Mixed Messages from PWC

Last month (September 2024), PwC UK mandated employees to return to the office or be with clients 60% of the time (up from 40% currently). Their attendance will be tracked to check adherence to the new rules. Reviews of the data pertaining to each individual employee will take place every month.

In the same month, PwC released the PwC’s 2024 Workforce Radar Report. The report states that return-to-office mandates have, in many cases, failed. It says that flexibility is about providing an employee experience that’s as right for employees as it is for the organisation.

“Let them work at the office, at home or some hybrid arrangement unless there’s a truly compelling reason not to.”

There is a stark contrast between PwC’s UK actions and the report. The report states that it relies on research and data from a variety of sources across the PwC network and work done with clients across industries, sectors, and geographies. The five lead authors of the report work for PwC US.

Karen Lonergan, chief people officer at PwC Australia, said: “PwC Australia has a flexible workplace policy which does not include an onsite mandate. Our leaders and people work together to ensure we meet the needs of our clients while building a culture of collaboration and offering our people the many benefits of flexibility.”

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity due to local legislative requirements. Firms in the PwC network are members of, or have connections to, PwC International Limited (PwCIL). PwCIL’s purpose is to:

“..facilitate coordination between member firms in the PwC network. Focusing on key areas such as strategy, brand, and risk, and quality, the Network Leadership Team and Board of PwCIL develop and implement policies and initiatives to achieve a common and coordinated approach among individual firms where appropriate.”

“..member firms agree to abide by certain common policies and to maintain the standards of the PwC network as put forward by PwCIL”

There is no “common and coordinated approach” to employee office attendance or “certain common policies to maintain the standard.”

If you are a PwC employee in the UK, it is unfair that you are mandated to be in the office 60% of your time when your US colleagues must only spend 50% of their time in the office. If you work for PwC Australia, the benefits page on the website states.

“Be empowered to work smarter, from anywhere, in a way that suits your lifestyle. There are many options like working from home, working remotely in Australia, working from a different PwC Australia base office, part-time arrangements and job sharing. If it works for you, your team and your clients, it works for us!”

The UK mandate

According to Inc.Australia (September 7 2024):

“PricewaterhouseCoopers is getting more serious about its return to office mandate, informing the 26,000 workers at its United Kingdom offices that starting next year, it will begin tracking where employees do their work from.

The accounting firm is insisting employees spend at least three days a week in the office or with clients–an increase from the current expectation of “two or three days” per week.”

PWC provided the reason for the mandate in a memo to employees.

“Our business thrives on strong relationships – and those are almost always more easily built and sustained face-to-face. By being physically together, we can offer our clients a differentiated experience and create the positive learning and coaching environment that is key to our success.”

The report

The report starts with a powerful and true reflection of our current position.

“Bluntly, there’s no such thing as business as usual anymore. In fact, 45% of CEOs in PwC’s 27th Annual Global CEO Survey told us their organizations won’t be viable in 10 years if they stay on their current path. That’s why we set our sights forward, looking for clues about what leaders can do in the near-term to help transform and reinvent their ways of working. 

The research for the report revealed five workforce signals on the radar that leaders must turn their attention to over the next three years if they are to evolve the workforce.

Location

Let’s look at the Location signal.

On page 15 of the PWC report, a bold statement says, “Return-to-office mandates haven’t worked. What will?”

This is gold.

“..the idea that being on-site all day every day is necessary to establish and sustain a strong culture is a myth. Don’t be afraid to offer flexible options for fear of diminishing it.”

The report says that whilst many organisations are mandating a return to the office, hybrid workers demonstrate the highest satisfaction levels. 74% are engaged, and 76% feel like they belong.

83% of hybrid employees feel the most appropriately compensated.

99% of hybrid employees say that their companies' cultures promote community, collaboration, inclusion, and belonging. 

Despite the conflict between the report and PwC’s actions, the report has some sound advice.

Don’t look back, look ahead

It reflects what I have been saying for years now. There is no going back to how it was before March 2020. That ship has well and truly sailed. It recognises the benefits employees realise when working remotely.

“Employees didn’t miss those long, stressful commutes, and they got used to the flexibility in scheduling, parenting, caregiving and so on that working remotely gave them. They were not keen on going into the office without a compelling reason. In many instances, after instituting a return-to-the-office mandate, financial services management teams received a daily report of the number of employees swiping their badges through office turnstiles, as if the number of employees was the point and not what those employees were doing once inside. As we’ve heard from multiple companies, some employees didn’t even go inside. Instead, they swiped their badges through the turnstile, turned around and went home.”

The recommendation is to have a location strategy which is not about mandates. It is, and should be about, what employees need to do their work and grow their careers with the organisation. It is about collaboration, connectivity, communication, and community. All of which are office agnostic.

A location strategy should drive a dynamic corporate culture and increase employee engagement. It should retain and attract talent.

A location strategy must be flexible and subject to adjustment as needed. PwC suggests two levers.

Take tax efficiency and optimisation into account

No matter what choice is made about who should work, where and when, there will be property and state employment tax implications that will have to be factored into the calculations and the location strategy. There will be a balancing act.

Your choice of office location may be driven by proximity to customers. This could be a high-tax location. You may then consider using less space,  which will drive your location strategy – on-site, hybrid or remote. You may need to look at an alternative location.

Consider that when you have an employee in a location where you do not do business, you may be impacted by the tax implications in that location. Remote workers may have negative tax implications, but they may also allow you to have less office space.

The increase in remote work has meant that talent is moving to more tax-friendly locations. The need to attract talent may mean moving or expanding into areas where the talent is located.

You can read this article I wrote early this year on where businesses should locate their offices and compete for talent.

The right place at the right time for all the right reasons

This is the second lever. It is what PwC called modality.

“..working in person, in the field, hybrid or remotely — and the physical location of the office space you need are inextricably linked, almost impossible to separate. That’s because the modality impacts the choice of location and the choice of the location impacts modality. You can’t consider one without the other in making an informed decision.”

A decision to go fully remote or fully on-site will have far differing impacts on your location strategy.

There are key elements you need to balance

·       You need workspaces in locations where the talent you need lives without breaking the budget.

·       You need to have enough workspace for groups of people to co-locate and accelerate skill-building, networking, collaboration, and productivity.

·       Having a flexible approach to when employees use workspaces (versus other spaces) to strengthen culture and employee satisfaction.

What I like about these key elements is that the report refers to them as “workspaces”, not the “office.” Workspaces could be co-working spaces, libraries, hotels, coffee shops, etc. The workspace needs to suit the needs of the employees and the work they are undertaking.

What I don’t like is the use of the term “culture” when talking about location. Culture is not built in an office. It is built on shared values, beliefs, experiences and aspirations. The report does clarify, as I quoted earlier, that “the idea that being on-site all day every day is necessary to establish and sustain a strong culture is a myth.”

However, neither does an office mandate to spend three days in an office, falsely wrapped in the term “hybrid working model” establish a culture. There are fully remote companies with excellent cultures.

The time is NOW to devise a plan that marries the desired behaviours of your workforce with the desired outcomes for the business.