Features Working Remotely
RBC’s CEO raises alarm bells over productivity, innovation with hybrid work: ‘We likely need more people back’

The rise of remote work has led to productivity, innovation and workplace culture challenges, according to David McKay, the president and CEO of the Royal Bank of Canada (RBC).

McKay made the comments during an earnings call on March 1 when he said that most chief executives would “tell you there is a productivity loss.”

“I think that the absence of working together in many ways has led to productivity and innovation challenges and society isn’t back together enough and working enough,” he said.

There has been a lot of dialogue among CEOs globally, he said, about the issues of creativity and productivity in hybrid working environments.

“We’re in this discovery area and trying to find a balance with employees,” said McKay.

At RBC, he said there have been productivity gains and losses — depending on the group you’re looking at — but there is opportunity for improvement, he said.

“I’m trying to say that we likely need more people back at work. Not permanently, like not five days a week, but more than we’re seeing today,” said McKay.

‘Really tough’ HR issues

McKay doesn’t expect office occupancy to return to pre-pandemic levels.

“There is going to be some dislocation. But I think we’re probably edging back to a better balance,” he said. “We’re finding our way, as a society. I think all CEOs in every sector I talk to are struggling with the balance of attracting, retaining, developing talent, promoting talent, building culture, creating productivity. It’s tough. It’s really tough.”

Inflationary pressures

He also addressed inflation and the impact that was having on compensation.

“There is persistent inflation out there that just doesn’t come through on the salary and benefit line as we — as all companies across the world — increase base pay and compensation to match the inflationary environment,” he said. “But it also comes through our third-party strategic sourcing line of all our partners, all the companies we work with from technology to advisors to consultants. All those inflationary costs come through other lines of business.”