Throughout my career in the City, there has been one word I have become wholly accustomed to: risk. The next few months could be a real test of our understanding of risk beyond our investment decisions.
As Autumn arrives, after 18 months of remote working, many firms are enthusiastically preparing to welcome back their full teams in person. But are senior leaders aware of the business risks they face not fully considering hybrid working as the new normal?
Returning to the physical workplace is for many, the strongest, and in many cases welcome, signal yet that life is slowly returning to ‘normal’. However, as we prepare to return to our routines, senior management may be taking a risk in failing to recognise the huge impact that the pandemic has had on the way that we work, the benefits that the past 18 months of working from home have brought to the table, and what our version of ‘normal’ has done to exclude different groups from the formal workplace.
By refusing to recognise this and embrace various aspects of flexible working, firms may be losing much more than the Zoom calls we have all become so accustomed to.
Access to flexible or part-time working has often been more associated with women needing to work around caring duties and the industry has long expressed concerns about compliance issues.
Covid-19 dramatically disproved many of these myths. The need for flexibility is not limited to a single group or a single set of needs. Research by employee engagement app Totem found 40% of men surveyed were in favour of hybrid working, compared to 47% of women.
If firms realistically expect to continue to attract and retain the best possible talent, company culture must adapt to consider ways of working that support employees work/life balance, including in the areas of mental health and wellbeing we saw severely tested over the past 18 months.
Attracting and retaining diverse talent is also key as diversity becomes a regulatory focus. The Bank of England, along with the Financial Conduct Authority and the Prudential Regulations Authority recently published a paper exploring how to improve diversity and inclusion in regulated firms.
This sets out the various regulatory duties of each body that cover this topic and includes options to make senior leadership more directly responsible for diversity and inclusion in their firms, and link remuneration to diversity and inclusion data.
As a regulatory issue, senior leadership face severe consequences if they do not consider how to create workplace cultures that foster diversity. Initial industry data is likely to be poor and while there is no single silver bullet to resolve this, embracing hybrid working sends out a strong signal of awareness of the needs of groups across several intersectional areas including gender, race, neurodiversity, disability, and age.
Clients are increasingly asking about working practices and demanding an effective approach to acknowledge, measure, and address the discrepancies in the industry and the consequences that they are bringing forward.
If firms fail to address discrepancies dissatisfied clients will look for alternative companies that understand better workplace cultures are better for business and financial outcomes.
The ESG case
The environmental and sustainability impact of fewer people commuting to the office cannot be overlooked. In April 2020, it was reported that global carbon emission decreased by 17%. By embracing hybrid working, firms would contribute to the reduction of pollution by reducing commuting costs, and potentially limiting international travel.
Furthermore, fewer employees on site means less energy spent on areas such as lighting and temperature control, meaning an all-round reduction in a firm’s carbon footprint.
Firms may otherwise find themselves contradicting their ESG pledges around diversity, sustainability and improved environmental practices, and at odds with sustainability commitments in their investment practice.
It’s understandable that we look for what we know after 18 months of uncertainty but the world has changed and brought new risks but also new opportunities. As we prepare to head back to the office, it is vital that employers really consider how they reset the rules of work to ensure that they offer a more balanced inclusive way of working. Any firms that fail to create a new system of working is putting their business success at risk.