Welcome to the Workology Podcast, a podcast for the disruptive workplace leader. Join host Jessica Miller-Merrell, founder of Workology.com as she sits down and gets to the bottom of trends, tools, and case studies for the business leader, HR, and recruiting professional who is tired of the status quo. Now here’s Jessica with this episode of Workology.
Episode 341: The Future of the Office With Peter Cappelli
Jessica Miller-Merrell: [00:00:25.62] Welcome to the Workology Podcast, sponsored by Upskill HR and Ace The HR Exam. I am so pleased to have Peter Cappelli with us on the podcast today. Peter is the George W. Taylor Professor of Management at the Wharton School and director of Wharton Center for Human Resources. He is also a research associate at the National Bureau of Economic Research in Cambridge, Massachusetts, and was recently named by HR Magazine as one of the top five most influential management thinkers and by NPR as one of the top 50 influencers in the field of aging. He was also elected as a fellow of the National Academy of Human Resources. Peter’s most recent book, The Future of the Office, Work From Home, Remote Work and the hard Choices We all face came out in September of last year. Peter, welcome to the Workology podcast.
Peter Cappelli: [00:01:19.62] Thank you.
Jessica Miller-Merrell: [00:01:20.52] Let’s get to it where we’re talking directly to HR leaders here, so I figured we would jump right in. What are your thoughts about how our industry has changed because of the global pandemic specifically and how HR supports our workforces?
Peter Cappelli: [00:01:34.59] You know, they say Chinese expression may you live in interesting times, right? And one of the things we know about success in the corporate world business world is that you got much greater opportunity to be successful if you’re dealing with problems that really matter to people. And so suddenly, boom, all the big topics in the news are right in our lap. And I think one of the things that this. You know, relates the most to on this issue of a future, the office is what’s our point of view. Particularly about whether or not people should come back to the office or should we let them work remotely? And if so, how? All those questions are ones that we shouldn’t wait till the CEOs tell us what they want to do. And then we have to say, Oh, have you thought of this or thought of that? We should be going to them and saying, you know, here’s what we know about this, and here’s how to think about the problems and the choices and what do you want to do? Right. So we should frame it up for them. That’s what’s going to make us influential.
Jessica Miller-Merrell: [00:02:36.58] I love that and I do think that we need to have. We need to really have the ear of the executive team and giving them information resources to help them work through and think about their the larger organizational strategy and how remote work might fit into that. Why do you think workplace leaders and employees seem to be so divided about returning to the office? I feel like every day there’s a new news story where employees are writing letters to the leadership or they’re walking off the job because they want to work from home while others are like, This is where I need to be.
Peter Cappelli: [00:03:12.82] Some of it is because of the nature of the work they’re doing. If you are a tech company and the kind of jobs people have are pretty independent from each other, you know, that’s we know this from a lot of prior research. The best predictor of whether this is going to work is literally how independent are the task. So for tech folks, you know, you could do it by working remotely from a lot of those jobs and not have to be in the office very much. That’s why those companies one of the reasons those companies are saying, you know, this is great, we should do more of this. If you’re in banking, let’s say, particularly the investment side where there’s a lot of relationship stuff going on, you know, the idea of trying to do all that remotely just doesn’t sound right to people. It hasn’t been done that way before. So that’s why they’re kind of on the other pole of this. But I think there’s some other reasons. Some of them, I think, are probably not so good. And that is it’s not clear always that the people at the top really have a good sense of what we already know about these things. Write about how work from home might work. And so a lot of it is going with their guts, you know, which is saying, I think a lot right now, I’m still not sure we can trust our employees. That’s probably not a healthy position to take. And people are going to respond well to given that we’ve run this experiment for more than a year now in lots of places where we’ve been telling them that it did go ok and we did seem to get things done. So, you know, a lot of it is functional and some of it is just kind of frankly opinion that’s still driving a lot of behavior.
Jessica Miller-Merrell: [00:04:46.21] For HR leaders who are struggling right now. For example, if their company didn’t do the best job maybe of handling the pandemic or working from home or maybe setting expectations around a return to the office. What advice would you have for them?
