For the past seven months, we’ve been the subjects of a massive social experiment: working from home. We are in the early stages of a social shift on a scale that seldom happens in history and we are only just beginning to see the wider impact. Our latest research illuminates how WFH is affecting organisational culture—including engagement, morale, productivity, and performance—and what leaders can do to succeed at this new way of working.
In August 2020, we surveyed 212 senior leaders and 2,037 front-line employees and we found that WFH is pervasive and is not going away any time soon. According to the study,
- 69% of executive respondents report between 75 – 100% of their workforces are now WFH.
- Only 3% said none of their employees were working from home.
- 22% don’t intend to make work from home permanent, but they don’t have plans to return to the office.
- 27% plan to have a larger percentage of people work from home in the future.
The bad news is that the date shows leaders who ignore the potential impacts of WFH put their organisations at substantial risk. On the other hand, the good news is that where leaders proactively engage employees in spite of WFH, commitment, engagement, and teamwork are stronger than ever.
Hidden Costs of Work-from-home
According to our study, leaders who have done little to address the new work-from-home dynamic are at a greater risk of:
- Witnessing substantial employee turnover
- Sinking productivity
- A weakened employee commitment and connection
- Strained team performance and teamwork
- Lower employee engagement and morale
- Weakened employee/manager relationship
The Collapse of Social Capital
But the greatest cost of inaction is to social capital. We define social capital as cooperative goodwill in the pursuit of achieving a shared goal. Or in other words, the measure of people’s willingness to work together to get things done.
To measure social capital, we used a five-question scale that indicated whether healthy group performance had increased or decreased since WFH. Specifically, do employees:
- Respond quickly to requests from each other?
- Give one another the benefit of the doubt rather than taking offense?
- Sacrifice their own needs to serve a larger team goal?
- Take initiative to solve problems rather than waiting to be told?
- Invest more than the minimum effort required to keep their jobs?
What we are seeing here is that the social capital is deteriorating in organisations where leaders have taken no action to preserve culture. In other words, employees in these organisations are much less likely to respond quickly to colleagues’ needs and more likely to suspect one another’s motives, focus on their own narrow interests and do as little as possible to avoid being fired.
Success Is About Leadership Not Location
Social capital facilitates social interaction and cooperation—the fundamentals of teamwork and collaboration.
In our view, it is a report card on leadership—ignoring your reserve of social capital is as dangerous as ignoring your reserve of cash.
But social capital is not just a predictor of organisational success, it is also a measure of leadership competence. The job of a leader is not simply to generate results. Leadership is about creating a social system that generates results. And when distance impacts that social system, leaders need to get creative.
We found that tremendous social capital can be generated if leaders match new social behavior with virtual technologies. The limiting factor has never been distance, it has been an absence of innovation in social rituals that create similar effects to proximity.
What worked about the office was that it was a highly structured way of promoting unstructured interaction. It gave the illusion of spontaneous connection. But the truth is that those “chance” happenings have always been engineered. We were all required to arrive at 8am, lunch at noon, leave at 5pm, and office where we were told. And it worked. Like marbles in a bowl, our contact with each other was not elective, but it was effective.
Leaders who have thrived in recent months understand that work-from-home demands more than substituting conference calls for conference rooms. It isn’t just about using virtual technology to substitute for the structured interaction required to get work done. They are experimenting aggressively to create new norms and rituals for unstructured interaction.
Leading Out: Strategies to Engage Your WFH Workforce
According to employees who feel more committed to their organizations since WFH, simple interventions like the following have the most meaningful impact:
- Offer virtual training at least as consistently as was offered prior to COVID
- Implement new tools and technology to facilitate connection
- Offer counseling or psychological services
- Hold fun, off-the-wall, virtual events (virtual dance parties, online eating contests, etc.)
- Increase frequency of team meetings
- Ask for input on needs in company-wide and 1:1 meetings
- Survey employees for feedback on what’s working
- Change work hours or implement a flex-time policy
- Schedule non work-related meetings for team members to simply connect
The Manager Matters
In addition to structured and unstructured social innovations, another critical element to building social capital in a WFH environment is manager-to-employee relationships. An employee report of an improved relationship with his/her manager is strongly associated with every other positive outcome.
Likewise, when comparing those who report their relationship with their manager has suffered to those who say it has improved, those who say it has suffered:
Distance Isn’t Destiny
This study provides both a warning and a roadmap for leaders trying to navigate a new WFH landscape.
For decades, studies of corporate culture have concluded that the further two people were apart physically, the lower their estimation of one another was likely to be. Our findings suggest otherwise—distance isn’t destiny. At the end of the day, the necessary condition to a productive social system is leadership not location.
The forced WFH experiment of 2020 suggests it is possible for leaders to create strong social capital without physical proximity and doing so is absolutely vital.