Anna: Welcome back to the Noyack Expert Series. I am Anna, your producer and host for the day. And today, we are with one of the remote work experts in the field right now. Peter, why don’t you introduce yourself and how you got into this sector of the world?
Peter: So I’m Peter Cappelli. I’m a professor of management at the Wharton School, where I’ve been for 40 years now, and I direct our Center for Human Resources. When the pandemic was rolling along in 2020, when we were wiping down groceries, it’s easy to forget how weird it was, right?
Anna: Yeah.
Peter: I was getting lots of questions about the management issues of employers who were trying to get people to work remotely, and how do you do it? So I thought maybe the thing to do is to write about it, and it turns out there’s a reasonably long history going back at least to the 1970s of studies of remote work. So I wrote a book about it in 2021, it was called The Future of the Office, and it was describing what do we know from prior research about remote work, and then also thinking through what the issues are in doing it. And I think it sort of proved right, they wanted me to update the book, and I thought, boy, there’s so much been written, it’s easier just to write another book. So we wrote another book. And the new book is called In Praise of the Office, which summarizes, I think, the gist of this, which is the idea that there are all kinds of things about in-person contact that are important to at least remember, and we seem to often be forgetting them.
Anna: Yeah, well, that’s something really important to keep in mind especially now because we are past the pandemic but there is still a pretty strong remote work culture that is going on and I feel like there’s a lot of benefits to having a remote work environment but there’s a lot of drawbacks especially when you do forget those little pieces of humanity that you get when you’re working in an office with people. What was, I know we talked a bit about the pandemic already, but do you have any basis of what remote culture was like before the pandemic and how it’s changed to where we are now?
Peter: You mean for people who were working remotely before?
Anna: Yeah.
Peter: Well, it was, I mean, so a bunch of studies of this, it starts with the idea of telecommuting, which was created as a concept by NASA engineer in the 1970s. And the idea was, he was in Los Angeles where they had big smog problems and car pollution was the cause. And they were actually trying to shut down car traffic depending what day you were on, you were limited to when you could drive your car to try to keep it closed down. And one of the things he started to speculate about is with computer power growing, you could have satellite stations, offices, outside of the core of the city, and people could commute to those rather than go into the city. And phone line connections tied to computers would be enough to make this happen. So originally telecommuting was not about working from home, but it was working someplace other than your core office.
Anna: What are some of the lesser known or hidden benefits that in-person work brings to a company culture as a whole that we’re realizing some of that was missing when everyone was remote and some of that still is missing when people are remote. What are some of the lesser known things that are good about that?
Peter: Yeah, I think an interesting question as to how much organizations are aware of this stuff, but one they can’t miss is new hires are lost for longer, right? Because there’s nobody to just talk to about stuff. Nobody is there taking you out to lunch, saying, oh, you’re the new kid. Let’s go out for lunch. I’ll tell you what’s going on here. There’s no water cooler to listen in on and find out what’s going on. You can’t observe the organizational culture. As we know, statements of what the culture are about are worthless as a guide. They’re aspirational, typically, and they all sound the same. But the culture in terms of what do we really value here, you observe, you don’t read about it, right? And it’s hard to observe anything if you’re at home. So the biggest problem is for young people or new hires in general, they’re lost for longer and they’re less productive. It’s hard for them to ever learn what the culture of the organization is in terms of norms and values, and one of the problems I think that inevitably emerges is you end up with two distinct cultures. So there are people like me who were around for a long time before the pandemic. We know each other still. We have a sense of how the organization operates. And then we have a new group hired since then. And by the way, that group gets bigger every year, right? And they don’t know any of that stuff. And the two groups are puzzled by each other. And the people who have come in since, they do kind of understand that if you want to get anything done, you’ve got to work through the people who have been there for a while because they know other people, they know how things work, but then you start to lose some of those people and then it gets harder and harder to get things done. So that’s the big thing. I think the other thing is communication is just simpler. We probably all had the experience of having a disagreement with somebody on email, and then it escalates and you get nastier and nastier to each other. If the person is right there in the office across from you, it’s hard for that to happen in the same way.
Anna: Yeah.
