Is IBM’s Rethinking of Its Remote Work Policy a Bellwether?

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Wharton's Peter Cappelli discusses IBM's decision to rethink its remote work policy for some employees.

There used to be a joke at IBM that the company acronym stood for “I’m By Myself.” The software giant was once a model for telecommuting, saving significant operational costs by allowing many employees to work from home. But IBM recently gave thousands of its remote employees an ultimatum: Return to the office or find a new job. Peter Cappelli, Wharton management professor and director of the school’s Center for Human Resources, joined the Knowledge@Wharton show, which airs on SiriusXM channel 111, to discuss why IBM is rethinking its remote work policy for some roles, and whether other companies could follow suit. Following are five key points from the conversation. (Listen to the full podcast at the top of this page.)

  1. Remote work policies were developed for practical reasons.

Working remotely is a relatively new concept that didn’t take hold easily. The traditional office structure called for bodies in chairs to promote a sense of productivity.

“The initial problem always was that many people on the management side assumed that if they weren’t watching you, you weren’t working,” Cappelli said. “Even when it might have made perfect sense for people to work away from the office, they didn’t want you to do it because they figured you were just goofing around.”

The switch to telecommuting began with the growth of Silicon Valley, where California’s notorious traffic meant workers spent a lot of wasted time sitting behind the wheel. Executives realized that if they let workers stay home, they could recapture lost time and boost productivity while saving money on office space.

Ironically, it was Silicon Valley that first began pushing back against the idea of working remotely, Cappelli said. Google, for example, is known for offering generous employee perks such as catered dinners and in-house child care.

“The initial problem always was that many people on the management side assumed that if they weren’t watching you, you weren’t working.”

“The point of that was to keep people at work,” he said. “The reason you could bring your dog to work was so that you don’t have to go home and let her out and feed her.”

Yahoo CEO Marissa Mayer also made headlines when she ended the company’s remote work policy in 2013.

“I think the problem here was really this kind of one-size-fits-all thinking,” Cappelli says about telecommuting. “Is it a good thing or a bad thing? The answer is, it depends.”

  1. IBM changed its remote work policy for the sake of innovation.

Cappelli said IBM is switching to a business methodology known as “agile management,” which necessitates the end of telecommuting for many. Agile management emphasizes highly flexible cooperation, face-to-face communication and daily interaction as keys to fostering innovation.

“I think what IBM has invested in is an alternative way of doing projects that involves collaboration, where the idea is you really need people together in order for this to work,” Cappelli said. “That doesn’t mean it doesn’t make sense for other people in other organizations to work from home. The boundaries on that are always changing.”

Medicine and plumbing, for example, were fields once thought of as strictly hands-on. A plumber couldn’t unclog a sink remotely any more than a doctor could listen to a patient’s heartbeat over the phone. But advancing technology has changed that. Now, a plumber or a doctor can videoconference with a client to help solve certain problems.

IBM is embracing agile project management because there is a mountain of evidence that shows traditional methods are ineffective, Cappelli said. The old way of project management was very top-down. Managers handed a group of employees a specific directive, a set budget and a fast deadline. Under agile project management, the parameters are far more flexible and teams are self-regulating.

  1. Yes, but what about fairness?

With its global reach and reputation, IBM’s change of heart about working remotely is likely to tip off a trend of “follow the leader.”

“Most companies are very nervous doing things they feel are out of step with everybody else,” Cappelli said. “For a long time, the way to get ahead in the corporate world was just to copy what other big companies or leading companies were doing, and that looked like you were doing best practices.”

But best practices around working from home are “all over the map,” which makes it harder for companies to determine what works for them, he said.

Perhaps a harder problem to solve is the question of fairness. Within any company are jobs that lend themselves to working remotely, and jobs that don’t. So, how do you create parity for those distinct groups?

“Most companies have had historically … a one-size-fits-all model [of managing people]. We’ve got policies for everybody, and we want to treat everybody equally because we’re all in this together,” Cappelli said. “How are you going to manage to treat two different groups of employees differently when your whole organization has been based around treating everybody the same? Actually, a lot of employment law is based on that.”

  1. It’s unclear whether the policy change will reap greater profits.

Capelli says it’s tough to ascertain how IBM’s change will affect the company’s bottom line. The evidence correlating profits to telecommuting is never clear, so those in the C-suite will have to make educated guesses.

“I think the idea of having to work back in the office is the tip of the iceberg. It’s just a manifestation of bigger change.”

But one thing is clear: A number of IBM remote employees are trying to figure out how to rearrange their lives in order to return to the office. Many may not find it feasible and will search for work elsewhere.

“In fairness to the company, they aren’t doing what a lot of companies did, which is just firing everybody and bringing new people in. IBM has been pretty good about finding innovative ways to hang on to their employees,” Cappelli said.

  1. The takeaway is IBM’s shift in methodology, not workplace policy.

“I think the idea of having to work back in the office is the tip of the iceberg,” Cappelli said. “It’s just a manifestation of bigger change.”

He circled back to IBM’s embrace of agile management and what it means for the company. Agile management isn’t a revolutionary piece of technology but an idea, an operational value system. It has a proven track record for innovation. However, it could have an unintended cost when it comes to the quality of life for employees.

“The old approach of doing projects was quite predictable, and it made your life as an employee or as a manager overseeing it much more predictable,” Cappelli said. “Now, if the process is unpredictable and you’re a manager trying to watch this thing, and you’ve got the finance guys still pestering you for the same level of accountability, and you’ve got employees who can’t organize their life around the agile product development cycle, what’s going to happen? What we know in the past is that family has yielded to corporate demands, and [those demands] are likely to become more unpredictable as we move down the pike.”

Cappelli made an additional point regarding the unrelenting pace of agile workflow: “This was a much easier thing to [implement] a few years ago when the unemployment rate was 7% to 8% and everybody was just happy to have a job.”

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