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Market-Based Solutions to Vital Economic Issues
Aug 22, 2023

From People Analytics to Middle Management: How Firms Can Best Support Their Workforce

Part of our series on Workforce Disrupted

As quit rates return to pre-pandemic levels, many are declaring an end to the era of the so-called great resignation. However, even if labor market numbers have begun to stabilize, the last several years have still led to a sea change in how people feel about their working environment – and what they want from their working lives. These changes have underscored the idea that while firms and brands are often seen as the major players in job markets, it’s ultimately the workers within those entities that drive change.

Sekou Bermiss, UNC Kenan-Flagler Business School associate professor of strategy and entrepreneurship, looks within firms to unpack these questions. His work focuses on employee mobility, the micro-foundations of competitive advantage, and how the people in these firms contribute to organizational success. Bermiss recently co-authored an extensive report with the Filene Institute on remote work, using both academic literature and survey responses. He also teaches courses on people analytics, human capital, leading for impact and organizational theory.

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Given his research agenda, we asked Bermiss several questions around his recent report and remote work more broadly, hoping to open up the black box of how the design of an organization can help or hinder its goals.

What is people analytics – and how can firms use it to their advantage?

People analytics is the practice of using data and statistical inference methods to improve the human resources decisions made within organizations. Firms can use people analytics to their advantage in a couple of different ways. First, it can be useful for firms to better understand the performance of their current HR processes. People analytics is a useful tool for testing assumptions that firms have about what does and does not work within the firm. Second, the people analytics approach can also be used to help firms rigorously design and test new HR policies. Taken together, these uses of people analytics can provide a firm with a competitive advantage in the labor market by giving them critical insights about what policies and processes will help them recruit better talent and have their employees be more effective, productive and satisfied in their work.

How can a firm best use the human capital within its workforce, given the record levels of turnover that have been observed in recent years?

I believe that the most important thing for a firm is to continually work to make the workplace engaging and developmental for their employees. The analogy of employees as “human capital” can be dangerous in this regard. Historically, we think about capital as commodities that firms use to maximize production. While employees provide value to the firm, conceptualizing them as commodities is problematic. For example, when a firm looks to purchase a commodity, such as lumber, the best strategy is to purchase it at the lowest possible price to maximize the potential profit margins. However, in the labor market, it would be a poor strategy to hire the “cheapest” employees that a firm could find.

Instead of the human capital paradigm, I would recommend firms adopt a strategic partnership paradigm, in which they see their employees as strategic partners that work together to achieve a common goal. In a strategic partnership, it’s always clear that while there is an overlap in interests between the two parties, there are also nonoverlapping interests that may not always be complementary. As a strategic partner, employees are more willing to go the extra mile for the common interest as long as their personal interests are also being met. Adopting the strategic partnership paradigm will not prevent all employee departures but is more likely to lead to a more productive and engaged workforce overall. And, when employees leave a firm that treats them like a partner, these previous employees are much more likely to be advocates and future customers for that firm in the future.

Middle managers are an essential source of human capital since they have to manage both up and down in a firm. Yet, this is also a group that’s been reporting high levels of burnout and turnover. How can organizations effectively support these workers, given the centrality of their work?

This is a really important factor, especially as firms navigate some form of hybrid work arrangement. One of the insights from my research with Doug Leighton is that there seems to be a disconnect between the senior executives and lower-level employees at many firms. In terms of returning to work, we found that many senior executives staunchly believe that the firm would operate more effectively if employees returned to the physical workplace. Meanwhile, lower-level employees stated that they believed that the firm would be more effective if people are allowed to work remotely. Middle managers are often placed in the position of having to enforce a return-to-work policy that is disagreeable to many of their direct reports. I think this is a part of the increased burnout we observe.

Firms can support middle managers by providing them (1) specific training and (2) better formulated policies to enforce. Firms are asking middle managers to manage in new ways. Subsequently, middle managers need training to help them more effectively identify interpersonal issues within a hybrid workforce, remove biases that can easily develop within a hybrid work group, communicate and motivate hybrid employees, and provide feedback and evaluation.

Aside from the training, firms can also support their middle managers by incorporating employee input into new return-to-work policies. The starkest examples of this are firms that institute a blanket policy about how many days per week employees should come into the office versus working from home. As you can imagine, these blanket policies are often met with skepticism by employees, because the ideal hybrid policy is driven by the tasks that the employees are doing and the extent to which they need to collaborate with one another in real time. Firms can help middle managers by establishing policies that account for context but are not fully idiosyncratic. In other words, the best policies are standardized throughout the firm, but not based on one single standard.

What role does culture play in a hybrid or remote working environment?

Culture plays a huge role in the working environment and especially in hybrid working environments. Culture is based on the informal rules and expectations within a firm; it thus establishes what behaviors are considered appropriate and legitimate by employees within the firm. As a firm shifts to a more hybrid or remote working arrangement, this will require a change in the informal rules and expectations of behaviors. This might seem like a huge undertaking, but culture change can begin with small but important behavioral changes, such as the expectations within the firm about how and when employees are expected to reach out and respond to one another about operational issues. When everyone is co-located, these communication norms develop pretty quickly and can be easily monitored by management. In a remote and hybrid working arrangement, it is easier for new counterproductive norms to develop that go unnoticed by managers (such as Zoom fatigue).

One important aspect of culture is trust, especially between manager and employee. How can managers and firms best cultivate trust in a remote or hybrid working environment, so as to ensure that their supervisees are performing their job fully and with due care?

Trust can be tricky to cultivate. If you have to ask someone to trust you, it normally means that they do not trust you! In social psychology, trusting behavior is defined as the willingness of a party to be vulnerable to the actions of another. The research on trust suggests that one effective way to develop trust is to engage in a large act of trust by making yourself vulnerable to the other party. This can be done by sharing information that could potentially be used against you in future interactions. An example of this could be the senior leadership of a firm sharing details with employees about how its operational costs impact revenue and profit margins – this could be useful to explain why certain HR policies need to be implemented for the financial wellness of the firm.

Sharing this information, however, opens up senior leadership to questions from employees about revenue sharing and increased compensation. Developing trust means making a trusting action that shows vulnerability, with the expectation that the other party will reciprocate with another trusting action. If this occurs, trust develops between the two parties over time. It’s also important for firms to managers to realize that it is very difficult for those in a low-power position to make the first attempt to develop trust. It’s therefore on managers and executive leadership to take the first step toward cultivating more trust within the organization.

Does remote work have any negative effects on a firm, workforce or worker – and how can these best be ameliorated?

I hate to give the classic academic answer to this, but I have to: It depends! On one hand, recent studies looking at remote work suggest that employees tend to be more productive in remote and hybrid working arrangements. On the other hand, recent research also shows that remote employees tend to have less identification and social connection with the firm. This can lead to issues down the road around retention and leadership succession. Thus, increase in remote work may have some short-term benefits but some long-term drawbacks. Firms can maximize the benefits and minimize the drawbacks if they are able to provide their employees a workplace environment where employees see the value in their work and believe that they are learning and developing as an individual.

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