Highlights from Microsoft’s New Future Work Report 2022

Last week Microsoft published its new Future of Work report. As it’s 100+ pages, I thought I’d give you the highlights. Use these as inspiration when thinking about and designing your Future of Work strategy. I also highlight some implications and questions for leaders. Enjoy. (The link to the full report with references and data is in the comments below).

Introduction

Microsoft looks at the FoW on four different levels, what they call “scales.”

• The individuals scale considers topics like the effects of remote and hybrid work on productivity and well-being and the evolving relationship between work and ‘life.’
• The teams scale considers topics like collaboration patterns, the role of different tools, meetings, asynchronous collaboration, and virtual and mixed reality.
• The organizations scale considers topics like social capital, cross-team communication, systemic loneliness, office space, employee expectations, and the Great Reshuffle.
• The society scale considers topics like the changing geography of work and remote work, disparate impacts, and sustainability.

You’ll find the key messages from each of these scales in what follows.

Individual Productivity and Wellbeing

On hybrid

• Information workers prefer hybrid over other modes, at least for now
• For individuals, hybrid work refers to working part of the time in the office and part-time from somewhere else. For organizations, hybrid can also refer to having a mix of fully on-site and fully off-site employees.
• Top concerns flagged by employees about working even partly outside of the office include lower socialization and lower visibility to leadership.
• There has been a significant increase in employer acceptance of hybrid work, but employees still want more flexibility than employers are planning.
• Full-time in-person work is more persistent than many believe.

Productivity

• The word productivity has different meanings to different people, and individual definitions of personal productivity are often multi-faceted.
• Often definitions are not aligned between managers and employees.
• Productivity is something that happens over time, and choosing a specific time interval is yet another dimension.
• The evidence is mixed about short-term productivity during the pandemic.
• The flexibility that hybrid affords may maximize productivity by allowing people to work in the way that works best for them or by allowing different tasks to be done at the office and at home — or both.

Wellbeing

• Like productivity, wellbeing has multiple facets, and the term is often used without a clear understanding of its concrete meaning.
• However, it is well-studied in the literature and is often considered to have three components: subjective (experiencing a pleasant life), eudaimonic (focuses on flourishing, self-realization, or positive psychological functioning, is related to the satisfaction of basic human needs for competence, autonomy, relatedness, and self-acceptance), and social (quality connections which are seen as sources of energy, as well as constructs such as social acceptance, social coherence, social contribution and integration, and organizational belongingness).
• Post-pandemic individuals increasingly recognize the relationship between their workplace experiences and their well-being, and the challenges span across subjective, eudaimonic, and social well-being needs.
• Employees are more likely to prioritize their health and wellbeing over work than before the pandemic.
• One diary study showed that common self-reported “top challenges” shifted from meeting frequency (i.e., too many meetings) early in the pandemic to physical and mental wellbeing issues as the pandemic has continued.
• The interplay between work and personal life has undergone a series of transformations, from work-life conflict to work-life balance and now work-life integration.
• People report a greater need to prioritize health, well-being, and family over work than in pre-pandemic times, and they wish to better integrate those needs through how and where they work. This requires a renewed focus on spillover effects of performance, skills, and affect across work and personal life.
• Successful work-life integration requires goal prioritization and adjustments to work patterns. Work-life integration is highly personalized and depends on one’s goals and circumstances. People have been adapting their existing ways of getting things done according to their priorities.
• Remote work can have mixed effects on wellbeing. Pre-pandemic research on the relationship between remote work practices and wellbeing has shown mixed results. Remote work and subsequent work-life balance and job autonomy can improve job satisfaction, but employees may feel socially isolated, guilty, and try to overcompensate.
• One’s level of work-life integration or segmentation depends on both the flexibility — one’s ability to shift one’s boundary spatially or temporally to meet the demands of the other domain — and the permeability — how much intrusion occurs from one domain to the other.
• Burnout, characterized by emotional exhaustion, depersonalization, and a reduced sense of accomplishment, jumped in the summer of 2020 and remains high.
• Work-related stress increases the risk of mental and physical health disorders, decreases productivity due to absenteeism and burnout, impairs decision making, decreases overall job satisfaction & increases rates of stress-related accidents and employee medical, legal, and insurance costs.

What does this mean for leaders?

To me, there are two main conclusions from all these insights:

1. Productivity and well-being will only be possible if employees have the freedom and flexibility to choose how, when, and where they’d like to work. Mandated “back-to-the-office” will lead to a decrease in both.
2. Leaders need to invest time in (a) understanding each person’s individual definitions and preferences and (b) aligning expectations between business needs, team needs, and individual preferences.

