Remote Working in Private Equity
The COVID-19 pandemic has significantly changed working life. In-person attendance from Monday to Friday, set working hours and a fixed workplace in the office appear to be a set-up of the past and flexible arrangements have already been established in many funds.
Moving towards a new normal
To understand the new work norms in a post COVID era in private equity (PE), Russel Reynolds Associates conducted a survey with our trusted PE sources in the DACH region to gauge their opinion on remote working and what they would like to see in the ‘new normal’.
01: Work norms in PE prior to COVID-19
Prior to the COVID-19 pandemic, around half of the survey participants already had the opportunity to work partially remotely. One third, however, stated that they had only been able to work remotely since the COVID-19 pandemic.
02: Work norms in PE in a post COVID-19 era
According to most of the participants, an average of 25% of the teams in PE are currently working remotely. Almost 50% of respondents answered that they would like to work remotely for one to two days. Less than 20% answered between three to four days or even five days would be desirable.
It is interesting to note that about 1/3 of the PE specialists responded that they would not like to see an increase in remote working after the COVID-19 pandemic. So, the ‘new normal’ is possibly dependent on the individual opinion of the employees and cannot be generalized for every company.
All respondents concurred that the fund they currently work for will have a new way of working after the pandemic. In the majority of cases, the change will liken a hybrid model of on-site office and remote work. Almost half of the PE specialists stated that the fund they work for even has a “work from anywhere” policy allowing employees to work flexibly from wherever they want.
03: Advantages and disadvantages of working from home
The benefits of remote working can be defined by two core tenets: 1) work life balance and 2) less travel time.
If we take a closer look at the aspect of work-life balance, there are several reasons that underlie its importance. The survey respondents often mentioned the time they had gained with their families and especially their children as an extremely positive aspect. In addition, private matters can often be dealt with more flexibly. The adaptability of working hours and the location of work was mentioned, as well as the possibility of being able to work in a highly concentrated manner in certain situations.
The travel time savings are related to both the morning commute to the office and the time spent travelling to external appointments. The commute every morning can be avoided and appointments with external parties can now be held online. Unnecessary time and cost wastage can be saved, and the added stress of constant travel has also been eliminated.
Although the increased work-life balance was mentioned as a positive aspect, about 50% of the respondents said that a clear separation of work and private life was no longer possible due to remote working during the pandemic.
The negative aspects of working remotely are mainly less interpersonal interaction with one's own team as well as the loss of individual coffee breaks to share private as well as professional experiences. Team communication and interaction suffers and maintaining the team spirit becomes increasingly difficult. Furthermore, one PE professional mentioned that brainstorming face to face would be more productive because one could not do other things virtually on the laptop at the same time.
04: Competitive advantage: Creating a desirable working environment as a fund
In order to stand out in the market and remain competitive, funds should dedicate more time on building team spirit, so that this can be maintained even when working remotely. Many of the respondents clearly stated that efficiency is higher, and they often concentrate better when working from home.
Nevertheless, a certain amount of time in the office on site is appreciated and also felt to be important in order to revive the team spirit and collaboration. Another aspect of improving the team spirit are team events that were cancelled due to the pandemic, and they should be revived. Home office, flexible working hours as well as the possibility to go to a centrally located office are perceived as important. Of equal importance is the investment in technology to support remote working. All in all, flexibility as a holistic construct of the new way of working is perceived by the PE professionals as attractive.
So, what is the conclusion? As always, there is no one size fits all solution. Going forward, funds will likely run hybrid models with an emphasis on the office vs. work from home time. While we have all seen the benefits of more flexibility, we have also seen the downsides of not having personal interaction.
