As organizations move back to work, what does ‘the new normal’ look like?
Larry Morgan, MAIR, SPHR, SHRM-SCP, GPHR | June/July 2021 Footnote
Editor's note: Updated May 27, 2021
The COVID-19 pandemic required employers to rethink office and work arrangements, resulting in several changes. As those changes occurred, employers also were faced with demographic, economic, cultural and technological changes. So, looking ahead, what does it all mean?
Looking into my crystal ball, here are the changes for which I believe employers should prepare.
Hybrid model
The hybrid model of combining remote work and in-office work two to three days per week appears to be the most common workplace model going forward. Employers may wish to identify positions that could be done remotely and survey employees regarding preferences.
I anticipate employers will have a phased-in approach for returning to work. Issues to consider regarding the hybrid model:
- What are the expectations toward in-person meetings, and office and phone/computer availability during core hours?
- How do we manage teamwork, common meetings and collaboration?
- What technology platforms should be used and what are the primary methods of communication?
- What financial support will the organization provide employees for home office equipment, furniture, internet connections, ergonomic evaluations, etc.?
- How will performance and productivity be measured, how frequent and by whom?
- Does the hybrid model align with the organization mission, vision, culture and values? What changes are needed?
- Which employees will be mandated to report to work (e.g., production, customer-facing, delivery, etc.) and will this create employee relation issues?
Organizations should be prepared to question the long-held traditional beliefs about how, when and where work is done.
Labor force
Baby boomers will continue to exit the primary workforce with phased retirement and millennials and Generation Z will comprise more than 50% of the U.S. workforce by 2025, according to the U.S. Department of Labor. This newer generation will demand a different work experience, including flexible work schedules, work-from-home arrangements on a regular basis, ongoing training to keep skillsets current, formal employer career pathing, and coaching and mentoring arrangements.
They will also seek out workplace values, including organizations with strong ethics, corporate social responsibility emphasis, zero tolerance for harassment, bullying, discrimination and environmental programs.
Talent wars
Déjà vu all over again. As the economy continues to improve, the talent wars will continue. Expect increases in job transition with shorter tenure and frequent employer changes. There will be greater competition for talent and employers poaching of employees will increase. Employees will again have the upper hand as the labor shortage and increased demand will require increased wages and flexibility, including remote-work options. Employers will have to define their employee value proposition to market themselves and differentiate themselves from other employers. Requests for counteroffers will increase. A recent study suggested 75% of job seekers will consider flexibility and work-from-home arrangements as a critical component in employment decision-making.
Wage rates will increase based on pressure from the Biden administration, increased local and state minimum wage rates and the demand for labor. It may also become easier for employees to unionize based on easing of anticipated National Labor Relations Board changes.
Recruitment
As stated, there will be greater competition for talent and employees may have multiple offers. Employers should think beyond traditional geographic borders if the work is fully digital. Consideration for more part-time and flexible hours will also be helpful in recruitment efforts. There’s an opportunity to focus on expanding your traditional workforce channels to include homemakers, persons with English as a second or third language, people on work release from criminal justice, student interns and others. Digital recruitment will be a primary means of attracting candidates using sources such as Indeed, LinkedIn, Facebook and employer websites, as well as the continuation of employee referral programs.
Technology
In response to the pandemic and widespread remote work activity over the past year, employers are likely to continue with remote access and a reduction of office workspace footprints. Consider providing employees with portable equipment, phones, routers, high-speed internet equipment or provide a subsidy for devices.
The digital workforce is here to stay. Even employers who previously held that employees cannot work remotely will retain pandemic-related adjustments and establish formal work-from-home arrangements. Investment in technology training, communication equipment and cyber protection against hacking, virusware, malware and ransomware will increase.
Home office issues
Consider payment or reimbursement of home office equipment if employees are allowed/required to work from home. Items to consider include standup desks, ergonomic chairs, internet connection expenses, printers and paper. Some employers provide employees with a lumpsum payment to purchase needed equipment and supplies, others included options with expense reimbursements. Employers should establish a policy and expense limits and communicate this to employees.
One consideration is the return of purchased equipment such as ergonomic chairs. The policy should state any expectations such as “return of equipment less than one year old, return in good condition or having a value of greater than $150.” Note that under Minnesota law, return of equipment must have employee authorization for any paycheck withholding at the time of receipt.
The IRS recently issued updated guidelines regarding these expenses at www.irs.gov/publications/p15b. As part of employer analysis, consider the following situations:
- The employer purchases the items and provides them to employees.
- The employee purchases items and receives reimbursement from the employer.
- The employee purchases items and does not receive reimbursement.
