The Executive Edge (Q1 2025) - Inside This Issue: Workplace Flexibility and RTO, Employee Morale, and Skills-Based Hiring

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Workplace Flexibility and Return-to-Office Mandates

• AP News: California and Texas join push to end remote work among state employees
• CNBC: 5 years into the remote work boom, the return-to-office push is stronger than ever—here’s why
• Economic Times Southeast Asia: 70% of employees report reduced stress and enhanced productivity in hybrid roles: Survey
• Forbes: McKinsey On Return To Office: Leaders Are Focused On The Wrong Thing
• HR Brew: Employee satisfaction across Europe largely boils down to location and flexibility, study reveals
• SHRM: How Return-to-Office Mandates Are Affecting Workplace Civility
• The New Indian Express: Work-life balance a top priority: 52% of Indian employees willing to leave jobs that don't offer flexibility
   

Headline Highlights: Despite a growing preference among employees globally for flexible and hybrid work models—citing reduced stress and increased productivity and satisfaction—many employers and government entities are intensifying return-to-office mandates. Emerging research has found increasing acts of workplace incivility at companies with RTO mandates, while other research suggests that leaders should look beyond RTO policies and focus more on practices that fuel the employee experience and productivity.

Expert Perspective from Dave Mayer, Professor of Management and Organizations, Michigan Ross:

What do you believe are the driving factors behind these trends of RTO mandates, and what common pitfalls are leaders facing when prioritizing RTO policies over addressing underlying organizational issues like employee burnout?

There are several reasons driving the RTO mandates. First, management may hold a belief that employees are more productive when in the office (even though evidence does not always support this notion). Second, particularly for creative work that relies on multiple perspectives, managers often advocate for the advantages of being in the same physical space. Third, as a way to reinforce culture and enhance connections, management might advocate for being in the office at the same time.

One pitfall is that management does not always understand that the cat is already out of the bag. Once you provide someone with additional autonomy, making decisions such as RTO that lead to feeling like one has less control over one’s work day is particularly upsetting. In addition, many employees report being more productive at home because there are fewer work-related distractions. Thus, they fear that being back in the office could lead to more interruptions and less production. Thus, there are psychological and productivity-related factors that management may not fully acknowledge.
 

What strategies have proven effective in supporting positive team dynamics during transitions back to in-office work?

It is important for leaders to adequately explain why there is an RTO mandate. If there is not a legitimate justification, employees are more likely to be dissatisfied. However, if leadership can explain the value of in-person creative work and the power of connection to build and reinforce culture, employees are more likely to see the value in RTO. If employees believe RTO is useful and even fun, they are less likely to resist. Often, employees see the value of being in the office at least a few days per week. And new data suggests that employees in their 20s are more positive about working in the office.
 

Given the growing tension between employee preference for flexibility and employer push for in-office work, how should business leaders strategically balance these competing priorities?

An employee can feel flexibility in multiple ways. For example, allowing an employee to work from home once or twice per week or have four longer days with Friday off can be immensely useful. Also, providing flexibility in terms of projects to work on that match employees’ expertise and passion can give them a greater sense of control, even with an RTO mandate. The key is that employees still feel some autonomy in their day and their work.
 

Worker Morale and Motivation in Times of Uncertainty

• Axios: American workers' enthusiasm for their jobs falls to a 10-year low
• CNBC: Employees are less confident than ever about their company’s future, says new report—here’s why
• HR Dive: Workers lacking motivation? Monitoring and incentives aren’t the answer, researchers say
• HR Magazine: Not just Blue Monday: Employees unmotivated year-round, research finds
• Marketplace: Amid much uncertainty, the job market is clearly softening
• Michigan Ross: How Leaders Can Strengthen Teams When Morale Is Low
• The Times of India: Five years after Covid: Post-Covid fallout in the US and why employee morale is at an all-time low
   

Headline Highlights: Recent surveys reveal that employee confidence dropped to a record low in February, with layoffs and geopolitical uncertainty hindering morale. Businesses risk lower productivity and higher turnover with low morale, posing a challenge to business leaders in keeping teams engaged and motivated during uncertain times. Recent data also revealed that clear goals, performance reviews, and feedback are more effective drivers of employee motivation than monitoring and incentivization.

Expert Perspective from Lindy Greer, Professor for Management and Organizations, Michigan Ross:

What are some of the early warning signs of employee disengagement?

I know that when our operating environment is uncertain, and we are often in fire-fighting mode, it can be hard to step off the hamster wheel of our jobs and take a broader look at the health of our teams and organizations. However, by taking that time to zoom out, we can often find ways to support our teams that will save us time in the long run by preventing fires and stress and allowing us to team together more effectively in the face of uncertainty and adversity. One of my favorite sayings in support of this is, “Slow is smooth, smooth is fast.” By taking strategic moments to pause and reflect on the health of our teams, we can create more time down the road by being able to course-correct and intervene in ways that can help our teams be more effective—with fewer fires to put out—in the future. When you’re taking that moment to zoom out, here are ways you could spot warning signs for team health:

• Are people showing up? If you’re online, are videos on? Are people in person and online actively participating in meetings?
• What are your engagement scores? Putting numbers to the energy of your teams and assessing every quarter can catch energy dips before they bottom out.
• What is the content and tenor of meetings? Are people focused on what’s right at hand or thinking about innovations and longer-term strategy? Teams that engage in creative work and can see the bigger picture are more likely to be engaged.
   

What steps can organizations proactively take to address declining employee morale before it impacts productivity or retention? What leadership approaches are most effective for maintaining morale during periods of economic uncertainty or organizational change?

