There is a need for a new social contract involving companies, people and governments.
This article is part of GP-ORF series — From Alpha Century to Viral World: The Raisina Young Fellows Speak.
What if the COVID-19 pandemic could turn into an opportunity to improve human lives, businesses and cities? Global social distancing measures imposed at the height of the pandemic triggered the largest remote-working experiment in history — it used to be the privilege of freelancers and digital nomads, and became business-as-usual for months for any nine-to-five employee. The issue is that, unfortunately, working from home does not necessarily mean being more productive or happier…yet. Smart working could be the answer, but how does it differ from remote working? What benefits can smart working bring to people’s quality of life, corporate income statements and urban sustainability? How can smart working be sustained during the pandemic and beyond?
Rise of smart working and its advantages
The COVID-19 outbreak led to the largest experiment of remote working globally, despite it neither being planned nor people being fully ready for it. Although, 88 percent of global HR managers surveyed in March 2020 said their organisations encouraged or imposed remote working solutions. The months after showed that it is possible to use virtual communication to interact with clients and colleagues for a sustained amount of time without having to always be in the office or travelling to meet key partners and stakeholders. But what good does this new way of working bring?
Research shows that the potential of smart working can be unleashed in terms of benefits for workers, enterprises and societies, especially if applied at a large scale. Most examples considered here are from Italy and China, as there is a wide amount of research available since the two countries were hit early by the pandemic. For employees, smart working is a way to optimise schedules, save commuting time and costs, and achieve a higher quality of life. In Italy, there are more than 13 million job commuters (over 20 percent of the total population) that spend, on average, 70 euros (US$ 85) per month and 72 minutes a day to reach their workplace, costs that could well be reduced by a permanent or quasi-permanent smart working schedule. Furthermore, smart working raises employees’ wellbeing and flexibility, as demonstrated by a study conducted by Politecnico di Milano, claiming that 80 percent of employees who shifted to smart working have seen improvements in their work-life balance.
On the corporate side, smart working may result in higher levels of productivity and access to wider workers’ pools, lower fixed costs and enhanced retention rates. In Italy, it has been argued that, on average, smart working could raise productivity by 15 percent and trigger a 20 percent reduction in absenteeism. And in 2015, employees of a Chinese travel agency who shifted to smart working were found to take shorter breaks and less sick days, generating a 13 percent increase in productivity. Moreover, the flexibility brought by the transition to this new way of working can also help to improve the attractiveness of job positions for millennials — in 68 percent of the cases — as well as to reduce employee churn rate: studies have found that smart workers are 13 percent more likely to stay in the same company on a given year . Furthermore, smart working helps companies have access to a much wider pool of workers since it goes beyond standard physical, geographical and organisational boundaries, opening doors also to new forms of working arrangements, such as outsourcing and crowdsourcing of tasks. According to the most optimistic sources, this may lead to a substantial labour cost reduction of up to 80 percent. Another experiment conducted in China estimated savings by almost US$ 2,000/year per smart worker, due to the reduction in required headquarters space and related rental and utility costs.
Societies at large can also benefit from this practice, which brings lower road congestion and pollution, more social inclusion and higher fiscal revenues. For example, a study conducted between 2017 and 2019 in Mantua, Italy, showed that, by not going to the office, 250 smart workers avoided emissions equal to 42 tons of CO2, a figure comparable to the effect on the Earth’s atmosphere of 2,792 trees. The pandemic-induced lockdowns allowed for spontaneous experiments conducted at an unprecedented scale — each country reduced many types of pollution, experiencing almost immediate effects on various environmental aspects. For instance, in Spain and France in April 2020 actual nitrogen dioxide concentrations diverged 61 percent and 52 percent, respectively, from expectations thanks to lockdown measures.
From a societal standpoint, the benefit of labour pool inclusivity should also be considered. Smart working broadens job opportunities for people with difficulties in accessing offices, such as those with motor disabilities or who have family members needing assistance at home. For example, in the UK, there is a 30 percent employment gap between disabled workers and non-disabled ones, which could be significantly reduced thanks to more flexible working arrangements. Finally, by increasing the number of employed people, smart working could also raise the number of taxpayers and reduce subsidy costs.
Now that the benefits to companies, people and societies have been defined, it is important to understand the key difference between smart working and remote working, as the latter is what most companies and workers have experienced during the lockdown period.
Remote working is not always “smart,” especially if forcedly conducted from home, without giving employees the flexibility of working where, when and how they want. In fact, smart working means being able to choose when and where to perform the assigned tasks — going to the office when it makes the most sense or staying at home or in a nearby co-working space when one wants to avoid unnecessary distractions or commuting costs.
The key mistake that many companies have made has been thinking that remote working is automatically smart. Without taking the necessary precautions, transformation measures and adopting the right mindset, abrupt and not well-thought shifts can lead to severe issues of disorganisation, underperformance and psychophysical malaise. Examples from Yahoo and IBM sustain this view — the former reversed its decision to introduce smart working in 2013 because employees seemed too relaxed and always focused on other things, whereas the latter went back the same way after introducing smart working in 2017, because, besides cost cutting, there was no increase in creativity nor productivity .
Therefore, to avoid backlashes, unnecessary risks, and negative side effects on workers’ productivity and wellbeing, the transition towards remote working needs to be performed by considering five key areas of action:
• Cybersecurity: Cyberattacks have become a daily struggle for businesses, with hackers trying to illegally access information every 39 seconds. Investing in prevention technologies is not the only defensive measure against data breaches . It has been estimated that nine out of 10 successful cyber intrusions are caused by people’s mistakes or carelessness, not by technological flows. The probability of successful “people-based attacks” goes up when workers are not in the office, since, experts say, our minds tend to follow less stringent confidentiality protocols in places usually associated with leisure time. In this sense, the transition towards smart working could exacerbate the situation and make corporate infrastructures more vulnerable. While VPN and antivirus software for personal computers are essential to reduce the exposure to malware, conducting dedicated training programmes to increase employees’ awareness about cybersecurity best practices and behaviours is the most efficient way to address the problem.
