The Future of the Office
The Covid-19 pandemic has by enforcing a global working from home experiment accelerated long-term underlying trends in several areas, e.g. hot-desking, flexible hours, and use of technology to enable working from home.
One of these is rethinking how and where we work and the idea that work must be tied to an office. Many businesses are now fundamentally asking ‘Why do we go to the office?’ and therefore ‘What is the office for?’
In this article I will review some of the latest thinking on the future of the office and highlight why this is a critical time to review what space you need to operate effectively and how this space is organised.
Whilst this article principally focuses on the traditional office environment, we should also not lose sight of the fact that the pandemic has also had dramatic knock-on effects in manufacturing environments. That, however, will be the theme for a follow-up article next week – for the time being let’s look at how the ‘traditional office’ environment will be affected.
Working from Home – The Good News
Before the pandemic, the conventional wisdom had been that offices were critical to productivity, culture, and winning the war for talent. Companies competed intensely for prime office space in major urban centres around the world and concentrated on solutions that were seen to promote collaboration. Densification, open-office designs, hoteling, and co-working were the typical battle cries.
According to McKinsey research, 80% of people questioned report that they enjoy working from home. 41% say that they are more productive than they had been before and 28% that they are as productive. Many employees liberated from long commutes and travel have found more productive ways to spend that time, enjoyed greater flexibility in balancing their personal and professional lives, and decided that they prefer to work from home rather than the office. Many companies think they can access new pools of talent with fewer locational constraints, adopt innovative processes to boost productivity, create an even stronger culture, and significantly reduce real-estate costs.
According to a survey which took data from 1.5 million sources by global commercial real estate company, Cushman & Wakefield, around 72% of staff expected their companies to embrace flexible working after the lockdown lifts.
Facing a sudden need to cut costs, chief executives have indicated in recent days that their property portfolios look like good places to start given the ease with which their companies have adapted to remote set-ups.
“The notion of putting 7,000 people in a building may be a thing of the past,” said Jes Staley of Barclays. “Maybe we don't need all the offices that we currently have around the world,” mused Mondelez’s Dirk van de Put, while Sergio Ermotti said UBS was already thinking about moving out of expensive city-centre offices.
The video-conferencing service Zoom has seen its corporate subscriber numbers grow more than 350%. Cloud companies are falling over themselves to tell people “See, we told you so! The cloud works!”.
The technology is fast and (mostly) secure. For too many years SME business owners ignored these powerful technologies that would have allowed their employees more flexibility. Thanks to the Covid-19 pandemic, we’ve learned that, assuming a relatively new computer and a relatively decent broadband connection, most office workers can get much of their jobs done from their home offices. And, depending on the person, potentially be more productive.
Many chief executives also seem not to miss the office.
“I have been so much more connected to 20,000 employees in the last six weeks than I have in the last six months thanks to the technology we are using,” said Jim Collins, of biotech and agriculture group Corteva.
Even Sir Martin Sorrell, the 75-year-old advertising boss who runs S4 Capital, said he had found working from home “energising”, and expected it to herald a “permanent change” to his working practices. The former WPP chief executive has already started ending leases at some sites.
“I spend around ￡35m on property in a year,” he said. “I’d much rather invest that in people than expensive offices.”
What would a return to the office environment look like?
Most bosses and property owners say their immediate preoccupation is how to get workers back safely. But in the short term it is already very clear that the need for social distancing will reverse commercial real estate’s “densification” trend, which for years saw more people crammed into smaller spaces.
“Our customers with dense layouts are removing workstations and will return to work in a less dense environment,” said Owen Thomas, Chief Executive of Boston Properties, who predicted that some clients could even need more space as a result!
Office density is perhaps the biggest challenge for businesses returning to work. As fewer people can be in an office at any one time, companies will need to deploy rotas, explains Rosie Haslem, director at London-based design and research studio Spacelab. “In the shorter term for the return to work, we will need to ensure people can socially distance. This can be achieved through both management of people – such as flexible hours and rotas for how many people come into the office each day – and management of space, including reconfiguration or removal of desks and the closure of certain communal spaces. These things are low-cost ways of getting people back into work, quickly. Investment in technology to assist in the management of people flow and space occupancy, and to enable things to be ‘contactless’ may indeed follow – but arguably this is just an acceleration of pre-existing property technology trends.”
Hygiene measures such as enhanced cleaning, for example, are relatively inexpensive to put into place. In contrast, there is a growing consensus among many architects that ventilation will be a major theme. Today, many offices recycle the air in the buildings, unlike in say operating theatres where fresh air is provided. Employee welfare measures, such as improved air quality, are going to be more important in the future.
Others worry that offices, particularly skyscrapers, are simply incompatible with government guidelines for combating Covid-19.
“Moving 5,500 people vertically is a big challenge with current social distancing measures,” said Adam Goldin, head of UK business for CC Land, which owns the “Cheesegrater” tower in the City of London. “How do we support tenants to social distance in a 46-storey building? We’re working with all our tenants to support them as they start to return to work, but I don’t think any building has enough lifts to take one at a time.”
