Dr. Chris D’Souza
In late 2020 most businesses around the world were providing white collar employees cash to set up home offices with desks and chairs. Some were even providing gift baskets to lift their spirits. They were also advising employees to take time off and take care of their mental health. Other social movements also gathered steam in that period. Diversity, Equality, and Inclusion (DEI) initiatives promised to hire and promote more women after the #MeToo movement and abandoned harsh performance appraisals in favour of more “empathetic” assessments.
In 2022, employers were trying to retain workers due to talk of the ‘Great Resignation’. Those who did not resign were ‘quietly quitting’.[i] As a result, experts prophesied a new era of work in which people sought occupations they genuinely enjoyed, businesses took a stand on social problems, and the 9–5 workday was supposedly history.
That was all over by early 2023. Professional workers around the world were devastated by a wave of layoffs that included more than 250,000 in the tech sector alone in 2023. Even those who are still employed may find that their employer has changed from the sympathetic, understanding figure they grew close to during the first two years of the outbreak. Meta Facebook’s CEO Mark Zuckerberg informed staff that performance evaluations would be more rigorous than before; Alphabet’s CEO Sundar Pichai reportedly urged staff to work with “greater urgency, sharper focus, and more hunger;” and Twitter owner Elon Musk reportedly told staff to resign if they didn’t want to put in long hours at high intensity.[ii]
In September 2022, a Microsoft survey warned of a “paranoia” in which 85% of managers questioned the efficacy of their remote employees.[iii] This forewarned of the coming change in the business environment that we now see in 2023. Also, post Covid-19, there was a re-emphasis on the bottom line, and management in many companies have started by abandoning initiatives that were launched during the pandemic to purportedly make the workplace a more compassionate and diverse environment. For example, ‘employee-perks’ are now being severely cut-down. Goldman Sachs discontinued its free coffee benefit in January 2023 and Delta Air Lines notified its staff that they can no longer use Delta’s Sky Clubs, even if they are traveling on company business or have purchased Sky Club benefits for themselves.
In the meantime, a growing number of businesses are offering contract roles to new hires rather than full-time employment. From May 2022 to November 2022, there were 25% more contract listings on LinkedIn than there had been during the same time the year before. As the likelihood of a recession rises, many businesses are focusing on worker productivity and cost reductions.[iv]
The result was that over 200 million professional workers in the U.S. and most of the Western world who had been gaining power over their employers for the first time in decades are now suffering greatly because of these changes. Even those businesses that had pledged to change to a more worker-friendly workplace are already reversing course, and the window of opportunity for the pandemic to fundamentally alter the nature of employment in business is rapidly disappearing.
The upshot is that the “new” workplace brought about by the pandemic might not be more inclusive, varied, or cheerful than the one that already existed. It may actually be worse. As a result, there will be fewer women and underrepresented minorities in the workforce because the measures achieved during the pandemic that improved their working conditions are now being undone.
Back to Misery
The pandemic felt like a great equalizer especially for working mothers and those with mental-health issues. Now for many it is back to misery as people head back to the office.
According to a survey done by Forrester Consulting for Modern Health, only 54% of U.S. workers interviewed in 2022 indicated they felt they have workplace flexibility to care for their mental health requirements, down from 64% in 2021. The same survey of C-level executives and human resource managers revealed their worries that the mental health benefits would encourage workers to take more time off, damaging the financial line of their organizations.[v]
Be Vary of Your New Perks
Interestingly, a lot of businesses are presenting recent developments as initiatives to provide their workers more freedom. Microsoft informed staff in January 2023 that the business was “modernizing” its vacation policy and transitioning to “discretionary time off,” wherein workers receive “unlimited” vacation days. In May 2022, Goldman Sachs made the same transition to unlimited vacation time.
On paper, that seems fantastic. But in reality ‘unlimited’ vacation time has a sting in its tail. It may be coincidental that both Microsoft and Goldman Sachs have laid off thousands of workers since the switch, but an ‘unlimited’ policy relieves the employer of the obligation to pay employees for unused paid time off (PTO) should they quit or be fired!
It also improves their cash flow because unused vacation days are not building up on their balance sheet. Clearly limitless PTO is a toxic perk, and it is evident that this is completely accounting-driven.
