Introduction
The coronavirus pandemic disrupted the traditional way of working for millions of people worldwide. As lockdowns, social distancing, and travel restrictions were imposed to contain the virus, many organizations shifted to remote work arrangements. According to the International Labour Organization (ILO), the share of workers who worked from home increased from 7.4% in 2019 to 17.4% in 2020, representing a 135% increase over historic trends.
While working from home is not a new phenomenon, the scale and speed of the transition during the pandemic was unprecedented. This shift poses significant challenges and opportunities for workers, employers, and society. This article provides an overview of the unintended consequences of the increase in work from home, particularly focusing on conflicts of interest where employees have other businesses and or interests. At Corporate Insights we conducted a survey in May 2024 of 22,857 employees from various industries and found that 37% of all employees were associated with a total of 18,258 business interests.
Trends
The rise in remote work has been uneven across regions, sectors, and occupations. According to the ILO, the regions with the highest share of remote workers in 2020 were Europe and Central Asia (25.4%), the Americas (21.3%), and Arab States (18.6%), while the lowest shares were in Africa (6.4%) and Asia and the Pacific (5.9%). Sectors with the highest share of remote workers included information and communication (46.6%), professional, scientific, and technical activities (37.6%), and financial and insurance activities (36.6%).
The level of education, income, and gender also influenced the increase in remote work. A survey by the Pew Research Centre found that in the United States, employed adults with a bachelor’s degree or higher were more likely to work from home than those with less education (71% vs. 35%) in December 2020. Higher-income individuals were more likely to work remotely than those with lower incomes (69% vs. 37%). Women were more likely to work from home than men (44% vs. 38%).
Consequences of Working from Home
The increase in work from home has had various implications, both positive and negative.
Some of the benefits of working from home include
- Increased flexibility and autonomy for workers, who can adjust their work schedules and locations to suit their preferences and needs.
- Reduced commuting time and costs for workers, who can save money and time on transportation and avoid traffic congestion and pollution.
- Improved work-life balance and well-being for workers, who can spend more time with their families and friends, pursue their hobbies and interests, and take care of their health and mental health.
- Enhanced productivity and performance for workers and employers, who can benefit from fewer distractions, interruptions, and conflicts in the workplace, as well as from the use of digital technologies and tools.
- Increased access and inclusion for workers, especially those who face barriers to participate in the labour market, such as persons with disabilities, older workers, women, and workers in rural areas.
- Reduced costs and environmental impact for employers and society, who can save on office space, utilities, and travel expenses, as well as reduce greenhouse gas emissions and waste generation.
- Bigger employee pool to choose from as no longer restricted by geographic location.
- Companies can select staff from geographic locations that offer competitive labour costing.
- GenZ want flexibility in their world of work.
Some of the drawbacks of working from home include
- Decreased social interaction and isolation for workers, who may feel lonely, disconnected, and unsupported by their colleagues, managers, and organizations.
- Increased workload and stress for workers, who may face difficulties in setting boundaries between work and personal life, managing multiple roles and responsibilities, and coping with the uncertainty and anxiety caused by the pandemic.
- Reduced collaboration and innovation for workers and employers, who may experience challenges in communicating, coordinating, and cooperating with their teams, as well as in generating and sharing new ideas and solutions.
- Decreased quality and security of work for workers and employers, who may encounter technical issues, cyberattacks, data breaches, and ergonomic problems, as well as face the risk of losing their jobs, skills, and income.
- Increased inequality and exclusion for workers, especially those who lack the necessary equipment, infrastructure, skills, and support to work from home effectively, such as low-skilled, low-income, informal, and young workers.
- Reduced social cohesion and trust for society, who may witness a decline in the sense of belonging, solidarity, and civic engagement among the population, as well as an increase in the polarisation and fragmentation of the society.
- The impact of managing staff remotely has led to an increase in managers workload and often despondency and low morale from employees.
One significant unintended consequence of working from home is the potential conflict of interest arising from employees having other businesses.
There could be several reasons why employees are having outside business interests to their primary employment. One reason could be the increased flexibility and autonomy that comes with working from home or hybrid working arrangements, which allows employees to better manage their time and pursue other interests and opportunities. Another reason could be the uncertainty and anxiety caused by the pandemic, which may have prompted some employees to seek additional sources of income and security. Additionally, the shift to remote work may have opened up new possibilities for entrepreneurship and innovation, as employees are able to leverage digital technologies and tools to start and grow their own businesses.
Conflicts of Interest
Remote work has made it easier for employees to engage in secondary business activities. This flexibility can lead to conflicts of interest, where the interests of an employee’s side business might conflict with their responsibilities to their primary employer. Such conflicts can manifest in various ways:
- Time Management: Employees might allocate work hours to their personal businesses, leading to reduced productivity and performance in their primary job.
- Resource Misuse: There might be instances where employees use company resources, including time, equipment, or information, to benefit their personal business.
- Competitive Concerns: Employees might run businesses that directly compete with their employer by using their employer’s know-how and other knowledge, leading to potential breaches of confidentiality and competitive advantage.
Case Study: Commercial Interests of Employees
In May 2024, a sample of 22,857 South African employees from industries including Financial Services, Commerce, Manufacturing, Telecommunications, Media, Mining, and Professional Services was analysed to understand the extent of commercial interests held by employees working from home or in hybrid arrangements.
Findings
A total of 18,258 business interests were associated with 8,443 employees (37% of all employees).
Of these business interests, 8,982 were active and registered with the Companies and Intellectual Property Commission (CIPC).
- 62% (5,548 businesses) were formed over 20 years leading up to COVID, while 38% (4,888 businesses) were formed post-COVID.
- 4,197 employees (50% of those with business interests) had active businesses, with 30% (2,572 employees) having formed businesses post-COVID.
Conflict of Interest Assessments
- Approximately 24% of employees did not declare their business interests.
- 15% of employees made no declarations of interest.
Conclusion
The shift to remote work has introduced new dynamics into the workplace, including the unintended consequence of increased conflicts of interest due to employees’ involvement in other businesses. While remote work offers flexibility and potential benefits, it also requires organisations to develop robust policies and monitoring mechanisms to manage and mitigate conflicts of interest. Ensuring transparency and clear guidelines will be crucial in maintaining trust and productivity in this evolving work environment.
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