Peter: You just see the other person, you walk over and say, What’s going on here? And most people, as they say, pull their punches, they get nicer when they’ve got to see the other person right there, and the problem gets resolved quickly. You’re not waiting a day for them to get back to you and you to get back to them. So there’s all this stuff, which is how work always got done in offices, but we didn’t know that because we never saw the separation between office and office work. They were all completely together. Now that they’re split, you can start to see what the office brought to the party, and that is all these interpersonal relationships. So another one, just so we don’t forget, is social isolation, which is becoming a national problem, worse and worse. The people in our focus groups uniformly said, in fact, I don’t think anybody ever said they had met somebody at work remotely and that person became a friend. We defined a friend as somebody you saw other than on virtual communication. And no one said that. And we were probably talking to roughly 700 people or so. No one said they had made a friend with somebody who they had met only virtually. So the social isolation gets worse and worse, right? When you’re at home and you’re out of college, and you just don’t see people in person.
Anna: I think a lot of the communication issues are furthered by the fact that you do have a lot of younger people like myself coming into the office and a lot of us grew up with texting and email and all of that being the main communication. We text each other, we don’t call each other. We’ll text each other, we won’t see each other in person. And I see how a lot of these issues that you get without being face-to-face, a lot of these newer hires are just unaware that it’s an issue. I have a personal story. The other day, I have a friend who I often work on various projects with and we were texting about something we were disagreeing on and it did get to that level. It was like a little nastier, a little nastier, a little nastier. And then when we met up in person the next day, we realized we were just talking about the same thing all along. And if we had just had an in-person conversation or picked up the phone instead of just resorting to instant messaging, then there wouldn’t have even been a discussion because we were referring to the same thing. So I think there’s a lot of those communication hiccups that are very inherent in how Gen Z and some of the younger millennials just communicate inherently with each other, and that furthers itself when you’re in a workspace with people across multiple generations, you see a lot of that discrepancy.
Peter: Yeah, and I think before, they just didn’t have that opportunity to make mistakes because there was no instant messaging, but also the person was just right there or one floor below you, and you were going to bump into them. So you didn’t want to be too nasty to people because you are going to see them, and when you’re remote, you’re not going to see them, so be as nasty as you like.
Anna: What are some other ways that workplace dynamics have changed post pandemic, especially with the sort of national, remote, hybrid, in-person split that we’re seeing across companies? How have the work dynamics changed? How have employee and employer attitudes changed? And how does this all tie in together?
Peter: Yeah, I don’t think we’ve got great answers to all of those questions. I think among the things that we are seeing is less cooperation, less collaboration. And one of the reasons is this focus on individual KPIs. So I need some help from you. If we’re in the office, I just go around to your desk or to your office. I just stick my head in the door and I say, Just a quick question, blah, blah, blah. And if you’re really busy, you will tell me come back later. And I can kind of read with any emotional intelligence when I’m pestering people too much, a little bit. And so I get an answer quickly and boom, off we go. If we are working remotely or even if we’re in hybrid and hybrid the devil is in the details as to how much we’re in the office and one of the problems is we’re not in very often, but if we’re in that context, I’m pinging you. Right? And if I am getting pings, then when do I answer? Well, it appears that that is among the last things that people respond to, because they got to get their own work done first, and then they turn to what people might be pinging me for. And it might be the next day, we get an answer. And I can certainly tell you in my own organization, things that you used to be able to walk down, for example, to the help desk and get a question answered right away, you’re now in the queue and you probably won’t get an answer that day. And sometimes it’s something that’s really important and you need an answer. And if it’s face-to-face, you can just go down there and plead and say, Look, it’s really important. I’m in this meeting now and the system has gone down. Rather than waiting to hear tomorrow. I want to get back to you and say, How’s your problem going? Well, it’s over, right? So that cooperation, collaboration stuff has gotten worse, and that’s something else we haven’t maybe paid enough attention to.
Anna: I know we touched on this a little bit with some of the newer hires, how they’re lost for a little bit longer, and it’s a lot harder to make those connections. What are some more details that you could share that you know of on how newer hires are faring, both in solely in-person situations compared to remote or hybrid situations? What’s the comparison there? What’s better for them?