Employers are also re-evaluating the exact location they want their employees to be in while at work. The days of the ‘Digital-Nomad’, where one can sip a Piña colada at a pool in Bali whilst working at your Melbourne office, may be well and truly over. Companies are calling employees back to the office, and some return-to-office policies appear to be getting more stringent, forcing employees to be in the office five days a week, despite the rise in popularity of remote work during the pandemic.[vi]
Many of the people who businesses had claimed they were attempting to attract and hire during the pandemic, including workers with disabilities, older workers, women, and workers from underrepresented groups, may be harmed by these remote work regulations. Migrants who usually live in regions or suburbs far from the Central Business District (CBD) claim that remote work allows them access to jobs in regions outside of the region where they live and freedom from the “micro-aggressions” they commonly endure at work. Women claim that remote work helps them better combine work and family.
Why is there no outrage?
As one sits in the subway with other employees who are also obeying the orders to return to the office, putting in long hours at a job they vowed to quit if the managers were not more lenient, one could be left wondering.
Why aren’t employees protesting?
With a possibility of a recession looming workers may still value their job. Other may be quietly quitting. There have been some protests in countries that are unionised, but these have been largely muted. Some countries have legislated flexible working rights or are attempting to do so.
Here in Australia, many workers are under the false misconception that they have a right to either work from home or to a flexible working arrangement under Australian law. That is not correct. Employees have a right to Request a Flexible Working Arrangement in Australia. This is written into law. That law is the Fair Work Act 2009 (FWA). Section 65 of the FWA provides that employees in Australia may request a flexible work arrangement of certain sorts—and if they are employees of certain sorts. The Australian Fair Work Act also provides some requirements for employers’ consideration of employee requests for Flexible Working Arrangements as well as the grounds for a “reasonable” denial of a request to work from home.
In a few other countries the Right to Work from Home has been enacted into law in varying degrees. The Irish legislation has formalised the right to work from home. Netherlands is also passing similar laws. Slovakia, Argentina, Chile, and Colombia have also enacted laws to permit remote work and working from home, to varying extents.
The Negative Effects of Benefit Cuts
Unfortunately, human resource experts warn that businesses’ shifting perspectives regarding their workforces could hurt their bottom line. According to McKinsey, businesses with a greater ethnic diversity have a 36% higher chance of outperforming their less diverse counterparts. More gender diversity on executive teams was associated with a 25% increased likelihood of businesses experiencing above-average profitability.[vii]
Management Accountants need to be careful when converting company strategy to organisational structure in these changing times. Lowering benefits may be more expensive than maintaining current ones because engaged employees perform better at work than those who dislike their jobs or employers. However, employee management is usually not high on the list of priorities for many CEOs — especially those who become leaders without any formal training in human resources and who are increasingly trained in engineering rather than management. The idea of improving their firm via taking care of employees is simply trumped by other worries, such as negotiating deals, making acquisitions, and devising cunning business strategies.[viii]
If their new financial bottom-line focused policies push away people who had previously been on the margins of the workforce — such as minorities, disabled workers, and parents of young children — employers who are already lamenting a lack of trained worker are in for a nasty surprise. Instead of a more productive business workplace, firms might discover that they are unable to continue hiring.
Chris D’Souza is Deputy CEO of ICMA(ANZ)
[i] Janek Ratnatunga (2022), “Quiet Quitting: The Silent Challenge of Performance Management”, Journal of Applied Management Accounting Research, Vol. 20, No. 2, pp. 13-20.
[iii] Microsoft (2022), “Work Trend Index Special Report”, September 22. https://www.microsoft.com/en-us/worklab/work-trend-index/hybrid-work-is-just-work.
[iv] Op. Cit. (Semuels, 2023).
[v] Forrester Consulting (2022), State of Employee Mental Health in an Uncertain World. September, pp 1-26.
[vi] Annie Goldsmith (2022), “100% in Office Every Day, Including Weekends: The Rise of the Hard-Line Return-to-Office Policy”, The Information, August. https://www.theinformation.com/articles/100-in-office-every-day-including-weekends-the-rise-of-the-hard-line-return-to-office-policy.
[vii] Kweilin Ellingrud, et. al. (2022), Companies say diversity matters. So why aren’t they becoming more diverse?” World Economic Forum, March 4. https://www.weforum.org/agenda/2022/03/diversity-inclusion-equity-business/.
[viii] Op. Cit. (Semuels, 2023).