About This Episode
Artificial intelligence is dominating boardroom conversations, yet many organizations are struggling to move beyond experimentation. In this episode of the Future of Work® Podcast, Frank Cottle sits down with Peter Cappelli, one of the world’s leading researchers on management, employment, and workplace strategy, to separate perception from reality.
Drawing on decades of research, Cappelli explains why AI implementation is less about technology and more about organizational design. The conversation explores workflow analysis, job design, hybrid work, remote collaboration, workplace relationships, onboarding, office strategy, and why many executives are approaching AI implementation the wrong way.
The discussion also examines return-to-office policies, the purpose of the office, flexible work models, and why relationships remain the foundation of collaboration. Whether you’re implementing AI, leading organizational change, or refining your workplace strategy, this episode provides practical guidance rooted in research rather than speculation.
About Peter Cappelli
Peter Cappelli is the George W. Taylor Professor of Management at the Wharton School and Director of Wharton’s Center for Human Resources. His research focuses on employment relations, workforce strategy, and organizational change. A regular contributor to Harvard Business Review, The Wall Street Journal, and Human Resource Executive, he is the author of several books, including The Future of the Office, Why Good People Can’t Get Jobs, and Our Least Important Asset.
What You’ll Learn
- Why AI adoption remains slower than public perception suggests.
- How workflow analysis determines successful AI implementation.
- Why organizational change—not technical skills—is the biggest AI challenge.
- What executives misunderstand about AI-driven layoffs.
- Why smaller organizations often adopt AI faster than large enterprises.
- The hidden costs of poorly managed hybrid work.
- Why onboarding suffers without intentional in-person collaboration.
- How workplace relationships improve collaboration and knowledge sharing.
- Why leaders should redesign work before introducing new technology.
- How purposeful office time creates better organizational outcomes.
Transcript
Peter Cappelli
[ 00:00:00,000 ]Think about it, that’s astonishing. Right. You got a really successful company and the leaders say, ‘We know what we’re doing.’ And the investors say, ‘No.’ And the company buckled and said, ‘OK, we’ll lay off people.’ At the same time they announced layoffs, they were up. announcing their hiring plans right so it was just performative. Then those pressures to lay off spread from company to company. They say, ‘Well, Google can do it. Why aren’t we laying off Peter?’
Frank Cottle
[ 00:00:25,680 ] Welcome to the Future of Work podcast. I’m really excited to have you here today. Gosh, your background at Wharton and the books that you’ve written are just amazing. The amount of research that you’ve done.
Frank Cottle
[ 00:00:37,150 ] Honestly, rare that we get someone with it—uh— as embedded in the whole process of the future work as you have been. So okay, well, thank you. I’m looking forward to that. You talked about. Studying organizations that are implementing AI.
Frank Cottle
[ 00:00:52,600 ] And rather than relying on. predictions, what’s the biggest gap between what executives say about AI adoption and what’s actually happening inside their organizations?
Peter Cappelli
[ 00:01:05,360 ] Well, let me tick off a couple and you can decide which one you think is the biggest. But the first is not that much is happening.
Peter Cappelli
[ 00:01:14,650 ] You know, the perception is it’s kind of all over the place and being transformed. And, you know, individuals are using it all over the place in offices for their own little individual things. Embedded in the actual workflow of an organization, sort of transcending individuals. That’s pretty rare still, and it hasn’t eliminated many jobs at all. Um, Those are maybe the two big things. The other big thing in terms of what the issues are in using it.
Peter Cappelli
[ 00:01:47,220 ] It’s not a skill problem. The reason this is so interesting, ChatGBT, is anybody can use it. The problem is organizational change. How do you get this embedded into the work processes? And that means you first got to do a lot of old-fashioned management stuff. You’ve got to map out the workflow. How do things actually get done? You know, from the beginning of a project to the end, what are all the steps in between? Then you have to do what. Human resources. People used to call job analysis. You got to look within each person, talk to them, and say, ‘What do you actually do here?’ Right?
Frank Cottle
[ 00:02:26,930 ] Yeah, I think your comment on job analysis is critical.
Frank Cottle
[ 00:02:30,990 ] Uh, that. You can’t ask someone to change unless you know what they’re doing and how they’re doing it, which is your workflow issue. That’s for darn sure. Um, one of the things that we’ve seen is that the adaptation is greater within smaller companies than it is in larger companies. Yes. And when we look at the total number of people employed here in the US, let’s just talk about the US for a second. Um, That’s a bigger majority than the people employed by the Fortune 1000.
SPEAKER_2
[ 00:03:03,480 ] Mm hmm.
Frank Cottle
[ 00:03:05,220 ] So do you think that that bottom-up element is going to carry AI forward, or do you think it’ll be a— to a point and then it’ll become a top-down again issue?
