The exodus of workers during Covid and the record high numbers of economically inactive have contributed to the UK’s 1.26 million vacancies and an understandable perception that the employment market is now employee-led. The increased demand for voluntary home working, which follows the enforced experience of it during the pandemic, is contributing to employers’ perception that they must compete for talent by offering not only financial inducements, but different working conditions, including flexible hours and place of work.

Any conversation with our clients will confirm this view but the big challenge facing employers is how much can, or should, we change our long-standing norms, practices, and policies to attract and retain people and are we sure that doing so will not damage productivity?

A major client recently explained how increased working from home and flexi-time arrangements for some indirect roles, such as quantity surveying, buying and engineering, was affecting customer service as well as making it difficult to achieve scheduled milestones.

We know that homeworking is here to stay — experience during lockdown has driven up demand. Surveys routinely report that:

• Four out of five workers expect to work at least one day a week from home. Around forty-five per cent of workers are either fully or partially working from home.
• Up to a quarter of employers have adopted homeworking as a permanent model. This obviously varies enormously by sector with, for example over half of businesses in the information and communication industry stating that they were using, or intended to use, increased homeworking as part of a permanent business model, which was true for only 3% of businesses in the accommodation and food services industry and 5% of businesses in the construction industry, which are less adaptable to homeworking

Introducing these working arrangements without fully examining the trade-offs and establishing new standards around basics such as e-mail response time and out of hours responses may make it more difficult to manage hybrid working successfully.

The key problem is that many roles still have no proper productivity-based metrics and instead rely on qualitative methods. Whilst these can provide important insights and offer some useful benefits for estimating productivity, they are not fit for purpose for managing it. Managing productivity requires objective information from accounting data or from systems that monitor the activities and hours worked by employees or, at the very least, manager-led assessments rather than employee-led self-assessment about whether they believe they are more, or less productive in a given environment.

We would argue that the function that tends to lead the design of the new norms and policies (HR) must also start to take accountability for the need for better data from the organisation metrics that may suffer as a result of new policies – even though it may not, as a function, be directly ‘on the hook’ for any fall in productivity.

HR must not be oblivious to the issues even though its primary concern is finding people of the right calibre whereas dealing with the productivity fall-out of new ‘Ts and Cs’ usually falls elsewhere.

The answer, of course, is to establish policies that balance the needs of the business to achieve results for its board, shareholders and customers, with the need to make it sufficiently attractive in the employment market.

Businesses must avoid a recruitment and HR model that does not sufficiently support the needs of the business and have a detailed understanding of the trade-offs. In short, it is vital that a business considers how, by increasing employee flexibility, it may be restricting its own. It should take a considered and data-led approach to balancing priorities.

One solution is to develop a clearly understood framework for productivity decision-making, which requires a detailed study of the current state of productivity, the pain points, and their causes. This exercise is of inherent value to the business in any event and may lead to other initiatives and changes.

The business should also clarify the position of its core norms (the policy on hours, dress, location, remote work, start and finish times, availability/status during the working day, out of hours contact, overtime, response times to e-mails, travel et cetera) and their link to productivity and performance. We must identify the relative value of working practices (this could be broadened to include attributes and attitudes) and how they affect productivity and performance.

HR-led policies that are good for recruitment but damaging to operations may still be the correct option if the trade-off creates a net benefit. It is also correct that the business may wish to set a series of non-negotiable norms for some roles, where transgressing them would be highly damaging. HR colleagues need to be made aware of these red lines to help guide their thoughts and processes.

As a business moves with the times it must use a joined-up approach to finding, retaining, managing, and developing talent. The important point is to ensure there is a framework that prompts and shapes these discussions. Decision-making without such a tool for assessing the net position may lead to a one-sided and sub-optimal conversation. HR must be at the forefront of these discussions not following behind the business.