- New work models will reshape organisations’ approaches to risk. Getting it right will mean gaining a sustainable advantage.
- But the impact of these new work models on organisations’ risk profiles has been discussed much less than the benefits.
- Business leaders should factor this new risk profile into how organisations change to unlock the full potential of the opportunity of new work models.
Three converging workplace trends — automation, open talent pools, and increased flexibility — are creating a once-in-a-generation opportunity to transform how work gets done. New work models present the appealing possibilities of an energising employee experience, increased output and reduced cost. Yet this combination of results could remain just a possibility if companies don’t recognise that, alongside the understandable appeal, comes less obvious risk that must be managed.
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New work models may present a sustainable advantage
Many of the benefits of reimagining how, when and where work gets done have been discussed extensively: lower real estate costs for companies, as well as less need for travel, and greater schedule and location flexibility, for individuals. Much less debate has occurred about how new work models will also reshape an organisation’s risk profile, however. Most notably, it will require business and functional leaders to monitor new intertwined vulnerabilities, assess risk tolerance and ensure the company and employees are adequately protected from unforeseen and interconnected consequences.
We believe that if you get this right your organisation will gain a sustainable advantage, but how can you do this?
A changing risk profile
In addition to the potential impact on company culture and innovation, which many leaders have considered, there are other important areas of change that shouldn’t be overlooked:
- Cyber risk has skyrocketed. This is is due to the rapid shift to remote work during the pandemic and the increased automation of business processes. While it may have been evident that home-working environments wouldn’t necessarily replicate the more sophisticated security of an office environment, it wasn’t clear that more individuals would be susceptible to phishing attacks while working away from offices. Nor did many predict the level of increase in cybercriminal activity.
- New work models both increase and moderate the risk of business disruption. For example, with technology that allows employees to work remotely, weather events that prevented individuals from getting to an office no longer limit work to the same extent. On the other hand, Wi-Fi outages and labour shortages impacting transportation hubs and supply chains add to the risk.
- An increase in errors, omissions and product liabilities cases. This is a real risk if organisations don’t adapt quality control and management processes so they are just as effective with dispersed teams.
- Less clear responsibilities in relation to remote and flexible working conditions. Even with standards for remote working environments, employers will have less control over the myriad different set-ups, creating a higher likelihood for more injuries “arising out of” or “in the course of” employment and greater workers' compensation claims.
- Working anywhere could increase risk of non-compliance with labour and tax laws. Gaps in insurance and benefits coverage for both employers and employees could also increase, particularly without well-defined protocols, controls and manager resources.
- More opportunities for previously untapped or excluded talent. This includes retirees, employees with disabilities and talent located far from headquarters. As automation helps companies expand their reach for skilled workers by taking jobs to people instead of bringing people to jobs. On the other hand, flexible work also creates a risk of eroding inclusion and diversity if managers’ biases lead to remote workers being “out of sight, out of mind”.
Societal considerations and reputational risks
Beyond direct business impact, decisions about new work models will affect the communities in which they operate. A stark example of this is how remote work dramatically changed the complexion of central business districts. Streets that had bustled with commuters and office workers emptied, and with that, an array of service providers such as coffee shops, food vendors, florists, and messengers were left without business.
With the increasing likelihood of future disruptive events — more global health crises, extreme weather events and geopolitical tensions — how and where work is performed will be impacted. This will have lasting effects on economies, including micro-economies around major cities, and communities.
It is possible that the role companies play in defining these effects will become an area of reputational risk and could also factor into environmental, social and governance (ESG) considerations of employees and investors.
The way forward
These risks should not dissuade leaders from capitalising on this extraordinary opportunity to reimagine the future of work. Rather, leaders should factor their new risk profiles into how they change to unlock the full potential of the opportunity in the new work models. It will simply take a careful balance and systematic approach to:
- Identify the specific opportunities to generate higher work output, lower cost of work and differentiated employee experiences
- Model the most significant risks of work transformation, redesign risk management, risk financing and capital allocation frameworks, and set up early warning systems to catch the unforeseen risks
- Build organisational as well as leaders’ and managers’ capabilities to recalibrate, redesign and continually evolve new work models as the values and preferences of the next generation of customers and talent evolve, and technology and innovation continue to shape how people work and new risks emerge.
Underscoring this transformation is the employee experience (EX). It demands special attention because the ways of work will continue to change how your employees engage with your organisation and connect with each other.
Our 2021 Global Employee Experience Survey reflects this point: 92% of organisations plan to enhance their EX over the next three years. This shows a clear case for the importance of planning, clarifying the best way to capture value, manage downstream risks and ultimately create an enduring competitive advantage.
How is the World Economic Forum promoting equality in the workplace?
Talented, valuable stakeholders may not look like you or your peers, and the Forum is working with Partners to embrace that fact.
The World Economic Forum’s Platform for Shaping the Future of New Economy and Society is focused on building prosperous, inclusive and just economies and societies. It takes an integrated and holistic approach to diversity, equity, inclusion and social justice and aims to tackle exclusion, bias and discrimination related to race, gender, ability, sexual orientation and all other forms of human diversity. Through the Partnering for Racial Justice in Business initiative, the Forum is working with a global coalition of organizations committed to building equitable and just workplaces for professionals with under-represented racial and ethnic identities.
- Through the Reskilling Revolution, the Forum is preparing the global workforce with the skills needed to future-proof careers. The initiative is working with over 350 organizations to provide 1 billion people with better education, skills and economic opportunities by 2030.
- The Forum is committed to closing gender gaps in business. Since 2006, the Forum has been measuring gender gaps in countries around the world in the annual Global Gender Gap Report. The Forum has helped to establish groups of accelerators focused on closing the economic gender gap including in countries like Chile, Argentina, Egypt, Jordan and Kazakhstan.
- Working with the Valuable500, the Forum is collaborating with the largest global network of CEOs committed to disability inclusion. Members are already making progress towards closing the disability inclusion gap through initiatives including the increased adoption of digital accessibility best practice and the inclusion of disability in diversity, equity and inclusion strategies.
Contact us for more information on how to get involved.