Back and forth: COVID-19’s impact on business in 2021—and today

The years-long pandemic persists. How can companies continue to adapt?

In this episode of McKinsey Talks Talent, talent experts Bryan Hancock and Bill Schaninger have a wide-ranging discussion, in which they look back at 2021 and reveal lessons leaders can take to garner more success in 2022. An edited version of their conversation follows.

Employees’ mental health is worse

Lucia Rahilly: Compared with last year at this time—on the one hand we are postvaccine, so we’re in a different place now, and on the other it feels like we’re constantly recalibrating expectations. What in your view has changed in employee’s mental health over the past year?

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Back and forth: COVID-19’s impact on business in 2021—and today

Bill Schaninger: One thing we’ve seen for sure is it’s gotten worse. There have been pronounced amounts of prolonged stress, prolonged anxiety, prolonged uncertainty. And we started making it OK by acknowledging that people are stopping working and not coming back.

There’s one group taking a timeout; they’re done. The doors are wide open for people to say, “I’m not doing it.” There’s another group that has basically said, “I’m done with the pandemic. I’ve gotten my shots. I’m going into the office. I’m going to do it the way I want to do it.” People in leadership who are a part of this group are being a bit demanding about people coming back. It’s an interesting bifurcation.

Bryan Hancock: And I think burnout is as much, if not more, of an issue now. I mean, when you ask people what their number one concern is about coming back to the office, it’s work–life balance. It’s the commute. It’s managing all the things they had to do while they still have schools that randomly cancel on a Friday and dog sitters that don’t show up because there’s a shortage.

When you ask people what their number one concern is about coming back to the office, it’s work–life balance. It’s the commute. And at the same time, you ask people what the number one worry about staying at home is, and it’s work–life balance because there’s no boundary between home and the office.

Bryan Hancock

And at the same time, you ask people what the number one worry about staying at home is, and it’s work–life balance because there’s no boundary between home and the office. You’re available 24/7, and some organizations have managed to hit the worst of both worlds: you’re expected to be in the office, so you have to deal with all the logistics of coming in. But then when you’re at home, you’re expected to be available 24/7. And people are just saying, “I was barely able to hold on during the pandemic, but now I’ve got the added stress of coming in without the benefit of a break between work and life. This has got to stop.”

Support systems are needed—stat

Lucia Rahilly: How are leaders doing in terms of emotionally supporting their employees?

Bill Schaninger: The leaders who were inclined to start with the humility to say they’re banged up, and have an awareness of their own grief, their own longing, and their own anxiety and being willing to engage the employees on it—I think that has yielded remarkable returns, just being able to have an open conversation on it.

Unfortunately, some leaders have gotten burned out and are in the world of, “I just can’t do it anymore. I’m going to set a date and you’re coming in.” While you can understand that reaction, I think some people just aren’t up to the emotional openness required of today’s leaders.

Bryan Hancock: And I think there is a set of leaders in between that may be up to it, but just don’t know how to do it. They did not grow up in a corporate culture where you actually talk about mental health and burnout. They don’t know what to do when somebody comes to them and says, “Hey, I’m done. I’m at the end.”

And there are organizations that are starting to recognize those folks in the middle—the ones who are well-intended but don’t know what to do—and providing them with training on what questions to ask and what things to do when a burned-out employee approaches them. Addressing that large group of leaders in the middle where people want to do the right thing but don’t quite know how, we’re seeing organizations starting to invest and be very intentional.

Lucia Rahilly: What else do you see employers doing on the kind of organization-wide level at this point to address mental health and burnout?

Bryan Hancock: We’re seeing it addressed at a couple of different levels. One is a benefits standpoint: Are we providing mental-health benefits that are on parity with our physical-health benefits? Are we truly treating mental health as a health concern? Are we making sure that we’ve got the right resources in place, like remote counseling? It’s about having programs where people can actually understand what mental-health issues are. At McKinsey, we have a mandatory training called Mind Matters. We all went through it, and identified and normed what mental health is, and made it acceptable for people to say, “Hey, I think I have an issue.” And we created a common language for us to rally around those in need.

Bill Schaninger: If it’s as simple as a time-out, literally a time-out, just, “OK, just take a pause, take a couple days off.”

I had an EM [engagement manager] I discovered, only because she was breaking down, that she hadn’t physically seen another person in 45 days. And I was like, “Whoa, OK, what do we need to do to get you with friends? Or with parents? Go there. Set up shop there.”

Lucia Rahilly: Sometimes it feels that these wellness programs are super helpful in terms of self-care, but they’re an additional work stream that folks have to undertake. Do you see employers making that calibration?

