Introduction
Just a little over three years ago, it was common to see employees interacting in office hallways, sharing information, and generating ideas; today many of those corridors are empty. With the transition to remote work, these chance encounters have diminished, leaving the internal culture vulnerable. Consequently, the dilemma that emerges for leaders is: how to keep that collaborative spark alive while fostering a vibrant culture in a virtual environment.
Although it is an attractive modality since it allows, among other things, access to talent anywhere in the world, scaling growth in different jurisdictions of strategic interest, and reducing operating and capital expenses, it is critical to recognize that there are also impacts that, if not addressed, can dramatically disrupt the organization and its performance in the medium and long term, given the effect they generate on culture.
What is the true reality of remote/ hybrid workplaces and what impact does it have on employees and culture? How do leaders maintain or develop a desired culture in a remote and growing environment? How do leaders overcome the cultural challenges that arise with teleworking? In this article, we explore the negative and positive impacts of telecommuting on culture, review several recommendations for addressing key challenges, and present our methodology for how to approach the transition to a hybrid model while maintaining the best of culture.
Positioning Culture: What is it and why is it Important?
Culture is the best predictor of job satisfaction, even ahead of compensation and work-life balance1.
Organizational culture is a fundamental aspect that not only defines the identity of an organization but also impacts its growth and success in the short and long term. In organizations, culture is the set of values and beliefs that determine behaviors shared by its members, and in turn, influence everything the organization does, from how decisions are made to how employees are treated. In this sense, culture not only influences the present of a company but also its future growth. On the other hand, the values hanging on an office wall, on a company’s website, or in a corporate brochure, only show leadership aspirations. In the end, the organizational culture is the one that is lived, not the one that is desired.
“Culture is the glue that binds an organization together. It has a very significant impact on the effectiveness, ethics and governance of the company.”
Adrian Montague, former Chairman of Aviva Insurance
The daily influence that culture has on the behavior of leaders and employees ultimately generates a cumulative effect with the same charge (either positive or negative). In other words, a positive culture with satisfied and high-performing employees in the long term tends to create more competitive and successful organizations, or at least that’s what the leaders of the world’s most admired companies (WMAC for its acronym in English) believe. According to a 2023 study by Korn Ferry, two-thirds of these leaders attribute 30% or more of the value of their organizations to culture, and one-third of them attribute 50% or more.
In short, company culture is a critical factor for a company’s success and can significantly affect employee retention, customer satisfaction, and ultimately, its performance and valuation. Therefore, it is important for organizational leaders to focus on developing and maintaining a strong and positive cultures recognizing that there are necessary adjustments to take care of if a remote or hybrid work modality is to be adopted (or has already been adopted).
The unfiltered reality of remote work
Remote work has become more popular in recent years. After 2020, different organizations were forced to provide this option to their employees to remain operational, while respecting the restrictions imposed because of the pandemic. Although there are some emblematic cases where workers were called back to their offices after the lifting of restrictions, many organizations maintained this model to some extent after seeing the benefits it generated. Like positive cultures, studies4 show that remote work environments help reduce attrition rates by 35% and reinforce employee satisfaction. However, one-third of leaders surveyed in the same study say remote work has weakened the culture, suggesting the reality of the effect is a bit more complex. Let’s look at some examples:
Different perceptions of benefits: According to a Harvard Business Review study5 on the perspective among managers and employees regarding remote work, managers think that it reduces productivity, while employees express the opposite. The discrepancy seems to stem from what each group understands by productivity; an employee may feel more productive if the time they spend commuting to the office is spent working, but that may not be apparent to their manager.
Eyes that do not see: Arvind Krishna, IBM’s CEO, warns that for some remote workers their professional career is affected and those who aspire to move up the hierarchy need to be in an office. Individual contributors who do not require much team interaction or exposure to leaders may miss opportunities for recognition or growth, especially in organizations with lax performance appraisal processes. This view is corroborated by an MIT analysis6 showing that of the 1.4 million employee reviews in the Culture 500 Employee Review, those who enjoy remote work tend to express negative reviews regarding recognition and reward for their performance, opportunities for advancement, and clarity of job expectations.
