Hybrid work boosts satisfaction and productivity and is here to stay, PwC says

• PwC's research shows hybrid work boosts satisfaction and productivity over full-time office work.
• The study surveyed 20,000 business leaders and workers.
• Companies should adopt purpose-driven strategies for hybrid work to enhance performance and culture.

PwC says workers won't return to the office five days a week — and it's time for companies to see hybrid work as the new normal.

"Hybrid workers have higher degrees of satisfaction and productivity than fully on-site," Anthony Abbatiello, workforce transformation leader and partner at PwC, told Business Insider.

Abbatiello and his team conducted 13 months of research — surveying 20,000 business leaders, chief human resources officers, and workers — to understand how companies can better leverage their workforces. That research culminated in a first-of-its-kind Workforce Radar Report published by the firm on Thursday.

PwC's research found that hybrid workers are likelier to feel they belong at their company than fully on-site or remote workers.

"We sort of started with 13 hypotheses. We came out with five signals that the research identified that are crucial for workforce transformation," Abbatiello said. Companies should know how to retain and attract talent, effectively integrate AI into the workforce, optimize the total cost of their workforces, invest in the right leaders, and implement a solid return-to-work strategy.

While some of these signals — like the rapid advances in AI technology — have largely been met with excitement in the corporate world, the return-to-office question has ignited a fiery debate between workers and managers.

Big Tech companies like Amazon are cracking down on workers trying to skirt partial return-to-office mandates. Wall Street goliaths like Goldman Sachs have been ramping up efforts to bring workers into the office five days a week after its senior managers expressed concerns about staff who failed to comply with the policy. PwC itself issued hybrid work mandates in September.

But forcing workers to adhere to mandates against their will could backfire, the study found. Companies haven't "been intentional about developing a location strategy that really gives them the result that they're looking for," Abbatiello said. He advises companies to be more "purpose-driven" with their strategies, which will likely drive cost savings, performance, productivity, and culture. "Don't use a mandate. Actually create a strategy," he said.

Research also shows that pushing policies on employees has consequences for companies. Managers who fail to explain why they implemented certain hybrid strategies that don't consider the needs of their employees — or explain the rationale behind return-to-office policies — can risk productivity, and team culture may erode.

The good news is that CEOs are starting to acknowledge the reality of hybrid work. This comes amid increasing evidence suggesting that allowing workers some flexibility can improve morale and enhance work-life balance, particularly for those who can avoid commuting on certain days.

Here's what else PwC's report had to say about reinventing the workforce:

Making the most of talent

There's a clear gap between how companies manage talent and how employees perceive it.

According to Abbatiello, companies should be both "talent magnets" that attract emerging talent and "talent factories" that help existing workers stay and build careers. He said the firm's research found that 80% of leaders believe they're both, and only 40% of employees agree. "That dissonance is really important," he said.

Companies can remedy this by ensuring their benefits align with employees' preferences, offering workers flexibility, meaningful work, and brand-building.

Figure out how to integrate AI

The rapid advances in AI have ushered into the corporate world a massive technological revolution. Many companies are exploring the best way to implement it.

Abbatiello said companies that want to capitalize on the technology need to think about the broader ecosystem it'll operate in. "We're all obsessed with AI, but we have a lot of infrastructure that we need to fix," he said. "Human capital management systems need upgrades and need to be able to deliver the results at the foundational level to enable us to bring in more generative AI and broader AI technologies."

Create a balance sheet for the workforce

Companies might be running up against hidden costs in their workforce.

The firm's report found that "senior leaders rarely grasp the total cost of their workforce." For example, many companies don't "know the usage stats of their benefit offerings because so much of it is outsourced to third-party providers."

Creating a balance sheet might be the best way to optimize costs. "We kind of always rely back on, OK, if I need to reduce my costs, let's just cut heads," Abbatiello said. "We're so reactive, and we go to the same playbook every time." The costs could also be lurking in tax plans and benefit programs, so cutting in those areas could help drive more financial efficiency and employee satisfaction, he said.

Hire the right leaders

As Abbatiello put it: "All of this is moot without investing in transformative leaders."

With strong leadership development and programs, the firm has seen a 25% increase in employee engagement and an uplift in revenue, he said. "You really have to enable leaders who are not just great leaders, but who are able to be resilient, agile, and drive change."