Our great hybrid work experiment got things wrong. How to fix it.
Apple’s attempt to bring back workers to its offices was to reach another important milestone on Monday. The plan — which called for Mondays, Tuesdays and Thursdays to be mandatory days in the office —was scrapped once again as Covid infections tick upward. Apple’s set schedule met widespread resistance from workers, and it was blamed for at least one departure of a high-profile executive. Apple’s director, machine learning Ian Goodfellow announced his resignation early in May. DeepMind is an Alphabet business unit. Apple has decided to continue with the pilot program which requires that workers be present in the office at least two days per week. According to U.S. Bureau of Labor Statistics 2019 data, 22% of employers in the private sector offered remote work opportunities before the pandemic. However, the rise in the number of employers offering telework options has accelerated this trend to 40%. BLS published the February results from a survey of over 82,000 employers in the private sector. It found that only a third of them had expanded remote-work opportunities during the pandemic. BLS received information from 60% of these companies that they intended to maintain the existing policies. Remote work is preferred by workers. Workers can work remotely and take breaks to exercise or walk their dogs. You can spend more time with your family and friends at home, or even for exercising. Some people find it simpler to focus on single tasks when they are not surrounded by the hustle and bustle of an office. Companies are worried that the remote working environment is making it harder to create a company culture, and limiting innovation. Businesses are exploring how technology and design could bring people together and help them to build relationships. The key takeaways from the investment conference: Investors value flexibility. Workers want to be able to work where they like and when they prefer. Employers who offer more flexibility to workers will be able to access the greatest number of potential employees. Employers who place more restrictions on their employees might need to pay higher salaries to recruit talent. Because companies don’t have as many office spaces, Office REIT stock is trading at a discounted price. This is not true. However, hybrid work styles may mean that some companies will need to downsize their spaces. Tech innovation will be driven by a surge in the redesign of offices to accommodate hybrid workers. Zoom calls and other tools that are associated with remote work do not lend themselves to collaboration. Mark Ein (chairman of Kastle Systems security firm), which monitors access swipes for its 2,600 buildings, stated that “if you think about it” the office is competing with working from home. Based on Kastle’s 10-city average, office occupancy currently sits around 43.4%. There is variation within that number. Austin in Texas has higher occupancy rates. However, certain industries like tech have been slower to bring back workers than others like finance. There are certain age groups that have greater interest in working. Micah Remley CEO of Robin says that this includes recent graduates who want to establish social connections and build a professional network. Robin also has apps designed to aid companies managing hybrid workplaces. Remley stated that they don’t like to work in an apartment 10 hours per day, and five days per week. “Early Growing Pains” This is not where the companies expected to be after the pandemic. It has been difficult for businesses to move forward with plans to resume their pre-pandemic employment patterns due to an extremely tight labor market. Recent days have seen Capital One and the New York Times halt their plans for a return to work. Brian Kropp (head of Gartner’s research practice in HR) says it could take companies several years to understand the best way to create a hybrid environment. Companies are currently experiencing “early growing pains”, he stated. Kropp believes that larger questions such as how to manage employees’ career paths and performance management, along with workforce planning are still to be answered. Office design is receiving a lot of attention. The office was a place where you could do your job in the past. One example is a mainframe computer. This is often no longer possible. Companies need to offer workers reasons to come to work. Ein explained that “business leaders are looking at how I can make my office an inviting place for people to go to,” Ein added. According to Ein, companies now focus on how they can make the workplace more comfortable and provide social activities such as happy hours and lunches. People are starting to leave the workplace even before the pandemic. Janet Pogue McLaurin is an architect who leads Gensler’s Work Sector practice and research programs. She said that 67% of people working in the offices of innovative businesses were still there at the end of 2019. Gensler studies also showed that workplace productivity was declining pre-pandemic. This was the first time Gensler had done this measure. She said, “So something had broken.” She said, “So something was broken.” This is an opportunity to not only fix what was broken, but also to envision something completely new and different. That’s what I believe companies are doing. Kropp states that employees now demand maximum flexibility. This framework allows companies to have the most workers. However, it presents a problem for managers. He stated that if you are able to rely on a strong group of managers, it is possible to push for more flexibility. “If you are taking away flexibility from employees, you’re going to have to either get comfortable with the idea that you’re going to have access to a smaller percentage of the labor market, or you’re going to have to make up for that loss of flexibility — most likely with just more compensation,” Kropp said. Kropp said that employees must be treated fairly. This includes compensating remote workers who can’t work due to their jobs. PwC global leader in people and organizational leadership, Bhushan Setti, stated that companies are investing in leadership development because it is difficult to manage in the hybrid world. Sethi explained that “The manager’s role… is very important.” “You drive experence. … If you don’t provide them with the right experience, they’ll leave — or just as bad, they won’t be as productive and engaged.” Keep in mind, however, that people return to work to collaborate with coworkers. However, office space might not be designed to allow for this and technology could be slowing down. While most knowledge workers are familiar with Zoom and Microsoft Teams, these tools were not designed to facilitate collaboration. Kropp stated that there are many new technologies out there that have received VC funding