In this CEO podcast episode, Vince Moiso and Scott De Long discuss the challenges businesses face in deciding whether to return to the physical office, work remotely, or adopt a hybrid model. The conversation delves into the potential turnover issues associated with these decisions, citing predictions of a 10% turnover rate in many companies. The hosts explore the varying perspectives within industries like finance and insurance, where some companies are opting for a complete return to the office, risking talent loss due to the preference for remote work that employees have developed during the past year and a half. Additionally, the hosts address the legal and financial considerations, such as labor laws, pay rate adjustments for remote employees in different locations, and the challenges of tracking remote work hours. The conversation highlights the importance of trust in facilitating remote work and emphasizes the uniqueness of each business, suggesting there is no one-size-fits-all solution.
Transcript | Season 1, Episode 5
Vince Moiso
Welcome to the CEO Podcast. I’m Vince Moiso. I’m here with Scott De Long. We’re having some no-name IPA from one of our favorite breweries, Artifex, here tonight. We will talk about getting back to the office versus working remotely and what the new office looks like moving forward for many companies.
Scott De Long
And I think there are complications no matter what you choose, right? If a company wants to be a back, all-remote hybrid, you’re still not going to make everybody happy. The first thing I want to say is just be prepared for turnover; I am predicting about 10% of most companies are going to turn over. Because no matter what you choose, some of your people are going to say, but I wanted whatever the other thing was right. And they’re going to go find a company that will do it that way. I see that come September, there’s going to be a lot of turnovers.
Vince Moiso
We were having this discussion earlier. I was mentioning that, obviously, I’ve got a lot of touches in both the insurance world and the finance world, and I know some high executives in banking and other financial institutions, and a lot of those places are going 100% back to the physical office space. And I agree with you that I think there’s going to be a significant talent loss. And why do I think that these people have gotten a taste of working from home for the last year and a half, right?
Scott De Long
And they’re getting their work done, or at least they believe they’re getting their work done.
Vince Moiso
Well, the key to it is the level of productivity that they feel. Perception, self-perception, or otherwise, they feel like their productivity levels are incredibly high. And they’d rather be in places like it, I was just talking yesterday. This woman who works in the banking industry is originally from San Diego, and her physical job is in the Bay Area. And now that she’s been back down in San Diego for the last year and a half, she says, I don’t really want to go back to San Francisco. And she’s really toying with whether she wants to continue with this company or not. And she’s been with the company for a long time. You can imagine that there is going to be a Fallout; there’s no question.
Scott De Long
There are ways to mitigate that, I think, but not completely; people are going to want what they want. But they also are going to need to feel like their voice matters. That’s a big thing these days, right? And we’re going to talk about empowerment at some point. But it is that they have a voice and that someone listened to them; there wasn’t some predetermined message. I’ve got a customer in the insurance industry who engaged me to do focus groups at his three locations: Southern California, Dallas, and Ohio. And he’s pretty sure he knows what he wants to have happen. But at the same time, he wants to make sure that people feel like they get it like he is listening to them now and at the same time. I’m not truly a facilitator in that because I need to present the pros and cons to folks because people are going to say, here’s what I want. Okay, here are the consequences of that. It’s not just a perfect scenario, no matter what you do. So, how do you handle cross-functional group meetings and turn the cross-functional group into a team? We talked a little bit about that before, but the face-to-face just makes more sense, especially if you think in the finance world and I think in the sales world right, we just think differently when we get in the same room would become people not just the finance guy or the credit guy or the sales guy or that or that kind of stuff.
Vince Moiso
Well, you know, I’m tied to an insurance company here in Southern California as well, and they’ve gone full remote. You’ve got I’ve got both extremes there. But you bring up a good point in our communication podcast; we talked about the hierarchy of communication and the top form of communication being face-to-face, and I agree. I mean, the reality is nothing takes the place of being face-to-face. You see body language, you hear the tone, your eye to eye, so much harder to get mad. It’s harder to tell somebody; no, it’s harder to. I mean, there are so many things you do to see humanity. You know, when you go permanently remote, you take the essence of that away from the functionality of a business. Right? And really the culture of a business because I do think from human from a human psychology perspective, humans are high touch, we need touch, we need to see each other, we need to feel needed, we have to, you know, we have to have all of those components that lend itself to being face to face. What a challenge. I think going 100% remote would be a challenge. Here’s what I think I would argue: there’s going to be Fallout for companies that go 100% remote as much as there’s going to be Fallout for those companies that go 100% back to the office.
