Anne Walsh, Guggenheim CIO Fixed Income, and Rob Falzon, Prudential Vice Chairman, join Yahoo Finance's All Markets Summit

Anne Walsh, Guggenheim CIO Fixed Income, and Rob Falzon, Prudential Vice Chairman, discuss the unprecedented issues facing American workers during the COVID-19 pandemic.

Video Transcript

KRISTIN MYERS: Welcome back to Yahoo Finance's All Markets Summit. I'm Kristin Myers. Let's go straight to our chat with Ann Walsh, Guggenheim's Chief Investment Officer for Fixed Income, and Rob Falzon, Vice-Chairman at Prudential Financial. Welcome to you both. Thank you both so much for joining us today in discussing what the future of work is going to look like, especially in a post-pandemic world.

So Anne, I want to start with you. Now, most of us have been working from home now for roughly half a year or even longer. But we're continuously hearing this chatter about what it's going to look like when folks get back to the office. But for right now, I'm wondering, how long do you think this work-from-home environment can be sustained?

ANNE WALSH: Well, thank you, Kristin, and Rob, and to all of you listening. So, you know, if you had asked me back in March whether, here we would be, nearly to November, and we would still be in a work-from-home situation, dealing with another wave of coronavirus, I might have been skeptical. I probably would have been skeptical.

But fast forward. Here we are. And I actually don't see many people returning to the office in the way that we used to work anytime very soon. In fact, I think we are looking at a 2021 return timeline, notwithstanding the fact that-- we're going to talk a bit about the benefits of working together, but also the way work is, I think, permanently changed in terms of particularly office work.

So I would say at this point in time that we're looking definitely at another three or six, or I'm hearing even well into next summer before we will be returning to offices. And I would suggest that the way we were working in offices will be-- or used to work, I say, for virtually my entire career.

KRISTIN MYERS: And now, Rob, I would love for you to weigh in here. I'm wondering about profitability. I mean, can companies be just as or perhaps even more profitable than before without the office?

ROB FALZON: Well, you know, it's interesting. There are two dimensions to that. The first is how productive they are in a remote environment. And then the second is, you know, when we go back, what is that workplace going to look like? And what are the impacts of profitability on each of those? You think--

You know, in the near term, productivity is actually holding up pretty well. In fact, it's up, according to the survey that we did. It was in excess of around 60% of the people that answered the survey said they were as, if not more productive remotely than they were in the workplace. And so that would indicate that the profitability would be enhanced and sustainable.

I do think-- to the point Anne was making, I'm not 100% convinced that that's sustainable in the longer term. I think there's been some technology innovation which has contributed significantly to that productivity. But some of it's coming because people are working longer hours. And 65-ish percent of them haven't taken the same vacation they took last year. Those that are in our survey, they're saving an hour of commute. And 60% of that, they're put back into work, as opposed to harvesting that as free time. And so there's a stress there that I'm not sure how sustainable that'll be in the longer term.

And then we're also seeing is the beginnings of some fraying around learning and development And what that can mean in terms of long-term, sustained productivity. So that poses a little bit of a question mark. Near term, clearly longer term, we'll have to see what will be sustained.

Going back, post the pandemic, when we go back to the workplace, it will look very different. And I suspect that most companies are going to adopt different models post-pandemic than they did pre. We're clearly looking at that part.

And I think coming out of that, there'll be rewards for employees and rewards for employers as well. Employees, I think, will have, long term, as a result of this experience, flexibility in how they work and where they work. And that will lead employers to be able to be more rational about how they invest in real estate assets. And frankly, the other part of that, that is, I think that it opens up the funnel of talent that you can attract into an organization to the extent you have more flexible work arrangements.

KRISTIN MYERS: So Rob, you mentioned a couple of things that I definitely am going to want to pick up on during this conversation. But piggybacking on what you were just mentioning about that survey, I'm wondering, from you-- and then Anne, I would love for you to weigh in. What do you think has changed? Now that we are in this remote work-from-home environment, what do you think has changed in terms of priorities for employees but also for their managers and for the employers themselves?

ROB FALZON: Well, you know, first, I think you have to separate the pandemic experience from the remote experience. The pandemic experience hasn't been very good. And it's caused a whole host of reprioritizations as a result of the burdens that are on families, whether it be child care, or elder care, the daycare, schools, the infrastructure that's available in our daily lives, not to mention the sort of societal isolation that we're all feeling. And so there's been a reprioritization of how individuals have to spend their day in order to adjust to the pandemic and its impact on their infrastructure. And I think companies, if they want to be successful long term, are going to have to be flexible with regard to that.

So remote, in my mind, has two dimensions to it. One is location, and the other is time. And we need to figure out how employees can get stress out of their lives by-- and get the right priorities with regard to the balance between work and personal by having some flexibility on the work front.

I guess the other thing I'd think about from a prioritization standpoint is that as we look at what we've been able to accomplish with employees working remotely, I think it puts a whole new priority on sustaining the level of gains that we've gotten from the investments in technology and how that has accelerated significantly through this remote experience. And that's been the positive part of remote, separate and apart from the pandemic part of it.

