Managers say that some of the most important challenges of remote and hybrid work relate to performance management. And over the past year, companies with good structures for goal setting and evaluating work done—which tend to be bigger companies—have performed better than average.

What’s the best way to approach this, and how do you make the shift? For answers, I reached out to Robert C. Pozen, who last week published Remote, Inc., a new book he wrote with Alexandra Samuel. Pozen also wrote a book called Extreme Productivity, teaches at the MIT Sloan School of Management, and earlier was a senior finance industry executive and government official.

Here is a transcript from our conversation, edited lightly for clarity:

What are the best practices for hybrid work?

By hybrid work, we mean that you would have some days in the office and some days at home. I believe that 80% of organizations will move to a hybrid model. There'll be a few people who want all remote, but that will be a relatively small group. The question is how do you decide where you ought to work, in what circumstance? There seem to be a number of factors. The first is the nature of the work. Studies show that about half the jobs in the US cannot be done remote: those are manufacturing jobs, transportation, agriculture, etc. Those obviously couldn't be done remote, but most knowledge-based jobs can be. It depends on the nature of the work. If the work requires a lot of collaboration and brainstorming, then you probably want to spend more time in the office. If the work requires extended periods of concentration where you don't want interruptions, then you probably want to spend work days at home.

The second factor is location. If you're headquartered in a small city like Cincinnati, or now in Austin or Sarasota, Florida, and everyone's around the city, then it's easy to get into the office and your commuting time is minimal. That favors going into the office as much as possible. But if you're in New York—I did a webinar where somebody said they had been commuting three-and-a-half hours total, an hour and forty-five minutes each way. So he isn't going to go into the office that often, though he will go in one or two days.

The third factor has to do with how you're organized: whether you're organized in closely knit teams, or whether you aren't that team-oriented. For a lot of programmers and designers, there isn't that strong sense of the team.

A fourth factor is culture. Studies show that Americans tend to be individualistic, and could do pretty well in remote. But other cultures, like being Brazilian, may want more bonding in work.

The last thing is just your own individual personality. Some people can structure their day pretty well when they're at home, but other people have trouble doing that. Some people are very prone to isolation, and they count on the workplace to provide them with interaction. Other people may have five kids and their parents are living with them. They have plenty of social interaction and might want to get away from it.

So those are all the factors. What you need to do is to think about how those factors impact you and your organization. [Stanford professor] Nick Bloom wrote in one of his articles that we should just leave it to employee choice—I don't agree with that. The organization needs to think of what the team wants. They may have different teams with different needs, all organized differently, but the team really needs to come into the office on the same day. And they probably should come on the same day every week, because that will allow people to make childcare arrangements and the like. At some point, the team trumps the individual choice; the team has to be able to have a schedule in the office that makes sense. Now, some people are scattered throughout the globe, but you still need the team to decide what are the hours in which the whole team is on. That provides a way for the team to work together.

So it's a combination, looking at all those factors. But when there's conflict, the team wins—you might think of a company as a conglomeration of teams with different characteristics

Bloom has revised his view. So I think he agrees with you now.

I think he's now backing away from individual choice because he sees that that's not practical.

Does knowledge work need to be structured differently in hybrid scenarios?

We advocate in the book that you try to have a different mindset when you're working remotely. But really, I've advocated that point more generally for knowledge workers, and the mindset is to think of yourself as owning your own small business. You own your own time, you own your own resources. If you think of yourself that way, then your boss becomes essentially your client. Like other clients, he or she can give you directions and have a set of deliverables that you're supposed to deliver on within some timeframe and some budget, but then it's up to you how, when, and where you produce those results. The key is for knowledge workers to move away from hours worked—that's a relic of the industrial age in which people on assembly lines thought of their productivity in terms of the number of hours worked. What we're really interested in is our results. If you can agree with your boss on results, and as long as you're producing them—why should your boss care exactly when and why you're doing it?

We developed this concept of success metrics. It's essentially an objective set of KPIs that you and your boss have agreed to. If your boss just says 'Do this by a certain date,' that's often pretty vague. People aren't clear about what it is that they're actually agreeing to do. I liked to say, when I used to manage a lot of people—how are we going to know at the end of the month whether we've been successful in a project or this program with this client? And it's the success metrics that turn a general concept into an operating system.

Success metrics are great for the employee, because they then have the freedom to work when and where they find it's best. As long as they're producing the results, that's great. They also have the flexibility to meet their own personal needs and family needs, so they're happier. From the boss's point of view, it eliminates the need to be micromanaging the employee every hour of every day. Companies are doing some pretty crazy stuff now—putting software on peoples' computers, so they can count the number of hours that they're working. That's a bad approach, period. And if the boss doesn't have to be micromanaging, then he or she can spend time doing more important things, like developing new products for new clients.

My sense from talking to managers is that the companies with the strongest performance management systems have done better during the pandemic, because they have a structure...

They have a structure around results, not hours. That's the key. Because in the pandemic, the notion that you're counting hours becomes ridiculous.