Blurred boundaries: According to the same MIT report6, in this modality there is a fine line between the flexibility it provides and the feeling of employees having to be available 24/7. Additionally, remote workers may experience the tendency to work longer hours, and this can blur the boundaries between their professional and personal lives. Constant access to technology and the ability to work from anywhere can lead to increased pressure to always being available and respond quickly to job demands. Not defining healthy boundaries between work and personal life can generate stress, resulting in chronic burnout and real or mental disengagement of the employee.
Needs of Generation Z: Finally, we cannot forget to mention the new generation that is entering the corporate world, Generation Z. With the rise of remote work, young people are joining companies with some hybrid modality, which leads us to ask ourselves: What is the impact of entering the world of work in a remote context for Generation Z? According to the MIT study4, those who work remotely may be missing out on key mentoring, coaching, and socializing opportunities. In the same study, 45% of leaders surveyed state that younger employees find it difficult to integrate into remote companies. Moreover, the National Institutes of Health of the United States7 shows (in data from 2021) a higher prevalence of mental health disorders in adults from 18 to 25 years versus other age groups, and it is the population that has received less mental health care.
In summary, many of the benefits that organizations can take advantage of from remote or hybrid work can be minimized by negative aspects such as lack of clarity about expectations and how to measure effectiveness, absence of mechanisms to mitigate lack of exposure to leadership, attrition due to absence of clear boundaries between work and personal life, and a lack of social interaction, which in turn diminishes the sense of community among employees, with the younger group having a stronger impact.
As a result, some of the questions that organizational leaders should ask themselves are:
- How can remote work be successfully implemented while taking advantage of its benefits and not falling into the traps mentioned before?
- How can culture (and therefore day-to-day behaviors and decisions) counteract these negative effects?
- What is it about the culture of my organization that differentiates me that I should take care of when implementing some form of remote work?
Telework Implementation Methodology:
The studies and literature reviewed as references for this insight offer different recommendations for companies to successfully implement a remote work model while fostering the organization’s culture. However, it is difficult to find a concrete methodology – that includes a comprehensive and strategic plan – for the company to transition to a hybrid work model, that ensures growth, maintenance, or improvement of performance, fostering the right skills, and without sacrificing its culture.
To fill this gap, we present below some elements of our Telework Implementation Methodology (Fig. 1) which consists of four steps: Evaluation of the Current Situation, Design of the New Model, Pilot, and Implementation. For purposes of this insight, we will focus on the role played by the six key elements that are the foundation of our methodology.
Figure 1. Telework Implementation Methodology:
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- Culture Management: It is necessary to understand it, in order to manage it: Establishing the practice of actively managing culture in organizations is far from being a standard practice, but it can be a key success factor as we have already established. If culture is not truly understood, or if it is assumed that the values being promoted are the ones actually lived within the organization, it’s akin to managing finances with inaccurate or aspirational financial statements. Where to start then?
- Conduct a culture study. Identify experts within the organization or external resources who can execute an objective study of organizational culture.
- Analyze the cultural attributes that emerge from the study. We must understand the values and believes that define the culture of the company to know to what extent these are compatible with the business strategy and then with a remote work model. A culture where values such as discipline, responsibility and autonomy prevail may be better suited to implement a remote working model than organizations that display attributes such as micromanagement, authority, or risk aversion.
- Determine which attributes you want to reinforce and which you don’t. Those that we want to reinforce must be deliberately instilled at every stage of the employee journey, as we will see in the next step. For example, a culture with high achievement orientation but low people orientation is more prone to fall into the trap of blurred boundaries. Therefore, aligning schedule expectations and respecting them (starting with organizational leaders) can prevent chronic burnout of highly motivated employees working from home.
