The Future Workplace Depends on Efficiency, Effectiveness, and Balance

Many leadership teams are grappling with how to build and sustain the requisite talent foundation to grow their businesses as the world emerges from the pandemic. Unprecedented high levels of professional mobility in the workforce driven by a fundamental reassessment of priorities and expanding opportunities to work from anywhere present a new strategic challenge. Companies that fail to adjust their workforce policies to reflect these emerging realities are likely to underperform those that do.

To be successful, companies must strike the right balance between driving for efficiency and achieving effectiveness while also supporting employees to balance work and life in meaningful ways. Efficiency measures tend to focus on reducing office space, commuting, travel, and entertainment activities. Effectiveness is about executing on existing goals and innovating in products, services, and business models. Quality of life refers to ensuring that employees have the resources and support needed for work-life balance.

We think of the future workplace as a stool whose three legs — efficiency, effectiveness, and quality of life — must be kept in balance. For the stool to remain upright, all three legs need to be sufficiently strong.

Weighing Hybrid Work’s Costs and Benefits

In their drive for increased efficiency, companies are trying to permanently reduce costs by widely sustaining economic gains realized through virtual work throughout the pandemic. This includes reduced travel and entertainment expenses and, critically, dramatic declines in office space. Many companies are making these efficiency gains permanent. For example, Salesforce and Airbnb significantly reduced the amount of office space they rent. Salesforce currently plans for more than 65% of its employees to work in the office just one to three days a week — 40% more than before the COVID-19 pandemic. And it was reported in May 2021 that Airbnb would “unload an additional 287,000 square feet at its San Francisco headquarters, bringing the total reduction of its real estate to more than 424,000 square feet.”

However, the focus on achieving these short-term efficiency gains must be weighed against the risk of impairing effectiveness. Companies must carefully assess, for example, how far they can push virtual work without undercutting innovation in product and process development or negatively affecting customer relationships and business development.

That said, during the pandemic, managers also created many process efficiencies. Significant changes to prior work patterns forced managers to trust and empower their employees more than before. This meant letting employees make more decisions themselves, where previously more extensive approval processes were deemed necessary. This, in turn, freed up employees and their managers to dedicate more of their time to the organization’s effectiveness.

Another important aspect of effectiveness is rooted in company culture. The essential social fabric of connection and shared cultural norms frayed during the pandemic in many companies. Repairing it requires disciplined investment in team-building activities, social outings, brainstorming workshops, personal development sessions, and meetings for sharing best practices. These “inefficient” activities are necessary for people to feel part of a team and an organization that cares about them. While building and maintaining a great culture is more easily done in a face-to-face environment, circumstances may not allow everyone to be physically present. It is then incumbent on leadership to use the best features of virtual technologies, such as innovation platforms, breakout groups, town halls, cross-functional problem-solving, and so on, to ensure that the social fabric remains strong.

Our research suggests that striking the right balance between efficiency and effectiveness is largely driven by the thoughtful design of hybrid work. By thoughtful design, we mean putting in place hybrid work regimes that are founded on a deep understanding of what can and cannot be done well in “virtual mode” and what must therefore resume being done in “in-person mode” as soon as is practical.

Shifting Management Mindsets

We have learned through our experience with the pandemic that what we call shallow teamwork, such as reporting, performing administrative tasks, making simple decisions, sharing information, drafting documents, and performing financial analyses, can be done effectively virtually. Likewise, our research and experience have shown that most one-on-one interactions between leaders and their reports, including some coaching, can be accomplished effectively through virtual means.

However, tasks that require teams to integrate their knowledge, create safe spaces for dialogue on difficult issues, and form emotional connections — what we call deep teamwork — cannot be done effectively while working virtually. For example, team efforts to achieve breakthrough innovation, solve complex problems, build durable cultures, and manage conflicts are still performed much more effectively in person, given the current limitations of technology.

If people really can’t come together physically, then a significant shift — one that represents a significant change for many managers — needs to take place. That shift is the move from input-based evaluations of work to output-based evaluations. While few managers may want to admit it, work hours are often a key part of employee performance assessments.

Hybrid work presents an operational and cultural challenge for employers: When should employees be in person versus virtual? Some companies have instituted rigid office-presence policies based on office occupancy rates, such as allowing each department to have only a portion of its staff in the office at any given time. Apple has mandated a minimum of three days in the office. Such policies are incompatible with achieving effectiveness, which requires more flexibility in determining when to have everyone present in person and when everyone should work from home. While this change makes it difficult to achieve efficiency in occupancy rates — especially from a pre-pandemic perspective — it’s essential not to sacrifice effectiveness to achieve efficiency.

The implication is that misguided efforts to increase efficiency through an excessive drive for virtual work risk impairing effectiveness if they are taken too far, such that the effectiveness leg of the stool is weakened to the point of failure. The key is to realize the cost reduction benefits of moving most shallow teamwork and one-on-one interactions to virtual mode while still actively encouraging deep teamwork to happen in person. “Encouraging” means having the space in which deep teamwork can happen and providing the resources for teams that are doing deep teamwork to come together regularly, even when the benefits of doing so are not immediately apparent, and even though this means giving up some tantalizing efficiency gains.

