As companies and workers continue to try to figure out where and how work will happen in a hybrid environment, the cost of existing office spaces previously built into 9 to 5 working week, 5 days is being closely examined.
Flexibility has become the buzzword for both sides of the power dynamics between workers and employers. Workers have been taking advantage of the benefits they have gained during the pandemic and tight labor market to maintain the personal time inherent in working from home. Many companies, many fearing cultural erosion that could increase revenue and hinder innovation due to their largely remote workforce, have been trying to meet workers where they are. that by gently urging, not forcing, workers return to the office.
The question then is, how does that affect budgeting and spending on often expensive workspaces when a large portion of your workforce won’t be there on a daily basis, what if all? Is there an opportunity to cut costs, or do those spaces currently need additional investment to try to attract workers who are staying at home back into the office?
Scott Dussault, CFO of HR technology company Workhuman and himself a staff hire during the pandemic, is witnessing this change first-hand.
“I always quote Larry Fink [2022] Letters [to CEOs] where he said that no relationship has been more altered by the pandemic than the employer-employee relationship; That will never change and we will never go back,” said Dussault, a member of CNBC’s Council of CFOs. The concept of 9-to-5 in the office 5 days a week is gone – the keyword will be flexible. “
For many companies, that means retrofitting the office to meet this new normal for employees and workers, and investing in other tools to ensure connections remain intact. Efficient execution – efforts can mean spending more money even if square footage or leases are adjusted.
“I’m not sure it would be a negative cost,” Dussault said. “I’m not sure if people are going to cut down on real estate; they’re going to change the way real estate works.”
Workhuman is nearing the end of a lease in the Boston area, and Dussault said the company is looking at expanding its space, which would provide a “clean vehicle” to adapt to the work environment. this new.
He recalls his time working in the 1990s, where it was a “football field of rooms” – the kind of situation where you could “go to work and sit in a cube all day and not never come into contact with anyone – you can really lose that. relevancy.”
Dussault said he sees the office becoming what he calls a “collaboration destination,” part of a hybrid environment where you can work from home on the days you’re working or emailing, the office can serve as an “all about connection” space.
“You will see a lot of open spaces, collaboration spaces, conference rooms, meeting rooms, break areas where people can sit down and meet each other,” he said. “It’s going to focus on connections that I think are frankly positive and that’s evolution — it’s going to be about making those connections more meaningful.”
That means investing more in things like gyms, where employees can take a physical break, or other spaces that provide places to rest or meditate, Dussault said, which he says known to lead to the cost of moving “from one group to another.”
“We need to understand and realize that when employees are at home and productive, they will have those things, and we need to try to make sure that those things also exist in the office,” he said.
It also further drives investment in digital tools, because there still needs to be ways for workers to connect with colleagues even when they’re not meeting in person.
“Companies are always talking about how important employees are, and employees are the most important investment — they don’t always act that way,” he said. “This is a good thing that comes from the pandemic.”
Neal Narayani, chief human resources officer at fintech firm Brex, noted that in 2019 the company had people come into offices five days a week in San Francisco, New York, Vancouver and Salt Lake City. At the time, “nobody worked from home, because it was considered negative,” Narayani said. But as the pandemic forced employees to work from home, where they’ve successfully worked on a number of major projects, that perspective has changed.
“We quickly realized that we could actually be more productive and faster, and video collaboration is a very powerful tool when you don’t have to go looking for a meeting room in your office,” he said. office.
Believing that a remote-first approach is the future of work, Brex believes in it. Of the company’s more than 1,200 employees, 45% are completely remote. The company still maintains those four hubs of office locations, where workers can go if they want, but the company has changed its approach so that every process is designed for those who work remotely.
That also changes the mindset of going into those spaces when Brex plans growth.
“When you reduce the cost of real estate, we can see how many people would go to an office if we made it completely optional, and the number is about 10%,” Narayani said. “So we were able to switch to a 10% real estate option, maybe even less, then take the rest of that dollar and use it on travel, talent development. , towards diversity and inclusion efforts, and toward anything else that makes the employee experience better.”
“It turned out to be a much better experience for us because those property prices are very high and those markets are very expensive,” he added.
Nearly a third of the costs of the company’s previous real estate strategy went into the company’s new off-site strategy, Narayani said, with another portion of that being used to pay for four office space and other coworking spaces.
Larry Gadea, CEO of workplace technology company Envoy, says that he thinks many companies are looking for ways to reduce costs right now, with spending on office space being one area with The ability is ripe for a cut.
However, Gadea warns that “people need to be together, they need to know each other”.
“They need to have a sense of unity of purpose and you need to bring people together for that purpose,” he said. “How are you going to bring people together when they’re across the country? I think there’s a huge amount of people who think they’re going to save money on real estate, but United and the other airlines and Hilton and Others are getting it instead.”
Gadea says that as companies try to manage a tight labor environment and other market challenges, more time needs to be spent “thinking about how to bring teams together.”
“The number one reason most people stick with a company is that they love the people they work with,” he said. “It can be a lot harder to love those people if you never see them because they’ve turned off their videos on Zoom or if they don’t even know them.”
