Hybrid work is happening. Your culture will need to catch up—fast.
The pandemic has transformed the way we work, and for many, a hybrid future is imminent. In this episode of McKinsey Talks Talent, talent experts Bryan Hancock, Bill Schaninger, and Brooke Weddle speak with McKinsey Global Publishing’s Lucia Rahilly about the need to radically rethink culture to get hybrid right—and about reckoning with the novel challenges of combining remote and on-site work. An edited version of their conversation follows.
A rare opportunity
Lucia Rahilly: What do we mean when we talk about culture, and why should leaders care about it, at this stage in the pandemic?
Brooke Weddle: When we think about culture, we think about a common set of behaviors, plus the underlying mindsets that shape how people work and interact day to day. What we see in the data is compelling: companies with healthy cultures have three times greater total returns to shareholders. We’ve also looked at causation and have seen a positive relationship, where health drives performance. And vice-versa: 70 percent of transformations fail, largely due to people- and culture-related challenges. That’s a sobering number.
Lucia Rahilly: Does a strong corporate culture help companies navigate change?
Bill Schaninger: It might help, but it also might hurt. In part, culture is just a predisposition to behave a certain way. During the pandemic, there wasn’t a rule book. Previously, a lot of culture centered on getting work done. But over the past 15 months, we focused on workers first, which stressed some cultures.
Now we’re asking what a return to the workplace looks like. This is an unbelievable opportunity to remake culture. It’s rare in a leader’s lifetime to have such a clean drop for reshaping how you run the place.
Lucia Rahilly: What are you hearing from leaders about their willingness to remake culture—and to consider a full return to the office versus hybrid?
Bryan Hancock: Some leaders are thinking about what a new culture and a new way of working might look like, and how to perpetuate culture in a primarily hybrid world. Others are saying that they need everybody back in the office to preserve their culture. And there’s some truth there; environment shapes behavior. But you can’t assume you’ll return to the same culture that existed prepandemic. There’s been too much change, both at the individual level and at the business level.
Lucia Rahilly: How does culture overlap with purpose?
Bill Schaninger: Individual purpose is something we’re seeing come to the fore. After such profound blurring in our personal and professional lives, code-switching is difficult. You’re aware that every moment you spend working is a moment you’re not spending with a child, with a parent who needs care, with your partner. Now a lot of employees are asking, “Does this job work for me? Do I care at all about what I do for a living?” Increasingly, the bar is rising, and people are saying, “My work has to be more than a job. It has to fit in with my life’s purpose.”
That creates an interesting opportunity for employers to help people figure out what really matters to them, help them find more purpose in what they do. If they can’t, maybe we help them gracefully leave. But if they can, there are obvious benefits: retention, motivation, satisfaction, engagement, productivity—all of it goes through the roof.
Lucia Rahilly: We’ve certainly seen leaders energized to talk about purpose since the onset of the pandemic. Does our research indicate that employees are focusing on purpose as well?
Brooke Weddle: We’ve found that meaningful values, as a management practice, were a core differentiator of companies that maintained a healthy culture during COVID-19. Companies were able to drive an innovation agenda when they emphasized bottom-up innovation, harnessed ideas from the front lines, and encouraged employee creativity and entrepreneurship in getting work done. We also saw healthy companies emphasizing the free flow of information—knowledge sharing, performance transparency—as well as practices like role clarity and operational discipline. Successful companies were innovating and shaping new solutions and translating them back into systems and processes.
Bill Schaninger: We also have research suggesting that as we plan for a return to the workplace, employees want to be involved and not kept in the dark.
Brooke Weddle: I’ve been working with a lot of organizations doing that kind of listening, with two speeds in mind. One is immediate: getting feedback on policies and guidelines. Do we need to adjust the use of videoconferencing versus phone calls? Do we need to think about policies to help caregivers?
The second is about shaping the future. How do we want to celebrate our new partner class in a law firm? Or create new rituals combining what we’ve learned in the pandemic? We’ve learned some virtual interactions can be special: you get a window into someone’s home, see their kids more. People appreciate that. At the same time, we probably need to bring back some in-person events that help people feel connected in different ways. Engaging employees in that dialogue is hugely important.