By Frank Watanabe, President and CEO of Arcutis Biotherapeutics
It’s too soon to know what the post-pandemic workplace will look like—and COVID-19’s surging Delta variant is proving it’s impossible to predict when that reality will emerge. But it’s becoming clearer every day that the future of work will probably never look exactly like it did before March 2020. Hybrid is emerging as the most likely new normal.
We know this because employees who’ve been working at home during the pandemic overwhelmingly say they want to return to a mix of in-office and remote work, according to new research from professional services firm PwC. And as companies seek to recruit top talent and reduce turnover, they’ll be looking for ways to create workplaces that speak to employee preferences.
Already, major corporations such as Google and even the venerable Ford have announced they’ll be hybrid after workers return to the office. Some companies, such as Twitter, have gone further, announcing that staff could work remotely on a permanent basis. Hundreds of small and mid-sized companies are making similar decisions, even though their announcements aren’t making headlines.
For all organizations making the hybrid switch, there’s no going back to what they knew. These are uncharted waters, and they can expect to encounter unexpected obstacles as they seek to engage employees, cultivate culture, and achieve ambitious business goals.
As the CEO of Arcutis Biotherapeutics, a company that has been operating in a hybrid model since our founding in 2016, I’ve been reflecting on what I believe are the keys to our success. In the past five years, we’ve expanded from a staff of three to more than 140 and our market capitalization has grown from $150,000 to well in excess of $1 billion. We’ve also advanced our pipeline of potential therapies, closing in on our first FDA filing of a New Drug Application. Notably, our annual voluntary employee turnover rate has remained at or below 7%, far below the biotech industry average of 17%.
In building an effective hybrid workplace, these 10 lessons stand out as the most integral to our success. In sharing them, my hope is that other companies can make the hybrid switch more seamlessly and take proactive steps to keep their employees engaged.
- Tech is a critical enabler, but it isn’t the whole solution. Having the right computers, videoconferencing software, and messaging platforms is absolutely essential for an effective hybrid workplace. Without them, productivity will drop and collaboration will suffer. Our experience has taught us the importance of testing and finding the best tools for our team and business needs. For example, we discovered many meaningful differences among videoconferencing systems; and learned that seamless implementation of these tools is as important as the features themselves. But as essential as technology is, it can’t ensure a successful and productive hybrid workplace—there are a multitude of other “soft” elements that leaders need to get right. A technology-centric approach will almost certainly flounder.
- Culture is still king. A strong company culture is core to optimal performance of any organization, but our experience suggests it’s harder to build and maintain a great culture in a hybrid environment. Whereas it may come naturally in the office, it takes a lot of dedicated work when you’re fully or partially remote. Leaders must redouble their efforts to communicate, reinforce, and sustain the tenets of their culture. Slogans on a poster or website won’t cut it. To make our corporate culture actionable, we’ve defined 13 “operating principles” that describe expectations of our team members; we constantly discuss these, highlight team members who demonstrate these principles, and recognize outstanding examples with awards. If you fail to walk the talk, culture will degrade. Employees are quite adept at recognizing discordance between the postulated culture and the real thing.
- Trust is everything. Not only is trust the single most important element for a hybrid workplace to function effectively, but it must go both ways: Leaders need to trust remote staff to accomplish their work, and employees need to trust that leaders mean what they say and will treat them fairly—especially if some employees are in the office more often. This may sound self-evident, but it’s remarkable how little trust exists in many businesses. Why is it that leaders will trust an employee with their most sensitive trade secrets, but don’t trust that same employee to do their work if they aren’t in the office? Honestly, if you can’t trust an employee to do their work without you constantly watching over them, you probably have the wrong employee. The hybrid work environment necessitates a higher level of trust, and that enhanced trust has second-order salutary benefits for the organization.
- Manage the work, not the workers. Some companies today are still devoting much effort to tracking how many hours each employee worked, how many vacation days were taken, and how many meetings were attended—and they use these measures as an index of the employee’s output. Leading an effective hybrid organization requires leaders to abandon such traditional approaches and focus instead on results. At Arcutis, we’ve never required attendance in the office except for monthly all-staff meetings, nor have we specified work hours or limits on paid time off. Instead, we set very clear and measurable, mutually agreed-upon goals for each employee. We continuously track and measure progress against those goals, and evaluate team members’ performance and calculate bonuses based on delivery against those goals. This approach has been incredibly effective at producing outstanding results on time or ahead of schedule throughout our corporate history.
- Give employees freedom to shape their work. World War II Gen. George Patton once said: “Never tell people how to do things. Tell them what to do, and they will surprise you with their ingenuity.” I’ve found this to be true. Certain “guardrails” will always exist for projects: timeline, budget, or legal constraints. But the key is to provide maximum flexibility within those guardrails for team members to accomplish the goal. The result is empowerment. However, empowerment without accountability leads to chaos. Everyone at Arcutis understands they will be held accountable for delivering on their assigned goals, and because it is difficult to hold groups accountable, each goal has a specific accountable owner. We take time to define desired results—but, to the maximum extent, we leave the means to the goal’s owner. This has allowed us to tap the creative potential of our entire staff and help our employees feel valued and self-actualized.
