Why companies are saying yes to the demands of the ‘avocado toast’ generation

Employers are so desperate to retain staff they are making extraordinary allowances.

Work from anywhere? ‘It’s the only way to retain 20 and 30-somethings, it’s the avocado toast generation that basically wants to travel the world and they have all the tech skills that companies want.’ Picture: iStock.

Employers are so desperate to retain staff in a tight labour market they are allowing employees to “work from anywhere” for a month – even if they are not productive – rather than have them quit, says one of the world’s leading workplace researchers.

Stanford University economics professor Nicholas Bloom says: “Labour markets have become so hot that employers are having to do stuff they don’t want to do for efficiency but they have to do to retain employees.”

It’s not ideal for productivity for staff to be working in a holiday resort, for example, he says, but “you have to manage it, it’s the only way to retain 20 and 30-somethings, it’s the avocado toast generation that basically wants to travel the world and they have all the tech skills that companies want”.

Bloom has carried out extensive research on working from home and argues that the hybrid model is now “totally dominant and has completely wiped everything else out” because it’s a win-win for staff and companies.

He says companies that allow workers two days a week at home are on average about 2 per cent to 5 per cent more productive than those insisting on five days in the office, and he predicts that post-pandemic about 25 per cent of all working days across the West will be conducted remotely.

Bloom says about 50 per cent of all workers can never work from home. For the other 50 per cent, “remote work was a minority, now it’s mainstream”. And with a hybrid system of three days in the office and two days at home we will see about 25 per cent of all work done from home, compared with about 5 per cent before the pandemic.

“Hybrid is dominant because it’s the best of both worlds,” he says, noting that many big companies in the US, Britain and Europe have announced plans for hybrid or intend to embed hybrid from June next year.

Professor Nicholas Bloom, Stanford University.

The move to hybrid is inevitable, he suggests, as people get set to vote with their feet: in one survey, only 60 per cent of people said they would go back full time if asked, 30 per cent said they would go back but actively look for another job and 10 per cent said they would quit on the spot.

He says companies in the US, Europe and Britain are struggling to get employees back and Goldman Sachs, for example, has already reversed an edict that everyone had to return to the office because it was not realistic.

“The fastest way to destroy your business is to tell an employee they are going to come back five days a week, because you will have a one-third quit rate in the first month,” Bloom says.

Another problem is that because quit rates are likely higher among people with a disability, women with young children and marginalised people who felt uncomfortable in an office, “you are going to have not only a massive quit but a diversity crisis”.

Bloom says remote work is a “systems shock for badly managed, old-fashioned firms” where managers controlled staff because they could see them, but “well-managed, modern firms are mostly sailing right through” using performance reviews rather than “creepy surveillance systems” to maintain productivity.

He estimates about 10 per cent of the workforce now working from home will remain as remote workers – IT support staff and payroll staff, for example, who do not manage staff and who are often on contract. There has been speculation about wage cuts as a trade off for working from home, but Bloom says the only debate underway is about the 10 per cent likely to stay home full time. “Some employers are saying if you are fully remote you will have a pay cut of 10 or 20 per cent, reflecting the fact that you are probably less productive,” he says. “Otherwise it’s not affecting pay.”

In surveys, workers suggest hybrid is worth about 7 or 8 per cent of their wage so “if you want them in five days you may have to pay about 8 per cent more”.

Bloom says one issue for employees is that “study after study” shows those who work from home miss out on promotions. Allowing people to choose to stay home meant that you could have a significant problem around promotion in the long term, he says.

In one trial he ran across 21 months, those who stayed at home four days ended up with a 50 per cent lower promotion rate. “It was massive and when you interviewed managers they said, well they are not here,” Bloom says.

He says while management training can perhaps help overcome the discrimination for those working remotely, the reality is that employees who stay home “just don’t learn as much about the company”; don’t know their co-workers as well; and are not as attuned to the company as those working in the office. It’s natural then when managers are choosing someone to lead a group, for example, that they will choose the person in the office.

Bloom says one solution is to make sure all staff are hybrid workers and attend the office on the same three days.

For example, he says tech giant Apple has mandated people will work Monday, Tuesday and Thursday, while financial advisory and asset management firm Lazard has set Tuesday, Wednesday and Thursday. He says the latter also has announced no one will work onsite on Monday and Friday to ensure all staff are “in the same boat” and people feel “I can stay home some days and everyone else is not getting ahead of me”.

Hybrid does not work, Bloom says, “when the boss makes some vague comment like ‘this firm believes in working from home’, and then he or she comes in five days a week so the people who report to them come in five days, and it sort of filters down and you end up with most people in five days a week and a few people with young kids, or people with disability, or people who live far from the office (at home). You can see where that leads. What you don’t want is management coming in … imagine there are 10 in a team and two start coming in, if the eight think they will miss out, the system unravels. I have said to quite a lot of CEOs, you really need to stay at home.”

Research suggests productivity is “somewhat up” in hybrid companies:, he says. “It’s quiet at home, people reshuffle activities and all meetings are held on the three days in the office (and focused work) is better done at home than in a shouty, open-plan office.” As well, workers save about an hour a day on average on commutes and generally spend half that time working

“If you say you gain 2 to 5 per cent in productivity and your employees value working from home as much as a 7 to 8 per cent pay increase, it’s a no-brainer,” says Bloom. “Why wouldn’t you do something employees like and that makes them more productive?”

He says firms are moving rapidly to hybrid: “I honestly don’t talk to any firms that aren’t doing this. People are happier and people quit less. They vote with their feet.”