Future of Work (2024-2027)
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Over the past five years, the American workplace has shifted dramatically.
The pandemic accelerated what was already an existing trend toward remote work, decreasing employee loyalty, and an increasing focus on employee wellness.
This - combined with a pressing shortage of knowledge workers - has left employers scrambling while putting employees in a position of negotiating power for the first time in decades.
In today’s piece, we’ll explore the top seven trends that will define the future of work in the 2020s and beyond.
1. Meetings in the Metaverse
Along with NFTs, the hype around the “metaverse” reached a fever pitch in 2021.
Searches for “metaverse” are up 1,000% in 5 years.
And a large part of the reason for that is because Fortune 100s like Meta (aka Facebook) and Microsoft began pouring billions into developing the metaverse.
On the one hand, consumer use cases are where the majority of the estimated $8 trillion metaverse opportunity lies.
On the other, both Meta and Microsoft are prioritizing metaverse workplace meetings (now referred to as the Meetaverse) as one of the first products they plan to roll out in the category.
The Next Evolution of Zoom Meetings
While exploring fantastical virtual worlds is arguably more exciting than work, the argument for holding meetings in the metaverse is actually quite simple.
Since the pandemic, the number of Zoom meetings held per year has increased by 2,900% relative to December 2019. And given the remote work trend is projected to continue growing, it's reasonable to expect virtual meetings will continue to grow.
Sure, we may not associate video calls with immersing ourselves in a fully digital world.
However, making the transition from interacting with colleagues on a computer screen - to interacting with their digital avatar in a virtual boardroom - isn’t that big of a leap.
In fact, both Meta and Microsoft bet that’s exactly what’s going to happen. And they’re putting their money where their mouth is.
Corporate Titans Battle to Control the Virtual Meeting Space
In April of 2021, Microsoft released the first iteration of its Mesh product.
Admittedly, this may not have been a direct “metaverse” play.
Mainly because the media hadn’t latched onto the metaverse topic in a big way until Facebook announced they’d be changing their name to Meta in October of 2021.
Instead, one could argue the launch of Mesh was a push to sell more of Microsoft’s VR headsets (including the HoloLens 2).
Regardless of the timing, the Mesh website makes it clear Microsoft is making a substantial push into the virtual meetings space.
Four months later, Facebook made it clear they too would be entering the space with the announcement of their Workrooms product. Which, similar to Microsoft, is designed to increase sales of the VR hardware (and in particular, the Oculus 2 headset).
Headwinds and Opportunities
Despite their investments, both companies have both opportunities and obstacles to deal with.
According to a November 2021 survey, 68% of adults reported being “uninterested” in Meta’s vision for the metaverse.
On the flip side, one poll showed 48% of respondents would join the metaverse for art and live entertainment, while 61% of millennials expressed they’d be willing to attend a concert in the metaverse.
With that said, there’s a difference between consumer entertainment and B2B utilization. Further, because the industry is so new, no studies have been done to gauge employee interest in the meetaverse.
With some of the smartest minds in the tech industry rolling out virtual meeting products, it's safe to assume many of us will meet in some form of the metaverse in the future.
2. Companies Shorten Work Weeks Rather Than Increase Pay
One of the largest drivers behind the rapidly shifting workplace is the current knowledge worker shortage.
As of May 2022, there were 11 million+ unfilled job openings in the US.
While some of these jobs were either duplicates or unlikely to ever be filled (with employers demanding top-tier talent for little pay), the fact remains there are millions of unfilled openings.
And a large part of the reason that’s happening is because employers can’t find candidates with the skill sets required to perform in today’s workplace.
Nationwide Skills Shortage
A 2022 study from Salesforce shows 3 in 4 employees do not have the skills needed by businesses. Despite this reality, only 28% are participating in training programs.
Because of this, employers are facing fierce competition to hire top talent.
Historically, one of the best tools for attracting top-tier employees was to increase compensation for the position.
However, that’s becoming harder and harder to do.
The Problem With Increasing Pay
Both consumers and employers are facing 40-year record high inflation. Because of that, many company’s expenses - from machinery to supplies - have become more expensive.
In fact, a CNBC Small Business survey in Q2 of 2022 showed that 3 in 4 small businesses are experiencing a rise in the cost of supplies.
And it’s not just supplies that are becoming more expensive.
In 2021, wage and benefit-related expenses rose 4% - the highest rate in 20 years. And in 2022, they rose approximately 3.4% (compared to the historical average of 2%).
With companies already having increased employee wages dramatically over the past few years, many companies are reaching the upper limit of how far they can increase their labor expense (which is typically the largest expense in a business).
