Hybrid Work’s Impact on Leaders, Employees, and Workplace Culture

The pandemic changed our understanding of almost everything: our relationships, where we live and work, and how we move through the world. From an organizational perspective, one of its most significant impacts was accelerating a power shift from employer to employee, placing a new focus on employee motivations, digital acumen, confidence in leadership behavior, and flexible work structures.

When asked about the biggest impacts to the businesses in the coming year, 72% of global business leaders responding to Russell Reynolds Associates’ 2022 Global Leadership Monitor selected the availability of key talent and skills as a top risk to organizational health over the next 12-18 months. Up from 59% last year, this makes it the most selected issue, ahead of uncertain economic growth, geopolitical uncertainty, and technological change. Strategic leaders are acutely aware of the interplay between talent and other risks, understanding that navigating our current economic and geopolitical uncertainty requires resilient and adaptable people at every level.

Figure 1: Top External Factors Impacting Business Health in next 12-18 Months
% of leaders ranking in top 5 (from list of 20 threats)

The talent crunch is not just about employees—what leaders want and need to be successful has also changed. 45% of surveyed leaders reported that executive level turnover has increased at their organization in the past year. More noteworthy, 56% of next-generation leaders are willing to make a move to another employer for the right opportunity. Not only is attrition at this level problematic from an operational and succession standpoint, losing next-generation leadership amplifies the challenge of engaging with an increasingly purpose-driven employee base. As such, understanding where and how people want to work is crucial to retaining them.

Employee interest in flexible work options shows no signs of slowing down

As LinkedIn reported in its Top Trends to Watch in 2022 newsletter, one in six job postings offered remote work (up from one in 67 in 2020.) Furthermore, those being called back to the office are reporting significantly worse employee experience scores than workers with flexibility. The 2022 Future Forum Pulse—which surveyed 10,818 knowledge workers globally between January 27 and February 21, 2022—found that, while employee experience scores fell for all knowledge workers, full-time office workers reported far worse scores when compared to flexible workers, including:

_{Source: The 2022 Future Forum Pulse, n = 10,818}

There’s another type of productivity: one in which you consider your efficiency, impact, and influence on others in addition to your outcomes.

Dean Stamoulis
Atlanta

However, this picture is not a simple one. While hybrid or remote work reportedly drives positive productivity impacts—and indeed our Global Leadership Monitor found that 61% of leaders felt that remote/hybrid working had a positive impact on their own productivity—productivity and impact are not necessarily equal. While many leaders (and employees alike) have been able to cram more meetings and other tasks into their day, significant proportions of leaders report a negative impact on their connectivity with others, their ability to lead a team successfully, and their engagement with the organization (see Figure 2).

Figure 2: Impact of Remote and Hybrid Working on Self

While personal productivity was either unaffected or positively affected for most leaders during hybrid or remote work, many leaders recognized downsides on organizational measures, with culture, cohesion within teams, and collaboration across functions most notably negatively impacted. Leaders are more split on the impact on organizational outcomes like innovation, operational agility, and future growth; the same is true on measures of inclusion (see Figure 3).  This warrants additional research on what differentiates the organizations that experienced positive versus negative impacts in these categories.

Figure 3: Impact of Remote and Hybrid Working on Organization

Didn’t like hybrid work? You’re more likely to assume no one else did either.

The debate about hybrid working is a big one; in fact, return-to-work/hybrid-work implementation was the 5th most frequently cited factor affecting organizational health in our 2022 Global Leadership Monitor. Leaders are faced with tough decisions on what policies and frameworks to set and how to enforce them.

Leaders’ views of whether hybrid/remote working had a positive, neutral, or negative impact on them personally are highly correlated with their view of how it affected the organization. We found that nearly all leaders who had a negative personal experience of hybrid work viewed it is negative for the entire organization as well. Specifically, 84% leaders who had a negative personal experience of hybrid work also felt that the set-up had a negative organizational impact. Those who had a positive personal experience were more evenly split on whether hybrid work had a positive, negative, or neutral impact on their company (Figure 4).

Figure 4: How Leaders’ Hybrid Experiences Affected Their Views on Organizational Impact

While we are not able to determine whether individual leaders’ views of the impact on the organization are correct or not via this survey data, it is important for leaders to separate their personal experience and preferences from what is right for the organization more broadly. To drive towards decisions on the right long-term working model, leaders need to balance a range of factors:

1. What are the organization’s goals (revenue growth, increased customer satisfaction, innovation, safety, etc.)?
2. What are current and potential employees’ expectations regarding how and where they work?
3. What supply and demand forces are at play in the labor market (e.g., levels of competition, availability of talent near organizational hubs, working models at other organizations)?

