‘A convenient excuse’
The SVB report noted employees may struggle with work-life balance while remote, which could lead to “reduced productivity and/or significant disruptions in our business operations.” It also flagged online connectivity issues and cybersecurity threats as other remote-related risks.
But some workplace experts say blaming performance issues on remote work as an underlying cause for SVB’s recent failure is “a convenient excuse that ignores deeper organizational issues and fails to address the root causes of the problem,” says Dan Schawbel, managing partner of the HR research firm Workplace Intelligence.
“Remote work itself is not the cause of performance issues,” he tells CNBC Make It. Rather, “what likely contributed to SVB’s collapse was a lack of effective leadership, communication and management practices.”
Experts say a drop in employee performance has more to do with leadership than working remotely. Working from home may change the technology of getting work done, but “a high-trust leader can perform on a park bench with a can and strings and create a great experience for employees,” says Michael Bush, CEO of Great Place to Work, the global research and analytics firm that evaluates corporate culture.
The majority of SVB’s 8,500 employees work remotely across the U.S., including top-level executives, FT reports — in contrast to financial giants like Goldman Sachs and JP Morgan that have championed returning to the office throughout the pandemic. The Federal Deposit Insurance Corp, which took over SVB, told workers to continue working remotely, except for essential workers and branch employees, per Reuters.
Remote work isn’t the only thing hindering productivity
There’s little data to support that remote work hampered productivity during the pandemic, as business performance skyrocketed throughout 2020, 2021 and most of 2022 based on Great Place to Work data from 30,000 global companies, 10 million leaders and almost 40 million employees.
But an increasingly volatile economy with rising inflation, interest rates, earnings pressures and worker’s fears of job insecurity has an outsized impact on engagement and performance, Bush says.
“Companies did very well through Covid and began to stumble over the past seven to eight months as financial pressures increased, but remote had nothing to do with it,” Bush says, adding that other financial institutions like Bank of America and American Express continue to be profitable while embracing remote work.
SVB may have also struggled with onboarding new employees during a pandemic hiring spree.
Bush recognizes remote work makes it more difficult to onboard early-career and new employees but adds that companies have always struggled with onboarding, even prior to Covid. He says it could take another four to five years for organizations to figure out how to onboard new employees effectively in a virtual environment, whether that means incorporating some in-person training early on or investing in metaverse technology to enhance the transition.
Bush says it won’t be surprising to see more leaders point to remote work as risks to productivity, but that it oversimplifies how businesses should think about the future of their hybrid and remote work policies.
SVB’s collapse may be the first to happen in the new era of remote work, but it’s worth noting that many other major firms failed even with the majority of their employees working from an office.
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