CEOs and Investors Agree on “New World of Work,” Now What? | Marketplace: Pay and Remote Work

People often ask me “how have you seen the early acceleration of so many work trends?” I look for patterns and symmetry…the signal within the noise.

Here’s a recent example I think is noteworthy:

The Conference Board released its C-Suite 2022 Outlook entitled “Reset and Reimagine” that noted CEOs expect “Leading in a New World of Work: Hybrid and Remote Work” to be a top priority.

AND, almost simultaneously,

Larry Fink, the CEO of one of the world’s largest institutional investment firms, Blackrock, released his influential “Letter to CEOs.” In it, he also lists “The New World of Work” as a trend CEOs need to pay attention to because Blackrock is paying attention to it as a key pillar of “stakeholder capitalism.”  He writes:

A new world of work 

“No relationship has been changed more by the pandemic than the one between employers and employees. The quit rate in the US and the UK is at historic highs. And in the US, we are seeing some of the highest wage growth in decades. Workers seizing new opportunities is a good thing: It demonstrates their confidence in a growing economy.

“While turnover and rising pay are not a feature of every region or sector, employees across the globe are looking for more from their employer – including more flexibility and more meaningful work. As companies rebuild themselves coming out of the pandemic, CEOs face a profoundly different paradigm than we are used to. Companies expected workers to come to the office five days a week. Mental health was rarely discussed in the workplace. And wages for those on low and middle incomes barely grew.

“That world is gone.

“Workers demanding more from their employers is an essential feature of effective capitalism. It drives prosperity and creates a more competitive landscape for talent, pushing companies to create better, more innovative environments for their employees – actions that will help them achieve greater profits for their shareholders. Companies that deliver are reaping the rewards. Our research shows that companies who forged strong bonds with their employees have seen lower levels of turnover and higher returns through the pandemic.” 

This symmetry is the signal of an accelerating trend: Large institutional investor says the “new normal of work” is a priority and CEOs report the same thing at the same time. It matters less who is influencing whom, and more that it is happening and aligned.

What this tells me is work flexibility, as the way an organization operates, is fast becoming a strategic imperative. It’s no longer an optional “maybe we will, maybe we won’t” policy, program or benefit that sits outside of the core business. NOW it’s on the radar of two of the key players in the economic ecosystem—CEOs and Institutional Investors.

The transition to a flexible, dynamic way of operating goes beyond simply defining “where” people work.  It will require rethinking and realigning many traditional practices and procedures. One example is compensation.

As Meghan McCarty Carino reported last week for Marketplace by APM, employers may have to re-think location-based pay with lower salaries for employees who work remotely from lower cost of living cities. Because remote and flexible work has pretty much become table stakes for job seekers, job function — not location – increasingly dictates salary.

My view, which I shared with Megan for her story, is that “There’s a difference between practice and theory. You can try to pay less, but there’s probably going to be somebody right behind you that will say, ‘You can work remotely, and I’ll pay you your full salary.’”

We’ve officially arrived at a choice point: Do you meet the moment and intentionally accelerate toward high performance flexibility, or do you stay stuck in the “will we or won’t we work flexibly” debate?  The CEOs and institutional investors have spoken. They are moving forward.

This is where it’s going to get exciting and interesting for those who are ready to go to the next level…and for those of us who know how to get there!