Additionally, it is beneficial to consider what differentiates the organizations that fared better during the pandemic. Our analysis finds two important drivers of hybrid work experience—an organization’s digital acumen and confidence in leadership’s behavior and capabilities.

Digitally attuned organizations boasted better hybrid work experiences and retention

We were interested in understanding how an organization’s digital maturity affected its leaders’ experience of hybrid work, from both a personal and organization standpoint. To do this, we asked leaders about how digitally attuned their executive team was.

We define “Digitally attuned” organizations as those with leaders who agreed or strongly agreed that their executive team has a strong understanding of digital technology and how their business must transform to adapt for the future. “Digitally limited” organizations are those whose leaders disagreed with the above.

Leaders who identified their organizations as “digitally attuned” fared better in flexible work than those at “digitally limited” organizations in every question we asked regarding hybrid work from a personal and organizational perspective (see Figure 5).

At the individual level, leaders at digitally attuned companies were slightly more likely to feel better about their productivity (68% vs 59%) and almost 1.5 times more likely to feel positive about their ability to meet objectives and KPIs (45% vs 31%) than leaders at digitally limited companies during flexible work. When it came to personal connectivity with others, leaders at digitally attuned organizations were almost twice as likely to have a positive view (42% vs 23%). Finally, leaders at digitally attuned organizations felt twice as positive about flexible work’s impact on their access to career opportunities.

From an organizational perspective, one out of five leaders at digitally attuned organizations felt positive about the cohesion within their teams, while only one out of 10 leaders at digitally limited organizations felt the same. Leaders at digitally attuned companies were nearly twice as positive about flexible work’s effect on their company’s culture than leaders at digitally limited companies. Finally, half of leaders at digitally attuned companies felt positive about hybrid work’s effects on operational agility, compared to just over a quarter of leaders at digitally limited companies.

Figure 5: Effect of Hybrid: Digitally Attuned vs. Digitally Limited Organizations

These differences, while intuitive, have real consequences.

70% of leaders at digitally limited organizations reported being likely to look for external opportunities, compared to only 38% of leaders at digitally attuned companies. With concerns about employee and leadership retention at an all-time high, the cost of attrition is not one many organizations can afford.

“In our current context, in which software continues to “eat the world,” organizations that have embraced technology as a way to be more efficient and increase collaboration are best positioned for success and are more likely to retain their leaders and workforce. Digital fluency and agility are now key markers for how employees view their organization’s growth potential.”

Nipul Patel
San Francisco

Leadership behavior was critical to hybrid work experience

We were also curious about the effect that confidence in leadership had on one’s experience—both at the individual and organization level—during the pandemic. To assess this, RRA asked leaders to rate their confidence in their leadership team’s capability and their behavior.

We define confidence in leadership capability as agreeing that the leadership team has:

• The right skills to lead the organization
• A strong grasp of your industry’s competitive dynamics
• Access to the right information to support strong decision making

We define confidence in leadership behavior as agreeing that the leadership team:

• Works together effectively
• Successfully embraces cultural change
• Role models the right culture and behaviors

Put differently: capability relates to leadership’s technical skill set, while behavior relates to its style and and soft skills.

While low confidence in leadership capability had limited bearing on the experience of hybrid (either personally or at the organizational level), low confidence in leadership behavior correlated with a negative impact on both the organization and the individual. Respondents were three times more likely to report a negative personal experience during the pandemic if they did not have confidence in leadership’s behavior.

What does this tell us? During the pandemic, leaders who demonstrated effective team collaboration, embraced cultural change (likely carried out, at least in part, over digital channels), and modelled a healthy culture and set of behaviors were more likely to foster a positive work environment for individuals than those who only demonstrated their technical and business acumen.

“2020 forced leaders to embrace authentic and empathetic leadership. Those who were not able to do so hindered their teams during the pandemic. Authentic leadership has gone from a ‘nice to have’ to a crucial component of leading teams and companies.”

Brad Pugh
Atlanta

If a respondent had low confidence in leadership’s behavior, they were over 12 times more likely to view their organization as negatively impacted by the pandemic (as shown in Figure 6). High confidence in leadership behavior does not necessarily indicate a positive view of hybrid’s impact on the organization, but it makes it more likely, as respondents with high confidence in leadership behavior were over four times more likely to report a positive organizational impact from hybrid work.

