The Future of Work and What It Means for Investors
- Sep 8, 2022
- 5 min read
Updated: Mar 12
[Editor’s note: This conversation was recorded in September 2022. The analysis of structural trends in remote work, office real estate, and workplace leadership remains relevant. Short-term labor market and inflation predictions referenced in the discussion have since played out broadly as described.]
The shift to remote and hybrid work is not a temporary pandemic response. It is a structural change with cascading implications for leadership, real estate, labor markets, and portfolio construction.
In this episode of The Artisan Podcast, Joseph Abramson, MBA, CFA, Co-Chief Investment Manager & Portfolio Manager at Northland Wealth Management, speaks with Ian MacFarlane, former SVP & Chief Strategist at Bank Credit Analyst (BCA Research) and now one of North America’s leading executive coaches, about the forces reshaping the workplace and what UHNW families with real estate, business, and portfolio exposure need to understand.
Leadership, Not Management, Is the Bottleneck
MacFarlane draws a sharp distinction between leadership and management. Management is about getting people to do things efficiently through extrinsic motivation: compensation, bonuses, structure. Leadership is about getting people to do things because they genuinely want to, driven by intrinsic motivation. In a world where employees are working from home, across time zones, and increasingly on shorter-term contracts, the management toolkit alone is insufficient.
Drawing on Daniel Pink’s research, MacFarlane identifies three components of intrinsic motivation that leaders must cultivate: autonomy (determining the “how”, even when the “what” and “why” are set), mastery (the ability to develop and perfect skills, which requires psychological safety and tolerance for failure), and purpose (connecting daily work to something larger than a quarterly target).
“Micromanagement has always been a bad thing. Micromanagement in the current environment is an absolute catastrophe. If you determine the what and the why, the how should rest in their hands.”
— Ian MacFarlane, former SVP & Chief Strategist, BCA Research
Remote Work: Distinguishing the Secular Trend From the Cyclical Noise
MacFarlane frames the remote work discussion through the lens of secular versus cyclical trends. The secular trend is definitively toward remote and hybrid work. The pandemic did not create this trend; it removed the human resistance that had been delaying an already-available technological capability. Once people adapted to the new normal, the change became effectively irreversible.
The cyclical overlay is that as labor markets tighten or loosen, employers may temporarily demand more in-office presence, as the technology sector demonstrated in 2022-2023 with return-to-office mandates. But this is a cyclical swing within a structural shift, not evidence that the shift is reversing.
The implications extend beyond where people sit. Remote work effectively expands the global labor supply. When any employee can work from anywhere in their country (or anywhere in the world for extended periods, as companies like Airbnb have enabled), the competitive dynamics of the labor market change fundamentally. For family-owned businesses in Northland’s client base, this means both an opportunity to access talent beyond their local market and a risk that their own employees can be recruited by firms anywhere.
Why Office Real Estate Is Structurally Broken
The most direct investment implication discussed is the structural deterioration of office real estate. Abramson argues that the office sector is following the same trajectory as retail real estate, just with a longer fuse because office leases are typically 10 years. The thesis, which has played out substantially since this conversation was recorded:
• Structural weakness in demand. Even as the pandemic receded, office utilization did not return to pre-2020 levels. Hybrid models mean fewer people in the office on any given day, reducing the space required per employee.
• Excessive leverage. Before the pandemic, office real estate was considered extremely safe because of long-term lease structures. This perceived safety allowed equity holders to load up on debt. Now that revenue is structurally impaired, the debt still needs to be serviced.
• Slow-burning fuse. With 10-year leases, the full impact takes years to manifest. As leases expire, tenants either downsize, sublease, or leave entirely. The wave of defaults builds gradually but is directionally unavoidable.
For UHNW families with real estate exposure, the distinction between asset types matters enormously. Multi-residential real estate in fast-growing markets (particularly in the southern U.S.) benefits from population migration, rent growth, and structural housing undersupply. Office real estate in major urban centres faces the opposite dynamic. Northland’s clients typically hold diversified real estate allocations through institutional-quality alternative investments, where manager selection and asset-type discipline are critical.
The Workplace Mental Health Crisis and Its Economic Cost
MacFarlane raises a dimension of the future-of-work conversation that most investment-focused discussions omit: the mental health implications. He cites data showing that one in four people will experience a mental health problem in any given year, and that access to care is dramatically insufficient, with wait times of one to two years in many jurisdictions. The economic consequence is a productivity drag that compounds over time.
For families who own or manage businesses, this is not abstract. Employee mental health directly affects retention, productivity, and the cost of disability claims. For investors, healthcare services, mental health technology platforms, and wellness-focused real estate are sectors positioned to benefit from this structural unmet need.
Three Investment Takeaways
MacFarlane summarizes the investment implications in three themes:
• Services over goods. The pandemic drove a surge in goods consumption as services shut down. As hybrid work becomes permanent and people re-engage with in-person services (healthcare, leisure, personal care), the next inflationary and growth tailwind will be in services rather than goods.
• Disinflation as the secular backdrop. Despite the 2022 inflation surge, the longer-term forces (technology, potential labor supply expansion through remote work, shorter employment contracts leading to higher savings rates and lower consumption) point to a disinflationary environment. The inflation episode was a supply shock layered on inappropriately easy policy, not a regime change.
• Purpose-driven businesses outperform. Organizations that can articulate a genuine sense of purpose, not just a mission statement on the wall, will attract and retain talent more effectively in an environment where intrinsic motivation matters more than compensation alone. This has implications for both the businesses families own and the companies they invest in.
About the Guest
Ian MacFarlane is the founder of IPM Strategic Research and one of North America’s leading executive coaches and strategists. Previously, he served as SVP & Chief Strategist at Bank Credit Analyst (BCA Research) in Montreal, where he co-launched the firm’s global asset allocation service alongside Joseph Abramson. MacFarlane’s practice focuses on helping senior executives and leadership teams navigate rapidly changing environments, with particular expertise in the intersection of strategy, psychology, and organizational performance.
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