Scott De Long
And there’s going to be follow-up for the people that do hybrid. Here are some of the problems with hybrids. As a CEO or the CFO, you’ve got to think about expenses. And you want to keep a dedicated office for somebody that’s only going to be there a day or two days a week. That’s so this office sharing piece and all of that, and I don’t get to have my picture of my kid on the desk. And I mean, no matter what we decide, there’s going to be some fallout people are not going to have it; there’s no utopian answer.
Vince Moiso
You start to ask yourself if you’re crunching numbers, you ask yourself, is the expense worth it? Right? And I think, in some cases, it is. I think if you’re running obviously a distribution business of physical products, there’s a physical space that you have, if you’re in manufacturing, there’s a physical space that you must have, there’s a lot of key positions, key roles in the company that require themselves to be in a physical space. Then, there are other positions that involve shirt, customer service, finance, and other positions that lend themselves to working remotely. Here’s where I think you start to get into trouble. And I’ve worked very hard to create a model within one of the businesses that I’m associated with when you have a say, part of your group that is in the office, and part of your group that is remote, and you try to have a meeting, and you’ve got some people in a room, and you’ve got other people on Zoom, or teams or whatever it is, you’re using it honestly, it doesn’t work. When you’ve got a lot of people that are physically in space, and they’re working together, and they’re talking with each other.
Scott De Long
That person feels ignored; they feel like the proverbial. They’re not involved and not engaged in it. But there are more issues than that. For instance, if you take a hybrid solution, where you say, okay, these people must be in the building because they must be, we need them there because they must be, and other folks can work remotely. And we’re going to, that’s our hybrid scenario. There’s jealousy that happens there as well. Why do I have to come to work?
Vince Moiso
I don’t think it’s jealousy. I think it’s FOMO. You know, what I found of what happens for the people that are remote is that they end up putting more hours in because they feel guilty for exactly what you said. I don’t believe that it’s jealousy they get. They feel a little bit slighted because they’re coming into the office, and why I don’t see what the other person is doing. I think they put this perception in their mind that they’re sitting on a beach, drinking a mimosa, and not really working when the reality of what’s happening. And what I’ve experienced the last 18 months is they’re working harder because there’s this sense of guilt of missing out on what’s going on. And in fact, they are missing out. The reality is that there are a lot of key moments that happen in a business that are face-to-face meetings, which add a higher value. And if you’re not there for that to happen, then you’re just missing out. The other thing that happens is that decisions get made very quickly. I know when I’m physically in the office, my business partner is physically in the office. And we’ve got our Director of Marketing and our Director of Sales in the office, and we’re all physically together. And we’re talking about this huge business development opportunity that we have in front of us. And we’re going through the details of decisions that happen at that moment, right then in there. Our senior project manager and others who would have normally been involved in meetings like that are not involved in that meeting. And then what you have to do as a result of that, then which becomes a little bit of a burden, is then someone on that team has to memorialize that conversation and say, hey, I need to put that out to the rest of the team, so they get caught up on what’s going on.
Scott De Long
I have another thought on that because they might go deeper than that. Not only do they need to memorialize it, but they also need to make sure they communicate. But to get buy-in to get a commitment on me, we can get compliance from people; we pay them, and you get compliance, but I want commitment from people. And the way that we get commitment from people is to get their input and make sure they’re part of the conversation, and we’re not going to be able to do that as much. It’s possible that decisions can’t be made that fast in the future when you start seeing the Fallout of the hurt feelings of the stories that you don’t get to incorporate. The business might slow down in this hybrid model.
Vince Moiso
You hit the issue on the nose; you nailed it: business, not might, it will slow down; it already has, in a lot of ways, businesses just, you know, slowed down to a pace where it’s allowing for key members of the team to be remote. And since they’re part of the decision-making process, oftentimes, it just slows it down. You’re getting responses, say in 24 hours, that you might have got on the spot.
Scott De Long
And if you don’t allow them to be part of the decision-making process, there is the negative that comes with that as well.
Vince Moiso
They were completely disempowering them, right?
Scott De Long
Those people are going to be leaving immediately. They’re going to figure out how to find a job where they can be a part of it.
