Due to the necessity to adapt to the global pandemic, business leaders opted for remote and hybrid work to keep businesses operating and to encourage employee safety. As the numbers started rolling in, however, CEOs of some of the largest corporations in the world started raising concerns about a loss in employee productivity due to remote and hybrid working arrangements. The debate about employee productivity related to employer working arrangements rages to this day as articles on competing perspectives roll out nearly daily.
A study by McKinsey released in September 2023 uncovers some unique insights that business decision makers can use to inform their remote and hybrid work policies. The results also empower advocates with a more granular view of the data. As is the case with many consulting engagements, the answer to the question of whether remote or hybrid work is best seems to be the customary “it depends.”
Disengagement and attrition quantified
McKinsey estimates that the median-sized S&P 500 company faces costs of $228 million to $355 million per year due to employee disengagement and attrition. Over a five-year period, this estimate can cost an organization billions of dollars. With productivity, risk reduction, and expense reduction being top strategic focuses for CEOs and CXOs alike, it is no wonder that press coverage on remote and hybrid work arrangements is so extensive and widespread.
Employee engagement archetypes
The McKinsey study’s insights derive from its success in identifying six distinct employee archetypes from its survey of 15,366 workers across the world in 2022 and 2023. The employees were also evaluated across a spectrum of satisfaction, engagement, performance, and well-being. The defined archetypes include:
- The Quitters (10%): These are the least satisfied or committed employees who are usually headed for the door. While not necessarily the lowest performers, their feelings can potentially affect other employees.
- The Disruptors (11%): These are the most actively disengaged and only second to The Quitters in satisfaction and commitment. Through actions like quiet or loud quitting, they pose the largest negative influence risk.
- The Mildly Disengaged (32%): These show below average commitment and performance and are neither satisfied nor actively disengaged and disruptive in a way that harms an organization.
- The Double-Dippers (4.5%): These represent a wide spectrum of engagement and satisfaction but have the unique characteristic of holding two or more full-time jobs.
- The Reliable and Committed (38%): These employees sit on the positive side of the satisfaction spectrum and are reliable performers who execute business as usual.
- The Thriving Stars (4%): These are considered the top talent in the organization and bring disproportionate value to the company.
Employee archetypes performance compared to baseline
Once the new employee archetypes were defined, McKinsey then identified performance and well-being variations from organization-level baselines, considering five of the employee archetypes and in-person, hybrid, or remote work arrangements. The results are shown in Tables 1 and 2 below.
Conclusions and observations
While the data displays similar results between performance and well-being, key differences can lead business leaders to choose between conflicting trade-offs. Here are my observations.
Performance conclusions
- Work arrangement has negligible impact on employee performance for the lowest engaged employees (Disruptors and Mildly Disengaged).
- CEOs’ productivity concerns appear validated with a negative impact association with remote work (Reliable and Committed and Double Dippers), but these are not warranted for hybrid workers.
- Thriving Stars achieve top performance regardless of work arrangements, but decision makers may want to consider remote and hybrid accommodations to hold on to their top talent.
Well-being conclusions
- Work arrangement has negligible impact on employee well-being for the lowest engaged employees (Disruptors and Mildly Disengaged)
- Top-performing and engaged employees report a high increase in well-being when afforded hybrid and remote work arrangement options (Reliable and Thriving Stars).
Recommendations
Armed with this information, I believe decision makers would benefit from acknowledging their inclinations and easing down a path informed by both external and internal data. Listed below are my recommendations for a path forward for likely decision-maker personas.
In-person advocate persona
For decision makers who currently advocate for in-person work:
- Reflection: The loudest critics of remote and hybrid work should feel validated this external data supports their concern that remote work can reduce productivity for all but their highest performers
- Action: Continue their current plans to bring people back to the office but reconsider their opposition to hybrid work accommodations, in particular for their most engaged and productive employees.
Neutral decision-maker persona
For decision makers who do not currently take a strong stance on any particular work style:
- Reflection: Continue to focus on what works for the various organizations and work situations present in your company, and do not change what you see is working at your company.
- Action: Set up appropriate data-collecting mechanisms and intelligence platforms so you have a pulse on any shifts in productivity and well-being. When in doubt, consider hybrid work for those employees who request more flexibility.
Remote or hybrid work advocate persona
For decision makers who currently advocate for remote or hybrid work styles:
- Reflection: The biggest proponents should feel assured that remote and hybrid work have their place going forward. In-person work mandates may result in losing high performers as well as a sense of organizational well-being. Feel confident that hybrid work arrangements will stand the test of time.
- Action: Consider various intelligence and experience platforms to help get a pulse on your distributed workforce and increase employee productivity. Consider shifting to hybrid work in cases where remote productivity drops.
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