Beyond Office Walls and Balance Sheets

Culture and the Alternative Workforce
by Sonny Chheng, Kelly Monahan and Karen Reid
Deloitte

The more things change, the more culture matters.

While organizational culture may be difficult to define and tricky to manage, it can have a powerful impact on individual and corporate performance. Research shows that organizations which cultivate a positive culture around a set of shared values have an advantage over competitors: workers who perceive their very human need for meaning and purpose as being met at work exhibit higher levels of performance and put in greater discretionary effort.

Culture is also a powerful driver of engagement, which has been linked to better financial performance. This is why, at many organizations, leaders strive to deliberately shape a culture that encourages employee effort and collaboration around a shared set of values.

Today, two factors present organizations with new and unique challenges to creating purpose and connection across their entire worker base. First, technology is enabling more people to work remotely, physically removing a portion of the workforce from the campuses where employees used to congregate. And second, contingent (or “off-balance-sheet”) workers comprise a growing proportion of the workforce—and may not feel the same investment in an employer’s mission and goals as a traditional employee.

In fact, 95 percent of net new employment in the United States between 2005 and 2015 consisted of alternative work arrangements, while the number of workers engaged in such arrangements steadily grew from about 10 percent in 2005 to nearly 16 percent by 2015, according to a National Bureau of Economic Research paper published in 2016. That number is expected to continue to grow. A recent Intuit report predicts that nearly 40 percent of all U.S. workers will be engaged in some sort of alternative work arrangement by 2020.

Under the new realities of the distributed and contingent workforce, employers face the growing challenge of fostering a shared culture that encompasses all their workers. In this effort to achieve consistency of culture, both location and employment type have distinct implications. Therefore, leaders need to develop a nuanced strategy to extend organizational culture to alternative types of workers.

Four Faces of the Alternative Workforce
Figure 1 shows how the workforce can be segmented along two axes: location (on- vs. off-campus) and contract type (on- vs. off-balance-sheet). Considered in this way, the workforce broadly falls into four segments, each presenting distinct challenges with regard to organizational culture. These axes are fluid in nature as many workers in certain industries, such as professional services, may split their time between off- and on-campus locations (as indicated by the gradient area). They may be considered “hybrid” workers who experience some of the cultural advantages of on-campus work, while also facing some of the challenges experienced by the remote worker.

  • The traditional worker. The traditional employee works on campus, in a full-time or fixed part-time arrangement. Given a shared location and regular in-person interactions, social norms and behaviors are generally highly observable among traditional workers, making this setting the most efficient at transmitting culture. The risk is that groupthink may arise, leading workers to conform to old ways of acting and thinking rather than challenging the status quo. In addition, traditional workers in satellite locations may feel isolated from headquarters, which can foster resentment or a sense of being “second-class citizens.”
  • The tenured remote worker. Off-campus but on-balance-sheet workers are commonly referred to as teleworkers, but they may also include traveling salespeople, remote customer service workers, and other jobs that do not require on-campus accommodations. Research suggests that remote employees often have less trust in each other’s work and capabilities due to a lack of interpersonal communication. However, companies still have some traditional levers to pull to engage the tenured remote worker, such as benefits and formal career progression opportunities.
  • The transactional remote worker. This type of worker is not only off-balance-sheet, but also off-campus. Often, they are paid to deliver very specific services. Many operate on flexible schedules and in customer-facing roles. The transactional remote worker may also experience a strong sense of instability, which may result in added anxiety.
  • The outside contractor. On-campus but off-balance-sheet, contract or consulting workers often bring an inherent outsider mentality and an array of previous experiences—and may view themselves as not being subject to the organization’s cultural norms and values. These workers usually do not receive the typical onboarding and new-hire training opportunities that can help build a sense of culture among on-balance-sheet employees. Given that they work on campus and can observe the organization’s norms firsthand, however, there may be more opportunities to make them feel like part of the culture.