Vince Moiso
And that is fallout. And so, I think it just becomes a business decision is how important that person is to your team, to make that business decision to allow them to be remote. I can tell you with that business, we made the decision to go hybrid. We’ve already created the Hybrid model, and we’ve made that a permanent opportunity. And we had a lot of key people within the business. There were three who moved immediately: one went to Northern California, one went to Arizona, and one went to Texas, and that’s fine with us. And the reason why is they’ve been highly productive in their roles. They work 100% remotely; we have one of them that flies in every month. Okay, great. You might argue, oh, wow, that’s an added expense to the business. But it’s worth it to have that added expense to the business because that person brings so much value to the business that it wasn’t worth it for us to lose her. Just because, you know, she wanted to work remotely. She made that request. I mean, same with the other folks. Does it just make sense? It made sense to keep them; they were valued employees, and they brought a lot of value to the table. What, we’ve got to take a few extra steps, right? Or a decision might be slowed by a day or two.
Scott De Long
What about the back half of that, though? Those that did not get that same opportunity? You don’t think they’re going to feel jealousy?
Vince Moiso
No, because we offered it to everybody, we did offer it to those positions that lent themselves right. There are operational positions that really don’t lend themselves to working remotely, right? They’re not offered that same flexibility, but they would never be offered that same flexibility because of the job responsibility that they chose to have. But for those who are not in those types of positions, we did offer it to them. We were careful about that because we wanted to make sure that everybody was offered the same opportunity. We didn’t have anybody coming back and saying, hey, you know, I don’t like it that she got to be remote. And I don’t get to. And in fact, what we found is there’s about a 50-50 mix of people that prefer to be in the office and the rest that do want to be remote.
Scott De Long
Here’s another issue that I think is going to come up in. We live in California; the California Labor Laws are between California and New York, the two most liberal labor laws; the courts will side with the employee; there are so many class action lawsuits because Nordstroms even had one right because the salespeople had to go in the back room and fill out their forms during their break. Or at least they felt like they had to because when they’re on the floor, they’re selling, they don’t have time to write things down. And I asked this of a customer the other day; I said what are you doing to track people, and how are you known. Anecdotally, you can tell, or people will tell you, that they’re working harder, working longer hours than working the middle of the night. They’re working great clear, they’re working there. Right. But I think there are going to be some issues within the labor law, the check-in and check-out, especially for the non-exempt. Starbucks even had as my son worked for Starbucks, and there was a class action lawsuit against them because they weren’t paying the assistant store manager or the shift leader for the two minutes it took for him to get behind the counter when he punched out to lock the front door. And that’s actual work. Right, that took them two minutes to get there. There’s a lawsuit about those two minutes; I think a lot of that’s going to happen as well because one or two things are going to happen. Either we’re going to put in systems and micromanage people, which is what we’re trying not to do these days. Or we’re going to have to go with anecdotal evidence, and most businesses don’t work well with that.
Vince Moiso
It comes with micromanagement. You’re right. It’s going to come with some micromanagement, you can’t help that, and there’s going to be extra steps that you’re going to have to take inherently, just embrace the new office. And that’s what it’s going to be on my mind. You brought up California, which is an interesting point in and of itself. I think we could spend a half day just talking about California’s labor laws. Here’s what’s going to happen if it happens; as I just mentioned to you, with three of my employees, one stayed in California and went to Northern California inland, not the Bay area. She’s saving some money. That’s not going to happen. But the other two went to Arizona and Texas, which is an interesting conversation; the reality is much more affordable for them. Now, the question becomes, does the pay rate change? Do you pay them now that they’re living in Texas? Do you pay Texas rates? Or they’re living in Arizona. Do you pay them Arizona rates? Or do you keep them on California rates?
Scott De Long
And you use that difference to fly them back and that expense that you’re talking about. Companies are going to think through this: if they want to maintain their bottom line, allow people to move, they need to fly back once in a while, we pay him a little last how happy you’re going to be getting paid less, I don’t care if your rate goes down, you’re not going to be happy getting paid less.
Vince Moiso
No, in their mind, they’ve already equated their value with what they’re getting paid, right? And the whole mental part of getting paid less for what you do, regardless of where you live, is hard to overcome. In fact, the decision that we made was to keep the pay the same. We did not reduce pay or change any of that.
Scott De Long
Your expenses went up because this person will fly back sometimes, but often, right? You must get the equipment for them to work remotely; that’s going to be an expense for you; you’ll miss out on some of their brain trust because they’re not going to be in every meeting they have been to before. The company takes a loss.
Vince Moiso
I would say we did some cost analysis on it. And we came out neutral. There were some costs that we eliminated that ended up as savings that offset the additional travel costs, and we had the equipment already in place. It was equipment that we already had. It was baked in. We didn’t incur that, and that was one of the decisions to say, hey, let’s go ahead and do this. In my case, it ended up being cost-neutral. But I do think that other companies are going to have to consider that as key employees may want to move out of state.
