Speculating about the future can be a perilous undertaking. If predictions from the twentieth century were right, we would be cruising around in flying cars and living in moonbases or on remote planets by now. Putting those pre-21st century fantasies aside, don't make the mistaking of looking backwards when driving forward. To survive the pandemic, circumstances forced companies to cut costs, get lean, leverage technology and remote workers, going forward it will be harder to bring workers back online and find new ones than it will be to raise growth capital. While the immediate past required companies to operate with technology and remote workers "in the "back" to survive, the immediate future will require them to bring workers back in the front.
Today, monetary policy is flushing trillions of dollars through our financial system and government fiscal policy is in stimulus overdrive. Global markets are responding, with major economies enjoying growth not seen in generations. In some sectors, it has already become immeasurably harder to find workers ("build") than it is to pay for innovation ("buy") or raise funds. By way of example, Uber has announced that it has set aside $250 million to fund incentives and guarantees to bring back drivers back on the road. While in the recent past we have looked for technology that replaced workers, we will now need to invest in technologies that enable workers to come back online. If companies don't figure out how to bring workers back online, they will miss out on the post-pandemic gold rush and what promises to be an unprecedented growth phase.
As we approach the post-pandemic future, we need to get busy preparing for the future of work and adjust for long-term and fundamental changes that will only accelerate. To understand what the future of work may hold, we need to understand what about work is changing. SAP identified two key trends in the future of work: changing technology and changing geography.
Technological changes mainly revolve around computing power, bandwidth speeds, connected devices, network architecture and the software that collects, connects and protects, which together enables remote life, work and commerce. Ask any major corporation about "digital transformation," and you will likely hear about how the company is investing heavily in IT to meet risk and compliance requirements more effectively and efficiently, how it is enabling better user experiences for its customers (or some similar sounding management consultant cliché). Broadly speaking, digital transformation is using computer technology to automate and virtualize business processes, and it is not a new idea. Back in 2014, MIT defined digital transformation as "the use of technology to radically improve performance or reach of enterprises."
The pandemic changed not only the dynamics, but the paradigm. A SalesForce report noted five years ago that digital transformation "mostly boils down to survival," but at the time, survival for a company meant remaining competitive in a marketplace moving at the speed of Wall Street's financial reporting calendar (measured in fiscal quarters and years). Today, digital transformation means the ability to reinvent the entire business model to fit any random and unpredictable new circumstance, and in an instant. While the consequence of failure used to be slow obsolescence and single percentage points of revenue decline, today the risk of failing to innovate constantly is immediate obliteration.
The pandemic has driven corollary effects on the geography of work. As IT systems have improved, many workforces have become increasingly distributed, with many going purely virtual. Some companies today have no physical headquarters, with workers collaborating almost exclusively through digital means. But again, the pandemic changed what was a dynamic trend into an immediate paradigm shift. While some businesses had already embraced distributed remote workforces, COVID-19 forced remote work to become the norm when possible, leading, for example, to a sudden shortage of webcams and other home-office equipment.
But this acceleration of slow moving "trend" to immediate paradigm shift has not occurred without serious ramifications. Not every company could afford to pivot quickly enough with digital transformation and remote work. Not every industry could benefit from these changes either. Those in the service industry had a harder time adjusting (if they even could adjust) than those working office jobs. Often-overlooked issues include human "happiness" factors. Deloitte noted recently that "[t]he deterioration of worker well-being, increased anxiety and isolation, and the loss of a sense of belonging have been recurring themes across enterprises," and that industries have focused on technological innovations at the expense of workers.
For some workers, "work from home" became "work from anywhere", and working during office hours became "work all the time." While pandemic times forced companies to ignore regulations in remote jurisdictions, avoid local payroll taxes where their workers had relocated, or adjust worker compensation to locally prevailing levels, a new deal will be required between workers and employers to achieve success. As workers return to work, how will "remote" work be contracted? How will companies balance flexibility expectations for both workers and employers? How will flexible time arrangements be handled? How will tele-commuting or remote locating be handled? Will your office become a "hotel" for meetings between workers or with customers when scheduled, or will it revert to being a place where everyone "clocks in" on a daily basis? What is the role and responsibility of the employer in the geographies where remote workers reside? How will workforce additions or reductions in force be handled remotely? What legal systems apply? What taxes are owed? To whom? The complexities of global technological and geographic dispersal of workers can not be underestimated. Policy, regulation and practice will need to evolve and answer these questions in order to achieve full utilization in a booming economy.
Now that businesses are planning for the resumption of "normal" operations, whatever those may be, we need to remember that the future of work is still human. And not all work can be performed remotely, and in the post-pandemic future, it will return to in-person interaction between humans and their devices at a point of in-person contact. Through all the revolutions of industry over the last two centuries, humans have still needed to work. Work habits have changed. Entire industries have come and gone, and new jobs have replaced old ones.
According to Stanford economist Nicholas Bloom, surveys show that one in three American workers plan on preparing to keep working from home in some capacity post-pandemic. Workers cite reduced commute times and better work-life balance as reasons to work from home. Bloom warns of a potentially rocky transition back to the future, with many employees unhappy with the arrangements their companies would offer, leading some to leave for competitors, slowing innovation, and promoting gender disparities rather than flattening them. Professor Bloom's research showed that workers clocking in remotely were demonstrably more productive but were promoted remarkably less. When offered the choice, workers would more often than not prioritize advancement than productivity, opting for more office time. As we plan the future, there will undoubtedly be more remote than pre-pandemic, and the challenge is to help organizations navigate the transition post-pandemic. "This has been a massive revolution - and we're only halfway through," says Bloom.
As we look for what is next in the workforce, we should focus on enabling human capital. Embrace digital transformation and remote work when they make sense for your company, but remember that employees need camaraderie, potential for advancement, and a sense of belonging, not just automation tools, productivity metrics, videoconferencing systems and team meetings. The future of work is changing, but the people involved are still the same. They are human.
Louis Lehot is an emerging growth company, venture capital and M&A lawyer at Foley & Lardner in Silicon Valley. Louis spends his time providing entrepreneurs, innovative companies, and investors with practical and commercial legal strategies and solutions at all stages of growth, from garage to global. He focuses his efforts on technology, digital health, life science and clean energy innovation. Louis's clients are public and private companies, financial sponsors, venture capitalists, investors and investment banks, and he has helped hundreds of companies at formation, obtaining financing, solving governing challenges, going public and buying and selling. Louis is praised by clients, colleagues and industry guides for his business acumen, legal expertise and leadership in Silicon Valley.
Originally published 28 April 2021.
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