- Don’t underestimate the value of human connection. Personal relationships are an important part of any organization. And like trust, they are no more or less essential in the hybrid workplace. Relationships foster trust, overcome frictions, and facilitate results. But it’s infinitely more difficult in a hybrid workplace for colleagues to build those personal relationships. You have far fewer informal opportunities to talk over a cup of coffee in the break room or socialize during lunch or after work. Leaders need to make a concerted effort to create opportunities for colleagues across the organization to form, strengthen, or sustain relationships. At Arcutis, we hold monthly all-staff meetings that all team members are expected to attend in person, and we dedicate as much time during those meetings for unstructured relationship building as we do for official business. We also invest in periodic off-site retreats, where a major focus is on relationship building, and we hold monthly social hours—which transitioned to Zoom when necessary during the pandemic. Although more than 60% of our staff joined since the beginning of COVID-19, we’ve been able to foster growing relationships between existing and new staff.
- (Over) communicate. Communication is critical for all organizations, ensuring alignment, connection, and facilitating the flow of information up and down the organization. But when pandemic lockdowns prevented any in-office interactions, it made us realize how much of our communication happened informally at the office. With reduced in-person contact, leaders must substantially increase their communication with staff. If you start to think you’re communicating too much, you probably should communicate a bit more. Go beyond dry business information to talk about company culture, strategy, personal stories, and lessons learned. This will reinforce other key objectives like trust and personal relationships. We’ve found that frequent messages, both formal and informal, and repetition of key messages help facilitate effective communication. Also remember that communication needs to be both from leaders and to leaders to maximize alignment and information flow.
- Urge employees to unplug. By now most of workers have experienced this firsthand: the flexibility of a hybrid workplace actually makes it harder to strike a healthy work/life balance. Surveys, including this one from Buffer, show that remote workers say they’re biggest challenge is unplugging. While leaders may benefit from a short-term productivity boost from those extra hours, over the long run, it substantially increases the risk of burn out. It’s one of the most challenging facets of the hybrid workplace for leaders to manage, as we have less visibility into the number of hours being worked. We’ve found success being open and upfront about the importance of maintaining a good work/personal balance, talking about the challenges of unplugging, and actively encourage employees to take time off. Leaders also set a good example by taking vacation themselves and being cognizant of when they send emails or messages, keeping it to business hours.
- Senior leaders should be hybrid, too. Earlier this year, author and behavioral scientist Jon Levy widely shared his opinion that the hybrid workplace wouldn’t last, citing research suggesting that without face time with leaders, employees would experience “serious implications for being recognized and appreciated and getting bonuses and promotions.” It’s an understandable concern, particularly in organizations that don’t hold in-person events and are focused on managing workers instead of the work performed. But one other key to success here is that that managers and executives have to lead by example and practice the hybrid model, too. At Arcutis, 75% of senior leaders work at least partially remotely, and over 50% do not live in the same state as our headquarters. This gives employees confidence that we have a long-term commitment to making the hybrid workplace function, and has the added benefit of leveling the playing field for face time with leaders between remote and local staff.
- Keep it about the people, not cost cutting. As leaders formulate their strategies for the hybrid workplace, it’s entirely possible that they may find opportunities to save costs in some areas—office space, in particular. For example, a different study by PwC survey found that about one-third of executives expected to reduce their real estate footprint as a result of the move to a hybrid workplace. While that is wonderful for their budgets, if companies focus on cost-cutting as one of their primary design criteria for the hybrid workplace, they run the risk of seriously undermining their company’s performance. Don’t lose sight of the primary benefits of the hybrid workplace: happier, more engaged, more productive employees, as well as enhanced recruitment and retention. An over-emphasis on cost cutting can quickly destroy these potential benefits and turn the hybrid workplace into a major drag on employee morale and productivity—and, ultimately, financial performance.
One very important caveat to all of our learnings is that we’re a knowledge-based business. Clearly, the tools and techniques we’ve cultivated are probably not appropriate in industries such as manufacturing, hospitality, or retail, where physical presence is a core component of the job.
However, given the predominance of knowledge-based businesses in our economy, and the immense shift underway to hybrid workplaces, I hope our lessons can translate into greater success for the hundreds, if not thousands, of companies who are shaping the new and more flexible future of work.
About the author
Frank Watanabe is president and CEO of Arcutis Biotherapeutics, a late-stage biotech company working to fill the innovation gap in medical dermatology. Previously, he served in leadership roles at Kanan Therapeutics, Kythera Biopharmaceutical, Amgen and Eli Lily. Watanabe is a former U.S. government official and was a commissioned officer in the U.S. Navy Reserves for 25 years. Watanabe holds an M.A. in National Security Studies and a B.A. in International Relations, both from Georgetown University.