Peter Cappelli
[ 00:03:17,790 ] Well, let’s just pursue your thought about why, because I think it’s true, why you’re seeing maybe more of this in smaller organizations.
Peter Cappelli
[ 00:03:26,280 ] I guess my view is it’s certainly easier to do in smaller ones. So let me give you a quick example as to why. If you are going to introduce something— looked at like chatbots into call centers, something like that, right? And I was looking at it in healthcare. If you’ve got an office of 40 docs, you just have to get those 40 docs to agree, here’s what we’re going to do and here’s why.
Peter Cappelli
[ 00:03:53,330 ] If you’ve got a healthcare system like the one that I go to at the University of Pennsylvania, sure.
Peter Cappelli
[ 00:03:59,640 ] eight or so different hospitals. And within those hospitals, you’ve got 10 departments within each one.
Frank Cottle
[ 00:04:06,990 ] and different systems.
Peter Cappelli
[ 00:04:08,430 ] Different systems and you’ve got to first just figure out what the heck do they all do. And then you got to get them all to agree to the same standard. And that is a nightmare, right? So smaller places, it’s easier to introduce. We used to talk about scale economies, you know. And the first reason why there’s not scale economies is the one we just described. But the second is nobody in their right mind is building these tools anyway. You’re just buying them from vendors. So you don’t get scale economies in building chatbots, let’s say, because the vendors have already done it for you. So it is really the reverse. It is harder to introduce in bigger places than smaller because bigger are more complex, right?
Frank Cottle
[ 00:04:55,850 ] What you hear, you made a comment about uh layoffs uh that we aren’t having layoffs because of AI in Europe. But yet you hear the headlines or you see the headlines.
Frank Cottle
[ 00:05:08,470 ] Um, Do you think that just executives from larger companies trying to say. Hey, even though we overhired during a period and this and that, we’re going to use AI as an excuse for our layoffs that we just wanted to do anyway. What’s your view on that? Is it a little sleight of hand going on?
Peter Cappelli
[ 00:05:27,520 ] Uh yeah, this is the beauty if you wonder why do we have academic tenure. This is one of the reasons.
Peter Cappelli
[ 00:05:33,700 ] Say what? You really think or what you believe is true. Yes, I think that’s it. So we’ve been following. These layoff announcements for a while. You know? They started after the pandemic and the belief by some investors that companies have overhired. And think about the Google situation, for example. A lot of this was targeted at Google first. And what the Google leadership said was: ‘Yes, we know we hired a lot of people. during the pandemic because we could grab them. They were maybe let go of other organizations and we grabbed them while we could because we know we’re going to need them. And yet the investor community said no. And if you think about it, that’s astonishing, right? You got a really successful company and the leaders say, ‘We know what we’re doing.’ And the investors say, ‘No.’ And the company buckled. And said, ‘Okay, we’ll lay off people.’ At the same time, they announced layoffs.
Peter Cappelli
[ 00:06:35,320 ] They were up. announcing their hiring plans, right? So it was just performative. Now we come to AI issues, I think You’re right. Then those pressures to lay off spread from company to company. They say, ‘Well, if Google can do it, why aren’t we laying off?’ And then the boards hear this and it spreads from tech everywhere else. So yeah, initially they were saying, you know, because of AI, and they were hinting that it had taken over the work. But then, when you can’t show many examples really where that’s happened much. Then they pivoted and said something really bizarre. They said, we anticipate that it will take over the jobs. So we’re getting rid of the people now. It doesn’t make a lot of sense. You’re just going to leave the work undone until AI can do it. And then the new thing they were saying was, we need the money.
Peter Cappelli
[ 00:07:23,790 ] In order to pay for the big investments we’re making in data centers and AI. So I looked into that and the finances of some of these companies. If you look at companies like Meta, they say they’re going to spend huge amounts of money. $ 140 billion on these data centers next year. It’s a big number. They have over $100 billion in cash right now. The industry analysts say. They can pay for this $140 billion pretty easily just out of revenues. And then you say, what did they save from their layoffs? About a billion. So they saved a billion, but they’re going to be spending $140 billion. And they’ve got cash and they’ve got revenues.
Peter Cappelli
[ 00:08:04,480 ] They didn’t need to lay off those people to save the billion to make this happen, right?
Frank Cottle
[ 00:08:09,470 ] No, I certainly agree with those numbers. Those numbers being valid, you can’t argue them. One thing I think is interesting.
Frank Cottle
[ 00:08:18,110 ] As you know, I’ve been in the flexible workspace industry for almost five decades. All my gray hair shows from that.
Frank Cottle
[ 00:08:25,460 ] One of the things that we’ve seen through all the iterative changes— whether they’re technology-driven or financially driven by the economy, etc whenever there is massive layoffs, we immediately see an instant, and we track this through the Department of Labor Statistics. But we immediately see whole numbers, tens, and tens, and tens of thousands of new entities, new corporations, LLCs, et cetera, being formed.
Frank Cottle
[ 00:08:57,099 ] There’s always a surge in the formation of new companies. If you’re at Google and you fire three good engineers, those guys are sitting next to each other. They say, ‘Hey, let’s go build a product.’
SPEAKER_2
[ 00:09:08,146 ] Hmm, hmm.
Frank Cottle
[ 00:09:09,020 ] Let’s do this and let’s do that. So we see the emergence of a whole variety of new entities coming from these layoffs. At the bottom and starting to get to drive new products and a good example of that, not just in new entities, but in product use. Is if you look at the amount of direct advertising done through social media right now, uh, for small companies trying to help bigger companies integrate into AI.
Frank Cottle
[ 00:09:43,140 ] opened tenfold in the last 12 months. A big percent of those people, I’m in a position.
Frank Cottle
[ 00:09:51,010 ] Are those people that were laid off from Google. The number of offers being made and the number of companies. And one of the ways to rectify that is all you have to do is look at—oh, this company’s been in existence for 10 months, 12 months, 14 months, or that’s how long this person’s been there to call upon you. And you immediately say, ‘Hey, this guy used to be at Google. This guy used to be at Meta. This guy over here at Microsoft.
SPEAKER_2
[ 00:10:15,940 ] Hmm-mm.
Frank Cottle
[ 00:10:16,520 ] It’s a very interesting phenomenon that happens every time we have them.
Peter Cappelli
[ 00:10:20,820 ] That’s interesting. Yeah.’ And it raises another interesting question, and that is— if they could start these new companies to go after these markets. Why is it that the companies, when they employed those people, weren’t thinking about that? Exactly.
Frank Cottle
[ 00:10:33,950 ] I think big companies like to deal with big companies. You know, Google doesn’t announce what it gets me as a client.
SPEAKER_2
[ 00:10:42,540 ] mm-hmm.
Frank Cottle
[ 00:10:43,150 ] They want to announce when they get some other major company as a client. or Amazon to their data centers. We just signed such and such for a $40 billion deal. They never tell you what the profitability is, the size of the transaction itself. yeah uh so I think you know big likes big the market likes headlines.
Frank Cottle
[ 00:11:05,970 ] And I think there’s this bottom-up structure that is percolating.
SPEAKER_2
[ 00:11:11,420 ] mm hmm.
Frank Cottle
[ 00:11:12,190 ] Will end up driving the real change that we’ll see in the future of work as we go forward.
SPEAKER_2
[ 00:11:19,400 ] Hmm, hmm. Yeah.
Frank Cottle
[ 00:11:22,090 ] Yeah, the next billion-dollar unicorn company is probably going to have two or three employees.
Peter Cappelli
[ 00:11:26,860 ] Yeah. Well, as we say in Philadelphia, God bless. Good luck. I do.
Frank Cottle
[ 00:11:33,340 ] Yeah, no— that’s really you know, speaking of employees and flexibility, flexibility in the workplace. As we came out of the pandemic, a lot of new structures were developed for employment, remote work, hybrid work.
Frank Cottle
[ 00:11:50,030 ] Uh, all variety of things, uh, working from home, etc. Really took a big leap during the pandemic, and it held over an awful lot of it. You’re a big proponent of in-office in many respects, the importance of the office as a structure. Which I think I would agree with. The world right now is a big proponent of work-life balance. And commuting is not necessarily part of that balance. Or getting rid of it as part of that balance—I guess. What’s your view on the more complicated and the research that’s come out of what’s really working, what people are really doing. Especially as it relates to these larger companies, because they’re the ones with the great visibility.
Peter Cappelli
[ 00:12:40,910 ] Yes, no, I think that first thing is a good point you just made, and that is: it’s largely a big company, big city phenomenon, but it is ubiquitous in big companies and big cities, some sort of remote work.
Peter Cappelli
[ 00:12:55,119 ] I found this whole terrain a little surprising, I guess, in my work experience, which has now also been quite a while. So I wrote a book at the very beginning. Well, right during the pandemic, basically. That just about: What do we know about remote work? Because it had just been thrown on us, right? The biggest experiment in industry, certainly in the office ever, right? A global development. And there have been a fair number of studies about remote work, but they were mainly studies about an individual who was working remote and their peers are still in the office. And those things didn’t work out really well for the individual.
Peter Cappelli
[ 00:13:39,820 ] Not surprising. You could imagine what would happen. They were kind of cut off from what happened in the organization. The same phenomena that expats often faced when you left headquarters, people kind of forgot about you.