Peter: Yeah, well, let’s imagine you are, say, one of our Wharton students, and they’re expecting to get a summer job or to get a permanent job, and they want to go to New York. And suppose you get your dream job in New York, and after you’ve signed and everything, you’re ready to go, you get a message saying, great news, you get to work remotely on this job. And you think, why is this a good thing? I gotta stay in my tiny New York apartment. And the whole reason for being in New York was because I wanna be out, and I don’t know anybody there. So the people I’m going to meet are people who are around my office. And I’m not going to meet those people. And I’m stuck in this tiny little physical space. I mean, this is really bad, right? A really bad thing. And I think there are lots of situations where that is happening. I certainly knew some people who just graduated who were trying to work from home, like in their parents’ basement or something. And it’s really difficult. It’s exhausting, partly because you are tied to your screen. One of the things that’s happened that does not get enough attention, although we know it’s true, meeting time is up, right? People spend more time in meetings when they’re remote and hybrid than when they were in the office. What impact does that have? Well, let’s first explain why. One of the reasons is it’s easier to make meetings bigger. Right now, the size of the meeting depends in part on the space of the room. We can’t have a hundred people in my conference room. There’s only room for 10 people or something, right? Can’t have a hundred, but if it’s online, you can have a hundred. And if people want to be in the meeting, sure, why not? You don’t want to look like you’re hogging it. So the meetings are bigger. The other problem is that there’s a norm that has developed of cameras off, and when cameras are off, people are not paying attention. Students, I can tell you for sure, are not paying attention. They’re doing other work, they’re multitasking. So they’re not paying attention. So one of the things that happens is you need post-meeting meetings to explain to people what happened in the meeting, or those people who are complaining that they didn’t get a chance to speak up at the meeting. And the people who are running the meeting get lost because they get no feedback, they can’t tell whether people are paying attention or bored. Even if cameras are on, it’s a little hard to tell by looking at people this big, but if cameras are off, you just can’t tell, right? So meetings are longer, meetings are worse, and less gets done. That means you’ve got less time to get your regular work done, and you’ve got more conflicts because things don’t get resolved in meetings. The other thing about meetings that people often say the most important part of the meeting is the 10 minutes afterwards when you’re walking back to your office with other people and you can just quickly talk about what the heck’s going on here. And you can’t do that. Some companies say, well, we’ll leave the Zoom link open so you can chat. Yeah, you can chat with a hundred other people who might be listening in, right? So that doesn’t happen either, right? So I think that’s another aspect of this we haven’t paid much attention about. Meetings are longer, meetings are worse, time to get your own work done is even more narrow. Things that used to be able to be answered by a quick conversation, grab a couple people in the hall and just get an answer, now you’ve got to set up a meeting to do it, and all that stuff takes longer, slower, clunkier.
Anna: How, with the increased meeting times and things taking longer and having less time for other work. How are new hires reacting to that? Is that part of why it’s taking them a little longer to catch on than they would if it was an in-person environment?
Peter: Well, I’d say independent of that, it’s taking them longer. And when I say longer, it’s not trivial. So I was talking to some offices, they were saying maybe three months longer, something like that. And some of them were setting up special training programs for their new hires, because they weren’t learning things that everybody in the past just learned that were obvious. And for new hires out of school, a lot of it is office etiquette. How do you learn that? Well, in face-to-face, you can see when people screw up what the reaction is from people in the room. You can’t see that on Zoom, right? And then if you’re hybrid and you’re showing up to work and you could make those same mistakes in person, but you haven’t seen it enough to realize what is appropriate and you’re gonna make more mistakes and stuff. So it’s just longer, harder, more mistakes likely, more misunderstandings between people who are older and people who are younger, because older are people who grew up in the office culture and younger haven’t. So it creates a bigger divide, which just happens to correlate with seniority almost perfectly, right?
Anna: Yeah, how does that balance impact the culture of an office environment? You have that both seniority gap but also understanding of the office. How does that seemingly widening gap impact the way the office functions as a whole?