Bryan Hancock: I do see employers starting to be very intentional about what a full spectrum of mental-health concerns could be. Employers are starting to differentiate between people who are really in need and those who are experiencing burnout. This is not to minimize burnout. There are different tool kits that can be implemented depending on the issues someone is experiencing, with some getting more clinical more quickly.

Lucia Rahilly: Do you guys have recommendations for leaders in terms of what to say to employees who they think may be suffering but are not sure how to approach?

Bill Schaninger: Depending on the company, there’s some reluctance to ask questions about someone’s mental state. Historically that would have almost been a no-fly zone. I don’t think we have that luxury right now. I don’t think you need to know if someone has a diagnosis, but I do think you ought to be paying attention by saying, “You seem like you’re in distress.” At a minimum, it’s a sign of caring, by asking, “Are you OK?”

I do think it’s a tightrope. Because we so guard and value our privacy, but in this environment so much more is on display. And if you look a little bit at insurance claims, more and more people are being diagnosed, usually with some level of depression and anxiety together. Maybe you can just start with, “I’m not a therapist, I’m a concerned colleague and it looks like you’re struggling.”

Bryan Hancock: One of the things that our Women in the Workplace [report] showed is that women are feeling more burned out than men. And although both women and men had a significant increase in burnout over the pandemic, individuals who had women as leaders felt less burned out.

So, I think there are two sides of that. One, how do we recognize and celebrate the additional work that those women leaders are taking on to make sure that their teams are being cared for? Because that in and of itself may be leading to burnout. And two, is this another reason why we should continue toward having more diverse leadership teams, so that we’ve got people who understand more contexts than a married, white male professional who has a great support system? They may not be as empathetic to somebody who is balancing a lot more.

Bill Schaninger: I think about my situation the first 17 years in the firm; I had someone at home taking care of the kids. I’d leave on Sunday night, come home Thursday night. And that was the arrangement. I was blissfully ignorant of all of it. Now, I got divorced and then COVID meant that I could actually have my daughter fully half-time.

I’ve never experienced the whole idea that the kids are in the house and it’s coming around 6:30 p.m. or something. Homework’s done and it’s, “OK, guys, I need to wrap this up.” The clock in my head, it’s pounding that I have a child there waiting for me to make them dinner. I remember saying this to a team, and a client I really love says, “Yeah, welcome to being a mom. Thanks. We’ve been doing that for a while.” It was like, “Yeah, OK.” I do think it’s blissful ignorance. There’s the [thought of], how can you help women?

There’s a societal thing here, which is we continue to load you all up with all the chores of the two partners; women take on a caring role for their husbands or their partners. They’re the primary caregiver to the kids, the elder parents almost always go to the woman to make sure things are coordinated and done. The task load for women, in our society anyway, is so massively disproportionate.

And we just said it needs to be a better division. Anything we can do to give guys a taste, to have that level of layering, and feeling torn pretty much 24 hours a day. I think that might actually help on the leadership front. You might be more sensitive to it.

Burnout and the Great Attrition

Lucia Rahilly: Our latest Women in the Workplace research shows that burnout and the burnout gap between women and men has almost doubled since last year’s report, and women who are also people of color are even likelier to suffer chronic stress. How do we see this playing out in terms of the Great Attrition research?

Bryan Hancock: It plays right into the Great Attrition research. We’re seeing that the reasons people are leaving organizations are more for the relational factors: Do I feel valued at work? Do I have a good relationship with the manager? Am I able to manage it all? Versus the structural factors: What’s my title or what’s my comp? We’re seeing that people are leaving for some of the broader pieces, not just the pay.

We’re also seeing through the Great Attrition research that people are walking away from jobs. When we surveyed folks, we found 40 percent of people were at least somewhat likely to leave their job in the next six months. And almost two-thirds of those would leave without another job in hand. So they’re walking away from work and if they’re walking away from work, without something else to go to, that’s a real signal that they are fed up.

Bill Schaninger: We’re out in the field right now with a survey going specifically to the people who left without jobs [waiting for them]. And I think it’s really interesting to ask, what would bring them back? We have to get our heads around what it was that no longer made it worth it if we’re going to bring these people back into the workforce. Otherwise, we will have a sustained level of not enough people working, which could be pretty problematic. And from a habit-building and psychological standpoint, [if] you spent six months not going to work, it might start getting really easy not going to work.

Lucia Rahilly: But what about financial obligations?

Bill Schaninger: Think about the number of people [in] dual-income [households], where the second income is often for the benefits or for the childcare. We’ll take the childcare out. We just gave them 18 months. They found out what their floor really can be. And so maybe the run rate’s a lot lower than they thought.

Lucia Rahilly: At first, when the Great Resignation/Great Attrition started to be discussed, it felt so out of reach—how are people doing this? But the more people do it, the more it feels like leaving your job could potentially be accessible for a broader range of people than one might imagine.