Peter Cappelli
[ 00:13:52,469 ] And so I just wrote a book about, you know, these are the questions. Here’s what we kind of know, and these are the questions. And they asked us to up to ask me to update the book. And I took on a co-author, Rania Nemi. And there, we were just looking at what do we know? Since the pandemic and since remote work has happened. And I think to summarize it, employees largely like it. A lot there are some groups that don’t like it as much— some young people in particular. The fight has all been around what are the effects on performance, which is understandable, right?
Peter Cappelli
[ 00:14:39,400 ] And there, the fight has been really very partisan on what does the evidence show about individual job performance? If you think about it, it’s a pretty narrow slice of the whole story. But I’ve been quite struck. Bye. The people who just ignore the range of evidence. So there were studies, two prominent ones by colleagues that were done before the pandemic, one on patent attorneys who have always worked independently. Actually, they were paid kind of piece rates, right?
Frank Cottle
[ 00:15:11,800 ] Yeah.
Frank Cottle
[ 00:15:13,180 ] Ours is a solopreneur. Yeah. Our trademark patent attorney.
Peter Cappelli
[ 00:15:18,810 ] Yeah, yeah, uh, and uh. This is for the US government, the federal government patent attorneys, and they are largely work completely independently from each other. And remote work worked well for them. Their performance actually went up on individual patents process, partly because they didn’t have to spend time in meetings anymore in offices where they had to do. They didn’t have to live necessarily near their offices, but they had to show up a few times. They don’t have to do that now. The other was a call center in China, as I recall, where they discovered— won’t surprise you—that a big bang in real estate savings when people worked remotely. Not so much in productivity, but when they allowed them to choose: do you want to be in the office or at home? They discovered that both groups’ productivity was better. Right. And you could sort of see why you might choose in China if you’re living with your in-laws and you got a lot of, you know, housing is crunched. You don’t have space for independent office.
Peter Cappelli
[ 00:16:20,670 ] And since then, though, there have been several studies showing negative effects in different kinds of ways.
Peter Cappelli
[ 00:16:30,680 ] Centers that do not that show the performance got worse when they were remote, a couple of showing things about collaboration and cooperation that gets worse when you don’t see see each other face to face. And a study that we did with another colleague, Jasmine Wu, where we were looking at basically doing focus groups or group interviews in a hybrid organization, asking people what had changed in their work before and after.
Peter Cappelli
[ 00:17:00,700 ] There in that organization, people really liked it and wanted to keep remote work, but you could see problems in onboarding new hires in particular, in cooperation. And this is sort of our story about in praise of the office: is there’s lots of things that happen in office work that get done because people know each other. and because it’s easier to help each other and in face to face. When they moved to remote, people’s focus shifted toward their individual KPIs, things I measured on. Agreed. And it’s harder to help each other and they didn’t feel obligated to do the things they used to do, even though they were never in their job description, like look after the new hire. who is sitting next to you.
Frank Cottle
[ 00:17:47,080 ] I think your obligation comment is right on. A cooperation can be managed pretty well, but that feeling of this person needs help, support, I think that’s a big drop out of the remote work issue.
Peter Cappelli
[ 00:18:04,600 ] Yeah, and I think our view is you could manage these things, right? So we never had the view that remote is bad, although I think we do. have the view that if you never see each other, you’re going to pay some prices for that in regular office work, and that you can manage it by getting people together and by making it purposeful. So I think there’s some general agreement among that. But I do run into lots of people who have a stake in one side or the other, and they’re just ignoring.
Peter Cappelli
[ 00:18:39,030 ] The gray areas and the fact that there is evidence, depending where you’re looking, on one side or the other, should you go back or should you not?
Frank Cottle
[ 00:18:48,000 ] No, I think you’re right there. One of the things that we noted is that the two things I’ll mention first, remote work and hybrid work, started in the mid-90s. With a Clean Air Act.
Peter Cappelli
[ 00:19:02,040 ] Yeah, even before that, I think, actually, right?
Frank Cottle
[ 00:19:03,900 ] Yeah, telecommuting.
Peter Cappelli
[ 00:19:05,240 ] Telecommuting, right.
Frank Cottle
[ 00:19:06,700 ] So that was a government-driven structure that required all companies of more than 50 employees to file a. Clean air act.
Frank Cottle
[ 00:19:20,730 ] Paper basically plans, um, uh, and uh, required them to have carpooling, van pooling, a whole variety of things, and uh, hundreds of telecommuting centers were built where people would go. They’re home, but far from their work.
Frank Cottle
[ 00:19:41,260 ] When the Clean Air Act, when the government lost the will to enforce the Clean Air Act, I forget which administration it was, 96 or so. 95, 96, all of that stopped. But that was the beginning of it. We saw a second surge of that in 2000, I don’t know, 14, I’ll say 15, 16.
Frank Cottle
[ 00:20:03,110 ] in the battle for talent amongst the tech companies prior to the pandemic. If they wanted to hire a top engineer, that engineer happened to live in Kentucky.