Peter Cappelli: [00:04:59.50] You know, I guess I would say not waiting any longer and just sitting on your hands is a really good idea. You know, I think where we’ve been getting into trouble is by not telling employees what’s going on and just waiting to see what everybody else is doing, which is what frankly, I think most companies have doing have been doing. I think at the very least, we should be telling our employees, you know, here’s where we’re waiting for. Here’s what we’re trying to figure out. And for sure, I think no matter what we do, we should tell them that this is an experiment and that we don’t know how all this stuff is going to work out. And if we’re going to try some practices, more work from home or different kind of arrangements for that, we should tell them, you know, we’re just trying this out. It’s an experiment. We don’t know how it’s going to go. One of the things that’s most difficult is everybody in this world knows is walking back decisions you’ve made and in particularly walking back benefits that people think they’ve been given. So if if you start to allow people to work from home permanently and then you say, no, you know, we’re not going to do this anymore, you’re going to get a bad result from employees unless you can explain why. Right. So if you want people to come back to the office, you need to tell them why, particularly because we’ve been telling them that work from home seemed to go so well. So why are we coming back? And you need to have a persuasive answer to that. And the answer ought to be something about why we are be able to get things done as well as we thought remotely. What have we been missing? What’s our explanation? And if you don’t have a good explanation for that, you better cook one up before you start bringing people back, or they’re just going to think it’s arbitrary and they’re going to be irritated.
Break: [00:06:46.03] Let’s take a reset. This is Jessica Miller-Merrell and you were listening to the Workology Podcast sponsored by Upskill HR and Ace The HR Exam. Today I’m so excited to be talking with Peter Cappelli. He’s the Author of The Future of the Office, Work from Home, Remote Work and the Hard Choices We All Face. Personal and professional development is essential for successful HR leaders. Join Upskill HR to access live training, community, and over one hundred on-demand courses for the dynamic leader. HR Recert credits available. Visit UpskillHR.com for more.
Making the Right Choices for the Future of Work
Jessica Miller-Merrell: [00:07:22.96] We’ll put a link to your book and the show notes, but can you talk a little bit about how we should think about our, the choices we need to make as HR leaders, as employers when it comes to the future of work?
Peter Cappelli: [00:07:34.87] Yeah. So I think in this work from home aspect of it, the future of the office. One of the things that’s fundamental to recognize is that the future of working from home will not look like the past. So during the pandemic, we closed most of our office and sent everyone home. So you’re working from home, but so is everybody else. There was a certain amount of pulling together that came with the fact that we were all in the same boat. There was also a sense that you were in no disadvantage from being home because everybody else was too. We were much more tolerant of mistakes and things that happen. My internet connection went down. My dog started barking during a meeting after the pandemic, where we’re raising our hands and asking people to raise their hands rather and say, Do you want to work from home or not? That’s a different world, right? Because you’re not going to be at home along with everybody else. You’ll have some people in the office, you’ll have other people working remotely. We’ve run that experiment. We did that with a period of teleworking that was common after the dot com period and around there. And what we discovered is at least for the employees who were working remotely, it didn’t go so well. They didn’t get promoted as often their careers tended to stall. Not very surprisingly, the people who were in the office with the bosses where things were being decided had more influence.
Peter Cappelli: [00:08:59.29] They got more recognition. They did better. So you have to be ready for that to happen. The second thing is the question of ok, on the employer side, what’s in it for us, permanent remote work where you know you’re going to just keep working from home forever, you’re going to move someplace and work from there. That’s a different story. That means, frankly, it’s going to work for the company because we’re taking your office away. We’re going to shrink our real estate footprint and we’re going to save a lot of money there. Ok, but how about hybrid, some sort of hybrid model where we’re allowing people to work more from home? How does that help the employer? We don’t have a good answer to that. Maybe it’s going to help us recruit. Maybe it’s going to help with retention. We’re not going to save money on real estate that way. So what is the story? It’s going to be more difficult for supervisors to manage. So, you know, we need a clear point of view as to why we should do this as an employer if it’s to make our employees happy. Ok, that’s good. But how is that going to help us? I think if you don’t have a good answer to that question, you’re probably not going to get very far with your CEO conversations.