It would appear from all the evidence presented so far that the “traditional office” has had its day. But as we will see in the next section there is not a ‘One Size Fits All’ solution … and in any case there is no such thing as the “traditional office”. The office has always evolved to meet ever changing requirements and will continue to do so going forward.
The Case for the Office
Over the past decade many big companies reversed their work-from-home policies to get people back into the office and talking face to face
It should be recognized that this remote work craze isn’t new. The internet has been around for a while. And over the past decade big companies like Yahoo, IBM, Aetna, Best Buy and many others reversed their work-from-home policies to get people back into the office and talking face to face. They realised the cost of keeping these workers away from each other far exceeded the savings they were reaping on rent and utilities. They realised that people need human contact to get things done. Real, live, face-to-face human contact.
The office should be a place we choose to come to for activities that are better done in person such as building relationships, brainstorming, learning, mentoring, as well as personal conversations.
In addition, more than half of younger workers are said to be struggling with working from home, given they are less likely to have the space to work in and are unable to socialise as much.
Chris Grigg, chief executive of British Land
“There is a danger of groupthink,” he warned. “You have to bear in mind that there are some people struggling to juggle childcare or home schooling with their day job, and more junior colleagues who are sharing flats who think this is nothing short of a nightmare.”
Flexibility and choice will be key as we move forward into the next normal.
Prior to taking medium or long-term decisions about office space requirements, it’s important to find out from employees how and where they want to work. While some of us have the benefit of a functional home office, this is not the case for most. For those who do not have the space or a conducive environment at home to work it will be impossible to work as productively as they can from an office.
Not all remote working is created equal.
‘Work-from-Home’ policies need balance. There must be physical presence. You need to see that worker and that worker needs to see you and his or her colleagues. You can’t create a team when everyone’s completely virtual. Something is missing. Human contact is missing. Technology just can’t replace that.
The Way Forward
The reality is that both sides of the argument are probably right.
Every company and its culture are different, and so are the circumstances of every individual employee. Many have enjoyed this new experience; others are exhausted by it. The productivity of the employees who do many kinds of jobs has increased; for others it has declined. Many forms of virtual collaboration are working well; others are not.
The four key steps that businesses should consider when re-imagining how their workplaces may look in the future are described below:
1. Reconstruct how work is done
Companies should identify the most important processes for each major business, geography, and function, and reinvent them completely, often with involvement by employees. For both processes and cultural practices, it is all too tempting to revert to what was in place before the pandemic. To resist this temptation, businesses could start by assuming that processes will be reconstructed digitally and put the burden of proof on those who argue for a return to purely physical pre–COVID-19 legacy processes.
2. Decide ‘people to work’ or ‘work to people’
In the past couple of years, the competition for talent has been fiercer than ever. At the same time, some groups of talent are less willing to relocate to their employers’ locations than they had been in the past. In fact, talented people could live in locations of their choice, which may have a lower cost of living and proximity to people and places they love. A monthly trip to headquarters or a meeting with colleagues at a shared destination may suffice. This approach could be a winning proposition for both employers and employees, with profound effects on the quality of talent a company can access.
3. Redesign the workplace to support business priorities
Companies could create workspaces specifically designed to support the kinds of interactions that cannot happen remotely. If the primary purpose of an organization’s space is to accommodate specific moments of collaboration rather than individual work, for example, should 80 percent of the office be devoted to collaboration rooms?
To maintain productivity, collaboration, and learning and to preserve the corporate culture, the boundaries between being physically in the office and out of the office must collapse. For example, in-office videoconferencing can no longer involve a group of people staring at one another around a table while others watch from a screen on the side, without being able to participate effectively.
4. Resize the footprint creatively
A transformational approach to reinventing offices will be necessary. Instead of adjusting the existing footprint incrementally, companies should take a fresh look at how much and where space is required and how it fosters desired outcomes for collaboration, productivity, culture, and the work experience. That kind of approach will also involve questioning where offices should be located.
These changes may not only improve how work is done but also lead to savings. Rent, capital costs, facilities operations, maintenance, and management make property the largest cost category outside of labour. The value at stake is significant. Over time, some businesses could reduce their property costs by 30 percent.
Those that shift to a fully virtual model could almost eliminate these costs. Both could also increase their business resilience and reduce their level of risk by having employees work in many different locations.
Now is the time
As employers around the world experiment with bringing their employees back to offices, business owners must act now to ensure that when they return, workplaces are both productive and safe.
Businesses must also use this moment to break from the inertia of the past by dispensing with suboptimal old habits and systems. A well-planned return to offices can use this moment to reinvent their role and create a better experience for talent, improve collaboration and productivity, and reduce costs. That kind of change will require transformational thinking grounded in facts.
Ultimately, the aim of this reinvention will be what good businesses have always wanted: a safe environment where people can enjoy their work, collaborate with their colleagues, and achieve the objectives of their companies.
Neil Niblock
ICON Business Advisor
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