The Great Experiment of 2020
Since 2020 began, 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 work from home is affecting organizational 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 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…and the Good News
The data show leaders who ignore the potential impacts of WFH put their organizations at substantial risk. Where leaders have failed to adapt to this new work mode, there is diminished trust, engagement, and performance.
On the other hand, where leaders proactively engage employees in spite of WFH, commitment, engagement, and teamwork are stronger than ever.
Hidden Costs of Work From Home
Leaders who have done little to address the new WFH dynamic are at risk of:
- Employee Turnover
- Sinking Productivity
- Weakened Employee Commitment and Connection
- Strained Team Performance
- Lower Employee Engagement and Morale
- Weakened Employee/Manager Relationships
What’s more, employees at organizations where leaders have done nothing to preserve or improve the culture in light of WFH are:significantly more likely to report their culture has suffered than employees whose leaders have taken action and 200% more likely to report feeling substantially less committed to the organization.
The Collapse of Social Capital
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?
According to the study, social capital is deteriorating in organizations where leaders have taken no action to preserve culture. In other words, employees in these organizations 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.
VitalSmarts’ Seven Ingredients of Social Capital
- Responsibility: People generally take initiative to solve problems rather than waiting to be told.
- Discretionary effort: The norm in the organization is to voluntarily give more effort, passion and creativity than the minimum the job demands. (32% see an increase in peers, 23% see a decrease. 17% acknowledge their personal DE has declined.)
- Connection: Most people feel a personal connection to the organization’s mission, values, and people. (50% feel less connected.)
- Commitment: People rarely, if ever, think about looking for another job. (Only 16% now actively thinking about another job. 44% actually feel MORE committed because of events of the last 6 months.)
- Reciprocity: People respond quickly to requests from others.
- Trust: People operate on an assumption of goodwill, giving one another the benefit of the doubt when problems occur.
- Teamwork: People sacrifice their own needs to serve a larger team goal when needed.
What Builds Social Capital in Surprisingly Stronger Organizations?
- Fun, off-the-wall virtual events (virtual dance parties, online eating contests, etc.)
- More frequent team meetings
- Scheduled non-work-related team meetings for team members to connect
- New tools to facilitate connection
These actions have a 220-440% greater impact on social capital than the top stated preference of “Changed Work Hours and Flex Time Policy.”
Two Mechanisms of Social Capital
Your social system is strengthened through both structured and unstructured interaction.
- Repeated positive experiences of collective successful striving
- Surprisingly virtuous behavior in challenging circumstances
- Regular free-form interaction to promote exploration and social learning
Surprisingly Virtuous Behavior
“The CEO sends an email to the company every time we have a COVID case. The folks we have in the factory are crucial to our success, they must trust the company. And they do. By getting emails out early, people feel the company [cares about their health.]”
“Our company took action before the government did. They halted all travel and sent everyone home in March. It showed the employees that the top level of management does care about its employees. They have been great at communication and explaining why decisions were made. Once they did a deep-cleaning of the facilities, they very slowly started to allow essential on-site personnel. They have made it easy for employees to obtain the necessary office set up equipment. Our CEO took a 100% pay cut with a 50% cut for his top management team and a 10% cut for all management. This is amazing.”
Unstructured Interaction is a Germ of Social Capital
- In an eToro trading call center, productivity rose 10% when employees took coffee breaks simultaneously rather than sequentially.
- Innovation surged in a German bank when seating patterns were changed to promote connection between isolated teams.
- Bank of America got a $15 million annual productivity boost in one division by placing longer tables in the cafeteria, forcing more people to sit by each other.
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 organizational 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.
The Office is a Way not the Way
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 8 a.m., lunch at noon, leave at 5 p.m., and be in the office when 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
Create Caring and Connection
Senior executives and employees shared stories of social innovation that promotes meaningful virtual contact:
- “Our company now holds more large group meetings and employees are having one-on-one interaction with upper management.They are asking us to participate more in sales and marketing than we ever did before and communicate how we are contributing to our company goals.”
