Planning a Covid recovery: don’t ignore the future of work

As we adjust to a business environment that has been significantly influenced (changed) by the Covid-Pandemic, companies that are struggling to come to terms with the disruption that they face have to make significant allowances for the future of work.

This could mean anything to a company that is under pressure and a failure to adjust to this may see financial distress knocking on their doorstep. It is up to turnaround professionals, as agents of change, to help companies navigate this complex issue.

A good starting place is to identify change that is temporary and change that is transformative. Companies can then develop strategies to address these issues. I recently read a report by McKinsey that was based on group of articles which discusses this topic in detail.

Three key areas driving the future of work

The McKinsey report points out that research and client work point to three key areas that organizations must clearly evaluate as they seek not only to emerge from the Covid-19 crisis but thrive in the post-pandemic world.

These represent three levels of depth that companies must build their strategy around by accounting for the changes to the nature of their work.

• Temporary changes in response to crisis. Covid-19 forced companies to adapt rapidly to accommodate new physical distancing restrictions and change their operating model in order to keep the lights on. Many companies repurposed workers during the peak of the pandemic. One online retailer, for example, spent $85 million redeploying team members to safety-related tasks and audits to ensure they could safely meet the increased demand. However, many of these changes will likely be fleeting as the pandemic recedes. Over time, they will serve as a strong lesson in managing crises but be less relevant to the long-term future of work.

• Permanent changes to the day-to-day work. The Covid-19 crisis did accelerate the adoption of trends once deemed as the longer-term future of work. Investments in digital and automation transformations, considered too ambitious before the pandemic, suddenly became key to survival. These plans are now seen as vital lifelines to sustained competitive advantage or sustenance. For instance, a Middle East-based grocer, already building its digital muscle long before Covid-19, saw the need for rapid investment in its online platform to fulfil skyrocketing demand. Within five weeks, the company rolled out the infrastructure to support the expanded marketplace, and it continues to be the centrepiece of reimagining the way they do business.

• New types of work. The pandemic also ushered in the emergence of new ways of generating capital and doing work. These are organization-specific changes that have transformed the organizational outlook to work and generating value. This is a larger trend that has not yet materialized as a temporary or permanent change. Take, for instance, the tele-everything trend of broad adoption of remote processes. This trend, however, goes beyond just the increase in remote processes and into rethinking how tasks can be performed more efficiently with the use of technology. The explosion in telemedicine, virtual schooling and learning, and e-commerce are pushing the thinking on how money can be made, and how work can be completed beyond business as usual and into the creative.

The report adds that, additionally, some organizations are rethinking their very definition of value generation, moving away from an exclusive shareholder lens toward considering a broader group of stakeholders that includes society and the environment. We’ve seen a renewed push for strong alignment among a company’s purpose; environmental, social, and governance (ESG) issues; and how money is made.

It remains to be seen which of these emergent trends will be temporary, and which will become permanent as organizations balance new avenues of capital generation, evolving technology, and shifting societal expectations.

The report points out that one thing is beyond doubt…the future of work has arrived. Organizations must truly understand the uncertainty of change in order to make appropriate strategic decisions across the three levels. To understand the impact of the changes to the nature of work, both momentary and lasting, organizations must first align and invest in a clear set of strategic priorities. Defining these priorities, and seeing them through the three levels of depth, will enable them to derive bespoke value from their financial, human, and technological capital.

Maximizing value during the implementation of a future of work strategy

When trying to develop a strategy to cope with the disruption that companies face (as it relates to the future of work), McKinsey points out that their analysis confirmed that there is still no silver bullet.

The report points out that the single biggest differentiator is the amount of effort put into the transformation—measured by the number of recommended actions taken throughout a transformation’s life cycle. Companies that took a holistic approach and implemented all 24 transformation actions were over twice as likely to be successful (78% compared to 31%).

Even executives reporting successful transformations appear to be settling for less, stating that they capture 70% of the full value at stake, on average. McKinsey’s research points to three actions leaders can take to maximize the value captured during implementation:

• Accelerate time to impact. The first few months set the pace of the transformation. While the average transformation realizes just over half of its value within the first 18 months, our research suggests that top-quartile companies move much faster and typically capture 74% of their transformations’ value within the first 12 months. These quick wins generate positive momentum and create a virtuous cycle in which value can be reinvested toward new initiatives and longer-term ambitions. For example, a manufacturing company transformed its branch operations and achieved significant operational efficiencies within the first six months. It was then able to reinvest those savings into new services and upskilling branch employees, resulting in growth and market share gains.

• Match talent to value. Successful transformations are more likely to strategically allocate the highest performers to the most important initiatives. This requires a clear understanding of where value is created and who in the organization has the experience and skills to deliver that value. However, leaders must be careful not to overburden their top talent. High performers should focus on the “boulders”—the largest initiatives that individually make up 5% or more of the full potential value. For the multitude of smaller initiatives, it is better to involve a broad coalition of managers, influencers, and frontline workers to increase employee engagement. Our research found that companies with transformations involving at least 7% of employees are twice as likely to outperform their industry peers in total returns to shareholders (TRS) compared to others.

• Mobilize influencers. Achieving employee buy-in is essential—and notoriously difficult to do. One way to win the hearts and minds of employees is to harness the power of influencers—employees whom colleagues look to for input, advice, or ideas. Our analysis shows that influencers in successful transformations are more likely than those in other organizations to play active, leader-facing roles—such as providing feedback to senior leaders, leading initiatives themselves, and acting as thought partners to line managers. For example, an energy company convened over 200 change agents who proactively developed and implemented grassroots initiatives, including redesigning meetings, hosting “lunch and learn” sessions, and launching competitions within their teams.

The report adds that leaders should be prepared to roll up their sleeves and go all in on transformation actions—especially during implementation, when there is significant potential for value leakage. Accelerating the timeline, aligning top talent to high-impact initiatives, and harnessing the power of influencers can tip the scales in their favour and maximize the chances of success.

There is significant scope for turnaround professionals to take the lead and help companies adjust to the future of work by implementing the trends and coping mechanisms discussed in this article.