Employers haven’t been challenged with as dramatic of a change since the industrial revolution. At no point in history has it ever been more evident that the shape and form of companies must change in support of the new era. You might ask yourself, what do you mean by the new age? How could you not think about this with the recent shift to remote work and the latest software solutions to support it? Has employment changed forever?
We are living in one of the most dramatic shifts since the internet first came to prominence. This shift is driving employers to look beyond just remote work and evaluate the efficiency of employment altogether. With that said, indeed, some jobs/careers will not change due to their nature, but most will.
Businesses in various sectors have started looking to contract-based employment or the use of entirely independent contractors to support company needs and objectives. This paradigm occurs as employers evaluate work production in remote settings and ask tough questions.
Here are some of the critical questions posed by employers:
- Am I getting the benefit of full-time employment with remote work (40 hours per week)?
- Have I installed the proper systems to deploy a remote work staff effectively?
- Should I employ full-time or go to term contracting and or independent contractors?
- Does it make sense to look at other, less expensive markets for skilled talent?
There are other employee benefits as well. Employees, 1099’s, and W2 contract workforces no longer have to deal with heavy commutes or spend as much on gas for transportation. The nature of the job market has widened and created more opportunities for the labor force. Their geographic location no longer binds employees. And don’t forget about the kitchen table coffee “perks” in the comfort of your own home.
The concept of decentralizing the workforce has changed the environment in some good ways and some bad. Larger employers are looking for skilled talent in less expensive markets throughout the US and internationally. Interestingly, larger employers hiring outside major cities can effectively cut labor costs without compromising quality but still pay above local market rates. But how does this impact companies servicing and located in smaller markets? As an employer, I can tell you that the costs to employ and hire in smaller markets disproportionately increase in relation to the larger markets like Los Angeles. Further, it is creating artificial shortages with labor in specific smaller markets.
It has never been more evident that we are moving into uncharted territory. Smaller organizations will be forced to look at a national strategy to compete. If costs increase with the labor force, you will have to find price increases, which might mean the need to compete in larger markets to offset the increase in labor costs.
I recently had the distinct pleasure to have a candid discussion with an executive at Capital Group. The asset management group is a leading asset management firm and ranks among the world’s oldest and largest investment management organizations, with over $2.6 trillion in assets under management. This discussion offered a great perspective on the positive and negative impacts of remote work. The executive stated,
“with over 15 years of field relationship management, the remote work paradigm has dramatically improved efficiencies, reduced cost. Where I used to be able to schedule 18–23 meetings per week, I am now able to get 30–40 meetings per week without the cost of travel.”
He explained that his cost savings annually had to be around 150K in travel, lodging, and other sales-related expenses. The most thing about the conversation was the production outcome. He stated that his production increased 21% in 2020 despite the pandemic, and in 2021 he saw an impressive 37% increase in production. That’s a staggering 58% growth in less than two years!
Capital Group isn’t alone. While some industries have struggled do to the change, many have improved but it has come at a cost as many see the impacts to culture. Businesses are having to rely on market intelligence more than ever with this change. In particular, this is very relevant as it relates to building new business prospects. Once capital group employee stated:
“You are much better riding in a sidecar with a mentor than as a lone wolf. The learning curve is more dramatic when you are remote as a new employee in a remote environment.”
There is still something to be said about humanity’s need to connect and communicate. We likely won’t see a complete abandonment of an in-person connection. What that looks like in the next couple of years is still up for debate, but one thing is for sure, it will never go back entirely.
The bottom line is regardless of your feelings about the new remote work environment, it is here to stay, and employers of all sectors are looking for new ways to embrace it.