What the workforce will look like in 2025 as it morphs due to pandemic

Key Points
  • Companies like Cisco are reimagining the future of work due to the move towards a more remote workforce during the coronavirus pandemic.
  • By 2025 more employees will work on a hybrid work schedule, AI and machine learning will transform hiring, and innovation teams will be more global.
  • A recent McKinsey & Co. global survey shows a corporate push towards automation; the shift to remote work or hybrid remote workforces; an increase in the use of freelancers, and growing reliance on artificial intelligence and machine learning tools to manage the workforce and other key functions.   
Carl D. Walsh/Portland Press Herald | Getty Images

The coronavirus pandemic has radically altered the way we work, and companies of all sizes are experimenting with new ways to manage their far-flung virtual organizations. According to experts, remote work is here to stay and even when the health crisis ends, a good portion of the workforce will remain working from home. The challenge is how to keep employees connected, drive innovation and collaboration, and keep a steady talent pipeline when people are geographically dispersed.

Companies are prototyping new HR models to keep up with this rapid pace of change. Some are embracing artificial intelligence and automation to keep operations on an even keel, gather data-driven insights about their employees, improve the talent search and manage global risk.

It's a daunting task and it's happening at a time when business leaders are already wrestling with economic shutdowns, health-care concerns, an upcoming U.S. presidential election and societal upheaval.

What will the future of work look like in 2025? A recent McKinsey & Co. global survey of 800 executives in a range of industries reveals key trends. These include: a push towards automation; the shift to remote work or hybrid remote workforces; an increase in the use of freelancers, and growing reliance on artificial intelligence and machine learning tools to manage the workforce and other key functions.   

These shifts are already happening. Since the pandemic, 85% of respondents had accelerated digitalization of employee interaction and collaboration, and 67% have accelerated automation and artificial intelligence, according to the survey. Industries on the forefront include technology, finance and insurance.

For a glimpse of how companies are in the midst of this transformation one can look at Cisco, a network hardware company with more than 75,000 employees headquartered in San Jose, California, at the heart of Silicon Valley. Today, 96% of the tech giant's employees are working remotely — from engineers to sales staff.

Cisco Systems CEO on Q3 earnings, future of remote and on-premises work
Cisco Systems CEO on Q3 earnings, future of remote and on-premises work

"We were lucky since pre-pandemic 40% of our workforce worked remotely so we already had technology and practices in place to handle a rapid transition to a virtual workplace," says Fran Katsoudas, Cisco's chief people officer. As she explains, so much of the HR function has moved to the cloud and the company has developed an AI tool it calls the Network Visualizer to help it "reimagine" the future of work.

"AI and machine learning is helping us better understand how our people think and work," Katsoudas notes. "It's helped us develop perks to incentivize our employees, find pools of hidden talent around the globe and develop new ways to stimulate innovation."

"We are learning new ways to collaborate and team build," Katsoudas says. As she explains, data analytics is being used to form teams and identify the best talent for projects across the organization. One thing the company has found is that like-minded workers gravitate towards each other, aided by technology, sparking bubbles of innovation.

Just as important, AI has helped Cisco make breakthroughs in hiring and talent development. "Now we are doing what we call 'blind hiring', where we don't see the name or the university the candidate attended. It's helped eliminate bias and let's us just review the purity of a person's work. This has opened up a whole new pool of talent we can tap — individuals who may not have a college degree but are skilled at coding and a host of other expertise."

How employee benefits might change in 5 years
How employee benefits might change in 5 years

It's a whole new dynamic. "By 2025 I envision we will have a hybrid model and we will be more deliberate in who comes to the office and for what purpose. That may include engineers working in our labs, customer visits that would bring us into the office or innovation days to bring in project teams. That's because we've found we can do so much remotely, including Webex meetings and talent expos."

"It may be that workers come to the office two to three times a week," she says. "The shift could make the company rethink its real estate footprint."

"Right now, we are at the beginning of this new journey and we are learning all the time," says Katsoudas noting that leaders have to stay in close contact with their teams who are under a lot of stress during this time. "Many employees are working remotely and have the added burdens of helping their children with school, caring for elderly parents while doing their daily jobs. As a result, there is more of a focus on mental health, wellness and work/life balance."

In response, Cisco is offering its employees new perks including subsidizing tutoring costs, more flexible work schedules and face time with leaders for career development.

A worker productivity scorecard

What has been surprising is the fact that Cisco, like many other companies, has seen its worker productivity increase during this time despite the metamorphosis taking place, Katsoudas revealed.

Most of Cisco's employees have been working from home for months, and Katsoudas said data showed many were accomplishing more. For example, according to the company's tracking, customer service representatives are taking more calls and customers are more satisfied with the help they receive.

This exemplifies a global phenomenon. A recent Boston Consulting Group study of 12,000 employees in the U.S., Germany and India found that productivity can be maintained surprisingly well in a virtual or hybrid work setting.

This may be a result of many factors. Without long commutes, small talk with colleagues and leisurely coffees in the break room, many workers — especially those who don't have to worry about child care — are getting more done.

Companies, too, are discovering that processes and procedures they previously took for granted — from lengthy meetings to regular status updates — are less essential than once imagined. And though some executives are concerned about burnout as working from home continues, they are enjoying the gains for now.

But key to success is tracking the pulse of employee sentiment. When analyzing the data, BCG found four factors that correlate with employees reporting continued or even enhanced productivity on collaborative tasks: social connectivity, mental health, physical health and workplace tools.

Katsoudas agrees. "In the future we'll put more focus on work and less on roles. We will give people opportunities to try new things and give leaders more flexibility in how they hire talent. But for all this to work we have to keep abreast of human development. Wellness and the mental health of our employees comes first."

For more on influential voices disrupting the next decade of work and finding opportunity in unprecedented times, join the CNBC @Work Summit this Tuesday, October 6.