KRISTIN MYERS: Anne, I would love for you to pick up on that point that Rob was just making there about how this pandemic has really just accelerated some of these trends that we had already been seeing in the workplace.

ANNE WALSH: Certainly. You know, there's a few things. I think before the mass amount of work from home, there was a great deal of skepticism as to whether working from home was even an option. Quite clearly, society has now learned that this is a demonstrable success. And this will give working people so much more flexibility going forward.

And I think it also gives employers confidence that the traditional-- and I'm going to put in air quotes-- "industrial model" of work that we have all been used to-- and there, I've been at it for decades-- that it is ready to be adjusted, and that work from home is one aspect of that flexibility. You know, industrial economists and scientists have been thinking about for years whether or not shorter work weeks worked. Obviously, work from home is now a whole new element, but other aspects of how work can actually change and be adaptive, and for people to be much more productive.

Interestingly enough-- and I'll actually turn to the survey that was done by Prudential-- that in terms of autonomy, individuals have more autonomy. And when individuals have more control over facets of their environment, whether that's their family environment, their work environment, or so forth, they tend to get a lot more enjoyment out of work. And I think that's been probably one of the reasons that individuals really have benefited from the work from home.

Additionally, Dr. Danny Kahneman did a study some years ago about the least favorable aspect of your working person's life. And the number one item was commuting, and the fact that people don't have to make long commutes. Again, the survey that Prudential performed indicates that they're using that for work. But frankly, even if they're using that for some other purpose, spending time with their family, catching up, a little bit extra rest, or what have you, or enjoying health, for example, taking a walk or something of this nature to help with physical and/or mental health, is a better use of time than the painful commute that so many people had to go through.

So I think we've shown ourselves, as a work society, that work can be changed, and the style of work can be changed in such a way that we can get a lot more productivity without that constant what I call that industrial model of face time, and sitting next to your manager, and so forth. So I think the work world is ready for a change. And again, harnessing the technology, that's quite clearly been a huge benefit here in order to make work change as we've gone through this year.

KRISTIN MYERS: So then, Anne, how does retaining talent change going forward? Is it all about-- you know, you're talking about things like reducing commute time. Is it all about being remote? Is that what employees, what workers want? I mean, how exactly do companies going forward make sure they recruit and also retain that top talent?

ANNE WALSH: So great question. There's several aspects to retaining top talent and attracting top talent. One is corporate culture, the opportunity set. Again, I'll go back to an individual's ability to gain satisfaction and enjoyment from work. And workplace flexibility, as we've just been discussing is one element of that. And I think that will go a long way to retaining individuals.

We haven't necessarily talked about gender. But certainly, women, for decades, have been seeking ways to balance the burdens of family as well as work. And again, this is not just women, of course. But historically that's been a very significant issue for women in the workplace. Women have been maybe more disproportionately, negatively impacted during the coronavirus because of some of these burdens. But my hope is that, on the back side of coronavirus, that women will enjoy the benefits of this new flexibility in work.

And quite clearly, I come from the investment management industry, and we need to attract women to the industry and retain them. Only about 9% of all portfolio managers are women. And somewhere along the line, some aspects, whether it's, again, providing more satisfaction at work, or opportunity, or flexibility, are going to be strong ways for companies to attract and retain top talent.

KRISTIN MYERS: You know, Rob, Anne is bringing up a really great point here about diversity. She's talking a lot about gender. Of course, race is also a part of that. So I want to ask you about something that we talk a lot-- when we talk about the public sector, a lot of folks have said, listen, this pandemic exposed a lot of inequities. And many are saying that this is the time that the public sector can really go forth and tackle some of those systemic issues. But on the private sector side, Rob, I am wondering if you think this is a time for companies like Amazon, for example, to go out there and flex their power to change the systems that are going to be impacting their employees going forward, and those systems that actually might be felt a little bit more acutely now that we are all at home.

ROB FALZON: Yeah. So a couple of thoughts on this. Great question, Kristin.

First, and following up on Anne's response-- yeah, so in our survey, it actually indicated number one, desire by employees, flexibility, number two, remote, number three, learning and development. And in all three-- if you think about all three of those elements and the learnings that we've had through the pandemic, we can enhance all of it. And one of the things that's actually, I think, suffering during the pandemic is the learning and development component of it because it's harder for people to learn on the job when they're remote. They've said that in the survey.

All that does translate into the opportunity to optimize how you're bringing talent into the organization. And clearly, what you want to do as an organization, what we need to do as a private sector, is you want to take full advantage of the talent pool that's out there. And that includes the diversity in that talent pool. If you're not doing so, it leaves gaps within your organization, and it leaves gaps, frankly, within our total economic output as a society.

And so we need to address this. We absolutely need to. Each individual company needs to do so if they want to have sustainable business models.

The complexion of our society is changing. And every company, in one way or another, is addressing themselves to that marketplace and that changing complexion in that marketplace. And if you don't have the diversity within your organization, and you don't have the top talent in that diversity in your organization, you're not going to be able to anticipate how the world is shifting and how the marketplace is shifting and be able to, therefore, address your organizational or your business strategy or marketing design around the opportunities that are out there.