Frank Cottle
[ 00:20:16,860 ] That engineer did not want to move to Silicon Valley.
Frank Cottle
[ 00:20:20,500 ] They would have to pay him three times as much, buy his house, relocate. His family didn’t want to move, etc. So they started with remote working. Yeah. For certain classes and categories of people that work. I will say. Production-oriented from an engineering point of view. It was a big group. Yeah.
Peter Cappelli
[ 00:20:41,300 ] Yeah, let me. Let me add one. And that was in the dot-com period, as you know, because you were living around there. When real estate was so expensive and the companies were booming, and they were trying to get people to work from home. And the reason that one was interesting is because they invented two practices which persist now. One is what in Europe they call hot desking and we call hoteling, right? And this was that you had to, if you wanted to come into the office, and you used to need to in those days, to plug in for security and things like that. You had to call in advance and make an appointment. You had a reservation like a hotel.
Frank Cottle
[ 00:21:22,440 ] I think Deloitte was the first big company that actually initiated that— national or international basis.
Peter Cappelli
[ 00:21:30,680 ] Right. And it made sense for them, right? Because they’re often following their clients around. Exactly.
Frank Cottle
[ 00:21:36,220 ] That’s exactly why they did it.
Peter Cappelli
[ 00:21:37,820 ] Having a particular office for you wasn’t something we were in it very often. The other thing was open office plans. And this is basically where you get rid of not just offices and not just cubicles, but often just desks put next to each other.
Peter Cappelli
[ 00:21:53,610 ] The reason they did it was, of course, because it’s cheaper— you can put a lot more people into the same space. They said it was to improve collaboration, but the evidence is clear that it did the reverse because you didn’t want to talk to people because you’d be disturbing other people. And if you go into those offices that operate like that, everybody’s got headphones on and nobody’s looking or talking to each other. The reason those two matter is because they reappeared now, right? So in a lot of organizations that moved to hybrid, the first thing that happened was— or permanently remote— but not that many went permanent. Was it that they shrunk their office footprint? And what we forget is, you know, this big real estate cost savings from that, but you can’t get everybody back in the office if you cut your office space by a third. So within these companies now, there’s kind of a CFO, operating, executive debate. Operating executives often are the people arguing we want everybody back.
Peter Cappelli
[ 00:22:55,530 ] The CFO. I said, we cut office space. Don’t ask me to go back and add it in now. So how do you make hybrid work when you can’t get everybody there at the same time?
Frank Cottle
[ 00:23:04,990 ] Third workplaces.
Peter Cappelli
[ 00:23:07,510 ] Third, well, there you go. You can do it, right? But you’ve got to be more purposeful about it. They don’t all have to be in the office exactly at the same time together. Right. But you have to find a way for them to meet and meet each other. You can do it, but it’s hard work.
Frank Cottle
[ 00:23:23,460 ] What we find is that companies are organizing hybrid workers and teams relative to their job description, relative to what they would, the same as they would be in the office. And they look at that and they say, ‘Well, we have this business or coworking center nearby.’ Let’s create a virtual office there. And then every Friday, the team will meet there instead of at the corporate office.
Peter Cappelli
[ 00:23:45,130 ] Yeah, you could do that.
Frank Cottle
[ 00:23:48,530 ] Real estate, primarily balance sheet debt. Um, about is staggering.
SPEAKER_2
[ 00:23:55,180 ] Mhm.
Frank Cottle
[ 00:23:55,910 ] The corporate uh balance sheet um and so we’re seeing a lot of that starting to go on uh more and more organized groups working in the third per places not just individuals.
Peter Cappelli
[ 00:24:08,710 ] And I think one of the advantages, I’m sure, of that is that if you’ve moved in your office, physical office, toward smaller space and open offices, it’s less pleasant than being at home.
Frank Cottle
[ 00:24:25,200 ] I agree, and the primary issue that you brought up is sound. Um, the noise that comes from it there’s a video a little video I saw from a major company actually that have some rules around sound. I have a guy with headphones on, and he says, ‘Headphones off, feel free to engage me.’
SPEAKER_2
[ 00:24:46,960 ] Oh, really?
Frank Cottle
[ 00:24:47,900 ] I’m on, but with one ear open, you know, you can talk to me if you need to. Headphones on. Leave me the F alone.
Frank Cottle
[ 00:24:58,710 ] Really that kind of a. a thing. Sound if you if you There are two complaints inside of office buildings. The first is my office is too hot. My office is too cold. Yeah. Okay. That’s the first one. The second one is I hear everything that person next door says. I can’t concentrate because that person is always on video calls. That would be me. Always on video calls, always making noise.
Frank Cottle
[ 00:25:30,120 ] And when you bring that across open workspace, it really becomes a problem.
Peter Cappelli
[ 00:25:34,640 ] Absolutely right.
