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EXECUTIVE SUMMARY

Adapting to the Reimagined Workplace: Human Capital Responses to the COVID-19 Pandemic

In April 2020 during the early stages of the pandemic, The Conference Board launched its first survey tracking human capital (HC) responses to COVID-19. We published From Immediate Responses to Planning for the Reimagined WorkplaceHuman Capital Responses to COVID-19 in May. What most of us had hoped would be short-term responses to the pandemic have evolved to have long-term repercussions on both the workplace and the workforce.

To understand how organizations are continuing to react to the changing business environment in the context of their workplaces and workforces, The Conference Board repeated the online survey in September 2020 with 330 HC executives, mostly in large companies. The accompanying chart book shares the survey findings about remote work and hiring, productivity and well-being, workforce cost-reduction actions, and plans for returning to the workplace.

Insights for What’s Ahead

More employees will work primarily from home (at least three days per week) after COVID-19. In our April report, we described the accelerated shift to remote work as one of the main legacies of the COVID-19 pandemic. The September survey makes us even more convinced of this conclusion. Just 4 percent of respondents reported that 40 percent or more of their employees were working remotely prior to the pandemic. Now, 34 percent expect that 40 percent or more of their employees will work remotely 12 months postpandemic. With six months of experience with primarily remote work, more than a third of organizations expect remote work to become the new normal for many of their workers, perhaps because remote work does not seem to hurt productivity and they realize that reversing remote work after a year or more would be difficult. However, in addition to causing long-term HC process changes, remote work will require significant changes in establishing organizational and team culture, as well as developing employee engagement.

Organizations are three times more willing to hire remote workers now than prepandemic. Only 12 percent of surveyed US organizations say they were willing to hire 100 percent remote workers anywhere in the US or internationally before COVID-19. Our most recent survey found that this willingness has increased over three times to 36 percent overall, and even higher for organizations that employ predominantly professional and office workers. We surmise that organizations are more willing to hire remote workers now that they have seen that remote work can be productive and that they can both increase their potential talent pool and potentially lower their labor costs by hiring in less expensive markets. This new willingness to hire remote workers could foretell a trend of shifting professional and office jobs to less expensive domestic or even offshore geographies and hiring workers whose flexibility needs (for child or dependent care, for example) may once have kept them from applying.

Finding qualified workers is still a challenge for most organizations. We expected that finding qualified talent would ease slightly, given the much higher unemployment rates due to layoffs and furloughs, as well as the increased willingness to hire remotely. However, most employers are still reporting difficulty finding qualified talent and, in the case of organizations that employ mostly industry and manual services workers, it is even harder than before the pandemic. High unemployment typically means many job seekers per job opening. So far in this crisis, this has not been the case. Many people listed as unemployed have not been actively or seriously looking for a job for various reasons; therefore, the ratio of job seekers to job openings has not been unusually high.

Many organizations are reporting a productivity increase. In our September 2020 survey, 47 percent of HR leaders self-report that workers’ productivity has increased since the COVID-19 outbreak versus just 13 percent reporting that productivity has decreased. This productivity increase is in part due to employees working longer hours since the outbreak of COVID-19, as 60 percent of organizations report. Our analysis also found that some organizations that did not report longer hours also saw higher productivity, perhaps due to a sense of urgency during a period of crisis. In addition, we did not find that remote work by itself had a significant impact on productivity; on average, organizations that did not see a large increase in remote work during the pandemic still reported a productivity increase.

Working significantly more hours has come at a cost to employee well-being. Since the outbreak of the pandemic, many surveyed organizations report negative effects in terms of work-life balance, burnout, mental health problems, and employee engagement. These findings invite the question of whether working extra hours is sustainable in the long term. Our analysis found that remote work did not have an impact on these negative results, but managers should be more aware of and proactively limit the number of hours their employees are working.

The pain continues as cost-reduction actions are still planned for the next three months. After six months of adapting to the pandemic, many surveyed organizations respond that they are not done implementing cost-reduction actions. From October through December 2020, 13 percent of surveyed organizations plan to restructure the organization, 11 percent plan to cut bonuses, 9 percent plan to conduct permanent layoffs, and 8 percent plan to defer pay increases and bonuses. On the positive side, many organizations have been able to fully or partially reverse some of the cost-cutting actions they had taken at the beginning of the pandemic, specifically around reducing salaries and wages (25 percent fully reversed).

Most organizations are planning for a return to the workplace by March 2021, but there is still significant uncertainty. With state-mandated lockdowns, one of the first organizational responses to the COVID-19 pandemic was to require all but essential workers to work remotely. We found that only 19 percent of organizations had remained open or returned to the workplace by the end of September 2020. Forty percent of organizations are planning to return to the workplace by March 2021. However, we expect plans for returning to the workplace could change if the forecast of increased COVID-19 rates materializes.

AUTHORS

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Frank Steemers

Economist
The Conference Board

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Robin Erickson, PhD

Principal Researcher
The Conference Board

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Amanda Popiela

Researcher, Human Capital
The Conference Board

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Gad Levanon, PhD

Vice President, Labor Markets
The Conference Board

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