So a strong performance management system for this more fluid work location and hours arrangement is grounded in success metrics and regular check-ins about them. As you know, the literature on performance reviews is that they are...

Pretty bad.

There are a lot of critics of performance reviews. So it's striking that in your book, you recommend very regular performance reviews around the completion of projects—you say at least once a quarter.

What we're talking about in terms of success metrics is not performance reviews. We're talking about something that's much more operational. It's more like deliverables—what are you going to deliver? And within what timeframe? The normal performance review is done once a year. It's a formalistic sort of thing; people write it all down and then they file it in the circular file and no one sees it. It doesn't really have much function. Since it's done only once a year, it isn't very useful. What we really need is performance feedback on a much more regular basis, which shouldn't be done like a traditional performance review. It should be done in terms of 'You had this project, here were the success metrics. You were able to meet most of them, some of them you didn't. Let's talk about how we can make sure that you improve and don't have these problems in the future.' That's not a performance review in the normal sense that we've been using, as in a yearly review. I call it performance feedback based on success metrics. Especially when people are remote, they do need more feedback. If you asked me whether that's true generally, I would say yes. You want to have performance feedback at least once a quarter—not a formal review, but feedback: How are you doing? What are you doing good? What are the problems and how can we improve them in the future?

What are some of the key tactics for operating as if you're running your own business in a remote or hybrid work setting?

It's a more proactive approach. First of all, if you're working remotely you've got to get the right technology. If you're in a separate office place, get it set up right. The second thing is you've got to learn how to structure your own day and not depend on the commute to be the rhythm setter. And third of all, you've got to have very regular discussions with your boss. If your boss isn't giving you success metrics, you need to propose them and take that approach to work. You're used to coming into the office nine to six every day; you're used to your boss telling you, 'This is what you need to do today,' and then coming around every other hour to see it.

That's a very passive approach, because you're essentially waiting for detailed instructions. So it's the opposite of owning your own business. When you own your own business, you're setting your timeframe, and you're gaining control and figuring out when is best for you to work, and when you don't want to work. You can only do that if you have a very clear agreement with your boss as to what it is that you're supposed to be delivering. For people who are used to having everything structured for them, that's a learned skill to move away from that and become somebody who structures their own day and their own time. I think that's what we mean. People get better at remote work once they've been doing it for awhile, and I think that's why—they've learned how to structure their own time.

From your research, what are the biggest mistakes that individuals and organizations make around hybrid work?

One mistake we just talked about is where they've decided that what they're going to do when people are remote is to find ingenious way to count the number of hours you're on your computer. And they do the same thing for your phone. Those are just ways in which you're trying to replicate the obsolete approach of paying hours and putting it there. A second mistake that make is they want to come up with a one-size-fits-all solution. Many organizations say, 'All our employees need to be in the office three days a week.' That may very well make sense for certain teams, but may not make any sense for other teams. In fact, they might have some global teams—you mean I'm going to fly to San Francisco three days a week?

The third is that the team trumps the individual choice. If you don't recognize that quickly, you're going to be in trouble. And the fourth mistake is that companies think it's okay to have people just find a seat when they come into the office—it's hoteling. I think that's very unnerving to people, and that they want to have a dedicated space. If you have two teams rotating through the same space, you can have two people sharing a desk, and then they don't have this crazy idea of hoteling, wherever you happen to wind up. People aren't going to be comfortable with that, and they're not going to be that productive.

In your book, you highlight specific questions around practices that workers and managers need to agree on and write out. Is it fair to say that you think documentation is important?

It's not the documentation. It's making explicit what are sometimes implicit expectations, and making sure that everybody's on the same page. That often takes the form of documentation, but we're not for documentation for documentation sake. When people started working remotely, many figured they had to be on 24-7; they were taking emails and on their Slack channel at midnight and felt they had to be on all weekend. So the question is, what should the norms of the team be? That's what I want to see a team leader do, and why I think the job of the manager is more challenging in a remote setting.

The team needs to agree, and make it explicit: what are its working norms? When are you supposed to be on? How soon are you supposed to respond to customer inquiries? How soon are you supposed to respond to internal inquiries? If you go hybrid, which days are you supposed to be in, and where exactly are you supposed to be? We're in this new situation, and if we have a vacuum—that's what a lot of companies had before, there was no guidance on any of these issues. When we switch to hybrid, there has to be guidance. But I'm the last person who is in favor of documentation, I can assure you.

OK—let the record be clear on that.

What should workers and managers be doing now, with the general expectation that in the future they will be in a hybrid situation?

They should read my book, they should read your newsletter, and start to understand and plan for what hybrid is going to look like. You're asking what they should do—they should think about all these factors that I delineated. They should think about what the team norms are, and they should come up with a hybrid plan that makes sense. The plan that works for the organization probably has a different plan for each of the teams. And they can't just have some HR person say, 'This is the way we're going to do it.' We have to build consensus. At any knowledge-based company, do you think you're going to stand up and order everybody to do something? That's crazy. They won't follow you. You have to build consensus, but you can't build consensus unless you have a plan. So that's what you need to do. You need to have a plan and it needs to be done differently for different teams and different places.

