From remote to hybrid work

At the height of the COVID-19 outbreak in the spring of 2020, over 70 percent of employed Americans were working from home all or part of the time and as of January 2021, 56 percent still were.² Before the pandemic, only 2 percent worked from home full-time.³ This dramatic shift was not something many workers or employers were prepared for. Companies scrambled to get remote employees up on virtual private networks (VPN) and start using the latest online workspace technologies for video conferencing, messaging, etc. and implement new organizational processes such as virtual closing of the books.

How employees did their job, changed overnight. In a KPMG American Worker survey, 77 percent of respondents said their jobs had become more demanding, and 35 percent said their team’s ability to collaborate had worsened.⁴ To sustain remote work, 44 percent sought allowances for work-from-home equipment and 40 percent wanted resources for better team collaboration (Exhibit 1).

One of the major pain points for employees has been technology; slow home internet connectivity is an instant motivation killer. And even the best online collaboration tools have proven inadequate for teams that rely heavily on in-person interaction for brainstorming and idea generation, the challenge remains that available virtual tools poorly replicate the real office environment.

On the other hand, when the technology works, employees say they have actually become more productive (the perspective of employers on productivity is more mixed).In a KPMG American Worker survey last fall, more than two-thirds of employees said that they were more productive working remotely. And they’re working longer hours. In the same KPMG survey, 49 percent of remote workers said their mental health had worsened—a sign that burnout is a real risk in remote work.

In many cases, the shift to remote work benefitted both employer and employee by forcing the adoption of secure online workflows. These process improvements will continue to benefit organizations as they shift to hybrid work.

Remote work is here to stay, at least some times and for some employees. As they prepare for a return to “normalcy,” only a minority of employers plan to bring everybody back to the office full-time. Some have already given up costly office space in anticipation.⁶

As they contemplate a future that includes a large share of remote employees, companies need to think about the ongoing risks. Remote work may undermine employees’ identification with companies, trust in leadership, as well as provoke dissatisfaction from colleagues working in the office. It also challenges the hierarchical structure of traditional organizations. This makes managing the employees’ relationship with their leaders and supervisors very important.

Companies should be mindful of how well different functions can be adapted to work from home. For example, accounting and finance, IT and R&D may be easier to transition to remote working, but other teams such as product development and operations may need more support or should take up a hybrid work-from-the-office/home approach.

For all companies and functions, the evolution of a hybrid workforce can be part of a wider digitization/transformation effort to improve efficiency, agility and creativity. But to hit these goals, companies need to go beyond installing the enabling technology; they must also transform the operating model and governance. When the focus shifts from where people work to what they do, companies need to do a better job evaluating their employees’ capabilities and figuring out the best ways to help fulfil them. This new value delivery model reimagines work in six key areas:

How will this affect workforce needs? While many companies expect long-term efficiency gains and cost savings from remote work and digital transformations, the impact on staffing levels is unclear. According to chief information officers polled by KPMG, the impact of ongoing digitization will be to automate tasks, rather than eliminate jobs.⁷ Robotic process automation (RPA) and other artificial intelligence technologies will continue to make inroads and will take over certain tasks, leaving many current workers in partially automated roles.

The first step companies can take to improve performance in the era of hybrid work is to “baseline” their needs. Most executives say nothing is more urgent than connecting workers to each other more seamlessly online. More than 80 percent of digital transformation strategy leaders polled by KPMG in mid-2020 said they were investing in collaboration tools (Exhibit 2). Not far behind was investment in cloud computing, which is required for many collaboration platforms     

KPMG has deep expertise in enabling clients with innovative technology solutions and operating model and culture transformation. We provide a comprehensive set of services addressing the client’s strategic, technological, and operational needs to change. Whether it’s a digital delivery and innovation assessment or a review of your current operating model, KPMG can help assess, design, and enable the capabilities needed to position your organization for success.

Change management also matters. A successful change management program provides a basis for people to act their way into a new way of thinking, taking full advantage of the new enabling technology foundation. This could include but is not limited to: