Distributed (but only a little)

Surveys indicate most workers favor a distributed workplace in which they can work from anywhere, any time.? When it comes to work, individuals focus (mostly) on their own specific benefits, as opposed to thinking about how the ways in which their work gets done affects the broader organization.? This makes sense, as one of the key benefits of our economic system is how it permits the individual to get ahead, to maximize its value.? Employees realize value in a variety of ways, including compensation and other variables.? Flexibility in where and when people work is high on the list of non-compensation related variables.

It’s clear most companies adopted a more distributed workplace, first in response to the pandemic (e.g., not as a strategic choice), and second to retain and attract talent in a tight labor market.? What’s less clear is whether US companies have settled on these flexible workplaces as their new normal, or if they’re now interested in limiting the amount of flex their workers currently enjoy.? There’s certainly anecdotal evidence of the latter, as the drum beat of big corporations announcing return to office mandates continues.? Understandably, when such mandates are made, employees often express a high degree of dissatisfaction, including threats to leave the company.?

Workers seek a Golidlocks effect in which the degree of distributed work is just right, meaning the employer embraces the distributed model but maintains a hyper-geographic bias.? This “modified” distributed workplace offers employees a sweet spot in which they get to maintain high levels of compensation based on specific (expensive) geographies, while disconnecting their cost of living from such geographies (e.g., living elsewhere).? Many aspects of the future of work are hard to predict, but it seems probable, indeed a basic economic reality, that companies who fully embrace distributed work won’t perpetuate this Goldilocks version.? Instead, they will look to retain comparable talent at a significant discount by engaging the global marketplace.? This practice could gain momentum quickly, as first movers will enjoy a substantial competitive advantage over companies who continue to pay hyper-geographic wages.? This is akin to the loss of US manufacturing jobs to developing markets.? Once some companies began manufacturing products in developing markets at substantially less cost, it forced others to follow suit.

What does this mean for the average worker?? Is it possible in continuing to advocate for distributed work they may (inadvertently) argue their way out of a job and/or set themselves up for significantly reduced compensation?? Arguably, US workers benefit more when employers favor an office-centric workplace.? Sure, there’s likely an inflection point at which the worker is willing to give up some level of compensation to maintain other variables it deems valuable (like remote work).? But when employers tap into the global markets, compensation levels will decline so precipitously that even the most pro-remote worker will reconsider her views.?

Ask TenantSee Weekly

This week’s question:? Our broker told us we don’t have to worry about paying for his services because he gets paid by the landlord.? Is this true??

This is not entirely accurate.? While the US office markets are mostly organized such that landlords cut the check for the tenant broker’s fee (e.g., the commission), the tenant, ultimately, pays the fee as it is baked into the rental economics.? In other words, the fee is paid through the rent expense.? This unusual disconnection between the tenant broker’s compensation and the party for whom it provides services can result in confusion.? It’s important for tenants to understand exactly how much the broker will earn and to select the broker who is best suited to deliver value commensurate with the fee.?