• Mental and physical adaptation to the new circumstances should be considered with attention: Working from home, being isolated from colleagues and far away from social relations may have deep psychological consequences, such as increased depression and anxiety. Furthermore, by cutting commutes to and from the office, remote working further triggers a sedentary lifestyle, promoting weight gain and obesity, doubling the risk of cardiovascular disease and diabetes, and decreasing concentration. That is when personal responsibility comes into play in adapting to this new work “virtuality” in a healthy way, finding, for instance, gathering places and opportunities such as co-working spaces, libraries, internet cafés, gyms, cooking academies or cultural associations.
• A work culture based on trust and intrinsic motivation: Extrinsic incentives, such as bonuses, promotions and threats of punishment, act as strong motivators for employees, but actually only work for jobs that require low intellectual effort and are usually repetitive. In the long run, they lead to a decrease in motivation and a loss of interest That is why companies are striving to unlock the intrinsic motivation of their workforce. For instance, to increase creativity and productivity, Google encourages its staff members to spend 20 percent of their time on what they find beneficial for the company, without control; Google News, Gmail and AdSense were all born out of that amount of time. To motivate and empower employees, it is important to satisfy their need for autonomy, mastery and purpose. An extremely positive example is the one of Best Buy, a multinational consumer electronics retailer based in Minnesota, US, reached a 41 percent increase in productivity after adopting a results-only work environment model. Similarly, a Chinese company proved that empathy is a powerful tool to encourage smart workers, as it strengthens connections, promotes inclusion, and creates a sense of community. How can this be achieved in a virtual environment? By increasing virtual social interactions such as video calls, intranets, photography competitions, maintaining spaces to express one’s opinion freely and including the team in the decision-making process with constant feedback sessions.
• Objectives and key results: Planning business objectives and measuring results is a key element for achieving remote working success. Employees may be working from home for the first time and may find themselves not knowing what to do. To align their work and results with those of the organisation, they should be individually provided with clear objectives and key results to achieve. The objectives and key results goal-setting framework has been widely used by companies such as Google, LinkedIn and Twitter to get their people moving in the same direction, and transparently measure their performance with respect to the goals set.
• Working spaces: Hot-desking is a strategy that commutes the new organisation and working culture—a solution with no assigned desks, reducing office size and space management costs while offering greater flexibility to employees. Another option could be desk hoteling, which implies the possibility of reserving workstations. This worked for E&Y in Cleveland, US, which almost halved its office size and retained the same number of employees. Generally, offices should be smaller and more distributed throughout the territory to be more easily manageable and reachable in case of need.
Making smart working work
Together with a company’s effort, aids coming from the public sector are crucial for this cultural shift to happen. Infrastructures, laws and incentives should be aligned and made available for companies and people willing to have a smarter and more sustainable future.
• Infrastructures: Smart working needs a higher upload bandwidth To make the transition feasible, governments should commit to ensure adequate connectivity access. In Italy, for example, ultrafast broadband covers only 24 percent of the population, versus an EU average of 60 percent, making 11 million Italians unable to efficiently work from home. During the lockdown, the website of the National Institute for Social Security crashed while handling 13 times lesser data than the ones managed by PornHub every day, despite spending 560 million euros in 10 years.
• Laws: In Italy, the 2017 law on agile work stimulated 60 percent of public offices, and 17 percent of large companies and SMEs to introduce smart working. However, the required procedures relating to the communication of individual agreements to the Ministry of Labor and Social Policy and to the National Institute for Insurance against Accidents at Work have not been as effective. A negative reaction was registered by 45 percent of large companies due to additional complexities and greater onerousness in the adaptation of individual agreements or policies. The Italian experience shows that the “devil is in the details”, and that the adoption of a law formally fair but practically difficult to enforce triggered a general backlash. This calls for more careful and far-sighted planning in countries willing to follow the same path.
• Incentives: In Italy, Regione Lombardia has granted 4.5 million euros of non-refundable aid to help companies introduce smart working. In the US, the Colorado Mutual prosperity programme has offered economic incentives for firms that decide to hire people living in the state’s rural areas and let new employees work remotely for at least three days a week. Nevertheless, it is also crucial to ensure that the right to be disconnected is guaranteed. Corporate cultures often underline the importance of being constantly online and available, which results in employees feeling that they cannot unplug from work, not even in their free time, leading to longer workdays and more severe health problems. National laws can help in this sense as well: Italy and France have already introduced some rules to balance corporate interests with the protection of workers’ private lives. Smart working should not be seen as a new type of contract, but rather as a new way of organising activities and tasks, and the right to disconnect and rest must be granted to every employee.
Overall, there is a need for a new social contract involving companies, people and governments. The former should grant employees higher autonomy and independence, thus enabling commuting time and costs savings; on the other hand, workers should guarantee the same or higher productivity. Of course, organisations should commit to provide more advanced technological systems and proper training programmes to ensure that the transition is smooth and flawless. From their side, governments should put in place an updated and simplified bureaucracy, infrastructure upgrades and monetary incentives to foster more inclusive working environments, cultural transformation and higher productivity.
So, what comes next? From the companies’ standpoint, a change in management strategies is required to enable an efficient and sustainable shift towards smart working. To be feasible, this should be implemented while revising organisational charts and incentives, upgrading digital skills, harmonising workspaces in line with the new culture, and establishing clear and flexible rules.
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