Frank Cottle
[ 00:25:35,920 ] The office, to me, and you and I may disagree on this, is primarily for interaction, purposeful work, and meetings.
Peter Cappelli
[ 00:25:43,990 ] Yeah, no, I think that’s right. I think that’s right.
Peter Cappelli
[ 00:25:48,560 ] And I think what I’ve seen, which is distressing, I think, is that you could manage these issues in an organization. You could be purposeful about it. Were places when employees first started to come back to the office that companies were making some effort first to make sure that coming back was not so unpleasant. They had events for them and things like that. They all seemed to disappear.
Peter Cappelli
[ 00:26:13,620 ] And I see them now just not. trying to manage this at all. At the very top of the organization, they’re not giving direction as to how to manage hybrid. They’re delegating it down to the local level. And you get chaos when you do this. The people next to me, their office manager says they can work from home. Mine says we have to be in on our hybrid days. You know, you just get chaos because the people at the top are not willing to set rules and say, ‘Okay, here’s what we’re going to do.’ And by the way, we’re the leaders doing it too, right?
Frank Cottle
[ 00:26:48,880 ] Do you think this goes back to AI? One of the things that you said initially in chatting about AI a moment ago was that you need to really understand workflows and you need to really understand the job description of the individuals and how to directly apply AI. Do you think that same rigor is necessary and not being applied properly, relative to remote and hybrid work.
Peter Cappelli
[ 00:27:20,720 ] uh yeah, for sure it’s not being applied uh uh i it wouldn’t surprise me at all if you could get much bigger bang by rethinking work. Just one more quick thing on AI. There are a couple of places I’ve seen big improvements after AI was introduced, but it seemed to me, looking at it objectively, that most of the bang came from rethinking the workflow and standardizing things. So it wouldn’t surprise me in remote work if you could get a much bigger bang. Just with a set of simple rules. Here’s a basic one. Place we looked, they never did this. If you’re going to have meetings, cameras on.
Frank Cottle
[ 00:28:04,210 ] Absolutely. You have to be present.
Peter Cappelli
[ 00:28:06,620 ] Yeah.
Frank Cottle
[ 00:28:07,060 ] Absolutely.
Peter Cappelli
[ 00:28:07,800 ] And it’s amazing how often you go to meetings when the meetings are huge and most of the people are cameras off or they’ve got their agent. they’re not even there their agent is there taking notes you know what’s the point of having a meeting if somebody is just going to take the notes just send them the notes and skip the meeting right no absolutely right absolutely we have seen the same even in smaller companies uh the getting engagement and it’s funny the seems like a lot of times the person that’s closest to the core of the meeting is the least engaged and the people The most remote are the most engaged. Oh, that’s interesting.
Frank Cottle
[ 00:28:49,900 ] Which is always kind of interesting.
Peter Cappelli
[ 00:28:52,420 ] Well, you know, it’s all unintended consequences, right? So one of the things I learned in this one organization we looked at in detail is people running meetings said, you know, with cameras off, you lose the audience and you don’t know it. If cameras are on, you can at least kind of tell a little bit. whether people are paying attention or not. When cameras are off and with virtual meetings, you can make them bigger. So people say, ‘Hey, I want to be in on this meeting.’ So you just add them. And if it was in the office, you could only have 10 people in the room. If it’s virtual, you could have 100 people in the room and they reported, you know, office time in meetings. In remote meetings, meeting time has gone up a lot. And. One reason they pointed out is they needed to have post-meeting meetings. Because people, after the meeting, said, ‘I didn’t know what this was about.’ Is it going to have to have another meeting to explain to them what happened in the first meeting? Because they weren’t paying attention.
Peter Cappelli
[ 00:29:48,640 ] It’s so obvious that these things could be fixed, but somebody at the top’s got to be willing to say, ‘Look, we mean it. We got to do it this way. We’re going to enforce it. And they’re not doing it.’
Frank Cottle
[ 00:29:59,060 ] No, I agree with that.
Frank Cottle
[ 00:30:01,980 ] Same.
Frank Cottle
[ 00:30:03,440 ] Engineering into the management of these things as necessary as the engineering into the products themselves a lot of times, especially for tech companies.
Peter Cappelli
[ 00:30:11,880 ] Yeah. And one of the things I noticed is that they have never rethought the workflow in the work process. You know, it somehow evolved this way and they’ve never sat down and thought about it before. AI provides that opportunity. To do it because people at the top say, AI is really important. You got to think about this. Remote work should provide the same opportunity, but Nobody’s willing at the top to say. Here’s the porch.
Frank Cottle
[ 00:30:39,390 ] Do you think it’s almost an empowerment issue? I have to let my people do it the way they want to do it versus tell them how they have to do it?
