Continuing problems with organizations' hybrid working arrangements could be address by more manager training and better attention to employee behavior
Recent events suggest that hybrid working is still causing some professional service firms certain problems. Behavioral factors and inadequate manager training are behind many of them, leading to risky practices going unquestioned while competence, conduct, and diversity problems fester in the organizational darkness of managing a remote situation.
“Any organization has two manifestations: the formal organization with its rules, procedures, and organizational diagrams, and ‘what actually happens’,” said Dr. Roger Miles, faculty lead of the banking industry body U.K. Finance’s conduct leaders’ academy and a researcher and consultant on behavioral risk.
“Discovering the latter exposes problems and risks but senior managers often have a determinist view and wrongly assume that what their rules say is what everyone does,” Miles noted.
Hybrid working hiding problems
Hybrid working became normal practice at many firms as the COVID-19 pandemic wound down. Staff liked being spared a commute and enjoyed the greater flexibility to accommodate childcare and other needs. And many firms saw the potential to reduce the amount of expensive office space that they rent.
Hybrid working remains popular with employees. With people no longer in the same place at the same time, managers depend on video-conferencing platforms such as Zoom, Webex and Microsoft Teams; however, without the necessary management skills, problems can go unnoticed or unchecked.
“In online meetings, you lack important clues — body language, other visual signs, conversational nuances, significant silences — that would tell people in the same room someone’s holding back their true opinion or has some other difficulty,” Miles said.
“It’s easier to query something in person, especially when you sense that somebody else may support you,” he added. “Virtual working can mean more doubts are suppressed, which is the opposite of the ‘speak up’ culture” that the United Kingdom’s Financial Conduct Authority (FCA) expects.
SVB & operational risk
Failure to challenge matters online has been suggested as a factor in the collapse of Silicon Valley Bank (SVB) because underlying causes included unhedged risks from rising interest rates, a narrow client base, and a sudden pullout of deposits. However, some flagged SVB’s enthusiastic adoption of remote working, which most staff enjoyed. A Financial Times report mentioned the difficulty of challenging decisions like interest rate risk over Zoom.
SVB’s 2023 annual report, released in February, acknowledged that its work-from-home (WFH) arrangements created operational risk. The report said the negative effects of WFH that SVB could experience included systems access problems, cybersecurity or information breaches, and work-life balance problems reducing productivity or causing significant business operations disruptions.
From the C-suite to call centers, hybrid working risk-reduction is not helped by the way many managers in finance are developed, and the focus often is on performing a role, not how to oversee others. Research by the Chartered Management Institute (CMI), found that despite the prevalence of managing via online channels, there was scant training for it.
Lack of training, online meetings where most attendees keep their camera and mic off unless called to contribute, and a subconscious ‘familiarity breeds contempt’ attitude creates problems. Sensitive online meetings can be overheard as people take calls in coffee shops, while walking dogs, or on a train. Hybrid working may also contribute to the use of unauthorized messaging services for work.
Further, hybrid working affects staff development and meeting FCA training and competence requirements, as in-person instruction entails getting the instructor and trainee into the office on the same day. Anecdotally, one problem is that upper-middle tier managers at some firms can be absent even on core office days. The FCA’s expectations regarding remote or hybrid arrangements require firms to take into account the possible detrimental impact on training, and there are clear shortcomings.
“We all learn in unconscious ways, and seeing your manager operate on a day-to-day basis in person will undoubtedly influence how we learn at work,” said Anthony Painter, director of policy at CMI. “A survey of managers late last year asked about onboarding new employees, and 7-in-10 told us they found onboarding new team members and building relationships at work harder in a hybrid work setting.”
Pushback from firms
The Lloyd’s insurance market is among those pushing back against three days in work patterns and wants Monday restored as an office day, ideally aiming for full-time attendance. Some investment banks always viewed hybrid working as an unloved post-lockdown necessity that got staff back in the office at least part-time without triggering mass resignations in a tight labor market. With economic conditions harder, firms’ attitudes started stiffening last autumn.
Staff resistance to full-time attendance may thwart firms. Several banks have repeatedly told employees to be in the office full-time since late 2020, but logic would dictate that you do not have to keep ordering people to do something if they are already not doing it. A report last August found that over one-third of staff at London law firms, and nearly half in North America, had ignored calls for greater office attendance with firms reluctantly conceding on the issue.
A call back to the office can weed out those abusing the concept of being managed remotely — sometimes referred to as ZEUS workers, meaning those who put in zero effort unless supervised. One company recently paid staff a lump sum towards the travel costs of returning full-time; later, non-attendees’ excuses included spending the money on clothes and disliking commuting approximately five miles. Another non-attendee who asked whether the firm would install air-conditioning first had to be reminded the office had always had it.
Reluctance to return to the office can indicate serious diversity and cultural problems as well, as it may really be about avoiding unpleasant people. Last month, a recruitment company reported that workers over 55 years old were the most likely to experience deliberate exclusion by colleagues. Women over 45 were twice as likely to face sexist behavior than younger ones and one-third had been bullied.
“If your colleagues are deterred from coming to the office because of a hostile environment, you have bigger problems than the balance between in-person or remote working,” Painter said. “Such a culture is fundamentally corrosive and will impact the well-being and performance of your staff. It will also exclude many talented people, whether over 45 or under 45.”
Other workers may find the office less attractive now that fewer people are there. In March, CMI research reported that 52% of managers found WFH meant workplaces, especially at larger firms, were lonelier; and 47% found work more stressful than in pre-pandemic times.