Bryan Hancock: We definitely saw a huge uptick in people that were retiring, but now we’re seeing a little glimmer of hope because the unretirement rate is going up. So, workforce participation was down and is still down 1.6 percentage points as of the summer. It’s now down to 1.5 percentage points lower.

We’re ticking back up. People are starting to come back into the workforce. We’re seeing that among the older population and among some other folks. What’s going to get those people in from the sidelines is going to be a compelling job, a compelling environment, a compelling group of people that they’re interacting day to day with. Because the option between a toxic work environment and being at home—they’ve found out through the pandemic that they can afford to be at home.

Diversity and the Great Attrition

Lucia Rahilly: Given that women and people of color are suffering burnout and suffering chronic stress and are more at risk of leaving the workforce, do we risk backsliding on the commitments leaders made in the aftermath of George Floyd’s murder and what subsequently felt like an inflection point in that push to redress racial inequities?

Bryan Hancock: I think the inflection point is actually now. Having had 18 months to reflect after the murder of George Floyd, organizations have now started to really think about what policies they have, and what are the manager behaviors? How can we think about hiring more diverse talent pools in a tight labor market? So, the announcements came first, then came the planning, and now it’s time for the sustained campaign. This is when we’re going to see whether or not we came through the inflection point, came through the other side and made substantial advances in DE and I [diversity, equity, and inclusion], and importantly, how included people feel in the workplace. Or if after all those plans and initiatives, we didn’t follow through, and then as a result, slid back.

Bill Schaninger: We’ve encouraged clients to challenge everything about the requirements for being hired. We’ve been looking at massive, massive gaps in the workforce. Immediately, you start wondering if there is an adjacency. Is there a person doing something really similar in a sector next to it?

Two decades ago, hospitals realized they were under threat. The experience wasn’t very good for the patients. They did not hire from other hospitals. They went to hotels. You have people who are wealth managers saying, “Who’s really good at helping rich people spend their money and is perfectly comfortable talking about large numbers?” People who sell time on private jets, yachts, ridiculously expensive cars. The point is it doesn’t have to be in your industry. The minute you say they don’t have to have ten years of experience, we just need you to know something about something and then we’ll grow you and bring you in. That should open the pool dramatically.

That’s the hope anyway, but I do think we’re in real, real trouble in certain sectors that are dominated by people of color and women. Those are the ones that have some of the highest rates of people leaving.

Lucia Rahilly: We’ve talked about remote work as an important element of the flexibility some of this demographic is looking for and as a potentially vital factor, both to attracting and retaining talent during this period of intense churn.

Bryan Hancock: I think very few companies would want to offer and very few employees would want to have fully remote because of the need for collaboration, for getting together. I think the days of expecting any employee in knowledge work to come in five days a week as a requirement is over. It will depend on work environment, job, the actual tasks they get done, whether that means that you’re coming in the office three days a week or three days a month.

Even in the most conservative companies there’s going to be an expectation that employees should have at least one day that they can flex and work remotely.

A shift in workplace power dynamics

Lucia Rahilly: Are you seeing any delta in performance between companies that have remained either fully remote or hybrid and companies that have called employees back full time?

Bill Schaninger: We were all amazed at how much we could do working fully remotely. However, it has started showing some withering of the ties that bind in the culture, the social connectivity, just being able to go get coffee or go get a meal, onboarding someone in an environment where you can’t see them. All you have is the rules that are written down. We used to joke and say the best salve for a bad operating model was a good culture. Well, what if you don’t get to interact with anybody? All you have is what’s written down and it’s probably wrong.

I think the power dynamic in particular is shifting. The employees have figured out after 18 months that leaders don’t actually get to tell them when they need to show up, and that’s remarkable.

Bryan Hancock: I think the flip is what’s actually happening. We need to tell the bosses what to do. What we’re finding is it’s the entry-level folks, the folks coming just out of college, the folks just joining the organization that are most hungry for coming back into the office, most hungry for the interaction.

I think the power dynamic in particular is shifting. The employees have figured out after 18 months that leaders don’t actually get to tell them when they need to show up, and that’s remarkable.

Bill Schaninger

What we’re seeing in professional-service firms is the more senior folks saying, “This is amazing. I can do everything from the Hamptons. I don’t need to come back into the city.” And now it’s organizations that are saying, “Apprenticing people is part of your job. And some parts of apprenticeship need to be done in person. So, you, the bosses, need to come in and you need to figure out when your employees are in, so that you’re all in together.”

So it’s flipped from the bosses telling the employees when to come in, to now the company’s telling the bosses that they need to go in and figure out with their employees what’s going to work.