Striving for Flexibility Within a Framework

Companies must ensure that efforts to increase efficiency and achieve effectiveness don’t come at the cost of employee happiness. Surveys have shown that the pandemic has triggered a fundamental reassessment of what talented professionals want from their workplaces and what quality-of-life sacrifices they are willing to accept.

Increased freedom and autonomy throughout the pandemic have catalyzed many workers to quit, switch jobs, or retrain based on their work-life balance preferences and career priorities. Companies cannot afford to ignore these realities on the ground for employees. Doing so requires companies to focus on balance and boundaries and develop leaders who are able and empowered to maintain a balance between efficiency, effectiveness, and quality of life in their organizations.

By balance, we refer to the thoughtful design of hybrid work that enables the right mix of shallow and deep teamwork. Leaders must have a sufficient “flexibility within a framework” approach to tailor hybrid work to the needs of their teams. By flexibility within a framework, we mean that managers need to spell out clearly why, when, and how they want people to be in the office. This helps to maintain the efficiency-effectiveness balance. It also supports quality of life because team members understand why they are working the way they are, and this understanding promotes acceptance. They are not in the office doing shallow work that they could do equally well virtually, and they are not isolated working virtually when they need to be together to do deep work. Requiring people to be in the office when the work truly requires it does limit individual freedom — but for reasons that most employees can understand.

By boundaries, we mean establishing and enforcing acceptable hybrid work rhythms, even if they come at the cost of some potential efficiency gains. One reason people are reevaluating their priorities is that they have been exhausted by 24/7 virtual work. This scenario has generated remarkable but unsustainable productivity gains. Efforts to sustain those gains are likely to backfire, especially given that it has become so much easier for talented professionals to jump ship for greener quality-of-life pastures, often securing increased compensation in the process.

Finally, the ways leaders lead in the brave new hybrid world of work play a critical role in maintaining the strength of the quality-of-life leg of the stool. This means (1) having the discretion to design and lead hybrid work regimes to match the needed mix of shallow and deep teamwork, (2) investing the resources necessary to build interpersonal bonds and sustain shared cultures, and (3) establishing and maintaining acceptable work-life boundaries.

Beyond that, leaders need to be trained in what we call multimodal leadership. This means understanding how to lead differently when teams engage in shallow teamwork in virtual mode versus deep teamwork in in-person mode. Our research has established that leaders must be effective in playing four critical roles — conductor, catalyst, coach, and champion — and know when and how to shift among them.

Balancing Efficiency, Effectiveness, and Quality of Life

It would be impossible to provide rigid prescriptions for how teams should organize themselves around the three legs of efficiency, effectiveness, and quality of life. Instead, leaders should review what worked and what did not with their teams. Based on that review and the considerations above, they should then cocreate with their team an approach that balances the three components in a meaningful way in their context. Below are examples of how companies and leaders we’ve worked with have designed hybrid work plans with the three-legged approach.

The director of a conglomerate of schools brings the principals of the various schools together in person to define joint strategies and ensure that they all feel part of one team. As much as possible, he meets with representatives of the Ministry of Education in person to ensure constructive collaboration. He also regularly meets with the chairperson of his board over lunch and/or dinner. The in-person meetings with the principals, the chairperson of the board of directors, and representatives of the Ministry of Education focus on effectiveness in terms of strategy, culture, resource allocation, and gaining commitment. For general announcements, updates on policies, and progress updates, he now only uses virtual meetings. This even applies to most of the regular board meetings. Altogether, this has brought substantial efficiency as well as effectiveness and quality-of-life gains. The latter was achieved by limiting commuting and engaging in high-quality collaborative engagements when people are together physically.

Every leader needs to figure out how to optimally use in-person meetings to create value in terms of effectiveness while using the virtual tools for all other value-generating activities. Please note that in all of this, we look at in-person meetings as key for innovation, creating and maintaining a common culture, ensuring constructive collaboration, and generating commitment.

This does not mean that effectiveness and innovation are limited to in-person activities. Pharma companies, for example, have discovered more effective go-to-market strategies for launching new drugs, given that virtual tools provide greater reach and most doctors are now more willing to be approached virtually. Wealth managers have found ways to onboard clients virtually, thereby making the process less cumbersome for their clients while giving them more time to focus on value-added activities. These findings directly impact the strategies to be set for the future. In executive education, clients have become energized at the possibility of combining in-person learning with online and offline learning in diverse, interesting ways. This has forced executive education providers to drastically change their business models.

While the pandemic has come with many costs, we can draw plenty of positive lessons for leadership teams that are shifting priorities from company survival to company growth. The key for leaders is designing hybrid work thoughtfully, investing in culture, and ensuring balance in terms of efficiency, effectiveness, and quality of life.