The world of work after the pandemic
The world of work after the pandemic
The pandemic has made clear that many current models of work are not sustainable. Job losses have been concentrated among the young, women and people of colour; some businesses have shown scant regard for the welfare of their workers; and rising food insecurity shows the vulnerability of many families’ finances. Meanwhile, the Black Lives Matter movement has drawn attention to longstanding racial inequalities. As economies reopen, we have the obligation — and a duty — to build back better.
As investors dedicated to sustainability, we care deeply about the pursuit of a more equitable and efficient future of work. To us, this must address three big challenges. First, ensuring that people are adequately compensated — not only in terms of their monthly salary, but also benefits such as retirement savings and healthcare coverage. Second, the world of work needs to address longstanding issues of poor representation of minority groups. Finally, companies need to do more to improve productivity growth, which has been lagging for years.
This vision for a future of work has informed much of our research related to financial inclusion, and is at the heart of our latest investment in Guideline, the self-described easy, affordable 401(k) for small business. Guideline works to address the first problem identified above and magnifies our focus on broadening employee benefits (as advocated for in our investment in Gusto). Retirement savings build financial security, but 40% of working-age Americans have no retirement account savings at all. Nearly 90% of America’s six million small businesses do not offer their employees a 401(k). The consequences are dramatic. America has one of the world’s highest rates of old-age poverty.
We believe Guideline addresses this market failure by democratising access to 401(k)s. Guideline has already helped more than 13,000 small businesses to manage more than $2.5 billion in retirement assets. We are excited to help them scale for even greater impact.
In addition, Generation works with the business community to improve understanding and innovation related to the future or work. In July, alongside our Chairman, former Vice President Al Gore, Generation’s growth equity team convened a virtual summit which brought together leaders from more than 30 companies. The following themes emerged:
Ensuring adequate compensation and benefits. Many benefits are complex to manage for small businesses. Companies like Pie Insurance, Gusto and Guideline are lowering the costs of access to benefits including health insurance, retirement savings and workers compensation. These services save small business owners hours of administration.
Organisations should also consider how they deploy their benefits to encourage broader participation. As we heard from companies including Tally, the trend of offering employees equity is gaining momentum. But companies must also be transparent and provide financial education to their stakeholders to manage such benefits.
Questions of worker classification are also increasingly important. The current framework in the US was developed 70 years ago. You are either a W2 employee or a contractor. We believe there needs to be a more flexible model. Millions are working at or near full-time as on-demand workers, and in dire need of access to benefits such as sick pay. This is a challenge that policymakers, companies and academics need to solve.
But gig-worker re-classification may take too long. Some companies are looking at other ways to close the gap. Platforms like Wonolo and RigUp are jointly paying into portable-benefit platforms alongside the companies and workers that use their respective platforms. This would allow consistent access to benefits through contract work or even through spells of unemployment.
Improving diversity and accessibility. For white-collar workers, by removing the requirement to physically be in the office, companies can open up access to new talent pools like working mothers, veterans and people with disabilities. Companies can diversify their talent pool in different ways. Organisations like Bitwise Industries, Handshake, Flockjay and Andela (another Generation portfolio company) understand that top talent is not solely in tech hubs like Silicon Valley, Seattle and Austin.
The opportunity for remote and distributed work can also allow us to challenge human biases that impact recruiting processes. Companies like Pymetrics, Eightfold.Ai and Checkr are leveraging AI to collect unbiased data to assess a candidate’s true potential to succeed in a job.
Improving productivity. One of the byproducts of not being physically in the office is the loss of chance meetings. These moments spur collaborations and also help young employees build social capital. This is especially critical for women and minorities. Organisations will need to build a balance of structured and unstructured time to allow employees to build connections.
While many knowledge workers effectively transitioned to work from home, the return to the office will be more challenging. How will it go when offices have one third or more of their team working remotely on any given day? One approach may come from Loom, which believes asynchronous video marries the human connection of video with the flexibility of setting your own schedule. Asana, a portfolio company, provides a systematic approach to orchestrating an organisation’s workflow to provide the clarity remote teams need, no matter where they are based. Their recent feature launch related to Goals helps to align teams towards their organisation’s mission.
All workers need to develop their skills as employment opportunities change. Guild Education believes if you can demonstrate that education holds benefits for both the employer and the employee, you can get employers to invest in education. Employees work harder and stay longer at organizations that support their education. Guild research shows that spending on employees’ education offers a 208% return to their employer.
We are thankful to the 30+ CEOs who joined us over our three-day session to share their aspirations for a future of work that is more inclusive and sustainable. And moreover, we are excited by the commercial opportunities related to building back better. As sustainability investors, we hope to continue to catalyse debate on this topic and look forward to hearing from you and updating you as our thinking continues to evolve.
 https://www.guideline.com/blog/defining-the-small-business-401-k-access-gap/ ; US Census Bureau