Frank Cottle
[ 00:30:47,790 ] I don’t want to disempower them for such a seemingly minor issue, which actually has consequences.
Peter Cappelli
[ 00:30:56,310 ] It’s a really good question, you know, and one of the things I’ve worried about, which is a little related, is the extent to which the c-suite has moved from loving human resources when it got them through the pandemic to now seeming to hate human resources. I think some of it, frankly, is because they kind of blame human resources for the state of play with respect to remote work, you know, and some of it might be that HR people were certainly the people telling leaders it is important to maintain this or people are going to quit. And it wouldn’t surprise me if they said it’s important to give people a say in this because it is important. People like to have a say. The problem is when you’ve got groups of people, you do have to think about what the consequences are. If everybody can pick their own day to come in, then the point of having— Basically, the inmates running the asylum.
Peter Cappelli
[ 00:31:59,070 ] And you defeat the whole purpose of being there together, right?
Frank Cottle
[ 00:32:02,600 ] No, I think a company needs structure and guidance for sure. A company also needs to understand if I’m going to get the best people, they’re going to be happy here. I have to have it create a balance. Because that is the new norm. Balance is a new norm—I think it’s going towards hybrid work. We see that. One of our companies, as you know, is in the virtual officing business. And that company is continuing to grow in terms of numbers of customers on a substantial basis. And the virtual office is the epitome of hybrid and remote work. mm-hmm uh so you know we see that uh yeah constantly at all levels from the federal government as a client on down to startups.
Frank Cottle
[ 00:32:50,629 ] And we also see it’s interesting.
Frank Cottle
[ 00:32:54,189 ] um when I talked to the head of a VC Avenger Capital Company. And I asked them, what do you think about this and that? And then we use a simple example, and I’ll use it right here now. Let’s see that you and I were each going to start a company.
Frank Cottle
[ 00:33:13,030 ] And we each needed a million dollars. We each have a little product.
Frank Cottle
[ 00:33:16,900 ] And. The BC, I went in and interviewed, and you know the first question he’s going to ask is, ‘What are you going to do with the money?’
SPEAKER_2
[ 00:33:23,480 ] Mm-hmm. Mm hmm.
Frank Cottle
[ 00:33:25,409 ] First question. You can do it. Well, I’m going to get into office. I’ve got to hire a staff.
Frank Cottle
[ 00:33:32,000 ] And I bring some imaging equipment, blah, blah, blah.
Frank Cottle
[ 00:33:36,720 ] And sign a lease to do that. And the guy goes, ‘Okay.’ Then you walk in and he says, ‘What do you get with the money?’ He says, ‘Well, I’m going to get a virtual office, hire people on a hybrid basis, remotely using flexible work space, and I’m going to build my software.’ Mm-hmm. I’m not going to get the money. You are.
SPEAKER_2
[ 00:33:56,500 ] Hmm.
Frank Cottle
[ 00:33:57,150 ] Every one of these companies now is looking at an investment profile. Every one of them has the fantasy that the next unicorn is going to be a three-person company.
SPEAKER_2
[ 00:34:08,550 ] Mm hmm.
Frank Cottle
[ 00:34:09,400 ] No.
Frank Cottle
[ 00:34:11,639 ] Mm-hmm. Assets or liabilities. So money is driving small and growing businesses from bottom up into these flexible models. So it’s not just a top-down big company or a small to medium enterprise that’s been established. Investment funds look at this model and we see it.
Frank Cottle
[ 00:34:36,699 ] Constantly.
Peter Cappelli
[ 00:34:37,820 ] Mm-hmm.
Peter Cappelli
[ 00:34:39,590 ] Yeah, I think in the tech world, where, of course, it got its start. It was easier to do that because so much of the work of putting software together is kind of discrete and could be done on an individual basis, and then you kind of put it together. If these were law firms, let’s say, it would be much harder to do, especially if you’re trying to train new lawyers, for example, and you want a lot of interaction. But I think it got a big push in tech, and it does make more sense there because of the discrete nature of the work— separate tasks that eventually have to come together.
Frank Cottle
[ 00:35:19,650 ] But, you know, within law firms, too, though, one of the biggest. Sore spots with property companies these days as major law firms are breaking up and partners are going into smaller structures, or the biggest group of lawyer growth are solopreneur lawyers.
Frank Cottle
[ 00:35:37,650 ] Yeah, well that could very well be this number are doing that. Yeah, and so you see that. It doesn’t really matter. When the great revolution comes, the first people we will hang will be the Lord.
Peter Cappelli
[ 00:35:50,950 ] Well, you know why, in defense of lawyers, you know why Shakespeare said that, right? It was because in that context was when you got rid of the lawyers, you could break all the laws.