For Squarespace’s founder Anthony Casalena, the most important element of his company’s culture is communication. Encourage continuous interactions between teams and employees at different levels so that everyone is aligned in terms of goals and expectations, while also being aware of possible changes. This allows employees to feel part of the projects and understand their roles within them.
- The Employee Journey: As with customers, identifying all the points (milestones) where the company interacts in a differentiated way with the employee, allows an analysis of the journey to discover what the employee’s experience is in each of those interactions. The employee’s experience during the onboarding process may be very different from their experience during training. To identify the necessary adjustments, we recommend asking the following questions:
- How effective is that interaction with respect to its purpose?
- How does the company make sure it promotes its culture during that interaction?
- How should that interaction be adjusted to remain effective in a remote context?
Figure 2. Example of stages of the Employee Path and detail of the Discovery stage:
Some key aspects of the employee journey that must be considered to successfully implement a hybrid work model are:
- Onboarding – It represents an ideal opportunity for the employer to demonstrate their culture from the beginning of an employee’s life cycle and clearly establishes performance expectations both in the office and remotely. Exposing the employee to different leaders and assigning a mentor (buddy system) contributes to the adoption of the culture. Studies show that good onboarding experiences can increase employee retention by 69%5.
- Training and development – One strategy to reinforce organizational culture is to provide training specifically on cultural aspects so that employees know what behaviors and values the organization seeks to foster. In addition, the organization can foster an environment of collaboration and virtual knowledge sharing, without the need for this knowledge to be shared through formal training.
- Remote trainings, while effective, sacrifice pre- and post-training interaction, so it is key to ensure breakout sessions or dedicate more time to spontaneous interactions, such as Q&A sessions, or simply share experiences at the end of the training.
- Daily operations – An employee’s interactions with a direct supervisor and teammates are the instances where culture is displayed and fostered the longest. Each organizational leader must assume the role of culture agent incentivizing and setting the example of the behaviors that are expected and correcting those less aligned.
- Awards, recognition, and performance management – This is the most important opportunity the organization has to send a very clear message to all staff about what is expected of them. Therefore, leaders must be careful to establish and communicate what behaviors to observe and the level of performance expected of each individual, and then stimulate those behaviors and performance through feedback and recognition in both the office and remote work context. Leaders should keep in mind that employees are concerned that their work will not be rewarded, or that they will not be given the same opportunities if they are not in the office.
- Disengagement and exit interview – It’s an opportunity for the employer to get feedback from an employee who has experienced the stages of the employee’s life cycle and determine how the culture has or has not contributed to their performance, or their decision to leave the organization.
- Assess competencies: What competencies (understood as behaviors, knowledge, and skills) must an employee have to successfully adopt a remote/hybrid work model? Organizational competency models are the framework for key processes of human resources functions such as selection, development, and compensation. These models are a good reflection of the culture that is sought to promote; therefore, it is critical to revisit the competency model to determine to what extent it is aligned with the strategy, culture and how compatible they are with remote work.
Recruiting and developing based on competencies such as self-regulation, autonomy, effective communication, collaboration, results orientation, high quality standards and management of communication technologies in addition to being suitable for the successful adoption of teleworking are also appropriate to foster high-performance cultures.
At Squarespace, one employee says that even though the company has grown, she continues to hire employees with a lot of disposition to collaborate. This quality leads the employee to have a desire to help his colleagues, even if they are not physically present with him. This creates and fosters a culture of camaraderie and trust in which the employee can feel accompanied, despite the distance between him and his colleagues.
- Indicators: How do we know that telework initiatives are bringing the results we seek? How do we know the impact of hybrid work on individual and collective performance? How do we know that our people are satisfied with the measures implemented?
Indicators allow organizations to measure in order to manage. If the organization has decided to implement or maintain a remote work modality, it must have a specific purpose. If the goal is to reduce costs, you should set a goal and monitor the reduction throughout the process. If what is sought is to improve the organizational climate by giving more flexibility to employees with the remote modality, the climate must also be monitored.