Jessica Miller-Merrell: [00:10:11.80] I wanted to ask you about implications because we’re trying to make, like you said, choices decisions right now, and we do need to be talking to our executive and leadership team about the, you know, is it in person or are we going to hybrid? Are we going to stay in full remote? What’s happening here? But talk us, talk to us about the implications for employers who maybe just want to go back to the way things were before the pandemic. I think a lot of employers are like, Hey, offices are open. Everybody’s coming back. What are the implications for those employers?
Peter Cappelli: [00:10:44.89] Yeah. And you know, the first thing on that is it does look like a lot of employers are just bringing people back and not doing much else. That’s different. So the census reported a few weeks ago that only about 11 percent of employees are working remotely now, down from about a third a year or so ago. And in some parts of the country, like in Texas, which has been more resistant to restrictions, we’ve already got about two thirds of the offices full again, so a lot of companies are deciding just to bring people back. I think if you’re going to go in that direction, you can anticipate and should anticipate the following quite pointed questions from employees. And that is look working from home or at least some of them working from home was really good for us and my family in particular. Why are we going back? What’s the answer to the question to that question? Why are we going back? It’s going to be worse for me. And if you don’t have a good answer that you’ve got a problem. One of the things to recognize, though, is not everybody wants to go back. So the latest data that I’ve seen Opinion Survey says that only about maybe eight percent of employees want permanent remote. That is, I want to just be cut loose. I’ll work remotely or go to Vail or wherever and live there.
Peter Cappelli: [00:12:02.41] Only about eight percent want to do that, about 30 plus percent. You want to go back to the office. The majority, although it’s not a huge majority, say they want more flexibility in terms of hybrid like models choice over when to work more from home. Right. So if you’re the employer thinking about bringing people back, we do need to think about the fact that most of our employees do want some flexibility. They don’t see why they can’t get it because they think they’ve just proven they’re working remotely seems to go, ok. So you really need a story as to why we need you to come back. And a story might be, you know, during the pandemic, we just didn’t have as much business. So it was easy to get things done. We were largely just going through the standard work we have to do. We weren’t innovating. We weren’t doing anything new. It’s hard to do that remotely one way or the other. You need a story as to why the pandemic experience is not going to translate as perfectly as we might think into the post-pandemic experience. And part of that might be to point out to them that, you know, employees during the pandemic, everything was fine for them in the sense that nobody was at a disadvantage for being at home. That’s not going to be the case going forward.
Jessica Miller-Merrell: [00:13:16.80] You feel like or I guess in your experience right now, are you hearing that employers who are allowing for remote work? Are they having as many challenges finding and retaining staff as maybe their in-person counterparts?
Peter Cappelli: [00:13:31.91] Well, I don’t think we have any kind of good idea about that, to be honest, you know, it’s all kind of anecdotes from people, at least the anecdotes that I have heard are that they have not. That is, companies who are thinking about or already implementing some sort of flexibility have not had any real problems retaining people or not. Particularly one of the things, I guess, if you’re an employer to think about is how much of that might be because they really wanted the flexibility and how much of it is that if you’re not giving people flexibility, you’re kind of just blowing them off that, you know, you’re not asking their opinion, you’re not taking the advice of employees, you’re not responding to what they say they want. That’s pretty irritating when that happens about anything. So how much of it is the general management approach that’s irritating to people and how much of it is the work from home, per say, it’s a little hard to sort those two out.
Jessica Miller-Merrell: [00:14:34.91] I agree, and I I also think that right now people are making a lot of decisions for their lives, and I’m not calling it the great resignation. I’m referring to it as the great realignment, because sometimes that means quitting my job or starting a business, or maybe just deciding to work from home or taking some time off for a number of different reasons. It doesn’t just have to be because my organization is going to go back in person or that my boss is a jerk. It could be, Hey, you know, this has given me an opportunity to kind of reflect and I don’t like doing this work anymore, so I’m going to change to maybe another industry. So it is, I think, really hard for us to really put our finger on it to say this is the reason why people are quitting right now or not going back into the office.
Peter Cappelli: [00:15:21.83] Yeah, I think that’s right. There’s also some facts that are kind of getting muddled here. The first is the notion that this is an unprecedented level of turnover. You know, it is the highest, you know, turnover rates reported. But that’s partly because the data has only been reported for 20 years. So it’s not like in world history. This is the most turnover. The turnover rates. The last data I saw were two point nine percent per month. Voluntary quitting. If you look just before the pandemic, it was two point six percent. So it is higher, but it’s not mind blowingly higher and there’s no evidence whatsoever that people who are quitting are giving up work. Most people who quit jobs immediately move to another job. So we got no reason to believe that the quit rate right now reflects people who are turning away from work. There’s no evidence for that, right? So we’re making all kinds of assumptions here which are not warranted in thinking about what’s going on.