Shorter Hours Instead of Higher Pay
With labor budgets already being strained, a growing number of employers are looking to alternative strategies for attracting high-quality employees. In particular, an increasing number are offering shorter work weeks instead of higher pay.
Keyword searches for “4 day week” are up 143% over 5 years.
The argument here is that some top tier employees - who can demand high salaries at most any company they go to - will value leisure time more than they will an extra $1,000 to $2,000 per month extra in their salary.
And with 92% of employees in favor of a shorter work week, combining attractive pay with less hours could be a highly desirable proposition for many employees.
3. Employee Turnover Continues to Increase
In addition to rising wages and a shortage of employees, companies are also having to deal with increasing employee turnover.
According to NetSuite, the top 10 reasons for employee turnover are:
- Lack of employee purpose
- Poor compensation
- Being overworked
- Bad managers
- Little to no recognition or feedback
- Poor work / life balance
- Boredom
- No opportunity for growth
- Bad hiring procedures
- Toxic or negative company culture
While the reasons for voluntarily leaving a position are vast, the combination of turnover plus rising wages and inflation puts employers in a very difficult position.
At the core of the problem, however, is employee’s dissatisfaction combined with their newfound position of negotiating power.
Wellness Trend Affects the Workplace
From healthy eating to meditation, the wellness movement has gained serious momentum over the past 20 years.
According to McKinsey, a 2019 study of 7,500 participants in six countries showed a full 75% of respondents rated wellness as being important (with 42% rating it a top priority).
Further, the same study showed a “substantial increase in the prioritization of wellness over the past two to three years”.
In looking at the top reasons behind employee turnover, it's easy to see how a growing trend toward wellness has led many employees to feel dissatisfied with their careers.
From a “lack of purpose” to “toxic company culture”, many of the top reasons for leaving a position relate to mental health. In particular, one’s overarching feelings and beliefs regarding how work fits into their life.
And with most analyses showing the $1.5 trillion wellness industry is expected to continue growing, it's fair to expect dissatisfaction-related turnover will continue to increase in the coming years.
In fact, Gartner estimated employee turnover would jump 20% in 2022 alone relative to pre-pandemic levels.
4. Companies Increasingly Emphasize Wellness Benefits
With employee dissatisfaction on the rise - and a labor shortage driving wages higher - it should come as no surprise employers are providing increasing levels of wellness benefits.
Interest in “Wellness" has increased by 53% over 10 years.
In addition to higher compensation and shorter work weeks, wellness benefits are an attractive perk in an increasingly expensive economy.
As most Americans know, mental health treatments like psychotherapy are not typically covered by health insurance plans (employer or otherwise). With the average cost of therapy ranging from $100 to $200 per session, many employees simply can’t afford an extra $400 to $800 per month expense.
As proof of the importance of this, around 2 in 5 American employers increased mental health benefits coverage during the pandemic.
And employees are responding. According to the same source, companies with 5,000+ employees showed “46% of employees have used mental health services since the pandemic began”.
More importantly, the wellness movement covers much more than just mental health.
Happier Employees Cost Less
As the wellness movement advances, both professionals and consumers have noticed the correlation between physical health, mental health, and overall wellbeing.
And while the rapid rise in wellness programs may be a new phenomenon, the benefits of improving employee’s physical health have been demonstrated for decades.
According to this 2021 piece from AIHR, companies with an effective wellness program realize an average reduction of 28% in sick days and 26% in healthcare costs.
In fact, in 2010, this study showed companies saved anywhere between $2.71 to $6 in healthcare costs for every $1 invested into wellness programs.
While it may sound obvious today, the fact is healthier employees have lower healthcare costs.
Bottomline savings, however, are not the only benefits of wellness programs.
Wellness Programs Increase Productivity
According to a study from the Journal of Occupational and Environmental Medicine, employees who participated in a wellness program “gained 10.3 hours of additional productivity” relative to employees who did not.
In fact, around 2 in 3 employers have reported an increase in their employee’s productivity as a result of such programs.
With consumers increasingly emphasizing wellness, and corporations seeing both tangible and intangible benefits from offering such programs, this is a trend we expect to continue growing over the coming decade.
In fact, even before the pandemic, 80% of employers planned to increase health and wellness spending.
5. Increased Monitoring of Remote Workers
While there’s no denying the pandemic accelerated the work-from-home phenomenon, this is one trend that was well in place even before the pandemic.
According to the Census Bureau, employees who worked at least one day from home increased by 35% between 2000 and 2010. In fact, even in 2016, 46% of Americans reported working from home “occasionally”.
For most employees, this trend has been a net positive. Even as offices have begun opening post-pandemic, a January 2022 survey shows 61% of people have continued working from home because they want to - not because they have to.
