Aegon Asset Management: The future of work

The Covid-19 pandemic has undoubtedly disrupted the traditional work model and accelerated what were previously niche workforce trends. So is the world of work changed forever? And if so, what will our future working life look like?

Let’s be clear – working remotely is not a new concept. Prior to March 2020, working from home and flexible working existed, but the extent to which employees had access to these options varied greatly across industries and companies. The vast majority of full-time office-based workers across the globe, were just that - office based. The pandemic, however, necessitated the immediate halting of this tried-and-tested approach and initiated the largest global working experiment in history.

Companies were forced to navigate unchartered waters and assess whether their operations could function in a remote environment with minimum impact on the delivery of services. Naturally, the larger the organisation, the greater the challenges but it is fair to say that mass remote working has been a huge success in the most trying circumstances. It has been achieved through a combination of human spirit and adaptability, and supportive technology which has underpinned effective working.

A very successful example of the latter is the adoption of communication apps such as Microsoft Teams, Zoom and Slack for business and general use. These video conferencing services have seen exponential growth over the pandemic. Microsoft Teams, for example, now has 145m users, compared to around 32m users prior to Covid-19!

In fact, a survey carried out by Techradar Pro and Smart Brief of 1,200 US-based professionals found that 75% of contributors had used Teams while more than 80% had used Zoom during the pandemic. Other notable technology applications which have experienced significant adoption include Cisco, Dropbox and Skype.

Innovative tech companies such as Everbridge* (critical event management software) also came to the fore, allowing businesses to effectively check-in on, and communicate with, their workforce as the situation quickly deteriorated and lockdowns were uniformly enforced.

Importantly, the existing technology and systems infrastructure that businesses had in place were also fully scrutinized. Many companies were, understandably, not fully equipped to deal with such an extreme tail-risk event. Accordingly, Covid-19 accelerated the technology spending carried out by businesses to unprecedented levels. Investments normally made by companies over the course of a number of years, were made within a few months. This is demonstrated by a 2020 survey of global technology leaders carried out by Harvey Nash and KPMG. The survey found that businesses had spent an additional c. $15bn per week on technology to ensure secure remote working during lockdown – one of the largest increases in technology investment in history.

Top 10 most-used software applications during lockdown

Source: Techradar.com, SmartBrief

The future: what does hybrid working mean in practice?

Will work in the future revert back to the pre-Covid-19 office model or is working from home now the new normal, leading to an ‘office-less’ world in the coming years?

The traditional ‘five days in the office’ model is arguably consigned to the history books, given where we are today, but moving permanently towards a remote global workforce also feels somewhat fantastical. The ‘hybrid’ work model - in which workers split their working week between their homes and offices - has been coined by several industry leaders in recent months and we expect this approach to be the favoured option of both employees and companies in the future. However, there are a range of issues and considerations which need to be addressed in order to implement this model successfully on a permanent basis.

One basic conundrum is how to split the week between remote and office working. A recent survey by management consulting firm, McKinsey, highlights that expectations around the future of work are likely to differ between organisations and employees. The majority of executives surveyed by McKinsey expected core employees to be in the office three or more days a week. The key driver behind this was preservation of company culture and team dynamics. Contrastingly, more than half of the employees who responded to the study wished to work remotely at least three days a week.

A recent study by consulting firm Gartner also found that 75% of remote workers had increased expectations around flexible working, with four out of ten employees suggesting they would leave their current employer if asked to return to a physical office environment permanently.

Such surveys demonstrate the importance of management and employees working collaboratively at this historic juncture to help shape the future of work and achieve optimal outcomes for all stakeholders.

The future: the robots are taking over…

The largest disruptor to shape the future of work is innovative and exciting technology that will change the importance of existing job functions, requirements, and processes. Various jobs that traditionally relied on human input are increasingly being automated through technology such as advanced robotics, complex algorithms, and other forms of artificial intelligence (AI). Notably, the International Data Corporation forecasts that companies will have spent a whopping $342bn on AI over 2021 (an increase of c.15% relative to 2020). The market is expected to grow by a further c.19% in 2022 and surpass $500bn by 2024! So, will we all be replaced by faster, smarter, stronger robots in a decade or so? Large scale Hollywood movies like ‘The Terminator’ and ‘I Robot’ spring to mind!

Despite the fears of some, we believe the continued evolution of robotics and AI will provide an overall positive impact on the world and its workforce. Inevitably, certain jobs will change or disappear, but AI will also help create new jobs and industries which will require new skills and training for the workforce of the future. We don’t see technology replacing human enterprise and ingenuity. Instead, it will act as a key aide in helping us to solve some of the biggest challenges workers, corporations and the world in general will face in the future.

For instance, despite the fact companies have massively increased their capital expenditure on technology during the pandemic (especially cyber security investment) the Harvey Nash and KPMG survey also found that this had been accompanied by an increase in cyber-attacks – continued remote working will undoubtedly keep this risk elevated. Ongoing innovation in technologies such as AI can help solve these growing cyber security threats. Another issue which more advanced AI can help with is resource efficiency problems across industries, while significant impact can also be made in wider areas of importance such as healthcare solutions.

In summary, robots will not be taking over just yet, but they will facilitate the translation of new and brilliant ideas into reality in the coming years.

*AegonAM currently holds positions in Everbridge.

By Farrakh Ashraf Senior Investment Specialist