Measuring employee satisfaction is especially important when employees are not physically present in the office, as the lack of physical contact and more limited or texted interactions do not allow colleagues or managers to know the emotional state of each employee. The more information the organization has about employees’ perception of organizational culture, the better ability it will have to make timely adjustments and achieve its goals.
In V2A for example, we implemented a monthly pulse to measure the “temperature” of our staff. This practice allows us to detect situations of discomfort in some employees and address them in a timely manner. In this sense, establishing the physical and mental well-being of the staff as a metric reinforces and serves as an example of an organizational culture that genuinely values the well-being of the workers, who in turn, appreciate it.
Figure 2: Approach to understanding the impact of the adoption of teleworking on the staff of a client in the financial sector in the Dominican Republic.
- Roles: Identifying which functions we can really maintain in hybrid mode and which functions would be counterproductive not to have in the workplace is an exercise that can seem simple, but it is equally important to perform the analysis. For example, functions such as Human Resources, although they could be performed mostly remotely, can also bring benefits if a hybrid modality is established ensuring the constant presence of this team in the office in case an employee’s situation might have to be addressed in person. These types of decisions reflect a culture of genuine concern for an employee’s well-being and are usually highly valued by the staff.
- Enablers: In this step the purpose is to evaluate if you have the right devices for remote work such as laptops and communication and collaboration programs (such as MS Teams or Slack) for example. These are also a reflection of the culture. An organization with a very frugal expense culture can sacrifice the deployment of enablers like the ones just mentioned that are critical to a successful implementation of remote work. Providing stipends to cover reasonable work-from-home accommodation is also a highly valued practice by employees.
In the case of Squarespace, they foster an environment of collaboration and knowledge sharing that manifests itself in the daily operation. They use the Slack platform to ask questions, stimulate discussions, and answer each other, even if they’ve never met. This type of dynamic is ideal for establishing a hybrid/remote work model.
Figure 3: Sequential analysis of functions, competencies and enablers for the implementation of a telework model.
Conclusions
A deliberately cultivated culture in an organization can become a key factor for success because of the positive impact it generates on staff, from retention to performance. Organizations can foster that culture in multiple instances along the employee journey from onboarding to disengagement, emphasizing it through example, feedback, and recognition.
At the same time, the implementation of a remote work model requires the organization to review and adjust this employee’s path in order to ensure that the culture is not only unaffected but is promoted and reinforced even in a virtual context. Understanding the culture and mapping the employee’s path are the key to success in realizing the benefits of telecommuting in a strong positive culture.
If you need help implementing a hybrid work model or want to learn more about managing your organization’s culture, contact our experts in V2A’s Organizational Development practice: https://v2aconsulting.com/organization/.
Sources and Notes
1 10 Things Your Corporate Culture Needs to Get Right, MIT Sloan School of Management, 2021
2 Which Workplace Factors Drive Employee Satisfaction Around the World?, Glassdoor, 2019
3 Culture is just a buzzword* *If you don’t know it’s true value; Korn Ferry 2023
4 Managing cultural pitfalls of hybrid work; MIT Sloan School of Management, 2023
5 Where managers and employees disagree about remote work, HBR, 2023
6 Five ways leaders can support remote work, MIT Sloan School of Management, 2020
7 https://www.nimh.nih.gov/health/statistics/mental-illness
Organizational Culture Research Report, Quantum Workplace, 2022
Revitalizing Culture in the World of Hybrid Work, HBR 2022
Company Culture Is Everyone’s Responsibility (hbr.org), 2021
Disclaimer
Accuracy and Currency of Information: Information throughout this “Insight” is obtained from sources which we believe are reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. While the information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information. The information may change without notice and V2A is not in any way liable for the accuracy of any information printed and stored, or in any way interpreted and used by a user.
