COVID-19 changed a lot of things, some temporarily like face masks on planes and others more permanent like remote working. Regardless, the workplace has been changed forever, giving employees more power than they had before the pandemic.
I had the privilege of hearing Peter Drucker, known as the father of modern business management, speak at a 2001 conference in San Diego. After a long and late flight from Boston, it was hard to concentrate the next morning, especially with a low energy speaker with an Austrian accent sitting motionless in a chair. But this was Peter Drucker, so I sucked it up and took copious notes. I can still remember what he said over 20 years later.
The world was abuzz with low-revenue highly valued dot-com companies, but that was not Peter’s focus. He described that the workplace dynamics had changed from an agrarian and manufacturing economy where companies had the power, hence the rise of unions, to knowledge-based workers. Describing his physical therapist who did rely on some machinery supplied by her employer, he said she had the more valuable asset—her knowledge. He also described that knowledge workers need to keep learning to remain relevant, making them even more powerful.
Since the dot-com era when the power of computers was just starting to be realized beyond more being efficient word processors or calculators as the world became connected through the internet, we now have cloud-based computing where apps and data enabled by high-speed WiFi on low-cost super computers sit on our laps or in the palm of our hands, further empowering knowledge workers.
But we still had to go into the office. Granted, some people worked from home mostly just a day here or there. But it was still assumed people go to the office other than external sales. It was considered important for collaboration and culture building and, though it still is, the pandemic and Zoom has made us realize workers could be even more productive working remotely. Not only do they save time and money not having to commute to work, they can live in cheaper areas.
Granted we lose something by not being together, especially for newer- and faster-growing entities, but the gains outweigh the losses.
So because of the pandemic, knowledge workers, who have the most important assets in their heads and can access information within seconds using the most powerful machines ever built that cost next to nothing, do not have to come to work. At an extreme, there are gig workers who do not even have an employer.
So do employers have any power?
Building trust and brand awareness in a crowded and noisy media environment with clients and prospects are still important as is access to capital and bringing people together to work as a team. But employers must face the fact that even more power has shifted to the knowledge workers who now don’t even want or need to come to work every day.
While COVID-19 brought temporary trends like a tight labor market, high inflation and volatile markets, employee retention will continue to be important as will benefits, especially ones like 401(k)s with a match through the magic of payroll deduction.
Tax deductions favor employer-based retirement plans and financial benefits. Most people will get better deals on healthcare and other benefits than they can on their own, especially at larger companies. And as defined contribution plans continue to be retrofitted to replace defined benefit plans, plan sponsors, providers and advisors alike realize the opportunities to help people with other financial issues at the workplace, including emergency savings, Health Savings Accounts, student loan debt repayment and retirement income. And though financial wellness is so hard to define, it’s still valued by many.
Most workers cannot afford a personal financial advisor and the only advice they might ever have access to will be at work through their plan advisor with greater protection and oversight by ERISA plan fiduciaries.
Plan sponsors are just beginning to wake up, beginning to unravel the many mysteries and complications of 401(k), plans realizing that they can be retrofitted not just to replace DB plans but also to become a powerful retention and recruiting tool. All of which becomes even more essential as power shifts to knowledge workers who can walk out the door with the organization’s most valuable asset as we experienced with the Great Resignation.