Figure 6: Confidence in Leadership’s Behavior and its Effect on Hybrid Work Experience

While valuing soft-skills and broader leadership behavior was accelerated by the pandemic, it is a trend that has been growing for some time. In collaboration with professors at Harvard Business School and Imperial College London, Russell Reynolds analysed nearly 5,000 job descriptions across various C-suite positions to understand the changing nature of leadership. Detailed in Harvard Business Review’s July 2022 article, “The C-Suite Skills that Matter Most,” we found that companies have significantly redefined executive roles over the past two decades. Traditional capabilities—notably, financial and operational management—remain highly relevant. But when companies search for top leaders today, especially new CEOs, they now attribute less importance to those capabilities and instead prioritize one qualification above all others: strong social skills.¹

What it takes to lead is changing. Leaders who exhibited behaviors that inspired confidence—including empathy, vulnerability, and human-first leadership—created better hybrid experiences and stronger cultures for employees and next generation leaders at the individual and organizational level.

“[During hybrid work,] the leadership capabilities that have come to the fore are resiliency, versatility, thriving in ambiguity, adaptivity, optimism, digital fluency, and people centricity.”

– CHRO of an insurance company

Recommendations

The pandemic enforced a massive experiment in how we work. It accelerated the adoption of remote working infrastructure and indelibly changed employee attitudes and expectations. As leaders fashion the right working model for their organizations, they must carefully balance company goals with their employee needs and expectations. Critically, leaders must recognize that employee experience is central to achieving organizational goals and strategy. When developing the right future work model for their organizations, leaders should focus on the following:

Ensure that “leadership team preferences” do not overly bias future working model decisions

• Figure out how to make connection—virtual or in-person—effective for you. Play to your strengths by connecting with employees in the way that best leverages everyone’s natural abilities.
• Invest in learning and development programs focused on building digital acumen and leadership skills in ambiguous environments.

Double down on engagement, connection to purpose, and people leadership skills

• Connect frequently with teams and individuals. Focus on understanding how employees and next generation leaders’ experience of work has changed, and how work itself is changing. (For more recommendations on employee connectivity and wellness, see our recent paper on how well-being underscores a healthy culture.)
• Evaluate role design at every level. Roles should be thoughtfully created with tangible connections to the company’s purpose in mind.

Focus on the “why” and “how” of work, not simply the “where” and “when”

• Gather employee input. Not only does this help build engagement and commitment at lower levels of the organization, but it also surfaces information and ideas that top leaders are often insulated from.
• If you adopt a flexible working policy, ensure that your talent management processes adapt to each style accordingly. Crucially, business leaders must commit to embracing each employees’ workstyle and ensuring that two classes of employees do not emerge with those in the office being favored over those that work remotely.

Organizations with the highest employee satisfaction have cultures that enable effective collaboration, embrace change, enhance employee engagement, and encourage empathetic leadership by incentivizing the right behaviors. Cultural values are changing, and they do not necessarily relate to physical location. While there is no one-size-fits-all approach, leaders looking to define their organization’s future should focus first on how their employees function and collaborate, rather than where they work.

Authors

Leah Christianson and Tom Handcock of RRA’s Center for Leadership Insight conducted the analysis and authored this report.

LEARN MORE ABOUT THE AUTHORS AND THE CENTER FOR LEADERSHIP INSIGHT

The authors wish to thank the 1,500+ leaders from RRA’s global network who completed the 2022 Global Leadership Monitor. Their responses to the survey have contributed greatly to our understanding of the impact of hybrid work on leaders.

The authors would also like to thank several colleagues whose perspective helped shape these findings:

Netila Demneri is a member of Russell Reynolds Associates’ Financial Services sector and Human Resources Officers capability. She is based in Toronto.
Nipul Patel is a member of Russell Reynolds Associates’ Technology capability. He is based in San Francisco.
Brad Pugh is a member of Russell Reynolds Associates’ Human Resources Officers capability. He is based in Atlanta. 
Harsonal Sachar leads Knowledge for Russell Reynolds Associates’ Human Resources Officers and Legal, Risk & Compliance Officers capabilities. She is based in Toronto.

External References

_{¹ Strong social skills are defined as a high level of self-awareness, the ability to listen and communicate well, a facility for working with different types of people and groups, and what psychologists call “theory of mind”—the capacity to infer how others are thinking and feeling.}

_{Kimbrough, Karin. “The Great Reshuffle in 2022: Top Trends to Watch.” LinkedIn. 21 Jan 2022, https://www.linkedin.com/pulse/great-reshuffle-2022-top-trends-watch-karin-kimbrough/
“Future Forum Pulse.” Slack. 19 Apr 2022, https://futureforum.com/pulse-survey
Fuller, Joseph; Hansen, Stephen; Neal, PJ; Sadun, Raffaella. “The C-Suite Skills That Matter Most.” Harvard Business Review. July 2022. https://hbr.org/2022/06/the-c-suite-skills-that-matter-most}