The Covid pandemic may be starting to feel like a memory, but remote and hybrid working are here to stay. And yet, getting the dynamics right remains a challenge that HR teams and business managers continue to work at as conditions change.

It’s an area that the 2022 Nash Squared Digital Leadership Report throws fascinating light on through the views of digital leaders (such as CIOs and CTOs) across a broad range of industries around the world.

We find that the big winner from remote and hybrid working is work/life balance, which a strong majority of digital leaders (65%) say has improved or stayed the same (19%). But the picture becomes more complicated when looking at other key factors. Productivity is another area that is generally accepted to have benefited from hybrid working – but our research shows that the early gains banked during the pandemic have begun to tail off. Meanwhile, we find that hybrid working has been bad for mental wellbeing and employee engagement – but here, the rate of decline has significantly slowed in the last year, indicating that organisations have been investing time and effort to turn this around and are having some degree of success.

Productivity challenges

Starting with productivity, many leaders recognised that the boost seen during the height of the pandemic was likely to be hard to sustain. And where 50% of respondents reported a productivity boost in 2021, this year that proportion has dropped to only 40%. The productivity spike was caused partly because people simply had less to do with their time when Covid was at its peak and lockdowns were in full force. There was also a level of nervousness amongst employees around job security. The natural outcome of these two factors was for people to put the hours in and dedicate themselves to work. As the pandemic waned, however, and moving on into 2022, life has returned very much to normal: socialisation and leisure activities are back, and individuals are therefore returning the balance of work and life back to nearer to where it used to be. At the same time, an inevitable level of fatigue has set in for many and they are looking to create more separation between work and life.

Another factor is that with individuals more separated than before, it is not as easy to bounce an idea or a query off a colleague. The ‘learning by osmosis’ that takes place in an office happens less now. This can slow down both work output and decision-making.

Of course, it was in part to address such factors that the hybrid working model was so widely espoused and seen as the way forward into the future. On the face of it, hybrid working could be the ideal balance between the old and new. So where are the problems coming from?

Firstly, I think it’s important to note that for many individuals, hybrid working is indeed the best of both worlds. They look forward to time in the office and to time at home. They wouldn’t swap it back in either direction.

Wellbeing is key

However, for others hybrid working is not the hoped-for panacea. It can hinder their productivity as we’ve noted – but there are other significant challenges too. Mental wellbeing remains a real concern. Some people struggle when isolated, and they also find the (often relentless) stream of video calls a strain. It’s much harder for line managers to spot when someone is struggling if they only physically see them periodically. Engagement levels naturally dip too. This can happen whether or not someone is struggling with their mental wellbeing. Simply being more removed from the organisation and other people loosens the sense of engagement and team connection. When people do come into the office, they should be able to coordinate with other members of their team to be there as well – otherwise, they may just travel in to simply sit on video calls all day, defeating the purpose.

That’s why it remains as important as ever for HR teams, in conjunction with the business, to keep on continually reviewing the working model to ensure it remains flexible and supports the needs of employees as well as the organisation.

At Nash Squared, for example, we’ve invested significantly in wellness, creating a wellbeing hub with advice, guidance and resources that we have made accessible to anyone, so our colleagues, our clients, our candidates and any of our connections can benefit. We’ve also trained mental health ‘First Aiders’ and run more wellbeing sessions with external mental health specialists with plans to do even more.

The efforts organisations are investing are having an impact – whereas in 2021, 58% of digital leaders said that mental wellbeing had deteriorated amongst their teams, this year that has dropped to 34%. It’s still a concerning percentage – but is moving in the right direction.

Keeping engagement high

On engagement, we see a similar picture: 43% said it had declined in 2021, but that has now moderated somewhat to 32%. Engagement is generated in many ways, with one crucial aspect being regular communication – but this must be at the right level and frequency so that it doesn’t just become ‘white noise’. Another key factor is that employees must feel they have a career development path or they are invested in to develop in their current roles. More than ever it means that HR teams need to keep reviewing the arrangements in place and making sure that development plans cater for hybrid working and individuals’ different learning styles.

More broadly, organisations need to consider their employee value proposition and make sure that they are evolving their offer to meet changing expectations. In the present period of inflation and the rising cost of living, salary is fundamentally important of course. But as our research shows, it may not be possible to attract or retain employees on salary alone – six in ten respondents in our research say that salary demands have become unsustainable.

Enhanced benefits and a ‘Total Rewards’ approach

This means that flexible, enhanced benefits packages where employees can opt for features that bring the most value to them (child care, dental care, gym membership etc) are a key tool – and are deemed to be the most effective way of attracting, retaining and engaging employees in our research. Given the cost of living, salary sacrifice arrangements that offer a tax efficient and therefore cash positive impact for certain benefits are likely to become increasingly attractive too.

This can become part of a Total Rewards approach where employers ensure that employees are aware of all the ways in which they are receiving value – from salary, to additional benefits, to training and development, and more.

Ultimately, for all the benefits that hybrid working brings to both employer and individual, it also raises new challenges. The role of HR has evolved since the pandemic, bringing with it new challenges and, more importantly, opportunities. HR teams must be right there alongside the business to guide the approach such that employees feel invested in, supported and inspired. In a challenging talent market, this is increasingly likely to be the difference between winning and losing as we move on into 2023.