Peter: It just gets harder, right? Because you have people who have different ideas about what you’re supposed to do and what’s appropriate and you get people who are irritated with each other because of that. They don’t understand that this person wasn’t being a jerk when they logged off the meeting early. They just didn’t know that that was not the same maybe in their world as walking out of a meeting early, which would be a real no-no, right? In the office context. So more misunderstandings, more irritation. And if you think about what culture is supposed to do, our norms and values, it tells you how to behave. In contexts where there aren’t really official rules. And so there are places you’re seeing this outside the office too, where we’ve got to deal with customers or vendors. And we’re supposed to be on the same team. You and I, let’s say we are a team, two of us to go talk to some client. And we got a very different sense about how we’re supposed to behave. Face-to-face meetings are coming back apparently for sales stuff. But now we’ve got two people who’ve got a very different sense about how we’re supposed to behave in person. And it’s just not going to go as well, right?
Anna: Yeah. Sort of tying a lot of what we’ve been talking about over the past half hour together, what advice would you give to an employer or what should they be thinking about if they’re deciding whether to offer a remote option to their employees?
Peter: Yeah, I think very few employers now are adding a fully remote option. I mean, they’re not going fully remote. I saw a list a little while ago compiled of companies that were fully remote. They’re almost all tech companies. They’re almost all companies that began fully remote. So they didn’t have to undo anything, right? So the options that companies are thinking about are hybrid options, where the issue is how remote do you want to be, and occasionally allowing some people to be permanently remote, right? And I would say if you are somebody, the individual– let’s start there– and you are offered the opportunity to be fully remote, should you take it or not, there are big risks to that. And I think if you’re going to be permanently remote and other people are going to be in the office, that looks like that telecommuting period we talked about earlier. Things are likely to be worse for you, right? Okay. In terms of promotions and opportunities and knowing what’s going on, being the out-group, you’re going to be sort of pushed out. The people in your office are going to treat you as a real outsider, right? And there’s another thing we haven’t thought very much about, and that is lots of people, I think foolishly, when they were told by their employer that they could move anywhere and work anywhere in Silicon Valley, for example, after the pandemic, this happened, and they picked up and moved. Well, the problem is if your employer decides, no, actually bad idea, we’re not gonna do that anymore, as they decided to do, right? A lot of the tech companies. What are you going to do now? Yeah, you’ve moved to your dream location where there’s great trout fishing, but there’s no other employers around. What are you going to do? Well, I mean, you could hope for another remote job, but the evidence is indicating that fewer of those are getting posted, right? So now you’re really stuck. You’ve uprooted on this promise that the employer will let you work permanently remote, and employers just don’t keep those promises, right? So now you’re stuck trying to be a virtual worker someplace else. The other problem, if you’re permanently remote, is some chief financial officer at some point is going to say, why is Peter an employee? He’s never here, right? Yeah, never. So you’re really dealing with him just remotely, right? Yeah. Why is he an employee? Why not make him a contractor? And you’ll be hard pressed to answer that question, right? And you might very well find yourself as a contractor. Maybe you’re fine with that. But I think for most people, it is not better. It is worse to be a contractor, right? So–
Anna: There’s definitely a lot more technicalities you need to think about, being a contractor versus an employee. There’s more planning you have to do.
Peter: Yeah. And the employer has no real obligations to you, right, in addition to benefit issues and legal protections and things, those are for employees, not for contractors, right? So on the employer side, one of the things to think about is will you change your mind? So during the pandemic, one of the things companies started to do was first shrink their office space. So while the pandemic was still beginning, I think in the first month of the pandemic, there was a survey of CFOs, I forget the exact number, but it was, I think more than a third of CFOs said they were gonna start shrinking their office space one month into the pandemic. What is shrinking your office space mean? That means you’re making a bet on hoteling and hybrid operations, right? And so you need to think about how well do those things work? So the companies that have done that, when hoteling started, it was a Silicon Valley invention in this dot-com period, and employees hated it because they wanted to come into the office to sit with their team, and they also like to have their stuff around them. You’re not gonna get either of those with real hoteling arrangements. So the whole idea is they don’t want to keep an office space for you, right? And the space you get will differ depending on when you come in and who else wants to come in when, right? The other change that they made along with hoteling was to reduce cubicles and offices and move toward open office plans, that is desks just next to each other. Why? It’s cheaper, right? Employees hate that even more than having kind of hoteling arrangements. And if you think about pandemic related stuff, we’re gonna move you all to desks that just sit next to each other. I mean, next pandemic comes along or the next flu season, how’s that going to work, right? So people hate that. So they’ve made these decisions now, and it’s hard to walk them back. So made a mistake, I really want to have everybody in the office. This is what Amazon discovered, as did JP Morgan, as did the federal government. They discovered, okay, we don’t have offices for all these people. What are you going to do now? So I think that’s a big one to think about. And the details of hybrid manage enormously. I’d say the big, just to put a bow on this whole conversation, the big problem has been management’s in charge of this stuff. They could do things to ameliorate many of these problems. If you wanted to have hybrid work, for example, and people in the office two days a week, it’s not gonna be as easy as if they’re there all the time. But you could do things to build social relationships. For the most part, as far as I can see, those are not happening. That employers are just operating as if people are still in the office and assuming these things are happening. And the best evidence for this is the employer complaints and the surveys from employees as well, saying basically they’re just not coming in the office. So they have anchor day requirements, but nobody enforces them so they don’t come in. Do you know the expression coffee badging, have you heard that one?