Jessica Miller-Merrell: [00:16:20.93] I think all that is a good point. I keep seeing stories or I’m hearing from friends of friends and they’re leaving their jobs because they make more money on their crypto investments. But I think that these are really small numbers and just kind of stories through the grapevine that you’re hearing, especially based on the data that you’re sharing with us right now.
Peter Cappelli: [00:16:41.63] Yeah, I think I was talking to a reporter about this and they said, you know that once these stories get going, then they become a trend and you get direction from editors to go write a story about this, you know? So this story is kind of have a life of their own. I think there are people who are deciding to retire. Some of that may have to do with the fact that they were pretty happy working remotely and don’t want to go back to the office, but frankly, I’d say a bunch of it has to do with the fact that their 401k or retirement investments have now gone up by 25 percent or so in the last year and a half. Suddenly, they got a lot more money, so it might have nothing to do with work from home at all may have to do with the fact that, you know, I can retire now. I didn’t think I’d be able to.
Jessica Miller-Merrell: [00:17:29.23] In an October Fast Company article, we’re going to link to this in the show notes you talk about onboarding 2.0. How do workplace leaders make a case for coming back to the office? Can you talk us through that?
Jessica Miller-Merrell: [00:17:42.40] Yeah, I think there’s a couple of things to think about. Once you’ve decided that you want to bring people back, making the case means, you know, as we were talking earlier, persuading them why it is important to the business. It’s not just the opinion of the CEO. We know it matters, and here’s why it matters. The interactions are really important here. The contact, we think, is important in learning whatever you think it is and you have evidence for. You should say that. I think the idea of onboarding people again is really important. And one reason is because after having been out of work for a year and a half, we are maybe a little disengaged at the very least into the office culture. And some people don’t want to come back. They’re afraid to come back or it’s just quirky. So trying to make the experience of coming back feel like something like onboarding, you know, first of all, welcoming people back, giving them some opportunity to process what happened in this year and a half, you know, a lot of people lost loved ones. Some of our co-workers died. The new hires have come in and you have met any of those people. Yet so do we have some opportunity for people to re-engage socially, which is a big part of the reason for being back in the workplace? In any case, the other thing to remember, though, is this is a great opportunity to change everything or anything about the organization because people are already shaken out of their old routines a little bit. So if you want the place to work differently, if you want people to be more cooperative or spend more time talking with clients or whatever it is, this is the time to roll it out as they’re coming back in because they’re already a little bit out of their routine. So, you know, thinking about onboarding as people come back, if you’re going to bring them back into the office is a really important thing to do and to do it right now.
Jessica Miller-Merrell: [00:19:42.76] I love this idea because maybe we haven’t talked about some changes or some policies or some important parts of the culture, and it’s a great opportunity to kind of refresh and reset, Hey, you’re coming back to the office. Let’s onboard everyone and talk about the organizational values and how your job fits into the bigger picture. So I think that it’s a great it’s a great thing for everyone to be thinking about. I wanted to ask you again one more time about hybrid, because I feel like there’s so much indecision about this. Do you think that we should let employees decide or is that a different model altogether? Because I feel like a lot of employees are saying like, Hey, I’m there, telling all their friends, I’m not going back to the office, no matter what. So do you think that we should let employees decide what they should do?
Peter Cappelli: [00:20:35.93] Well, I think the the advantage of giving employees some choice is really big, right? So hybrid just means everything other than everybody at home or everybody back in the office. How do you arrange that? So there are companies that are saying, for example, you can all work from home on Tuesdays and Thursdays. That might be great for people who want to be home on Tuesday and Thursday, but there may be some people who have a particular reason for being home on Friday, and the reasons might change week to week. And you know, honestly, a lot of the importance of having that flexibility is you can cut down on people having to take PTO days. You might not need as many PTO days if people can work from home, rather than having to take one of those days a sick day. If I’m just not feeling completely up to par, but I can still work and maybe a PTO day if I have to meet our contractor who can only get here at 10 30 on a Friday. So giving people some flexibility is really important to them. The question, I think, is does it mess up the organization if we give individuals flexibility? Is it better to just say, OK, you can do it on a Friday, but only on a Friday? And that way we’re sure everybody is here for meetings and other things and other time.
