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Maximising the potential of the agile corporation

Flexible working is forcing CEOs, Finance and HR Directors to fundamentally re-examine how they approach planning and running their organisational structures. It requires much more dynamic talent management strategies. This article examines the key questions senior leaders must address.
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If we accept that flexible working is here to stay it changes the dynamics of organisations more fundamentally than at any time in the past. If you are in a large established entity this change could be more shocking, so it is crucial for key leaders within your company to work effectively together to avoid unnecessary disruption and a fall off of productivity. The CEO, Finance and HR Directors must weigh up three critical questions each, all while never losing sight of the implications on employees.

The CEO: maximising the potential of the agile corporation

Operating in a more uncertain, less rigid structure could easily create discomfort and even disillusionment among employees, if the CEO fails to give a convincing performance. The key questions are:

  1. What does a more agile organisation mean for our business performance?

Achieving scale rapidly in this digitally-driven world is crucial for every commercial entity. If you have a flexible workforce deployed around the country or even spread across geographies, you potentially have a workforce that is closer to your customers. What could this do for key relationships? What extra value could a more diverse virtual team bring to your customers in terms of solving their problems?

  1. How will this impact company culture?

Creating and maintaining cohesion around a dispersed organisation is difficult. Those organisations that over-communicate are coming through this crisis better. CEOs needs to be honest with themselves and their employees – how good are the communications? How frequent? And most importantly, how transparent are the messages?  Astute CEOs will also see flexible working as the opportunity to dramatically increase the diversity of teams, as it is clear that more gender and ethnically diverse teams perform better.

  1. What are the liabilities?

Clearly, the CEO should be able to rely on General Counsel, Finance and HR for expert guidance, but a more flexible approach to employment opens up new liabilities and the CEO must be aware of the reputational damage that could result from a poorly handled employment situation. There are also difficult discussions around topics such as employee tracking, which has become a feature of the current remote working debate. Governments will be keen to protect workers’ rights and will scrutinise companies using flexible working practices. Those seen to be too “flexible” with  the rules surrounding flexible working could easily face penalties from regulators.

The Finance Director: making flexible more permanent

There is potential for efficiencies and savings for companies that move to more flexible working models, but it falls to the Finance Director to decide the risk factors. The key questions are:

  1. What are the tax and employment regulatory considerations? ‘Permanent Establishment’ and other travel and remote working risks could become substantially more complex in the coming years depending on where and how organisations employ their workforces. Given that Governments have significant budget deficits there every possibility regulators will tighten their enforcement of the rules to increase opportunities for tax revenue.
  2. Should we restructure how we pay employees? Flexible working could make the traditional “9 to 5” contract somewhat less applicable. Allowances for the expense of living and working in a city, or benefits such as travel schemes may no longer be relevant, but would employees stomach this loss? Could a company even suggest paying employees pro-rata for their time working in the office in a more expensive location and their time working from a remote less-expensive location? More importantly, if you decided to cut these benefits, would your competitors increase them to lure away your best people? There could be significant hidden costs to what superficially might be clear-cut savings.
  3. What should our physical footprint be? Remote working is leading to a significant re-assessment of office space. Large corporates may not need sizeable offices in expensive city locations. However, there will always be a need for spaces to meet and collaborate, while some employees will want to be in an office. This could lead to satellite offices and a smaller headquarters, backed up by investment in sophisticated collaboration software. While this change could be billed as an opportunity to reduce capital expenditure it will also require investment to create the virtual and physical environments employees will demand.

The HR Director: surviving the flexible talent war

With employees now embracing the concept of flexible working wholeheartedly, there are new headaches for HR Directors, but it is crucial not to lose sight of what remains the core premise for the function:

  1. Can we attract and retain the best talent? It is always the biggest challenge, which will only become harder with existing employees demanding more flexible working contracts and new employees choosing based on who offers the best flexible package. It will be vital to have clarity around the expectations of employees. Current remote working patterns have led to complaints of longer hours replacing the traditional ‘9 to 5’ office job. It also requires strong focus on wellbeing to ensure flexible working doesn’t lead to isolation or a lack motivation, which affects productivity.
  2. How do we avoid spiralling complexity? HR teams already face this challenge, but in the future, it could well be that global HR teams are recruiting and managing employees on a wide variety of contracts and working arrangements. No longer will it be just about balancing full time, part time and gig or contract workers, but in-office, remote and hybrid models will add a new layer of complexity. As much as possible, flexible working must not become a complex web of contracts and employment conditions as this will very quickly lead to unforeseen liabilities.
  3. Are we in touch with what our employees are thinking?

With these new challenges it could be very easy for the CEO, Finance and HR Directors to lose sight of what their employees are thinking. While flexible working could be an attractive reason to stay with an employer, our research – and that of others – shows that employees will increasingly consider leaving an employer, who fails to address their needs.

Therefore, the final part of any planning process must consider what potential changes mean to the employee. As such every senior leadership team must keep these questions from employees in mind:

  1. How flexible can I make my contract? As lockdown has shown, the loss of support structures such as schooling and social care facilities has made it harder on families to balance work and home commitments. Flexible work has given relief to some. Equally, being able to move to remote locations has opened up opportunities for more affordable housing for others. Employers that recognise the value this offers to their workforce will be able to recruit from an even broader pool of talent.
  2. Does this employer have a good reputation for flexible working? There is always a marked difference between the company that ‘says’ it supports flexible working and the one that practices what it preaches. Every employee will closely examine flexible working benefits – not just the traditional priorities of salary expectations and rewards, but also expectations around “office hours,” freedom to work part-time, how often they will be required to be “in the office” and whether they are provided the right tools to work remotely, as well as how their well-being will be looked after.
  3. Can I afford to lose the benefits of traditional employment? If employers do consider re-calibrating contracts to reduce salaries in line with flexible working, it could create challenges for employees with existing financial commitments. If the employer is unwilling to consider a variety of options for renumeration it could encourage staff to start looking elsewhere for more attractive renumeration. Given that the best employees are always the ones with the most choices, senior leadership teams need to be careful not to alienate their top talent.

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