2020 has been a unique year in so many ways, yet also an educational one. Asset managers have had to completely transform how they operate, serve their clients, keep their employees safe, and continue to build for the future in each area of their business. Amid all of these challenges, none has been more prevalent throughout the pandemic more than the growth of remote work structures. Before March 2020, the idea of having employees work remotely, even on a part-time basis, was considered taboo at many industry firms, due in large part to concerns about employee productivity. How does one successfully gauge employee performance when not working alongside colleagues in a company office on a day-to-day basis? Having now operated successfully in a “grand experiment” of sorts for the past nine months, the results speak for themselves and have been nothing short of remarkable. More than 90% of firms we surveyed indicated that they have seen either no change or an improvement in employee productivity since moving to a remote work structure. In some cases, our clients have actually expressed concerns about employees working long hours and not taking breaks, personal days, or vacation days to decompress. At the same time, both asset management clients and job candidates have frequently cited a reluctance to re-enter a Monday through Friday office role once the pandemic subsides. Headed into 2021, the continued evolution of remote work structures remains top-of-mind at many firms, in some part due to that knowledge. What will the future of remote work look like post-pandemic? It is difficult to say, but in our view the opportunities clearly outweigh the potential risks, giving us greater confidence that remote work structures will become more commonplace in 2021 and beyond.
Among the potential benefits of such a structure, perhaps clearest is the financial incentive for companies to locate more of their workforce in home offices, dramatically reducing the real estate footprint a company requires for its office space. When evaluating an asset manager’s income statement, real estate lease obligations often rank just behind compensation and benefits (C&B) as one of the largest expense items. With many firms paying seven figures or more in lease commitments each year, reducing that figure even partially would result in substantial savings. Several companies in the industry are already evaluating potential moves away from larger, more expensive cities to reduce costs (e.g., Goldman Sachs), so this could serve as a mechanism to create further savings while also becoming a potential employee retention tool as well. Because more companies are considering remote work options going forward, offering such a structure may not be so much a differentiator as a requirement to remain competitive in retaining and attracting high-quality talent. A closely-related benefit of having at least a portion of the company’s workforce working remotely is the opportunity to attract a more diverse candidate pool than was previously possible. With asset managers actively making an effort to increase the number of women and minorities among their employee base, this could be a game-changer, particularly for those companies who are located in areas where it may be more challenging to recruit diverse candidates.
Another potential benefit that could result from remote work structures and smaller corporate offices is a re-design of corporate workspaces. Whereas companies have typically had dedicated spaces for each employee, some companies are evaluating a transition to a shared space arrangement where employees would work in-office certain days and from home others. With a portion of their employee base working remotely either on a part-time or full-time basis, some asset managers are actively considering a new office structure that would utilize fewer offices and more of a team-based open layout where groups are seated together to foster greater collaboration and communication. Time will tell to what degree this is feasible given the potential continuation of social distancing and spread of viruses through close contact or surface contact.
One often overlooked advantage of remote work structures to employees and employers is the natural improvement in work-life balance that it creates. Having witnessed noticeable progress on this front throughout the pandemic, preserving remote work (even if only on a part-time basis) could result in a happier, more fulfilled workforce. The mental stress of a daily commute would be removed to a large degree, allowing employees to focus more on executing the core aspects of their role which would be a win-win situation for all.
As for potential drawbacks attributable to remote work structures, most commonly-cited is the impact on an organization’s culture and how it affects an employee’s acclamation, adherence, and attachment to that culture if working remotely. Companies have been proactive in trying to address this by hosting regular group video meet-ups and online events meant to create better connectivity among team members, especially new hires. While such a format cannot replace in-person communication, it still allows colleagues to get to know each other on a more personal basis apart from their regular work deliverables. Playing a larger part in assisting local communities as well as environmental stewardship initiatives have also played an important role in fostering a team concept. Structuring these types of events regularly will be important to ensuring that corporate culture is preserved.
Another potential challenge with having employees work remotely is that certain employees do not have a home office environment that is conducive to performing their role as productively as in the workplace. We have spoken with many job candidates this year that have expressed such a concern and prefer to be in-office instead. With that in mind, it seems likely that companies will ask employees to attest that they have and will maintain a professional home office work environment that meets company conduct guidelines.
We have an open question of whether companies will look to make adjustments to compensation structures for remote-based positions. One could envision a scenario where compensation for remote roles is slightly less than others given the greater convenience of no commute and related costs. This seems less likely for high performers or highly-specialized functions where there is considerable competition for talent such as investments, but for others it is less clear. Finally, will there be permanent changes to asset managers’ client service models as a result of the pandemic? Will clients still require in-person meetings or has thinking changed so that there will be greater receptiveness to hosting video calls for periodic check-ins or portfolio updates? It could be that requirements vary by client or segment, for example those companies with predominantly institutional vs. wealth management client bases.
Regardless of the remaining duration of the pandemic, it is almost certain that these topics will not all be resolved in 2021 but that the scale of this long-enduring global event will likely set the stage for considerable industry change in the years ahead.