Peter Cappelli: [00:22:00.62] It’s kind of a bit of a value judgment, but it is important to recognize that if you designate certain days as home days, it won’t always work out that those are the best days for your employees. Let’s say you’re doing an agile project right where the idea is really important to be face to face most of the time, but you’ve scheduled some days during a week where people can work from home. But then it turns out that the way the project is going, we still need another day of face to face testing on this thing just happens to land on that work from home day. Well, what do we do? Then we have to just delay the thing by a day or more important, more likely. We got to work from home day and you know, everybody’s got to be here the reverse. You know, we’ve got a day when everybody’s got to be here, but some people really need to work from home then. So, you know, it is an unpleasant choice. But frankly, the more choice the employees have, the more they like it, the more useful it is to them.
Peter Cappelli: [00:23:05.39] If you think your purpose in doing this is to keep your employees happy so that they stay with you, make it easier to recruit, give them more flexibility. If your big concern is, you know, if we give people flexibility, we won’t have the synergies in the office we need, then don’t give them so much flexibility or make it something that’s negotiated in their workplace per say. By the way, that’s an easy call to just say, let them negotiate it locally. Let your local manager decide the problem with that one, which we kind of had before the pandemic, is that you get these real inequalities across managers where some managers don’t believe and work from home. They think you’re going to be watching Gilligan’s Island on reruns if you’re at home and others think, why not? I just care whether you get your work done. We can’t allow that. That is really going to irritate people a lot now because they’re aware of this experiment. We’ve just run where it seemed to go. Ok, so if you allow local managers to have really different approaches to this, you’re going to get a lot of complaints.
Jessica Miller-Merrell: [00:24:11.06] Well, it’s definitely not a dull or boring time to be in human resources, which is kind of how we kicked this whole thing off. So I am excited about the opportunities and hopefully the continued focus on employees and the involvement of HR in terms of working and collaborating with the executive leadership teams. And I know that you are as well.
Peter Cappelli: [00:24:36.89] Yeah, it’s a really interesting time. I think the biggest thing is to be prepared for this and that means, you know, to have your point of view down where you have thought about the choices, you can lay out what they are. You can lay out the implications because by the time the leaders come to you, it’s too late. They’ve already thought about what they want to do and they just want you to execute it. That’s often really the boring work, and you may be finding yourself executing something you pretty much know is not going to work and you don’t want that.
Jessica Miller-Merrell: [00:25:06.80] Well, thank you so much, Peter. Your book is called The Future of the Office Work from home, remote work and hard choices we all face. Thank you so much for being on the podcast. Where can people go to connect with you and learn more about the book and the work that you’re doing?
Peter Cappelli: [00:25:22.26] Uh, at the Wharton School, my website’s easy to find. I’m the only Capelli here, so if you just put in Cappelli with two peas and two L’s and Wharton, just those two words and you will find me my find my website and you can see what I’m up to.
Jessica Miller-Merrell: [00:25:37.62] Awesome. Well, thank you again, Peter. I really appreciate you taking the time to chat with us today.
Peter Cappelli: [00:25:42.60] Thank you.
Closing: [00:25:43.38] I’m so glad to have the opportunity to speak with Peter today on this podcast. The topic of remote work hybrid work in person work is something that is not ending any time soon. It is something our employees are thinking about. They’re asking about their wanting to know more about, and certainly our candidates are thinking about these kinds of things too. The topic is something that will be a topic of conversation for years to come, and I think that this pandemic has fundamentally shifted the way we think about work and how we work. I want to also thank you for taking the time to listen to the work LG podcast. It is sponsored by Upskill HR and Ace The HR Exam. This podcast is for the disruptive workplace leader who is tired of the status quo. I know that’s you. My name is Jessica Miller-Merrell. Until next time, you can visit Workology.com to learn all about our Workology podcast and the hundreds, literally hundreds of episodes we have available instantly to you.
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