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Job van der Voort: The future of work is remote

During the height of the pandemic, tech employees seemed to be in the <a target="_blank" href="https://visionfund.com/insights/hybrid-work-statistics-2022">driver’s seat</a>. Jobs were plentiful and companies had little recourse than to let people work when and where they wanted to, even if it was thousands of miles from the nearest office. In the face of chronic talent shortages, people leaders settled in for a new normal of hybrid work and other employee-friendly policies and perks.Then the conventional wisdom changed. As stocks plunged in response to rising interest rates and slower GDP growth, tech companies began laying off employees in droves. Between October 2022 and March 2023, they shed 250,803 jobs, according to Layoffs.fyi. In a matter of months, companies that had struggled to get employees to come back into the office a few days a week were more insistent about showing up in person. The worker’s golden age was over.Or was it? Our most recent CHRO survey suggests the downsizing trend is easing. At the same time, companies are continuing to hire and to provide generous incentives to retain employees. Per-employee compensation costs remain high, and voluntary attrition rates are higher than companies want. In other words, talent, especially top talent, remains a hot commodity. Below is a closer look at evidence of a continued war for talent, insights into the persistent challenges of hybrid work, and a peek at top priorities for CHROs going forward. You can also explore and filter the full survey results using <a target="_blank" href="https://visionfund.com/insights/data/chro-survey-hybrid-work-challenges-and-searching-for-talent">Sōzō Pulse</a>.

<h2>1. After a spike, layoffs are easing</h2>The layoffs over the past year were sizable: 62% of those surveyed said they cut their workforce in the past 12 months. The reductions were especially pronounced in the United States, where 75% of companies trimmed jobs, and in Europe, where 71% did so. By contrast, just 44% of companies in Latin America, and 47% of those in Asia and the Middle East, had layoffs in the past year. Among companies that had layoffs, 51% cut 10% or fewer of jobs, while only 18% cut more than 20%. The remaining 31% cut between 11% and 20% of jobs. The layoffs tended to touch employees at all levels, as 55% of companies said they were spread evenly among junior, mid-level, senior, and executive employees. And while layoffs touched most functions, sales was the hardest hit, while product and marketing were the least affected.

Just 20% of companies globally expect to have layoffs in the remainder of 2023, a sharp deceleration from the past 12 months. However, the outlook in Europe remains more negative, as 43% of companies expect to cut jobs this year. Latin American companies appear to be the most optimistic, with none saying they plan to eliminate jobs.

<h2>2. The war for talent remains hot</h2>Even during the spike in layoffs, most companies continued to do what it took to retain and attract top talent. For example, 35% of companies around the world said they gave out-of-cycle promotions, 26% gave retention grants, 24% repriced stock options, and 14% issued retention bonuses. There were significant geographic differences in the tools companies leaned on to retain talent. In the United States, equity incentives were more common than elsewhere, with 40% of companies repricing options, and 35% issuing out-of-cycle retention grants. Companies in Asia and the Middle East favored promotions, with 53% relying on them. Companies in Latin America were less inclined to offer new incentives, with just 22% repricing stock options and the same percentage giving promotions. Companies in Europe, where layoffs continue to loom large, offered the least retention incentives, with just 14% offering new equity grants and the same percentage offering out-of-cycle promotions.    In other signs that talent remains in high demand, hiring freezes are rare and most companies are adding employees, either selectively or across the board. And more companies say per-employee compensation and benefits costs are higher, rather than lower,  than projected a year ago.

Other indicators suggest the market for talent remained remarkably stable over the past year. While earlier surveys suggested finding talent may have gotten easier, the majority of companies say compensation for new hires and the rate of promotions are roughly unchanged from their high levels a year ago. And voluntary attrition rates remain higher than what companies want, suggesting that employees have options for where to work. Fifty-six percent of companies said they hoped for an attrition rate below 10%, yet only half as many companies met that target in 2022.

<h2>3. Hybrid headaches continue</h2>Companies around the world have begun a push to get workers back into the office. Those efforts appear to be touching the employees of high-growth companies represented by SoftBank’s portfolio, but not always in expected ways. It’s no surprise, for example, that while the vast majority of companies globally, 72%, continue to embrace the hybrid model, that percentage is down significantly from a year ago, when 81% were hybrid. (Europe saw an opposite trend, with hybrid work rising from 89% of companies to 100%.) It’s also no surprise that those that are fully in office nearly doubled to 10%, from less than 6% a year ago. But the number of fully remote companies has also risen, to 17%, up from 13% a year ago. No companies in Asia, the Middle East or in Europe said they were fully remote. (Read <a target="_blank" href="https://visionfund.com/insights/job-van-der-voort-why-remote-work-is-the-future">our interview</a> with Remote CEO Job van der Voort on why fully distributed companies are the future of work.) By way of comparison, pre-pandemic, 64% of companies were fully in-office, and 34% hybrid, with only 2% being fully remote. But while hybrid work continues to be the norm, the challenges of operating effectively and managing employees who are sometimes in the office and sometimes not continue to bedevil people executives. For example, 53% of CHROs said that it is harder to manage their workforces now than a year ago. Despite the proliferation of virtual coffees, online team building activities, and offsites, the number of CHROs who say hybrid makes it harder to build culture has inched up to 79%, from 74% last year. And building a cohesive culture topped the list of issues CHROs face from hybrid work, with 38% saying it was their top challenge, followed by promoting effective collaboration, which 30% cited as their top challenge. Importantly, a year ago CHROs believed one of the major upsides of hybrid work was higher productivity. That optimism has waned significantly. Just 45% of respondents said hybrid work makes people more productive, down sharply from a year ago, when 70% said so.

<h2>4. Goals &amp; challenges for CHROs moving forward</h2>Not surprisingly, <a target="_blank" href="https://visionfund.com/insights/leading-a-high-growth-company-through-an-economic-downturn">economic volatility</a> continues to weigh on CHROs. Operating in an uncertain environment was cited by 43% of respondents as their top challenge in 2023, followed by employee morale at 20%, and organizational design at 16%. And while 33% described their employees as engaged, with another 20% as optimistic, 29% said their workforce was anxious.   These concerns are informing priorities for the year. The most cited top area of focus for CHROs was manager effectiveness, chosen by 39% of respondents, followed by change management, 24%, and culture, 18%. The top initiatives to strengthen culture? Stressing company values, empowering employees to shape decisions, and offering more professional development.

Still searching for talent and grappling with hybrid work challenges

CHROs - Q1 2023

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Despite layoffs, talent is still king

Our CHRO survey shows companies continue to focus on hiring and retention as they adapt to a changing economic environment.

Most affected by layoffs (by seniority)

Most affected by layoffs (by department)

Company posture toward hiring: Help still wanted

Per-employee compensation cost, compared to projections a year earlier

Hybrid work challenges continue in 2023

Hybrid work challenges in 2022, by comparison

The state of company culture is

To increase engagement and strengthen culture, companies are

Still searching for talent and grappling with hybrid work challenges

Cloudbeds: The art of
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Despite layoffs, talent is still king

Our CHRO survey shows companies continue to focus on hiring and retention as they adapt to a changing economic environment.

Most affected by layoffs (by seniority)

Most affected by layoffs (by department)

Company posture toward hiring: Help still wanted

Per-employee compensation cost, compared to projections a year earlier

Hybrid work challenges continue in 2023

Hybrid work challenges in 2022, by comparison

The state of company culture is

To increase engagement and strengthen culture, companies are

Still searching for talent and grappling with hybrid work challenges

Cloudbeds: The art of calculated risk

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Cloudbeds: The art of
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