Leadership1 publisher3 min readPublished
Cappelli's study of 760 employees traces a two-tier workforce to remote work
Wharton's Peter Cappelli and Jasmine Wu interviewed 760 staff at a global financial services firm and found remote and hybrid work cut colleague contact. The evidence comes from one firm, but it gives managers who treat hybrid work as settled a reason to re-examine what it costs in collaboration and training.
The Board Room · Leadership desk
What happened
- The interviews were conducted in late 2023 at a single firm operating across three countries.
- The authors say less contact eroded personal relationships, and with them the coordination and collaboration that build networks and get work done.
- Remote staff shifted toward individual performance goals, a pattern the authors say is common because individual KPIs are easier to measure for promotion.
- The most frequent comment from new hires was that coworkers did not answer their virtual requests for help.
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Why it matters
- cost The cost compounds with turnover, because each year of distributed work raises the share of staff who never formed in-person ties with the colleagues they depend on.
- decision Review design becomes part of hybrid policy, since the study suggests many staff will skip help that sits outside their own KPIs.
- exposure Informal news stops travelling between colleagues, so a team can lose an important coworker without learning that they left or why.
Cappelli came to the question doubting the early verdict. "When that wave of wonderful ended, it struck me as so implausible that what we did managing employees in offices for a hundred years was completely useless," he said [14]. He had written about the subject in his 2021 book The Future of the Office, and went back to it in 2023 [1].
The trade-off he and Wu describe runs through performance management. Cappelli said that in some ways performance management got better and more rigorous, because every week staff got a check-in with their boss, and that the extra attention focused people on their own work [8]. In the study, that focus meant workers stopped helping each other [17]. "A lot of people will think, 'It's not in my KPI to do that,'" he said [10].
The board-deck version of this research is that individual output is now managed more closely than before [8]. That version is incomplete because the losses the interviews found sit between people, and an individual scorecard does not measure them. Virtual meetings grew bigger and longer because nobody had to book a room. With cameras allowed off, hosts could not tell who was listening [11]. "Because nobody is paying attention, you have to have post-meeting meetings, and then notes about those meetings that get sent out to people who don't read them," Cappelli said [12].
The timing is measured in years. According to Cappelli, the loss of relationships mattered less at the start of the pandemic, when staff already knew each other and had set routines. It did more damage as new hires arrived who needed the veterans' mentoring [5]. A firm that judged remote work in 2021 was judging relationships formed in the office [5]. "You end up with this two-tier workforce. The old group is slowly shrinking, and the new group that's growing has an arm's length relationship with work. That's a weird thing that I don't see employers talking about or doing anything about at all," said Cappelli, who also directs Wharton's Center for Human Resources [6][15].
A skeptic would say this is one financial services firm, interviewed once, at a time when the firm had told staff to put their own well-being first. The authors accept part of that. They attribute the individual focus partly to that guidance [18]. The Wharton account does not report a comparison group of office-based staff, a measure of output, or results from other firms, and the article itself calls the paper a snapshot in time [16]. The evidence supports a narrower claim: at one firm in late 2023, contact fell and new hires struggled to get help [3][9]. The KPI finding is harder to set aside. It depends on what a firm chooses to measure, and that choice did not end with the pandemic.
These costs arrive on different timescales. A firm can change how it designs reviews this quarter. The two-tier workforce builds over years, one departure from the veteran group at a time, and the veterans are the people the later hires needed for mentoring [5].
What to watch
- Replication of the Cappelli and Wu findings outside financial services, or with a comparison group of office-based staff.
- Retention and promotion data comparing post-2020 hires with pre-pandemic veterans at hybrid firms, which would test the two-tier claim with numbers.
- Employers adding collective outcomes or help given to colleagues into performance reviews for hybrid staff.