Anna: Yeah.
Peter: So for listeners who haven’t, coffee badging is, okay, I gotta be in the office two days a week, so I go in, I swipe my badge, so to indicate I was in the office, I get a cup of coffee and then I go home. And why do I do that? Partly because there’s nothing for me to do in the office that I couldn’t do at home. My team is not necessarily in the office, the people I wanna see, they’re not here. So why should I stay? And even if some of them are, I discover that others are not, partly because some of them are allowed to be permanently remote. So we end up on Zoom calls. I’m in the office. So employers have to make the office time consequential, and they’ve got to enforce stuff. So if you’ve got anchor days, I’m sorry, you really have to come in. And they have not enforced them. They decentralized it, they let local managers decide what to do. Nobody wants to be the bad guy on the local management side so they pretty much let employees do what they want and then nobody comes in.
Anna: When it comes to backing up even more, let’s say we have an employee who’s trying to decide do I want to take this position with an in-person company, or do I want to take this very similar, almost exactly the same position, but work remotely? Does it come down to a question of what’s more important to me, managing my time or the office culture? What would you say that decision should come down to? What should they be thinking about?
Peter: Yeah, so I ask this question of people in person meetings frequently, and I say, what would you advise your kid? If your kid is leaving school just graduating from college let’s say and they’ve got this choice almost everybody says go to the office and the reason is you’re beginning your career you got a lot of stuff you gotta learn you will learn it more easily in the office and this is part of the divide we see this in universities everywhere going on right now the people who can most easily work remotely are people like me I’ve been around, worked in a very long time. I know how things work. I know the people there. It’s easy for me to work remotely. The new hires coming in, not easy for them. And what do they actually need? They need other people around them, probably people like me. But if we let people do what they want and don’t consider the spillovers, the people who should be there, they stay home. The people who need help, they’re in there but there’s nobody to help them, right? So I think it’s pretty clear if you’re starting your career you want to be in the office but you need to be in an office where other people are around or you’re not gonna get much benefit from being there. And also if you’re coming in, you want to be a good citizen, if you come in a few times and you discover nobody’s there, you don’t bother anymore.
Anna: Yeah, that would be true. I know some people that that’s happened to. What are some other things just that those people who are considering working remotely, what I guess in like a quick list, what are some things that they’re going to be giving up and they need to be OK with giving those things up if they are going to choose to go the remote route? Because I know for a lot of people. For them, the benefits of it do outweigh some of those drawbacks, but what are those drawbacks they might be missing out on?
Peter: Well, I think if you have reasons outside of your work for doing it, then you could make the case. I’m in a relationship at a really important time, and we want to be physically together, that’s something that doesn’t work so well remotely. Getting a remote job is the only way for me to manage this, okay. That’s a call you can make. You will pay a work-related price for that, but if that’s worth it, there you go, right? If you’re in an individual contributor type role, so this is a reason why tech people have been more inclined to support this stuff, because maybe the work I do could be done more by myself. There’s a famous research on this about patent attorneys. who work completely independently. And they don’t talk to each other. They don’t need to talk to anybody. The work is very straightforward. They are paid almost like salespeople on a piece rate system. They could be remote. In fact, now they are. Government, a while ago, moved them before the pandemic so that they could work permanently remote. They don’t have offices for them. If you’re doing that kind of work, probably fine. If you want a career of advancement, don’t do it. I mean, it’s just not going to be good. If you think you want to become a leader at some time in your career, don’t do it. You’re just falling behind if you’re out of the office in those contexts. So it just comes down to personal aspects versus career aspects. What ultimately is the most important? And I guess it’s good to be aware of what you might be giving up on that other hand. I think a lot of people go into the remote work world without having those realizations of this is what I’m giving up. And if I’m going to work as a remote employee for all of these different benefits, I have to be aware of all of these other things that I might be and will be giving up. I think that’s a step a lot of people miss and they don’t fully realize what they might be missing out on that they might have gotten otherwise going into that fully informed.
