Historically, any property consultant that professed to be able to reduce office occupancy costs and improve employee satisfaction at the same time would have been seen as a snake-oil salesman.
Post-pandemic this paradigm has shifted and what many organisations have yet to understand is that employee experience and cost savings can now go hand in hand.
The advent of hybrid working has meant that companies can achieve substantial cost savings whilst providing a greater and richer workplace experience. This will enable increased talent retention, attraction and collaboration as well as enhanced productivity.
This change has revealed three new truths about the modern office that were once considered contradictions.
The last 2 decades have seen an incessant effort to drive down occupancy costs. This has resulted in more people being crammed into less and less space. Whilst this meant greater space efficiency, this densification has taken a terrible toll on effectiveness, employee satisfaction and workplace experience.
This period has also seen a parabolic increase in computing power matched with a counterintuitive decrease in productivity. This phenomenon was dubbed the “productivity paradox” by Nobel laureate Robert Solow in 1987 when he quipped, “You can see the computer age everywhere except in the productivity statistics.”
I would contest that this is also due to the increasingly cramped and adverse conditions employees were being asked to endure in what Nigel Oseland likened to our treatment of animals in his seminal book “Beyond the Workplace Zoo”
Along came the pandemic and many in the industry predicted that the social distancing bought on by Covid would mean a reversal in the compression of our corporate spaces. However, our concerns over proximity to our fellow workers have since waned and we are now seeing a need to physically reconnect with our colleagues and fellow workers.
Many organisations have attempted to bribe employees into returning through the provision of free food or other perks. But, data bought out by Accenture and Microsoft indicate that we are returning to the office to socialise with our co-workers.
According to an Accenture survey from July 2022, 65% of employees said they would be more likely to go to work if there was a chance that lots of their colleagues would be there too. In my post “The Workplace as a Competitive Advantage” l highlighted that 84%of Microsoft employees believed that the opportunity for social interaction with co-workers would motivate them to make the effort to commute to the office.
Human connection is needed to succeed and to feel fulfilled at work. Before the pandemic hit, it was much easier to find this level of social interaction (despite often being frowned on by many organisations!)
In the new world of working anywhere and at any time, the survey data is telling us that we are craving a high-energy and interactive environment.
Before COVID we would gather in cafes and co-working spaces and evolve our thinking through conversation. Consequently, our workplaces need to evolve to accommodate the change in expectations.
Humans are herd animals and naturally, want what other people have. We feel a level of comfort from following the choices of others, rather than having to think about the situation for ourselves. In the same way, we avoid empty cafes; a sparsely populated office will not get encourage employees to commit to a lengthy and increasingly expensive commute no matter what the incentive.
Even pre-pandemic, when most workers were expected to come in five days a week, the average office occupancy rate was less than 60%. Remote working exacerbated this and turned many corporate workplaces into little more than furniture showrooms. Even now many corporate office occupancy rates are less than 30%.
For all its advantages, there are still many naysayers about this flexible work style but it turns out that the sceptics are wrong about a lot of things. The data from employees and their expectations shows that hybrid working is here to stay, with most people having resumed life by working from home and refraining from going into the office.
A study conducted by the National Bureau of Economic Research shows that the productivity rate for remote workers is the same as for onsite workers. In a study done by Cisco in April 2022, 82% of employees said they feel happier when working remotely, and over 60% of them felt their productivity improved significantly.
We are all aware that employees want more flexibility about where they work, but Gallup found they, even more, up to 94%, want flexibility about when they work.
The desire for work-from-anywhere at any time coupled with a need for in-person interaction has created a massive challenge for organisations. Many, sadly have taken their lead from Elon Musk in dictating that their employees return to the office.
Compelling people back to the office five days a week is not the answer and, at his point, is not even possible. Creating the energy you want while re-creating that "feel" you once had requires a different solution.
We are likely to see that these spaces will need to cope with a periodic influx of large numbers of staff ready and willing to socialise and interact with their colleagues. Traditional occupancy and utilisation stats will likely exceed those pre-pandemic levels, albeit for a shortened period. At all other times, they will be useless in guiding any form of Workplace decision-making.
Organisations wishing to proactively support their employees’ intentional use of their space will need to find ways of going beyond simply measuring utilisation and occupancy rates they will need to understand what their employees do, and deeply empathise with why, how, where and when those employees can do their best work.
The office has been described as “a machine for working”. But poor workplace spaces are littered with features that have disenfranchised employees who have sadly now built a better workspace at home and largely at their own cost!
This is a shocking indictment of the quality of the average modern office whose spaces now serve little organisational purpose and are now liabilities for employees and employers alike.
The consequence of the success of remote working has meant that employers will not continue to fund buildings and spaces that are barely occupied. It's an expensive waste of resources to provide an assigned desk for someone who will only use it two days per week on average.
Consequently, having a dedicated workstation at your office is now officially dead. We will instead see the rise of free-address workstations and all of the personal paraphernalia that made it yours will need to be consigned to your onsite locker.
Expectations have changed and employees are no longer averse to hot-desking as had been the case before Covid. This resistance has been replaced by a need for autonomy. In the Accenture study, 65% of Office workers stated that they "would give up an assigned workstation in their office to work remotely at least two days per week”.
The game has changed and if you want to keep your best people you will need to change too. If you are one of those organisations that have advocated that “your employees are your greatest asset" Well now they need you to prove it, by investing in them and the way they want to work.
Many organisations have instigated a modest desk-sharing regime in selected locations but this practice falls well short of what has now become necessary. The headcount to workstation ratios needs to dramatically increase in some cases by three or five times to reach occupancy levels that deliver the vibrant work environment that employees are now demanding.
This new desk allocation will require substantially less footprint, but this transition will necessitate an increase in collaborative spaces. However, the net result will be a downsizing and a concomitant reduction in operating expenditure.
High energy levels need to be maintained to attract new and returning employees. The new office will be dynamic and versatile as well as agile and flexible. Desk sharing will be seen as restoring the vitality and streamlining the footprint as well as reducing the cost and will be seen as a win-win for both organisations for employer and employee.
Those organisations that embrace this new model will outperform their competitors with improved engagement, talent retention and attraction, productivity and overall organisational performance.
We can help you learn how your employees are reacting to their work environment and what their needs are. Take our Workplace Assessment