality, almost like a gig-worker-type mentality, where they feel that their job is separated from their organization. They don’t feel as connected to the organization anymore. They’re also seeing less development than what we saw before. It used to be that naturally young workers would get the most development, and we’ve seen a significant drop in that as well over time. And part of that has to do with more of a separation physically from one another. It doesn’t mean we can’t be good at it from a distance. We’ve just got to get better at it and have the right managers and the right cadence in place to get that done.
Kerr: I’d like to maybe have you say also a little bit more about that separation, because we’ve come a couple of times in the conversation to employees and the collaboration and the connections, even when remote from each other. But walk us through a little bit of the role of socialization, social bonds, and how best to glue that aspect of the workplace.
Harter: Yeah. We were asked this a lot during the pandemic and everything that happened after. So we did the research, and we found that the social aspect of work matters even more now than it did in the past—maybe because it happens more rarely, and we’re not as intentional about it. But I think it has a lot to do with just our needs from a human nature standpoint. We know social well-being is one of the most foundational parts of well-being, and it doesn’t leave us just because we’re remote. And when we feel connected to our coworkers, we’re more likely to help them out, more likely to come up with innovative conversations. We’re more likely to share something with them to get something off our chest if we need to. And those kinds of bonds mean a lot. And so I think it’s important that we’re very intentional about how that happens—mentorship and socialization. I think planning coordinated in-person time is an essential part of that.
Kerr: Jim, I want to shift gears in a somewhat dramatic way and zoom us out to the macro world. Another aspect of the post pandemic world that many people are looking at—and either scared or happy or somewhere in-between—is how much this is going to change the nature of cities, the activity that’s in downtown districts, and so forth. So can you say a little bit about the persistence that you’re seeing in remote and hybrid work? What would that mean in terms of real estate location choices?
Harter: Gallup did a study that we published, must’ve been a year and a half, two years ago, where we predicted that real estate use in cities would drop by about 30 percent, and that has pretty much panned out. It has dropped by about 30 percent. And that could have a big impact on real estate and eventually the economy—unless they repurpose the real estate. You’ve seen some places where they’re attempting to repurpose it into apartments and those kinds of things, which could bring more livelihood back into the cities. But that real estate’s going to have to be used somehow in different ways. I think getting people into the office two to three days a week can maintain a lot of that real estate. Probably not all of it though, because organizations are going to have to be economical. The reason for people to be together has more to do with organizational productivity, I think, and how people can collaborate at a higher level than they’ve ever collaborated before. I think that, if we get this right, we could have the best workplaces we’ve ever had if we combine independence with the right kind of in-person time.
Kerr: Continuing on that, big questions for all workplaces are the level of diversity that they’re achieving and also the inequality that can exist across regions and racial groups and so forth. How do you think of this future as aiding or hurting some of those goals?
Harter: Well, in some ways having everybody remote for a while had some democratization to it. Everybody was on the same Zoom boxes, and everybody had equal access to one another to some extent. But I think, as we think about who can be in the office and the length of commutes, I think organizations need to be very conscientious about how they bring diverse groups together on a more regular basis. A big part of getting DEI right is, from our perspective, taking an approach to strengths-based management, where you’re actually understanding the innate strengths of each person. There’s a concept in academia, called “interpersonal congruence,” and it’s really about getting to know someone quickly in a different way. And some of that research has found that, when you use methods that build interpersonal congruence, diverse teams are more productive than non-diverse teams. And so I think, as people are working in these different environments, we have to keep thinking about how we build interpersonal congruence through strengths. And I think that can happen if we do this right.
Kerr: And beyond the immediate productivity of the group, one question people sometimes have about hybrid environments—where maybe some are fully remote, some are coming three days a week, four days a week—is, does more time in office lead toward more advancement? And how would that also be connected into what type of work or could be able to come in every day, versus remotely? Has your research connected around any of those advancement themes or what companies are trying to do to keep that more balanced?