Scott De Long
And the employees have cost decisions to make as well. How much time are they saving, not commuting? And toll roads and gases. And wear and tear on the vehicle, making those thought processes themselves.
Vince Moiso
It’s an interesting point that you bring up those. I feel like what we’ve received, so in my personal experience, over the last 18 months, is that we’ve got more productivity. I would say we have gained more than anything else. Ours is measured very well. We do have the positions. One was customer service, inside sales. Then, the other was our senior project manager, all of which are easy to measure in productivity. With that said, we’ve seen an uptick; why, well, they’re not commuting, they don’t have that downtime. They can take their 15-minute breaks and go do the stuff that they need to do because they’re in their house.
Scott De Long
You bring up an interesting point, though; we’ve measured things. I can see some organizations that have to measure different things now than they measured a year and a half ago, right to make sure productivity matters. Are we measuring the right things? And this is a good opportunity for people to say, are these KPIs the ones that we should be measuring? And what should we be measuring right now? I don’t think there’s a Shangri-La; I don’t think there’s a single answer. I think that each organization has got to go through this detailed process of figuring out what’s best for them, for their employees, their organization, their customers, all of that, and then make the best decision for them and deal with whatever Fallout happens.
Vince Moiso
Every industry is going to be a little bit different; every business model might be slightly different in terms of what makes sense to even go remote or offer remote opportunities. There’s a lot to think about as you make these types of decisions. And I know that there are a lot of companies that haven’t made those decisions and haven’t been transparent. You know, it’s funny because it reminds me of the other podcast, our previous podcast, the discussion around trust. And I think one of the things about, you know, offering this remote flexibility to certain employees is trust. To me, there were key employees that we trusted at a high level, and you know, that we run that business with a lot of transparency, high trust, and high empowerment. With that said, you can’t hide because of the way we do things and the way we measure things. It’s tough to hide whether you’re remote or physically at the office. Now, that puts us in a unique position to run a hybrid model effectively; not all businesses are going to be in that unique position to be able to do it. Trust must be a part of this to allow employees that level of flexibility.
Scott De Long
That brings up another thought, right? I implicitly trust these people; therefore, I can allow them to do this. Those that we don’t allow are going to say, well, then he doesn’t trust me.
Vince Moiso
I’m just telling you, this is how people think; well, the reality is in California, if you’re a California business, what you offer to one you got off at all, and the exceptions are going to be, like I said, if you’re a manufacturing business, or your distribution business, or your brick and mortar business, your retail business and your brick and mortar retail, you’ve got people that have to physically be in that space in order to do the function of your business. You can’t offer remote to those people. But there are, like you said, accounting functions and customer service functions that can be offered in those remote positions. I think you must be clear that, if you’re a California business, you offer it to one, you offer it to all with the exceptions I just mentioned.
Scott De Long
Here’s the point: there’s not a one-size-fits-all; you’re going to have to figure it out. And I’m hoping that the old school business model doesn’t happen while you’re figuring it out, whereas the person at the top decides, and it makes everybody live with it. I think that’s a mistake. If you go in that direction, I think the person can decide what he or she would like to see and kind of guide people on that may make sure that they know both sides. There’s the pros and cons of all these decisions. But, it’s not a top-down decision that you can make here. Some companies must base it on the way that their business runs. But this is where the turnover is going to happen. I just see a lot of turnovers in the third and fourth quarters.
Vince Moiso
Listen to all the entrepreneurs and businesses out there. You’ve got a lot of tough decisions to make. And I don’t think the answers are easy. Hopefully, the experience we shared today gave you some insight into some successes and some things to think about as you move into this new world of what the new office is going to look like. Remember, we want your feedback. You know, if you agree or disagree with what we’re saying, please give us your feedback. We really want to hear from you. Visit our website and ask us what you want.
Scott De Long
For sure. That’s been a lot of fun. Thank you, Vince,
Vince Moiso
Cheers. I take it you didn’t like the beer at all. Artiffex is one of our favorite places. And it’s very, very close. And you know, stay tuned. In the next 30 to 60 days, we will be shooting, filming, and recording our podcasts from location. We’ll be looking at a couple of different breweries. Stay tuned for more on that. And until next time. You know, I think we’ve got enough for you to think about. Thanks for tuning in.