In the first situation, these items would qualify as an employer-owned supply and thus would be a deductible expense on the employer tax return. If the employer provides these supplies and equipment for noncompensatory business reasons, employees will not need to pay taxes on these items. If used for business-related purposes, there is no taxation. This includes items that employees may also have available for personal use, such as a cellphone or computer, because the IRS deems these as “de minimis fringe benefits.”
In the second situation, if the expenses count as “ordinary and necessary,” or those which your industry considers commonly accepted for conducting your trade or business, these reimbursements will not count as taxable income to the employee. To avoid having employees count these expenses as taxable income, employers should lay out an “accountable plan,” or a set of policies that state what qualifies for reimbursement when employees need to purchase supplies and equipment at home.
In the third situation, employees purchase the needed supplies and equipment but have no expectation of receiving reimbursement from their employers.
Prior to the Tax Cuts and Jobs Act, if these expenses exceeded 2% of an employee’s adjusted gross income, they could claim these deductions on their tax return. Unfortunately, that’s no longer true. No federal tax benefits exist at the moment.
Mileage and hour tracking
If the employee’s “normal place of business” is a home office, then any travel to the traditional brick and mortar office is considered travel time and subject to IRS mileage reimbursement. It is no longer commuting time. Note for non-exempt employees, time tracking is critical.
Corporate office space
Based on the new normal and the 100% remote work or a hybrid work environment, employers should consider reducing fixed office space, shorter lease arrangements and a shift toward “hoteling” options and co-working spaces.
The hoteling option allows flexibility with employees maintaining a portable cabinet, which can be moved to a desk area when the employee is at work and put away once the employee leaves. Therefore, there are no assigned desk spaces and several multiuse conference areas can be used for projects and collaboration.
Co-working is an arrangement in which workers of different companies share an office space, allowing cost savings and convenience through the use of common infrastructures, such as equipment, utilities and receptionist and custodial services and, in some cases, refreshments and parcel acceptance services.
The co-working spaces provide “booked-in-advance” conference rooms and open work areas with fast Wi-Fi. Space can be leased on an ad hoc, monthly or annual basis. In some facilities, small office space may also be leased for personal employee use.
Workplace experience
Flexibility will be key. The hybrid workplace with staff coming into the office two or three days per week will become the norm. Meetings will be reduced. Travel will be reduced. There will be increased autonomy and less direct supervision by employers. There will be continued enhanced cleaning protocols and health concerns even after the pandemic is over.
Employees are rapidly becoming tired of Zoom meetings and may desire additional face-to-face contact. Employees with small children may desire to go back into an office setting as a change of pace or to provide more focus on work activity without distraction.
Employers will need to make additional efforts toward ongoing communications to maintain employee engagement. In a tight labor market, ongoing feedback and “showing the love” will be more critical than ever.
There will be a continued shift in performance appraisal methods and greater movement toward more frequent and more informal conversation with employees. This will result in less emphasis on a performance appraisal “form” and more dialogue, including discussions on career pathing and training needs. Employers will need to be clear about performance expectations, key deliverables and accountability.
Values
Employees will expect employers to emphasize community involvement, volunteerism, corporate social responsibility and environmental/green activity. They’ll also look for a greater emphasis on diversity and inclusion training, policies, integration with hiring, promotion and reward systems.
Employee benefits
Benefits will become more tailored to specific employee needs. “New benefits” will include Identity theft protection, enhanced paid time off (PTO) programs, enhanced PTO carryover levels, flexible schedules, higher levels of tuition reimbursement, student loan forgiveness and higher 401(k) contributions.
Many employers are now including adding Martin Luther King Jr. as part of holiday offerings. There may be an increase in 401(k)/403(b) participation and increased levels of employer matches. Financial literacy and mental health benefits and awareness will increase.
Policy changes
Employers will revise policies regarding current and future pandemic issues, including scalable plans for mask wearing, mandated vaccinations and a protocol as part of their business continuity/disaster recovery plans. Additionally, expense reimbursement policies and office purchases for remote work will need to be addressed.
There will be a shift away from general noncompete agreements except for higher level positions. There will likely be an increase in requiring trade secrets and competitive/proprietary information document requirements upon hiring or promotion.
Employers will also need to increase the frequency of handbook reviews for legal and regulatory compliance as well as review of workplace conduct, harassment/bullying and social media policies.
Forging ahead
We are living through immense change at an expedited pace. To remain relevant and competitive, look at your organization’s policies, values and foundation to best adjust for the future.
Larry Morgan runs the MNCPA HR Hotline and is president of Orion HR Group, LLC. He is a regular contributor to Footnote. You may reach him at larry.morgan@orionhr.com.
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