- “Every morning at 9:30, my team meets for a video call. The meetings are scheduled for 15 minutes – just a check-in to make sure everyone is okay. We started working remotely after just one day’s notice, so initially it was to make sure people’s systems were working, they were healthy, they had projects, and it was very work-focused. Now, after 5 months of working from home, one employee, after missing a morning call due to another meeting, the next day said ‘I missed you guys yesterday. This meeting is the best part of my day, I really look forward to it.’ The rest agreed that touching base every day was helpful and a comfort during a very challenging time . . . Our morning check-in has stretched to closer to a half hour and has become a time to share personal stories, give tours of our homes, see each other’s families, have our morning coffee together…all things we just didn’t do before. If anyone is upset, we show compassion. If anyone needs help, we provide assistance. If anyone has a success, we all celebrate. Through the shared traumas of the pandemic, ongoing racial injustice, and the divisive election, we have really come together as people who care about each other and help each other. It has made this crisis a little more bearable.”
- “Our group rarely got together socially except for at Christmas (and even that was still “work”). Since our team has been remote, we have had several Zoom Happy Hours that have been a great success. We share what’s going on in our lives at home and at work. People seem to relax and truly open up—perhaps it’s because they are in their own environments. These ‘gatherings’ seem to lift everyone’s spirits. People often marvel at the fact that ‘remote’ can feel so ‘close.’”
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 their 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:
- Report 57% lower commitment.
- Are 40% less likely to exert discretionary effort.
- Are nearly 4 times more likely to respond slowly to requests from others.
- Are more than 4 times more likely to assume the worst of others when problems happen.
- Are 3 times more likely to worry more about their own interests than larger organizational goals.
It Doesn’t Take Much . . .
Employee stories illustrate that improving managerial relationships isn’t a heavy lift. Here are some examples:
- “On several occasions, members of upper management have asked me how my kids were handling the transition to remote learning. In fact, in one meeting with our CEO, he asked everyone with small children how their entire family was doing in the remote environment.”
- “In the past, high-ranking global corporate officers visited individual locations infrequently. Since working from home, our global division leader sends weekly fireside-chat-type videos to all staff sharing information about the different organizations in our division along with success stories from each. This has made me feel more connected to my global organization outside of my own work group.”
- “Prior to the WFH deployment, I met with all employees roughly once a quarter for updates. After deploying to WFH, I changed that cadence to weekly with shorter (15-min) all-hands updates. I did this because I was worried people would feel disconnected otherwise. The feedback has been very positive . . . I will be doing it this way going forward regardless of whether we all return to the office.”
Just Do Something . . .
When it comes to improving social capital, some interventions had a greater impact than others. But encouragingly, almost everything leaders did to create moments of connection made a difference. A key finding of the study is that leadership matters more than location. If leaders invest in increasing social capital, they can largely offset the cultural downsides of WFH.
Specifically, where leaders proactively build a sense of connection during WFH, VitalSmarts’ index of social capital is substantially higher. For example, employees are:
- 60% more likely to respond quickly to requests from each other.
- Nearly three times more likely to give one another the benefit of the doubt rather than taking offense.
- Nearly three times more likely to sacrifice their own needs to serve a larger team goal.
- More than twice as likely to take initiative to solve problems rather than waiting to be told.
Distance Isn’t Destiny
This study provides both a warning and a roadmap for leaders trying to navigate a new work from home 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.
A Case for Virtual Training
While there are many options to engage your WFH workforce, virtual training is one that checks the boxes on creating both structured and unstructured connection. It’s also surprisingly effective at preserving culture. The study shows that among the employees who say they are getting the same or more training since WFH…
- 33% say their culture has improved since WFH.
- 22% say they feel more connected to their organization.
- 52% say their commitment to the organization has increased.
VitalSmarts virtual training options can help your WFH team not only build crucial skills but also strengthen social capital, commitment, and connection.