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It happens every time there’s a recession or even when the whispers of recession start. Budgets get cut, policies get changed and things that seemed in favour of workers are scrapped in the name of cost-savings and efficiency.
Given how radically the economy has changed and is changing, however, perhaps this time (during what looks like another business cycle downturn) the decisions made should be more thoughtful than have sometimes been the case in the past.
A case in point are policies around working from home, whether full-time or through a hybrid model. Five years after the pandemic forced the issue, it seems that the C-Suite more or less hates the idea that workers are anywhere but at the office. JPMorgan Chase chief executive officer Jamie Dimon apparently spoke for many leaders when he used language that cannot be printed to explain why he didn’t care about how many of his employees signed a petition to allow them to continue their hybrid model (it was more than 1,000 at last count).
Although no Canadian executive has been quite as candid in their remarks on how they feel about work-from-home policies, organizations including the federal government have increasingly started requiring in-person attendance at work several days a week and a KPMG survey conducted late last year found that 83 per cent of Canadian CEOs anticipate a full return to the office within three years.
In an economy where people are increasingly worried about their jobs, relatively few are likely to quit when told their work arrangements are changing. It is the opposite of the Great Resignation phenomenon that we had a few years ago when tight labour markets came close to putting workers in the driver’s seat when it came to detailing their working conditions. What was on workers’ wish lists at that time was not just compensation, but also the ability to work from home as well as other benefits including things like training programs.
The unspoken sentiment now is that anyone who isn’t happy is welcome to quit, with the unspoken part of that being that it is the weakest workers who are likely to do so.
In fact, it might be the opposite that ends up occurring, with workers most in demand who are likely willing to take their chances elsewhere. Moving away from policies that have proven to be popular with workers may not be in the best interest of organizations trying to a build work force that will be able to cope with a challenging economy now and plenty of disruptions ahead.
Even if ending work-from-home arrangements does not cause issues in the short run, it may well end up being the wrong policy for the longer term. Part of managers’ unease about having workers at home is that they simply were never trained on how to manage them. With so many organizations forced into allowing work from home by the pandemic, policies and procedures were made on the fly and, even years later, are still a work in progress. With organizations bailing altogether rather than working on improving things, a return to hybrid policies in the future (perhaps heralded by a new labour shortage) will not go as smoothly as might be desired.
At some point too, organizations might remember that employee turnover is hugely expensive and that for the most part it is in their interest to hold on to the people they have hired. A 2024 study by professor Nicholas Bloom at the Stanford Institute for Economic Policy Research found that employees who work from home for two days at least are just as productive as those who are fully in-office and, more importantly, were much less likely to quit. The study looked at 1,600 workers at Chinese travel company Trip.com, finding that resignations were 33 per cent lower among hybrid workers than was true for those who were required to be in the office full time.
Work from home will not be the only thing on the chopping block if the labour market weakens. We know that training programs also tend to get set aside when the economy slows, which again might prove to be a short-term solution to tight budgets that ends up hurting companies in the long term. Given that skills needs are evolving, building a solid work force means continuously re-skilling, which will not happen if budgets are slashed. As we get closer to the end of 2025, a host of other items (including holiday parties) are likely to be on the chopping block as well.
If the economy does soften, employers will have the upper hand, although perhaps that is not a good way to describe the shift in power. Ultimately, whatever policy changes are made should be made with an eye to driving productivity, which is what ultimately drives profitability, and that is ultimately good for everyone.