Many companies have struggled with figuring out their flexible work policies, but what they may not realize is that many investors are watching —and judging.

A number of investors have explicitly and publicly integrated work-from-home (WFH) policies into their evaluations of prospective investment targets. I’ve heard from dozens of investors who approached me for advice on assessing the effectiveness of such policies. I see employee buy-in and clarity around policies as crucial. If companies don’t get this right, they are undermining their long-term valuations.

Unfortunately, many companies fail in this arena. A recent study by Mercer showed that only one in three (34%) companies have clear rules for handling flexible work. They looked at 749 companies and found that nearly half rely on loose, informal guidelines, while 17% don’t really manage it at all. This vague approach can hurt attraction and retention of employees—and, increasingly, investors.

Additionally, how well are companies sharing their policies? A separate survey by Fishbowl asked about 7,300 professionals how well they understood their company’s plan for hybrid work. The results? Just over half got their company’s hybrid work guidelines, but nearly half were left clueless.

NEXUS BETWEEN POLICY CLARITY AND PERFORMANCE

But why is clarity so important? It’s because the success of WFH rules largely depends on how clearly they’re shared and understood. A clear policy acts like a blueprint, guiding everyone in the company toward working well together, ensuring a steady flow of productivity across all teams.

Choosing the right flexible work style is crucial, but having a well-understood plan for that style is equally vital. Clear policies set the stage for how teams operate, aligning everyone towards shared goals. On a smaller scale, they clear up the daily work routine for each employee, laying out what’s expected, how to get there, and how success is celebrated.

The positive effects of a clear WFH policy go beyond just the immediate teams; they ripple through the whole company. Clear WFH rules help sync up different departments, building a culture of openness and trust.

Plus, a good WFH policy isn’t a one-and-done deal, but something that adapts to new market trends, company goals, and feedback from employees. It’s the channel through which the company’s core beliefs and expectations are shared and embraced by all.

The payoffs of a clear WFH policy are real and felt. On one side, it shows in solid numbers like productivity levels, employee engagement, and customer happiness. On the flip side, it nurtures a trusting, empowering culture, creating a sense of belonging among employees. Although this side of the coin isn’t easily measured, it hugely affects morale, employee stay-rate, and the overall vibe of the company.

IMPACT ON EMPLOYEE DYNAMICS

In a remote or hybrid setup, the usual face-to-face cues guiding our chats and interactions are missing. Here, the WFH policy steps in, offering a structured playbook that brings a sense of regularity and steadiness in how employees interact. Having clear directions on how to communicate, work together on projects, and what’s expected operation-wise clears up any fuzziness and sets the stage for effective teamwork and partnerships.

Teamwork is the magic ingredient in today’s company success, where a mix of skills, viewpoints, and backgrounds come together to spark new ideas and tackle tough problems. How well this magic works is heavily influenced by the clarity in WFH policies, which outline the go-to channels, tools, and rules for working together across and within departments. Clear instructions on how to share info, communicate, and dive into collaborative projects lay the groundwork for a teamwork-friendly environment.

How into their jobs employees are and how happy they feel plays a huge role in a company’s win, and are closely linked to how clear and sensible WFH policies are. Employees who get the operational rules and what’s expected of them tend to be more plugged in, happy, and driven. Plus, clear WFH policies send a message of respect, trust, and appreciation to employees, boosting their sense of belonging, job happiness, and loyalty to the company.

DRAW FOR TALENT

Transparency around WFH policies is not merely an operational guide but also a reflection of a company’s ethos and its innovative approach to modern work culture. When well articulated, these policies serve as a magnet for the kind of talent that values transparency, flexibility, and a results-driven environment. They resonate with individuals who are looking for more than just a traditional office setup, drawing in those who align with your company’s forward-thinking approach to work.

A well-thought-out WFH policy can be a substantial part of your company’s brand, showcasing its commitment to work-life balance, trust in employees, and a modern approach to collaborative success. When you have a clear WFH policy that’s communicated well, it signals to potential talent that your company values autonomy, innovation, and a balanced approach to professional and personal life.

A clear stance on flexible working arrangements indicates a level of maturity and adaptability in a company’s culture. It shows that the organization is responsive to contemporary work trends and values a culture of empowerment over micromanagement. This, in turn, attracts individuals who are self-driven, adaptable, and thrive in a culture of accountability and flexibility.

NEW CRITERIA FOR INVESTORS

Investors increasingly focus on the clarity of WFH policies as a sign of a well-run company. A clear and well-communicated WFH policy shows a management that understands modern work needs and is proactive in creating a good work environment.

Investors see such policies as a sign of ongoing productivity and efficiency, making companies with clear WFH policies more attractive. They see that clear policies lead to happier employees, less turnover, and better customer relationships—all key for long-term business success and, in turn, investment returns.

How much employees agree with the WFH policies is also crucial. It shows how aligned the workforce and management are, which is a key sign of a well-coordinated company and potential for ongoing good performance. Investors are keen on checking the level of employee agreement as it indicates a company’s ability to keep top talent, build a positive work culture, and maintain high productivity levels, even in a remote or hybrid setting.

The talks between companies and investors are now including discussions on WFH policies, employee engagement strategies, and other related topics. This expanded dialogue helps build a deeper understanding and better alignment between companies and their investors, potentially leading to stronger investor relations.

As the corporate scene keeps changing in response to new work dynamics, investment decisions are changing too. Considering the clarity of WFH policies and employee agreement is part of a wider trend towards a more well-rounded approach to investment analysis. This trend is likely to keep growing as the benefits of clear WFH policies and strong employee engagement continue.