The Long-term Strategic and Cultural Impact of Covid-19

The Long-term Strategic and Cultural Impact of Covid-19 - from kitchen table of Michael Legut, PhD.

People are a key part of any successful business strategy. Things such as productivity, office space costs, employee satisfaction and talent availability, all impact a company’s ability to execute their strategy. And for most companies, investments in human resources are one of the largest expenses. In this article I will provide some thoughts on ways that the residual impact of the pandemic will influence future work activity, strategy and organization culture.

How Things Work Around Here

While business strategy deals with growing the operational parts of a company, the organization’s culture tends to reflect the human elements. The norms, values, behaviors and expectations of a company are the things that are internally felt and demonstrated by the employees. Many describe a company’s culture as “how things work around here”. For many companies, one of those expectations is “butts-in-seats".  The simple way to describe this is that managers and employees are expected to be physically present at their work stations during work hours. Their work performance and career advancement is dependent upon regular physical presence and face-to-face contact with their manager.

The Shift

As we have all seen over the past 20 months, the expectation for “butts-in-seats” has been disrupted by the pandemic. Currently, Covid-19 is causing many companies to adjust employee work locations by shifting to hybrid office schedules and limiting in-office activity. This is an ever evolving situation and those companies that require workers to be physically present, are scrambling to mitigate the health risks of current and future Covid variants. We hope that at some future date the current Covid pandemic dilemma will be under control. However, the residual impacts related to the increase in remote and hybrid work location choices, will likely have a more permanent effect on how business operate, their strategy and their culture. But right now let’s consider how the current business changes may become more permanent in a future post-Covid state. The next table provides some thoughts on changes to “how things work about here”.

Current and Future State Scenarios

Organization Elements	Current State Scenario	Future Post-Covid State Scenario
Work Activity	To maintain productivity, employee work location is driven by the company’s ability to arrange work activity from different locations such as satellite, hybrid, contractor and remote facility sites.	Employee work location is based on the type of work (knowledge sharing vs. manual), staffing needs (permanent vs. flexible), skill availability, and the employee’s family, health, safety and financial needs.
Company Policy	Work policies are adjusted to manage health concerns, off-site work costs, work process flow, cyber security, maintain the brand/image, and allow knowledge sharing.	Decentralized work activity increases and policies evolve to address retention, recruiting geographically dispersed talent, promoting company empathic visibility, managing remote performance and improving employee satisfaction.
Business Strategy	On-going changes with staffing needs, supply-chain, customer demands, and improvements in technology require changes to business processes, and customer relationships to apply innovative practices, sustain current business and find new market opportunities.	Accelerated efforts to leverage new technology and flexible staffing create opportunities to reduce location and human resource costs for labor and office space, and allow broader access to more customers and talent.
Company Culture	Values, norms, behaviors, traditions that reflect “how things are done around here” are being disrupted. Concerns regarding employee performance, productivity, training and career advancement arise because of the lack of in-office connections. Difficulties occur for leaders try to manage with a command-and-control approach. Planning for employees to return to in-office attendance reflect the effort to maintain “butts-in-seats” culture values and expectations.	The evolving culture values and expects trust in the leader and employee relationships.  Work outcomes become the key measures to assess performance, career advancement. Leaders are valued for empathic management style and building employee relationships.

When we look at these scenarios, we can begin to see that long-established internal norms and business processes that reinforce the “physical presence” mentality are evolving. Over the past year companies have experimented with new ways to validate employee performance, grow careers, collaborate with co-workers, build leader-employee relationships, and retain and recruit employees. However, because of the business investment in off-site work, and longevity of the current pandemic, the pandemic mitigation changes are likely to become more permanent. This will cause many companies to adjust their business strategies and their culture in order to continue to thrive. But change is hard. A McKinsey study found that a significant number of companies have not yet established plans to adapt to a more work flexible environment. As with many previous business evolutions, adaptation or the lack of it, will determine success or failure.

Final Thoughts

Throughout time there have been major innovations and events that have created changes in business behaviors. For example, in technology we now have AI to reduce manual tasks. We have increased security behaviors to mitigate terrorist attacks. Our manufacturing processes changed dramatically when assembly lines were created. All these have cause organizations to change how they operate and to make cultural shifts to accommodate those changes. Similarly, the pandemic has had such a world-wide impact on employee work activity that it will likely create a permanent shift in work location flexibility. As hybrid and remote work activity options become permanent in the post-pandemic environment, business strategy and company culture will also evolve as companies adapt to maintain a competitive edge for retaining and attracting employees.

Hopefully this blog will help leaders consider options regarding how the pandemic will impact their company policies, business strategies and culture. As always, my goal is to help leaders consider options to lead their companies in the post-pandemic world. For additional discussion, I can be reached at www.leaderimage.com or on my LinkedIn page