Harter: The development part, I think, is a big factor, and we’ve seen, for young people, drops in their self-perceived ability to develop. And I think we’ve seen drops in engagement among women, also. And women have historically, when they reach childbearing years, have had some disadvantages when it comes to development. Some researchers have found that that has been part of the explanation for the pay disparity. There is, though, Bill, I think a human bias that, when people are in person, they will probably have a higher human nature bias toward having opportunities to develop, unless organizations find ways to do that better from a distance. Having those one meaningful conversations a week can help close that gap, because managers are more in touch with people, what their aspirations are, and you can make that happen. But if you’re a young person thinking about “how do I maximize my chances for development?” and you have an opportunity to be in person for at least a significant amount of the time, I would definitely do that, because you want to work all your angles. You want to leverage the human biases that exist to your advantage. But at the same time, in the best-run organizations, you’re going to have managers who do have those weekly conversations and do have a clear progression plan and are very clear with people about what their opportunities are and give them opportunities through their strengths to reach those aspirations and goals. But that’s in an optimum organization. Not every organization is at that level of optimum efficiency right now.
Kerr: Jim, one other major workplace trend over the last several decades has been the increase in contingent gig work, contract labor, and similar. Do you make connections to remote and hybrid work and potential shifts in the contingent labor side?
Harter: I think of it more about the mentality of employees who may not formally be in the gig economy, but there’s a growing mentality of separation from employee, employer almost like a gig worker. So I think psychologically that’s starting to happen more, and I think organizations need to close that gap and I think it can happen by having the right conversations with people. For most people, feeling they’re a part of an organization is a big plus in terms of your own well-being. People feeling connected to a mission or purpose, feeling connected to colleagues at work, is a big part of human nature and a part of what makes us better. And so I’m not saying that gig work doesn’t work for a lot of people, and it does for some, but it’s not good for the individual or the organization, if they’re a part of an organization, to feel separated from the organization. It’s bad for their well-being, and it’s bad for the performance of the organization.
Kerr: Jim, there was an Economist article last month, July of 2023, that was actually describing how we’re still trying to understand the productivity impacts of remote and hybrid work. The article was contrasting various academic studies that had come out. And I’m sure some of our listeners have seen some of the work by Stanford economist Nick Bloom, and his surveys have been finding that fully remote work decreases productivity, whereas hybrid arrangements are not. With the Gallup work, where are you coming out on this productivity side, and is there one form that is more productive than others?
Harter: My answer to that right now is, it does depend a lot on the type of work. I’m not saying you can’t be fully remote and be productive. We saw, pre-pandemic, many people who were fully remote who had great managers who could make it work. I think you’ve got to be an exceptional person to work fully remote and have an exceptional manager to make it work and be highly productive. Right now, we’re seeing in our data, on average across job types, that people who are fully remote have seen a gradual decline in feeling connected to the mission or purpose of the organization, and that concept does relate to productivity and performance. So I think there’s a risk that comes with fully remote. There’s a risk that comes with hybrid, because people may feel less clear about their expectation. We see that in the data as well. There’s been some deterioration in people feeling clear about their expectations in a hybrid environment. With great management, it can be the best of all worlds, but you have to have great management to continually rethink and reprioritize.
Kerr: Jim, we began with the long research history of Gallup and moving to what’s next in the workplace. We’ve spent most of our time today talking about Culture Shock, your most recent book. What’s next? What are you researching right now that you think is going to be on the horizon a year from now, two, three years from now?
Harter: Well, we’re all over studying what people’s perceptions are of artificial intelligence and where that’s headed, because I think how people perceive it, regardless of the advances—which I think are pretty significant right now—are important. So right now we’re seeing, when we interview CHROs, they’re saying that there’s going to be a significant number of jobs affected by artificial intelligence. When we ask employees, they’re not quite as aware of that. They don’t think their job’s going to be affected by it. So there’s a bit of a gap right there that we need to figure out—between what executives think is going to happen and what employees think is going to happen. And inevitably, job roles will be replaced, probably starting with more task-oriented kinds of things. But to me, the positive side of it is, organizations do have increased labor needs. They’re battling to get enough people in a lot of jobs. And if we think about ... Let’s just say that half of my job could be replaced by artificial intelligence eventually. My thought about that would be, that allows me to do the other 50 percent that I might like a lot more than the other 50 percent. And I can be more efficient and more productive with it. We’ve got to embrace it and figure out how we make our jobs more efficient with it and not overly rely on it but use it in the right places. In some cases, as a great starting point in other cases, is a check. In other cases, it might fully replace some tasks if it does it reliably. So that’s one area.
Kerr: We look forward to that research, Jim. It’s a fascinating line of work and obviously AI is big on everyone’s mind. Current book is Culture Shock. We thank you for sharing your observations about where we are in terms of remote and hybrid work and particularly some things that we as managers can do to make that better. Thanks, Jim.
Harter: Thank you, Bill. Appreciate you having me.
Kerr: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.