An employee gets into his car after arriving to work at the closed headquarters of Silicon Valley Bank (SVB) on March 10, 2023 in Santa Clara, California.
Justin Sullivan | Getty Images News | Getty Images
The SVB report noted that employees may experience work-life balance issues while remote, which could lead to “reduced productivity and/or significant disruptions to our business operations.” It also flagged online connectivity issues and cyber security threats as other risks associated with remote control.
But some workplace experts say that blaming telecommuting productivity issues as the root cause of SVB’s recent failure is “a convenient excuse that ignores deeper organizational problems and fails to address the root causes of the problem,” says Dan Schaubel , managing partner of HR research firm Workplace Intelligence.
“Remote work in itself is not the cause of productivity issues,” he tells CNBC Make It. Rather, “what likely contributed to SVB’s collapse was the lack of effective leadership, communication and management practices.”
Experts say the decline in employee performance has more to do with leadership than telecommuting. Working from home may change how technology gets work done, but “a high-trust executive can play on a park bench with a tin can and string and create a great experience for employees,” says Michael Bush, CEO of Great Place to Work, the global research and analytics firm that assesses corporate culture.
The majority of SVB’s 8,500 staff are working remotely in the US, including top-level executives, the FT reported – unlike financial giants such as Goldman Sachs and JP Morgan, which have supported a return to the office during the pandemic. The Federal Deposit Insurance Corporation, which took over SVB, told workers to continue working remotely, except for core workers and branch employees, according to Reuters.
There is little data to support that remote work has hampered productivity during the pandemic, as business performance has risen sharply in 2020, 2021 and most of 2022 based on data from Great a workplace of 30,000 global companies, 10 million leaders and nearly 40 million employees.
But an increasingly volatile economy with rising inflation, interest rates, pressure on earnings and workers’ fears of job insecurity is having a huge impact on engagement and performance, Bush says.
“Companies did very well through Covid and started to stumble in the last seven to eight months as financial pressures increased, but the remote had nothing to do with it,” Bush says, adding that other financial institutions such as Bank of America and American Express continues to be profitable as you embrace telecommuting.
SVB may also have struggled to hire new employees during a hiring pandemic.
Bush acknowledges that telecommuting makes it harder to onboard early-career and new hires, but adds that companies have always struggled with onboarding, even before Covid. He says it could take another four to five years for organizations to figure out how to effectively onboard new employees to a virtual environment, whether that means incorporating in-person training early on or investing in metaspace technology to improve the transition.
Bush says it wouldn’t be surprising to see more leaders cite telecommuting as a productivity risk, but that this oversimplifies how businesses should think about the future of their hybrid and remote work policies.
SVB’s collapse may be the first to happen in the new era of telecommuting, but it’s worth noting that many other large firms have failed even with the majority of their employees working from the office.
DO NOT MISS: Want to be smarter and more successful with your money, work and life? Subscribe to our new newsletter!
Why the bank works like the collapse of SVB: “It’s like a mass delusion that becomes reality”
Bosses think that working in the office 3 times a week is the “magic number”. “It’s not,” says the executive
How to get hired by a company with a 4 day work week