To build engagement and morale during times of difficulty, here are a few tips:

• (Re)focus on your purpose and mission. Why does your company exist? What value does it add to the world? How is the world different because you exist? How do you bring stories about the good your company does in the world back to your employees? How can you celebrate and talk about your purpose more? United people in times of change is so important. And the most important thing to align around? Your mission.
• Consider adding in some jolts of joy. While we may not always be able to ‘fix’ the negative forces our teams face, we do have control over our ability to bring some countervailing forces for joy into the team. This could be in the form of the positive energy you can find to bring energy into your team in the next team meeting, providing affirmations and shout-outs to things the team and its members have done well lately or supporting company values, having a playful icebreaker at the start of the meeting, or taking time out for a meal or offsite activity that brings positive energy.
• Get rid of roadblocks and things that aren’t working. I love the book ‘The Friction Project’ by Huggy Rao and Bob Sutton. There are so many processes and systems that may have been good ideas at one point but no longer serve current needs. Eliminating these internal sources of friction can help your team better handle outside challenges.
   

What role does company culture play in morale?

Having a strong culture —where employees are aligned around three to five company values that are made manifest in the rituals, artifacts, norms, and behaviors within the company—is critical for employee morale and company performance more broadly. Especially in times of change and uncertainty, helping your employees feel a stable and visible anchor in the company’s values and culture is key.

Take the time to consider - does my company have a strong set of values (ideally 3-5 that balance key managerial paradoxes, like people/performance and change/stability)? The Michigan Model of Leadership provides an example of what research would say is a ‘strong’ value set —verb-based, manageable in number, and balanced across paradoxical needs at work. For more, see: https://sanger.umich.edu/our-model/

Then, reflect on how employees see these values in their lives at work on a daily basis—both in person and online. Are the values on the wall in the office? Are they in the header of meeting agendas when you are working remotely? Do you talk about the values as a leader? Where, when, and how? How could you use language around your values more often across the spaces you interact with your employees? What are you celebrating and rewarding in your team? Could you have a spotlight in meetings for employees who demonstrate company values?

 

Skills Based Hiring

• Forbes: How Skills-Based Hiring Is Expanding Opportunity For All
• Harvard Business School: Harvard Research: Fewer than 1 in 700 get hired without a college degree
• HR Dive: Employers shift to skills-first hiring amid AI-driven talent concerns
• LinkedIn News: Women hold just one-third of top-level management roles. Here's how skills-based hiring can help close the gap.
• UNLEASH: HireVue’s CEO on the future of GenAI in HR: ‘Validated skills-based hiring is the currency of the future in talent acquisition’
• World Economic Forum: Skills-based hiring can help us recruit for jobs that don’t exist yet
• Worklife: Skills-based hiring poised to redefine HR strategies in the year ahead
   

Headline Highlights: The traditional focus on job titles and roles is starting to shift as more companies embrace hiring based on specific skills. A persistent talent shortage is pushing organizations to get creative, prompting many to prioritize transferable skills and potential over prior titles or experience. While most roles are still filled through traditional degree-based pathways, skills-based hiring is gaining traction as a more agile and strategic way to close talent gaps and prepare for the demands of an AI-augmented workforce.

Expert Perspective from Lisa Morgan, Alumni Career Coach and Executive Coach, Michigan Ross:

How is the rise of GenAI and automation changing what skills matter most at the leadership and team levels?

Determining the best ways to utilize GenAI to gain an edge in the market is on the agenda of virtually every executive team right now. Accordingly, it’s really important for leaders and professionals at all levels to dig in and become competent users of AI tools in their personal and professional domains. I’ve seen individuals who do this expand their capacity to envision creative ways AI can improve their team’s productivity and quality. As organizations vet candidates for filling new roles, naturally, including questions on AI skills and experiences will help ensure teams are sourcing the talent that will help accelerate AI adoption. Sample questions might include: Tell me about a time you used data to advocate for change, or describe a challenging problem you faced and how you used AI to solve it.

With the increase in skill-based interviews, companies may test candidates by assigning case studies and asking them to use AI tools to solve the case. Some things never change, however. Executives need to continue to hone their leadership skills—among them inspiring teams with shared purpose, cultivating positive culture, catalyzing change, and enabling strategy execution. Leadership has always been and will continue to be the difference-maker in organizational success.
 

What trends are you seeing among executive-level job seekers in terms of how they’re positioning their skills and value in a shifting market?

Over the past two-plus years, as we’ve shifted into a macro environment of cost-cutting and downsizing, we’ve seen the labor market do an about-face, from one where demand for talent was high, and supply was relatively low to one where there are many uber-talented professionals in the market and far fewer positions available. In this environment, when companies are hiring, they are searching for specialists who can solve particular problems. They are less willing to consider the generalist candidate. Ironically, once an executive is hired, they are usually expected to tap their generalist toolkit and solve a variety of problems. Nevertheless, this makes it particularly challenging for executive job seekers to stand out in a crowded field. I recommend that executives cultivate a target company list, conduct due diligence on their target’s pain points through research and networking, and then shine the spotlight on the skills and experiences that speak to their target on their resumes, LinkedIn profiles, and interviews. Taking a consultative approach, which admittedly is not a quick fix, ultimately leads to success.
 

How should executive leaders rethink career development in an era when roles, titles, and traditional paths are becoming less defined?

Individualized career development is even more important as career paths become less defined. Executive leaders need to foster cultures in which leadership teams and talent management work in concert to identify roles and stretch assignments that allow people to grow according to their individual desires and timetables. For example, some professionals are anxious to move up and gain promotions and titles as quickly as possible. Others are raising young families or have other responsibilities that cause them to prioritize balance over growth. It’s important to check in frequently with all team members to do a pulse check as priorities change. By the time high-value talent has another job offer, it’s too late. Open and regular dialogue with each team member is critical.
 

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