So I actually think that what we're learning from the pandemic, to the point that Anne made earlier, is we've learned to work remotely. In our own organization, our model was, if you wanted to work remotely, you had to prove to your manager why it was OK for you to do so. We intend to turn that telescope around. Managers will have to prove why employees have to be on site as opposed to the reverse of that, provide that flexibility.

And if we can provide that kind of flexibility, I think we can then-- from a geographic standpoint as well as from a socioeconomic standpoint, we can reach deeper into the marketplace to bring talent into the organization because we can accommodate the individual needs of that talent and coming to work for us, whether that be know scheduling, flexibility, or whether it be location, remote.

KRISTIN MYERS: So Anne, picking up here on this conversation that you essentially kicked off and Rob has been now commenting on, in this new world, where we're not meeting face to face, we're increasingly using tech, wondering what the impact could be, and how that tech could be used to tackle those problems of diversity around race, around gender, create, perhaps, race-blind, gender-blind hiring practices or accountability in the office. I mean, what are the next steps, do you think, that companies are going to be taking to really tackle some of those problems within their own workforce?

ANNE WALSH: So I mean, this is a multilayered experience for so many in management now, to try and advance corporate cultures and to provide these opportunities for our very diverse workplace. Collaboration and training are very important aspects to attracting and retaining diverse candidates. And I really do believe that if we, together, come together and apply this-- what I would refer to more as a team-based approach to training, to work, generally, this is positive.

Evidence-- and it's strong evidence-- suggests that team-based, and particularly, diverse team-based approaches to work have much better outcomes. There's strong evidence to suggest this in the investment management business. And certainly, anything that we can do to move forward to create these diverse teams is extremely important and will only benefit companies.

If I go back to a few elements-- one is training. And I'm going to, again, cite the Prudential survey, in that training and educational opportunities for our team members is very hard to initiate in this particular coronavirus time. This is where technology can help us a lot. And the learning opportunities should be multisensory, using the best of technology. And we should be able to allow and encourage our team members to have more interaction using technology, of course. But it's a substitute for in-person training and in-person learning.

And part of learning is corporate culture. It's obviously skills. But again, it's a multidimensional aspect. And it's probably harder for our younger team members and our more junior members because they haven't had years of on-the-job training that give them the ability to advance and continue to work in a fashion during this lockdown period that would be the same as someone who's had decades of experience within a traditional work environment.

So we need to adapt for younger people to bring the training that they need, but also for diverse candidates and team members who are also not maybe as experienced sitting in the industrial work environment after years and years and years. So there's a lot we can do. But we have to harness the technology to advance that ball.

KRISTIN MYERS: Now, Rob, I know we're running out of time. And I wish we had so much more time to chat with you both about this. But Rob, I wanted to end on this question. We've been talking a lot about tech and how it's bringing us together during this time when we can't be together, and how it can be used to address issues like diversity going forward. Wondering how you think that companies can maintain humanity, so to speak, in this world that is increasingly-- and, of course, now, as a matter of necessity-- tech driven.

ROB FALZON: Yeah, that's a very interesting question. Because actually, I think the longer we remain in this sort of fully remote environment, there's actually some decay in what I call culture. You can call that humanity. And every organization has a culture, and it's an expression of the humanity in that organization.

And I do think that, on the edges, it's a difficult thing to maintain. Actually, in the short run, culture has improved. And the sense of humanity, actually, in a sense, has improved too. While we have an extraordinary amount of divisiveness in society today, what you have seen in the private sector, from a company standpoint, is very high ratings from employees to their employers and how they're stepping up, both to the virus, the pandemic, and what they're doing for their employees, and what they're doing in their communities as well, and how they're responding to the things that we're seeing in our society.

And so, actually, ironically, in the short term, I actually think the humanitarian and cultural aspects have been enhanced. And the survey actually shows that when we've asked-- I think it was close to 3/4 of the employees rated their employers in A or a B in terms of how they're conducting themselves during this period. And it reflects both that community engagement as well as how they're engaging with their employees.

The challenge, again, becomes with sustainability. The novelty of stepping up and the types of initiatives that you announce, the flexibility that you're providing to your employees, the additional assistance that you're providing through your communities and to your employees, those are things that almost become expected at BAU over time. And therefore, the appreciation of that begins to wear off and the ability to make a difference in culture [INAUDIBLE].

So I do think, over time, we need to get to a new normal. That new normal won't be everyone back at the workplace. But there isn't-- we're human beings. And we have a human condition. That human condition requires some level of interaction in order for us to get that human aspect that we all crave. And that's the pandemic part of the remote experience that's, I think, the most difficult for the community.

KRISTIN MYERS: All right, well, we will unfortunately have to leave that there. This has been a fantastic conversation. Our thanks to both Anne Walsh, Guggenheim Chief Investment Officer for Fixed Income and Rob Falzon, Vice-Chairman at Prudential Financial. Thank you so much for being with us today.

ROB FALZON: Thank you, Kristin. Thanks, Anne.