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Rejecting hybrid work will cost employers, survey finds

Employees may rush to the exits post-pandemic, and many will want a hybrid work option. If employers want people back in the office full-time, they have to pay them more.

When employees scrambled last year to work from home, it cost them on average $600 to equip their home offices. New research has found that employees want to continue working at home, at least in a hybrid work schedule -- and they will take the same job for less pay with a new employer to keep that option.

In total, this pandemic-driven shift to home offices amounted, both in equipment costs and labor, to 0.7% of GDP, nearly $1 trillion. This is "about the same amount that the government spent on defense in 2020," said Nicholas Bloom, a professor of economics at Stanford University and one of the authors of a working paper based on a survey of 30,000 Americans, titled "Why Working from Home Will Stick."

But this new world of work comes with significant risks for employers. Work from home is so popular that job seekers may take the same job with a 5% to 10% pay cut if it allows a WFH option, Bloom said.

The paper estimates that 20% of full-time workdays will be from the home post-pandemic, compared with 5% before the pandemic. Employers who reject hybrid work may face problems. 

"My broad advice for firms is the labor market is heating up, and pretty soon we are going to be back in the war-for-talent era," Bloom said in an email. "This will mean firms not offering a couple of days a week WFH will have to compensate their employees with significantly higher pay to stop them quitting."

"If firms really hate WFH, they can pay their employees 8% more to keep them -- but if they don't, they should expect to see rising quit rates," Bloom said.

Another complication: Sustainability

Employers may have to offer more than a hybrid work option in recruiting. According to new research by IBM, employees are increasingly seeking out employers with "environmentally sustainable" practices and policies.

In a survey of 14,000 workers in nine countries, 71% of job seekers surveyed said that "environmentally sustainable companies are more attractive employers." Moreover, two-thirds indicated they "are more likely to apply for and accept jobs with environmentally and socially responsible organizations -- and nearly half would accept a lower salary to work for such organizations," the IBM survey found.

People want "more purposeful and meaningful work, as well as wanting to work for a company that better fits [their] values," said Elizebeth Varghese, global leader of talent and HR reinvention strategy client services at IBM Global Business Services.

Another post-pandemic risk for employers is the pent-up demand for a new job.

According to Prudential Financial's Pulse of the American Worker survey, released this month, as many as one in four workers plans to look for a new job. Morning Consult, on behalf of Prudential, surveyed 2,000 U.S. workers in March.

For employers worried about losing employees, those on the verge of leaving may signal their plan to depart.

Danger of employees checking out

Employees at risk of attrition cut back on their time at work five to seven weeks before leaving, according to the Prodoscore Research Council. The firm makes software that can measure employee productivity by monitoring application usage, for instance, in Office 365. Managers and employees see a dashboard that scores their activity.

One metric is called "gap time," which is time that is unaccounted for and might be a sign of declining productivity, said Adrian Reece, the Prodoscore Research Council's principal statistical consultant. As employees near the end, this gap time increases.

"There seems to be this checking out and this changing behavior that you're seeing from the person," Reece said.

If managers see a productivity drop, it may be time for the manager to check in with the worker and have an "honest conversation," Reece said.

The "Why Working from Home Will Stick" research was also written by Jose Maria Barrero, an assistant professor of finance at the ITAM Business School in Mexico City and Steven Davis, an international business and economics professor at University of Chicago Booth School of Business.

About half of employers reimburse employees for their office expenses, this research found.

The finding is near what Global Workplace Analytics, a telecommuting research and consulting firm, has also reported.

About half of employers allowed employees to take on-site equipment home, with the balance providing a range of options, including reimbursement for submitted invoices.

Whether employees are willing to give up higher pay to continue to work-from-home remains to be seen, said Kate Lister, president of the analytics firm.

"It will be interesting to see if that actually proves to be true in a world where WFH opportunities are abundant," Lister said. "Or when say, an employer expects you to take a pay cut if you move to a less expensive region."

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