Anna: Yeah and I think here’s a classic story and I have seen this a couple times where somebody just graduates from college and they say okay we can work you can work remotely here great I can stay at home live with my parents save money all that’s true you’ll irritate your parents believe me as people who have had college-age kids they don’t necessarily love this that you’re living in the basement but you will save money and maybe that’s good it does slow down your launch into adulthood when you’re living in your parents basement on the social side you are saving money is that important could be for people but you are giving up things on the social side, on the developmental side, and of course on the career side, right? So it depends, it seems like the easy thing to do and it is easy, but as you say that’s largely because you’re not thinking about what the costs are. That is why parents, when we ask parents what to do, they say to their kids, go to the office.
Peter: Do you have any final pieces of information, things you want to touch on before we close out for the day?
Anna: Yeah, I mean, on the employer side, it’s a really interesting survey of employees about a year after the pandemic or so, that about 88%, it was a huge number of employees said they understood the case and they kind of accepted the case for coming back to the office. But now we’re five years on. And telling people five years on that now you gotta come back to the office is a big change.
Anna: Yeah. Especially when people have built their lives around some kind of hybrid or remote work. And when we say they have hybrid, remember in lots of cases, it’s effectively remote because they’re not enforcing it, right? So if employers wanna make a change, it’s a big organizational change task. And it’s got to start with persuading employees that there’s a good reason for coming back. Right now the story, the narrative you hear all the time is employers want you back simply because we think you’re goofing off when you’re at home. And no doubt there are employers who do that, but there are also employers who are trying to micromanage you remotely. Not great either, but they could do that if they wanted. But I don’t think that’s what’s going on with the employers, but they’re also not explaining to the employees what’s going on. They’re not giving them evidence of a problem. They’re not trying to show them that this is costing us, this is hurting us, and maybe it’s not good for you either. And then they have to make the office time better. For example, fixing meetings. Meetings have been a problem for a very long time, right? No rules about meetings. You can create rules pretty simply when to have a meeting, when not. Some companies do, most don’t. But why not? I mean, it’s such a distraction to have bad meetings, have too many of them. So we have to do things to make the office context better. Unfortunately for the employers, all sits with them because they have all the marbles, right? And they could control this process, they could make return to the office if they want, go smoothly, they could persuade people to come back, I think, and not simply rely on power, which is kind of what they have been doing. But so far they haven’t done that and that’s kind of disappointing.
Peter: So it just seems like a lot of it just comes down to whether you’re an employee, an employer, remote, in person, a lot of people just aren’t thinking through the full extent of both sides the full extent of what’s going to happen down the line and just being aware of that will better help companies and employees make decisions that are best for them.
Anna: I think that’s right and I think it’s a general lack of understanding about management something that’s been growing over time and particularly the behavioral aspects we’ve been increasingly thinking about employees the way we did 50 years ago or so. It’s kind of like engineers approaching the problems, so that’s not a good thing.
Peter: Well, thank you so much for coming on this episode of our Noyack Expert Series. We really appreciate you coming on and talking to us about remote work, the drawbacks, some of the potential benefits, depending on who you are. Do you have any projects that you want us to link and send on over people to, anything you want to give a plug to?
Anna: You know, I’m pretty easy to find. There’s not too many Cappellis, particularly at the Wharton School, two P’s, two L’s, and you can get to my website and see what we’re working on and things there.
Peter: Perfect. And also don’t forget to subscribe to the Noyack Wealth Weekly newsletter. You can find it on our website, www.wearenoyack.com. Thank you all for watching, and thank you, Peter, for being here today.
Anna: Thank you.