You spent years in finance, which is one of the industries that's most outspoken about the need for people to be in person in the office all the time, as soon as possible. What do you make of that?

You won't be surprised to know that my answer is, having run a large finance company, that it has a lot of different teams that are operating in very different ways. What you may be talking about is the investing function, where you have a group of analysts who are analyzing various companies, and then portfolio managers who are making decisions about how they're going to construct their portfolios and which stocks and which bonds they're going to pick. In that part of the finance industry, elaboration and argumentation, almost an adversarial picking-on—'Okay, you're pushing this company, let me push back. You say this, is that really true? Why should I think that this company will succeed? There are several other people that are competitors in your space.'—that sort of real argumentation is best done in person.

It's not that it's the finance industry; it's that that part of the finance industry needs heavy back-and-forth. It's collaboration, but in a sense adversarial cooperation. Now in the finance industry—I used to have a $100 million dollar systems budget every year when I was president of Fidelity Management. That's a whole different group of people and they're operating in very different ways. And for them, they can do a lot of this stuff remotely, but you need them to come together in certain times. Many of those people like to work on their own and then get together at the end of the day to discuss how much they completed. There is also the subgroup that is planning out these big projects. For them, I've found, the key is to require every few weeks that they meet with the users and show them what they're doing, ask them for more input. The typical big system projects—and I know the hard way from screwing them up, is you meet with the user–they tell you what you want, and then they want you to go away and come back six months later and have this beautiful project. That never works out well. They need to meet with the users every two weeks in person, so they can really understand. In fact, you want them to actually show the users what the screen is going to look like, because otherwise many of them have no idea what they're getting.

Third, you have the group of people who execute the trades. There's a huge amount of equipment, as all that is done heavily electronically. You can't possibly take that equipment to your house. You can have a terminal, but it's a huge amount. And you want the very instantaneous back-and-forth among the traders.

Fourth, you have a group that deals with the customers. We're dealing with the big institutional clients—for a lot of them, they're going to be on the road a large part of the time. That's probably key to their maintaining relations with customers and keeping them. They don't have to be on the road all the time, but a good number of days. Many of them probably have already been hybrid; that's been their life.

So when you say that the finance industry is going this way, I'm saying that's a generality and behind that are teams that have very different needs and should approach that situation very differently. But what I think implicitly you're saying is what most people think of as finance, which is analyzing companies and figuring out where to put your money, that core investing function probably does to a large degree benefit from being in person.

I think you just made the case better than any of the bank CEOs who I've heard talking about it have.

I saw JP Morgan's CEO say he wants all the branch people there in person. He means he wants the branch people to see the customer. One of the interesting things going on is when we put in at Fidelity, first we did touchtone phones. Then we added all this computers stuff, and we thought, 'This is going to be great, we're going to reduce the number of customer calls because they're all going to be able to do it,' touchtone this-and-this—we didn't, we had fewer calls, but they took much longer because they are much more complex. Then we had to build the whole workstation to support it. But if you've built a good enough workstation, then the phone reps don't need to be in the phone center. They can be someplace else.

One of the things you're doing in the book is helping people to make a distinction between when collaboration is productive and when it's not. How would you coach people to understand that?

It's a tough distinction to make. The key is to identify situations in which the final product is going to be a lot better if you have it tested by other people, you're arguing about it, and you're not just doing it yourself. You're getting their input in a friendly, but argumentative sort of way. If your final product is going to be better because you fought through it then you want to be there. A lot of brainstorming comes into that category because what you're really saying is a free flow of ideas. You're starting thinking X, and then you move to Y, then somebody says Z and before you know it you're at A. What you're really talking about is for what type of work does other people's input improve the product. That can be either other people's input because they're stimulating you to think about things that you haven't thought of, because they're pressing you on the logic of your argument, or because they're bringing out competitive or implementation issues that you haven't fully developed. In all of those cases, you're better off. Though you're also better off if you're doing what I call fine negotiation. Of course you can send a document back and forth 15 or 20 times, but many times it's more effective if you're sitting down.

So far we've been talking about people who are on your side of the table and about how you're improving the product of your team. There's a second sort, where you're dealing with people on the other side. So one is I call it fine negotiation, like contract negotiation where you're disagreeing, but you've got to hash it through with someone—What's your real purpose here? What are you trying to get at? Can we do it this way? Could we do it that way?

Another thing with the other side of the table is a lot of sales relationships, where you're striking up a relationship. You're selling partly on the product, but partly on relations. What you're doing in a lot of sales is trying to understand the other side's situation a lot better, and then you can be responsive to it. So those are two categories in which being in person is more important.

You can order Remote Inc., the new book by Pozen and Alexandra Samuel.

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