Peter Cappelli
[ 00:36:00,960 ] Could take over everything, right? But just one, just to follow up on that, the opposite side of that for law firms are that they have pulled back on letting associates work remotely because so much of law is about learning from the more senior people and sticking your head in their door. And one of the things that we discovered trying to get people— rapid responses to questions when people are remote— we could do it if we really tried, but I don’t see them trying it. You know, people are allowed to post, ‘I’m unavailable for a long time you hit them on a Slack channel. They don’t have to respond immediately. And at least what I heard is, you know, we get our own KPIs done, and then I look to see who is pestering me for a response. And I heard from new hires who said, you know, I don’t know these people. I ping them. They never respond, right? I’m still responding to my friends who I knew before the pandemic.
Frank Cottle
[ 00:37:00,100 ] I think the new hire is the person that is the most impacted by all of this. Uh, overall, and we are at risk of creating a knowledge and workplace bubble, if you will. Uh, within this group, where yeah, within that age, the new higher age group to where everything will be so different for them. They won’t ultimately.
Peter Cappelli
[ 00:37:28,610 ] Yeah, well, and if you think about a tip, you know, a typical company, even if you have 10 turnover, right? So, average turnover in the US is about 30 or so—uh, surprisingly high. But say, you’re a company with 10— In about four years, half your workforce is new. So you end up with two different cultures. You end up with those 50% who knew each other and knew what the organization was like before. And you got 50% who don’t know any of that stuff. And that’s not a great thing. You could manage it, but I don’t see him trying.
Frank Cottle
[ 00:38:01,850 ] Well, I’ll complicate it a little bit. You also have five generations.
Peter Cappelli
[ 00:38:06,910 ] Yeah, I’m I’m not a believer in the generational stuff. You know, the National Academy of Sciences has pointed out did a study on this, and they said basically what’s going on there is we’re just confusing age effects with generational effects. So older people, I mean, my cohort and your cohort, who they now describe as the workaholic generation. You know, when we were kids, you’ll remember, we were described as the laziest Generation ever. And they were probably right.
Frank Cottle
[ 00:38:38,910 ] Rebellious.
Peter Cappelli
[ 00:38:39,780 ] Yeah, rebellious, and now we’re the conformists. We just got older and got kids in mortgages, right? There are differences by age for sure and what people want, but they’re not new and they you know, they’ll be there forever.
Frank Cottle
[ 00:38:55,569 ] We’re sort of running long here, Peter, and I’m going to ask one final question. For the leaders that are listening today and they want to keep offering flexibility but don’t want to lose collaboration, etc. What’s the one thing that you would say? Aha, do this one thing and you’ll probably be okay.
Peter Cappelli
[ 00:39:17,180 ] Well, I think you want to get people to know each other so that they feel some interaction with them, you know, social relationships.
Peter Cappelli
[ 00:39:29,550 ] Cover over lots and lots of problems, right? If you are having this experience, which I’m having at the moment on email with people who you have a disagreement with, and you notice it just gets testier and testier and testier the longer it goes on. And if we were all in the office together, you just stick your head around the corner. problems would be kind, kind of be solved. So you’d like to have that ability for people to feel like they can just solve the problems quickly because you have some responsibility to each other and getting people to know each other lots of ways to do that, but you got to work at it right. It doesn’t happen; it’s not going to happen by accident anymore.
Frank Cottle
[ 00:40:07,110 ] Well, you know, it’s funny. We’ve been doing business globally for- many decades.
Frank Cottle
[ 00:40:13,220 ] One of the recognitions that we have to your very, very point of emails and contracts, and we use contracts as the issue. We can have a contract with someone far away in a different.
Frank Cottle
[ 00:40:27,669 ] Economy in a different way. etc.
Frank Cottle
[ 00:40:30,790 ] But the contract and the rules of the contract will never solve a problem. Only relationships.
Frank Cottle
[ 00:40:37,560 ] Relationships.
Frank Cottle
[ 00:40:39,390 ] Solve problems. Yeah and that is an in-person issue so I would stand behind your your point a hundred percent.
Peter Cappelli
[ 00:40:48,150 ] And you notice that with younger people who feel that once you get a contract, things are done.
Peter Cappelli
[ 00:40:54,210 ] So yeah, try to enforce it.
Frank Cottle
[ 00:40:56,070 ] Contractors have started.
Peter Cappelli
[ 00:40:57,740 ] Yeah. I’ll try.
Frank Cottle
[ 00:41:00,720 ] Well Peter, I want to thank you very much. I’ve thoroughly enjoyed meeting you and enjoyed all the input you’ve been able to give us today. I’m very grateful for it and We’ll look forward to maybe chatting again sometime in the future.
Peter Cappelli
[ 00:41:14,220 ] Good. My pleasure, Frank. It was fun. Thank you.
Frank Cottle
[ 00:41:16,770 ] Take care. Bye-bye. If it’s impacting the future of work, it’s in the future of work podcast by all work dot space.