Bill Schaninger: You spend so much money recruiting these people, and you’re just going to let them walk because they’ve had a terrible two years and didn’t get any apprenticeship? It doesn’t make any sense. We started having a couple of my teams go to different McKinsey offices to be together and problem solve in the room.

The importance of the middle manager

Lucia Rahilly: We’ve talked about the middle manager and the vanishing role that the two of you said should actually be highly valued. Say more about the role that middle management plays in training and development.

Bill Schaninger: So much of the sense-making device of work, how does something really work? What really matters? How does it fit into the bigger corporate strategy? It’s not just about the task; there’s an operating part. There’s a culture part. There’s just a good, old-fashioned coaching part. That stuff is invaluable.

In our pursuit of cost-cutting we choked out the number of middle managers, and we said it’s better to hit the perfect number than it is to make sure that the work being done is actually getting the leadership it needs.

Bryan Hancock: We do a series of video conferences with HR leaders. And I was on one with probably 50 people and we asked, “How important is it to be in-person? How important is it for middle managers to be the ones to apprentice?” And somebody in the group had the devil’s advocate perspective, and they said, “But can’t you learn skills remotely? We’ve had all these technical training skills programs that we’ve rolled out. And we can see that people can code this more effectively and do this more effectively.”

And where the conversation went was fascinating because people said, “Yes, that is true. You can do some technical tasks and learn those remotely, but those tasks aren’t the ones that are, for many people in knowledge work, the ones that are most important. The ones that are most important are the things that are related to creativity and problem solving and understanding the overall situation.”

Those are the things that you only learn when you spend real in-depth time with someone. Those aren’t things that you can learn with a program. And yes, there is some ways you can have that conversation remotely. But I think all of the research shows that some of the most important skills for the future, which our Future of Work research confirms, come from those types of interactions, and you get those with your manager.

Bill Schaninger: You can see the impact that being fully remote has had on the fabric of the culture. And I have to admit there’s a part of me that thinks maybe for some pockets of the workforce, who had felt a bit disenfranchised and transactional, this has been wonderful because they didn’t feel connected anyway. What is the role of convening? Is it just communication? Is it celebrating? Does that still matter? Bryan and I are going out to dinner tonight to celebrate a young colleague who just got elected partner. To me, one of the things we do best is the celebration of the election into the partnership.

Every organization has these ceremonies. If you can’t stay anchored on that, and that too goes by the wayside, well, what do you have left?

Lucia Rahilly: Bryan, do you think the conversation that you had with the HR leaders indicated that companies are beginning to recognize that people development could be an essential part of the middle manager’s role?

Bryan Hancock: Companies are recognizing that the people manager has a critical role in development. We’re seeing that even in learning and development organizations they’re going to direct a lot of their energy to people leaders, because so much of the learning, so much of the skills they need in the future are what’s done in that job.

We’re seeing organizations think through not just how do I upskill the manager but how do I reorient the manager’s time? So that they have real time to be a people leader. So they have real time to spend on apprenticeship, to spend on time and coaching.

So how do we think about development as developing people through their manager versus development as being a bunch of cool things you can download off the learning-management system?

Top priorities for leaders in 2022

Lucia Rahilly: What are the top two or three other priorities on the minds of talent leaders going into 2022?

Bill Schaninger: I think many of them are worried about more people leaving. There’s a fair number of leaders who are hoping this is transitory, and that all of their employees are going to come back. In other words, how am I going to get all my power back? There’s a fair number of folks who’ve been at the tail end of their leadership career who walk out of their office and see an empty sea of cubes and say, “Where did all my people go?” Which turns into, “Where did my power go?”

We probably have to accelerate the transition of that group of leaders. I think it’s a wonderful opportunity for a newer generation of leaders who get this mix of remote, individual work, teamwork, and collaboration. I think we probably need to speed up that transition a little bit.

Bryan Hancock: Yeah, I think 2022 is the year of pulling it all together. What I mean by that is, I see organizations that are thinking about, “I need a real change in my culture to have my manager spend time with people. And to do that, I need to change the roles to make that happen. I need to change huge parts of the talent system—how I do performance management and how I think about recruiting and the role of the hiring managers.

Rethinking all of those pieces of the talent system with a goal, not to have individual outputs on talent acquisition, or performance management, or learning and development, but really to have all of those be in service of the change that we’re trying to make in our people. And the change that we’re trying to make through our people leaders.

We’re at the point now where for many organizations, next year is the year of, OK, how do we pull it all together? How do we, if we pull it together, rapidly advance? If we don’t, what are the risks for us on the other side?

Lucia Rahilly: Thanks so much, guys. This was a great discussion. I’m looking forward to many more in 2022.

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