Remote Work and Productivity
With that said, the increasing trend toward remote work has created anxiety for employers and managers in particular.
In a society where most of us grew up working on location, many employers are suspicious of their employee’s ability to remain productive while working from home.
On the surface, the data shows many of these suspicions have no basis in reality.
Despite the evidence, however, some employers don’t want to take any chances.
Increased Employee Monitoring
In the cutthroat world of investment banking, employee monitoring is nothing new.
Keyword searches for “remote work monitoring” over the last 5 years.
As far back as 2017, high-profile investment firms like Barclays have been outed as using sensors to track when bankers are seated at their desks.
To some, this may sound like overkill. However, as remote work becomes more commonplace, employees working from home should expect to be monitored in an increasing number of ways.
Remote Monitoring Technology
There are a variety of tools, programs, and software employers can use to monitor their staff. Examples include:
- Keystroke trackers
- Monitoring work computer/work phone usage
- Monitoring employee location/movement
- Analyzing employee emails or internal communications
- Tracking desk presence through automated computer camera capture software
Admittedly, many employees see these tactics as both overreaching and an invasion of their privacy. Fortunately for employers, however, the law tends to side in their favor.
Legalities of Employee Monitoring
At the core of the legal foundation surrounding employee monitoring is the Electronic Communications Privacy Act of 1986.
While the bill itself contains a variety of legalese, the short version is that workers should not expect any reasonable degree of privacy when on company property or using company equipment.
Common examples include monitoring anything that happens at the office (minus bathrooms or lockers), monitoring driver’s locations using GPS, and the ability to monitor most if not all company emails.
With that said, given the laws were written prior to the mass adoption of in-home computers (and in particular laptops), the legalities of certain monitoring behaviors in the modern era can be tricky.
Employee Monitoring in the BYOD Era
One trend that emerged over the past decade is referred to as BYOD - Bring Your Own Device.
Whether because of personal preferences or as a corporate cost-cutting measure, an increasing number of workers are either choosing to - or being forced to - work from their own computers.
In fact, the phenomenon has become so mainstream the BYOD industry is valued at approximately $367 billion.
Given the ECPA only covers monitoring employees who are using company property, employees who work from their own devices (laptops, phones, etc.) may be protected from company monitoring policies.
The Importance of State Laws
Along the same lines, the ECPA was written well before tens of millions of Americans were forced to work from the privacy of their own homes. Because of that, aggressive monitoring practices that would be legal in the office may tread a gray area (or be flat-out illegal) when used in an employee’s home.
In many cases, the legalities of such practices boil down to the laws of the state where the business is incorporated/headquartered.
As an example, California’s laws lean heavily in favor of protecting employee’s privacy rights.
6. Brand Stance As An Employee Attraction and Retention Tool
In a society that’s becoming increasingly polarized, some companies are turning to more ideological strategies to attract high-quality employees.
While this strategy may come across as controversial to some (and understandably so), companies with strong brand identities may be willing to shoulder that weight in return for what can be a dramatic increase in employee loyalty.
On the one hand, some CEOs - like Coinbase’s Brian Armstrong - have made it clear the purpose of a business is to drive shareholder value. And because of that, the company has no intention of getting involved in politics or controversial social issues (e.g. the transgender movement, police shootings, etc.).
On the flip side, studies have proven firms with “greater corporate responsibility performance can reduce average turnover times by 25-50%”.
With employee turnover at all-time highs, taking a strong brand stance can be a powerful way to attract and retain employees who share their employer's values.
Especially among millennials and Gen Z - who relative to prior generations - are increasingly concerned with social issues.
Sustainability and Brand Stance
What’s interesting here is how companies do not need to take a stance on thorny social issues (e.g. abortion) to attract high-quality employees.
Instead, many younger workers have shown to be more committed to employers who take a strong stance on environmental sustainability.
People increasingly want to know companies’ "sustainability" scores.
According to Fast Company, 40% of millennials report taking a pay cut because of their company’s commitment to sustainability. As it relates to retention, 70% said they would stay with a company that had a strong sustainability plan.
And in what is the strongest evidence behind the brand stance argument, a full 75% of millennials said they would accept a smaller paycheck in exchange for working at a company that shared their values.
As companies' ability to increase wages reaches a cap, and the lower bounds of a reduced work week get tested, its likely brand stance will become an increasingly common strategy for attracting and retaining employees.
Conclusion
While the COVID-19pandemic accelerated many of the workplace trends explained above, their foundations were in place well before the pandemic.
From the increasing trend toward wellness, to society’s growing preference for all things digital, the combination of culture and technology lie at the heart of how the modern workplace is shifting.
Combined with the current state of the economy, we expect many of these trends to continue into the mid-2020s and beyond.