Team Collaboration

• Remote and hybrid team leadership requires a focus on relationships.
• Relationship-focused leadership can motivate and support virtual team members to help address unfulfilled team needs, especially as virtual team size increases.
• Effective leadership in hybrid conditions requires new skills. Leaders need to play four roles — conductor, catalyst, coach, and champion — across two modes: virtual coordination mode and in-person collaboration mode.
• Both relationship-focused leadership (focused on mission, collegiality, and interpersonal engagements) and task-focused leadership (focused on processes and procedures) have positive effects on team performance, but relationship-focused team leadership shows stronger effects on virtual team performance in teams with larger team size. Relationship-focused leadership had similar effects on virtual team performance in long-term and ad-hoc teams, but task-oriented leadership had weaker effects for ad-hoc teams compared to long-term teams.
• Interpersonal trust is key to successful virtual and hybrid teams.
• Global teamwork must be intentional: Temporal brokerage is the unofficial enabler of global teams. Global teams may succeed fast but fail slowly. Cultural Intelligence training increases global team performance.
• Mixed gender groups have higher collective intelligence.
• Meeting-free days improve both cooperation and self-reliance.
• Routine meetings can be replaced with text-based chat, but chat overload needs to be managed. Successful teams align work routines to communicate in bursts, interspersed with individual work periods.
• Team creativity may benefit from low-fidelity asynchronous methods. Group creativity is not necessarily always at its best when people are together. Technological constraints may suit asynchronous ideation methods such as brainwriting and may improve decision quality.
• Opportunistic informal talk is harder for remote and hybrid teams but is crucial for knowledge sharing, trust, and morale. In the short term, informal chat can be organized around social rituals.
• Meetings improve when business objectives drive technology choices: All meetings need good voice and task sharing capabilities, but building trust and resolving conflict benefit from showing people’s video streams.
• Early post-pandemic adopters find that hybrid meetings have value, with the vital requirement that participation be encouraged and moderated.
• Async meeting experiences are needed, and summarization tech can help
• Technology shapes team activities, and teams shape the way technology is used. Flexible, collaborative environments co-created with workers are likely to be most successful.

What does this mean for leaders?

1. Team activities, routines, and habits need to be explicitly challenged.
2. Don’t use the “we’ve always done it like this” excuse. Even if you established certain practices during Covid, which seem to work just fine, review them and make sure your approach is the best suited to get a particular job done.
3. Establish regular social interactions. It might feel awkward at times, but all change is hard in the beginning, messy in the middle and beautiful at the end.

Organizational Transformation

• Communication in organizations became more siloed with more remote work.
• Remote work has influenced the way people collaborate in organizations, resulting in denser connections within groups and weaker connections across groups.
• These effects may make it harder for employees to acquire and share new information across the organizational network. Fortunately, hybrid work can likely help.
• Building and maintaining relationships is more challenging in remote work: The social side of workplace relationships, including exchanges of non-work-related information, social support, and even small talk, plays a particularly influential role in building trust and fostering innovation.
• Workplace loneliness was a problem before the pandemic and continues to be one now, as remote and gig workers may experience even greater isolation.
• Culture is a leading driver of the Great Reshuffle: Several studies have found strong correlations between toxic company culture and people’s decisions to seek new jobs.
• A recent experiment, backed by prior work, suggests hybrid work may be one way for firms to keep their employees, although it is unclear how market dynamics will evolve.
• Leaders may not be keeping up with evolving employee expectations
• Employees increasingly seek flexibility, autonomy, and being heard, but there are gaps between their expectations and what organizations are currently offering them.

What does this mean for leaders?

1. A key focus area for organizational leaders needs to be the creation of cross-organization relationships and collaboration.
2. A dynamic Team of Teams approach and an organization around value streams, which foster collaboration with other parties, seem best suited to this end.

Societal Impacts

• We are likely entering a new era in the geography of work. There have been roughly five eras in the geography of work in the history of the United States. There is evidence we are now beginning a sixth: the Hybrid Work Era.
• Interest in digital economy jobs is also increasing: Years’ worth of growth in interest happened in just a few months.
• Only a minority of global jobs can be done remotely daily. Remote work is not an option for many types of jobs, such as frontline work, among others.
• Organizations need to actively combat the proximity biases observed pre-pandemic, or they will disadvantage certain groups of workers.
• Organizations are struggling to keep roles filled amid the Great Reshuffle. As a result, both quit rates and hires have increased, though it varies by industry.
• Corporate impact on society is becoming more important to workers. Employees are placing increased importance on employers contributing to society.

What does this mean for leaders?

1. It simply means that your organization, its leaders, and employees need to adapt to the new realities.
2. Leaders should take charge and “lead”!
3. New Ways of Working and the Future of Work are now C-Suite topics of the highest importance.

Conclusion

• Work isn’t going to snap back to the way it was pre-pandemic. As workplaces open back up, the jobs that shifted to remote work during the pandemic are unlikely to return to pre-pandemic practices. Instead, people and organizations will carry forward their learnings from the past two years and develop new hybrid work practices that are fundamentally different.
• Working from home will continue to grow as the technology improves. WFH has continued to grow during the pandemic as firms and employees adapt to this. Better equipment and new technology will continue this growth of WFH over the following decades.
• Inclusive, accessible, and sustainable work environments must be imagined.
• We will learn from an unprecedented level of experimentation in work models: We are likely entering the most extensive period of experimentation in work models in decades. Some companies will see a willingness to try new things as a differentiator in a tight labor market; others will try for a productivity edge.
• The future is uncertain and full of possibilities.

Want more?

If you’re a leader interested in learning more and making sense of the Future of Work, join our new training, “Better Business Results through Better Ways of Working”. Click here to learn more.