and are making progress but that they are still not quite ready for prime time. He cited as an example a technology that allows remote workers access to their office to see where they are and to virtually chat with them. A technology that monitors people’s facial expressions in order to identify when someone is struggling. His vision also includes new technology that could make it easier to evaluate and assess a person’s capability to complete their work. Robin founded his company as a scheduling tool for conference rooms. Remley explained that office spaces were crowded. The company’s mission is to help companies squeeze the maximum intensity from a space by helping people choose when they want to visit the office. Remley stated that for a hybrid worker, coming into work is the most costly decision of their day. It helps employees know exactly who will be there so that they make the best of the decision to go into work. Not the death knell for offices Office space needs are declining, but not as much as one might expect — and not across the board. Morgan Stanley published a May 10 research note that estimated that office space demand would fall by 14% in the next three-years as more people work remotely and use shared desks. The firm’s latest AlphaWise survey of 100 U.S. businesses in March revealed that hybrid work is the future. Its findings show that work-from-home penetration will increase to over 40% and that the current norm for desk usage is 60%. This compares with the 80% before Covid. Morgan Stanley analysts including Ronald Kamdem (real estate analyst) stated that office REITs trade at a wider discount than other real estate investment trusts. These findings are consistent with the firm’s low ratings for Vornado, Hudson Pacific Properties, Office Properties Income Trust and Vornado. The stock prices of all three are at or close to 52-week lows. Kropp of Gartner says that companies using a hybrid strategy may be able reduce the office size. Companies that follow a conventional culture will likely not. According to some experts, companies shouldn’t reduce their office space. They should instead consider reconfiguring their office space in order to meet the needs of the workforce now and for the future. Workers value flexibility and will come to work at times that are most convenient for them. Apple employees may not have liked the idea that they would be required to work on certain days. Current worker trends show Tuesday, Wednesday, and Thursday are most common days to work in America. Employee surveys often reveal that workers want to work on the same day as others. This makes it hard to assume that companies would need more space in hybrid situations. Pogue McLaurin from Gensler said, “One thing we are finding is that the highest performing companies actually are three times more likely than those who aren’t to be expanding their footprint.” The trend reflects not only that the top performing companies are still growing and hiring — and did so throughout the pandemic — but also that these companies want to make sure that they are getting teams together in the best possible way. How do you encourage innovation and strengthen culture? She said. She said, “And I believe that some of the most successful companies don’t think in terms of how we reduce the square footage and allow different people to come in on different days. But how can we strengthen weak ties.” Many companies offer mentoring and coaching services and encourage employees to attend the office the same day. This is done in an effort to create social capital. Pogue McLaurin indicated that companies will be doing a lot of experiments over the next several years. While some of this has been done, more is expected to occur in the future. She said that “our work patterns are not yet fully established.” We’re somewhere in the middle. Armstrong World Industries has turned a portion of its Lancaster, Pennsylvania, campus into a laboratory where ideas and products — including some it manufactures — can be tested and evaluated by Armstrong’s staff as they go through their daily tasks. Armstrong and Gensler are working together to test systems that produce cleaner air, as well as designs that allow for more natural light. The office design incorporates nature into its style, with hanging plants and wood tones as well as earthy colors. Pogue McLaurin: Wilderness retreats, activating the outside According to Pogue McLaurin there’s a greater desire to bring in fresh air to offices and to improve outdoor space like roof terraces. A second trend is the mid-door space, interior areas that open to the outdoors to allow fresh air to enter. Designers can learn from each other and create environments that foster spontaneous interaction between coworkers by experimenting. To maximize space use for such events, designers may look at the various types of meetings participants have. If you are aware that some participants will only be able to attend the conference, and others will prefer videoconferencing, then how can you arrange for a room? It could also be that employees no longer work in the open space of large conference rooms, but instead manage their jobs from there. Perhaps that model will be rewritten in the near future. Private workspaces are available with wide open spaces that enable collaboration. Sanjay Rishi (CEO of Work Dynamics Americas), a real estate service firm JLL said that while much discussion about returning to work focuses on collaboration and the need for companies to have “we” space as well as “me” areas. After two years working remotely, the employees are accustomed to taking a break and will require this at work. Rishi said that home has a direct influence on how office design, seating, and comfort will look. Younger workers are more inclined to use third-places for meeting. It could be a cafeteria, a café or sitting in a park bench. This idea has been taken to the next level by Salesforce. The company booked Trailblazer Ranch, an 75-acre retreat located in Scotts Valley, California, earlier this year. The staff of the company can gather there to have meetings or leadership training. They also get together and build bonds through activities like hiking and yoga. Pogue McLaurin said, “These spaces were not previously thought of as offices. Now we are starting to think about activating them all.” Adobe wants people to move in the spaces they use every day. Eric Kline is the director of global workplace experiences. “A lot of our focus that helps drive innovation, creativity and productivity are these casual collisions when people enter,” he said. Adobe considers how different parts of its workplace interact. The company likes to consider different locations as “neighborhoods”, forming a larger community. Kline explained that it is important for employees to interact and not just live in the same place.