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With Working from Home Here to Stay, Expect These 5 Things to Change

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September 18, 2020 7 min read

Opinions expressed by Entrepreneur contributors are their own.

This article was written by Mitchell Terpstra, a member of the Entrepreneur NEXT powered by Assemble content team. Entrepreneur NEXT is our Expert solutions division leading the future of work and skills-based economy. If you’re struggling to find, vet, and hire the right Experts for your business, Entrepreneur NEXT is a platform to help you hire the experts you need, exactly when you need them. From business to marketing, sales, design, finance, and technology, we have the top 3 percent of Experts ready to work for you.

COVID-19 ushered in a grand experiment in the American economy, with up to 42 percent of the workforce working from home or otherwise remotely—the majority of these employees for the first time ever. 

After experiencing the pros and cons of the remote-work setup, many companies are opting to let employees continue to work remotely if they want to. Large companies like Facebook, Twitter, and Nationwide made headlines early on for announcing changes to allow their employees to work remotely indefinitely.

Regardless of how long COVID-19 remains a threat, 16 percent of the American workforce says they plan to work from home permanently. Here’s how you can expect that to shake up the workplace.

1. Many employees will consider relocating.

No longer bound to a physical office or limited by commuting-distance, many newly remote workers will reevaluate where they live, and why. According to one survey, one in three working Americans are considering relocating for various reasons related to either COVID-19 or a new remote-work status. Already, we’re seeing a resurgence in interest in suburbs as city-dwellers leave pandemic hotspots like NYC and LA for more spaced out, socially distant and budget-friendlier living outside the city.

Meanwhile, some destinations are making their best pitch to attract remote workers, and others will likely want to follow suit. States like Vermont, Maine and Oklahoma already had grant programs in place, offering cash to full-time remote workers that relocated somewhere within their borders. Beyond the U.S., countries like Estonia and Georgia in Eastern Europe, and Bermuda and Barbados in the Caribbean are greatly relaxing their worker visa requirements in an effort to lure digital nomads, largely to boost their economies suffering from a drop off in tourism. 

While, at first blush, it may seem that WFH employees choosing to work from a different home may simply be a matter of reconciling time zones for Zoom meetings, over the long run it means a few other significant changes for employers.

2. Compensation strategies will have to adjust.

With employees less tied to offices and increasingly less concentrated in certain regions, policies determining salaries and other benefits will need to adapt accordingly. 

Shortly after Mark Zuckerberg announced that he expects roughly half of Facebook’s 48,000 employees to be working remotely in the next five to 10 years, it was revealed that pay for Facebook’s remote workers who choose to relocate will adjust to the market rate for their home area. Such a trend will likely make remote-work candidates from outside big cities more attractive to employers, as they represent a significant cost savings for the company. 

Another likelihood is that employers will start setting salaries for new job postings according to national averages, rather than what’s competitive for their particular state or city. At the same time that salaries may get more competitive to align with local costs of living or national averages, employees may be able to pad their compensation by requesting a WFH stipend or reimbursements from their employer. Now that they’re using personal assets for business use, employers may be on the hook to offset some of these costs. 

Personal assets like computers, phones, internet, electricity and square footage of their residence may all figure into the equation. However, as research by Global Workplace Analytics suggests, one worker working remotely just half of the year can mean up to $11,000 in savings for a company. If true, that’s more than enough to offer WFH allowances as part of a more attractive compensation package for remote workers.

The number one problem shared among entrepreneurs today is finding, vetting, hiring, and retaining expertise

3. Retaining talent will become more difficult.

With remote work becoming more mainstream, more job openings will list full-remote status as an option. While some companies may still want an employee to be within driving distance of a physical office for occasional face-to-face meetings, other companies may search nationally or even internationally for new hires, depending on the nature of the job.

This means employees are no longer as limited by geography in their job hunting. Whereas a graphic designer in a mid-size Midwestern town, for example, may have once had a dozen or so attractive companies to work for, the shift to normalizing WFH opens up hundreds of more employment opportunities.

Some workers with in-demand creative skills may even contemplate going out on their own, as they get the taste of freedom that remote work offers. A number of platforms exist today that help creative professionals quickly connect with clients in need of one-off or part-time work. Certainly, if social interactions among colleagues decrease due to remote work, company loyalty is likely to wane, making retaining talent all the more challenging.

4. Work culture will be harder to establish.

Similarly, cultivating a unique work culture—one that unites and energizes a team around a shared mission—will be more difficult to do in the WFH era. And this connects to retaining talent, too, as 56 percent of employees say a good workplace culture is more important to them than salary.

Much of a company’s culture is introduced on Day one, via employee onboarding. However, becoming oriented to a new company becomes a very limited endeavor without the traditional face-to-face interactions like the office tours, coworker meet-and-greets, job shadowing, lunch hour and all the other opportunities for imparting shared values to a new employee.

Establishing a strong work culture will have to reimagined in an era where 90 percent or more of work interactions may be digitally mediated. Strong communication strategies and tools, like manager check-ins, newsletter and employee surveys, for example, will be absolutely crucial to keeping remote workers feeling central, rather than peripheral, to a company’s mission.

5. New means of monitoring employee productivity will evolve.

Time cards, sales quotas, a supervisor’s vigilant eyes—there are lots of ways to monitor and measure an employee’s work performance. For remote workers, however, some of those ways become less feasible.

At the root of the issue is trust. Is an employee accomplishing what he or she was hired to do? Historically, the main issue preventing more remote work opportunities was trust—managers simply didn’t trust their employees to be as productive outside the office where direct supervision was lacking.

However, some studies have proven that assumption wrong. In one study, conducted by a Chinese travel agency in 2010, the company found that its randomly selected WFH travel agents saw a 13 percent increase in productivity compared to their office-working counterparts.

And yet, each company will want to verify that this is true for its own employees as well. Since most remote workers are conducting computer-based tasks, the demand for employee-tracking software is surging. Some of these services allow managers to track everything from keyboard strokes to non-work related sites visited or even snap periodic screenshots of a employee’s computer screen.

While these tactics may help employers sleep more easily at night, they come at the cost of frustrating an employee’s sense of privacy and decreasing their sense of autonomy, powerful components of work-satisfaction and performance. Certainly, employee-tracking software will continue to develop and be in demand, though savvy managers will recognize the best productivity standards are ones that most clearly align with delivering results for the company’s overall objectives.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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