 

Creating a Shared Cultural Experience Across a Segmented Workforce
Just as broader organizational strategy must be crafted deliberately, culture must be intentionally shaped to make workers feel valued and perform well. Based on the strategic choice cascade—a framework often used to help make intentional decisions about an organization’s strategy—this approach applies similar principles in thinking about how to sustain culture across all four workforce personas.

What is our culture and purpose? To leverage culture as an asset, organizations must first have a clearly articulated culture—one whose norms and values support the advancement of the organization’s purpose and mission. This may seem self-evident, but just 23 percent of respondents to the 2017 Deloitte Global Human Capital Trends survey believe that their employees are fully aligned with their corporate purpose. This is an alarming disconnect. Research suggests that purpose misalignment is a major underlying cause of the rampant disengagement facing many organizations today. A strong corporate purpose—however one defines it—can yield dividends, not just for workforce engagement and productivity, but for the brand and company growth as well.

How do we improve cultural fit? As organizations leverage alternative workers more and more, it will become increasingly important to obtain consistent, high-quality work from this talent segment. To reduce onboarding, training time and costs, companies may opt to create a consistent group of alternative employees who work regularly with the organization. Workers who are naturally a good fit for an organization’s culture get along well with the other employees, have a positive experience during their time with the organization, and experience the sense of belonging that can fuel discretionary effort. Therefore, an important step is to screen alternative workers, particularly the transactional remote employees (individuals whose employment relationship was long considered purely transactional), for cultural fit before hiring them.

How do we create a consistent employee experience among our unique segments? While cultivating a shared organizational culture is important, it is also important not to assume that a one-size-fits-all strategy for shaping the cultural experience across the organization will be effective. This is where the segmentation depicted in Figure 1 comes into play. Your organization may depend on a variety of worker arrangements to achieve its goals; ensuring that your culture is experienced consistently across all worker types, albeit through different mechanisms, is key. Developing a strong organizational culture can ensure that each segment is valued for their contributions toward a shared goal. Here are some recommendations on how to approach each segment:

  • Traditional workers. Physical spaces can certainly be expensive to maintain, but they can also be the most effective in helping to shape an organization’s desired culture. Consider how your organization’s space is designed and what that signals to your traditional workers. Leverage the physical space to reinforce a commitment to your purpose.
  • Tenured remote workers. Invest in technologies that support digital collaboration and make working and connecting from off-campus easy. Include tenured remote workers when scheduling ad hoc meetings where their involvement would be valuable. In addition, consider creating opportunities for them to interact in person with other employees, and openly reward and acknowledge their efforts.
  • Transactional remote workers. Understand what they hope to gain from their temporary assignment, and use this understanding to build their commitment to your company and its culture. Don’t micromanage, but rather, acknowledge their ability to be autonomous and make it clear you support their flexible work arrangements. Understand their reasons for accepting the assignment and the greater context for how their work fits into the larger picture.
  • The outside contractor. Because this segment of the alternative work population works within your campus, their physical presence can be leveraged to communicate culture by inviting them to all-company meetings and encouraging their participation in lunches or after-work activities. Don’t overlook these employees who work right in front of you; err on the side of greater inclusion in communications.

What digital technologies or other tools do we need to extend our culture? Digital technologies offer an array of tools that can enable up-to-the-minute information sharing, instant feedback and data analysis in real time. Leaders can and should leverage these tools—not only to drive collaboration and connectivity, but also to understand the employee experience and its evolution. But don’t limit yourself to just digital tools. Third-party coworking spaces can be used to create communities and meeting places where virtual workers, whether on or off the balance sheet, can connect live. An influx of large companies are renting such spaces for employees to create connection points and to appeal to a different type of worker.

Next Steps
An organization’s culture can help boost its performance—but to deliver its full potential, culture should extend to all types of workers, not just traditional employees. Given the current and anticipated growth in the off-balance-sheet workforce and in the number of individuals working off-campus, leaders should think about how they can include these workers in their efforts to create and sustain a positive organizational culture. Business leaders who are prepared to directly address this imperative will likely have more success in maintaining a culture that enables their strategy. iBi

This article was adapted from an article by the same name published in Deloitte Review in July 2017. Download the complete report at deloitte.com.

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