The Workplace You Need Now. Sanjay Rishi
McDonald’s downtown Chicago headquarters, and Amazon’s facilities in Seattle and Washington, DC’s near-suburb of Crystal City, Virginia. Urban areas became more dynamic and competitive, offering the best overall value for corporate employers seeking to attract the next generation of workers.
Now, the value equation is shifting again. Urban environments and big gateway cities have grown increasingly expensive, with housing costs rising more quickly than the wages of the average worker. In the pandemic environment, cities became less desirable – albeit perhaps temporarily – and the remote working option made it easier for employees to live and work far from their corporate homes.
Thanks to the combination of the natural aging of the giant millennial generation – creating new households and families – and the newfound flexibility of remote working, Sun Belt cities and suburban (or “outer urban”) environments are seeing growing popularity, at least temporarily. Sun Belt and suburban markets outperformed traditional CBDs in terms of commercial real estate rents and occupancy during the pandemic. Many of these new “growth markets” enjoy demographic tailwinds and other advantages that make it likely that they will continue to prosper. But have no doubt, the great urban gateway cities will rise and prosper once again, filled with great companies and young talent. As evidenced by population shifts from cities to suburbs and back again, future changes are likely inevitable over time.
Next-Generation Remote Working
Demographic shifts had already begun to affect workplaces well before the pandemic, with the idea of a seamless live, work, and play environment starting to take hold in varying measures. Technology companies had been praised for creating a completely different kind of workplace, with amenities, sports and fitness spaces, and collaboration spaces to attract and retain up-and-coming talent. Companies in other industries sought to adopt similar concepts, with the expectation that doing so would enable them to be equally talent-centric and driven by creativity.
However, the emergence of this new type of workplace was not without challenges. The novelty of amenities gave way to a realization that installing smoothie bars and collaboration zones was not enough to declare that a cultural shift had occurred. Early adopters outside the tech space realized that a foosball table without a broader workplace philosophy didn’t really amount to much. The culture of organizations and regions, the preferences of individuals in various geographic locations around the country and the world, and the nature of the work itself were all cited as reasons to exchange a one-size-fits-all approach to workspaces no matter how amenities-heavy – with greater alignment to the ethos and culture of each organization.
And then came the pandemic, which brought upheaval in perceptions and experiences of individuals and organizations. The rapid movement of work from offices to homes demonstrated – at times surprisingly – the vast possibilities for productive workers contributing to organizational success from more diverse workplace settings. Some have suggested the possibility of all office work being performed remotely. While the debate rages on about the various dimensions that impact the question of why organizations need an office, the idea that workplaces will disappear entirely has been convincingly dismissed. The idea that workplaces will likely need to change and evolve is also an agreed-upon truth.
As the largest work-from-home experiment since the advent of the corporate office, our recent experiences have shown that remote work can be effective – although not everyone wants to work remotely all the time. Now, some C-suite leaders are questioning how productive their remote workers have really been, how much office space their companies actually need, and what the real purpose of that space should be.
It’s important to remember that the pandemic era is not the first time that major companies have attempted remote work at scale. Previous remote-work initiatives during the 1970s through the 1990s taught many painful lessons on the shortcomings of large-scale work-from-home approaches, particularly at companies where culture was not well defined. In these experiments, organizations had at least some of the technology to accomplish large-scale remote work. Yet, many fell behind the progressive leaders that had continued to focus primarily on their physical offices as talent magnets and innovation centers. Early on, companies attempting the mixed-mode workplaces often unintentionally created an information disconnect between those in the office and remote workers, and fell behind in innovation and performance. Ultimately, some returned to requiring most employees to work in the office, whether all or at least some of the time.
Companies with sizable remote work programs were the exceptions. In advanced economies, only a small share of the workforce – typically 5–10 percent – regularly worked from home before the pandemic.iv Our comfort with remote work has improved by necessity and through advancements in connectivity, collaboration, and management technologies.
Companies across industries are now refining their remote work policies in response to employee expectations and the demands of their businesses. Many are likely to embrace increased workplace flexibility as a talent recruitment and retention strategy, and to open the door to working with the best talent regardless of location – an inevitable shift accelerated by the pandemic.
Some of the progressive companies leaning into the remote workplace are the very companies that provide enabling technology for remote working and virtual collaboration. Dropbox, for example, has shifted to a “virtual first” workplace, allowing employees to perform their individual work remotely and return to physical office hubs for collaboration and team-building purposes.
“Demand is coming back,” says Andy Gloor, CEO of Sterling Bay, a leading owner/operator real estate investment and development company that Crain’s Chicago Business calls “Tech industry’s go-to real estate developer.” Recent high-profile projects completed by Sterling Bay under Gloor’s leadership include corporate headquarters for McDonald’s and Google.
Gloor’s clients are convinced that “culture, brand, and teamwork just don’t work in a remote work environment,” he says. While Gloor does agree that some job profiles may be appropriate for work from home, he sees the vast majority of his clients, leading corporations and global leaders amongst them, continuing to build their success and future with talent coalescing in the workplace. He also sees some clients that had densified their spaces to high degrees now have additional space requirements to allow for social distancing in the workplace.
Emerging from the pandemic, companies face new urgency to tackle the complex journey to the future of work. Forward-looking companies are creating hybrid workplace strategies that blend remote and on-site working and, ideally, boost employee performance by providing workspace choice. Also important, companies recognize that their workplace strategies won’t necessarily be static. Always-on transformation will likely become the new imperative as employees embrace the idea that work is something you do, not a place you go – and sometimes the work you do is best done in the office setting.
In the future of work, many companies will pursue talent strategies based on geographically dispersed full-time employees and on-demand “liquid workforce” of people who may or may not ever set foot in the corporate office. “Talent anywhere” is now being considered as a legitimate component of corporate workforce strategy, looking beyond geographic borders to find the best employees who may be fully remote or in ecosystems of talent clusters in multiple dispersed locations.
Amidst a continuing global war for talent, employers will need to shape the workplace at least partially around the needs of employees, rather than vice versa. Health, wellbeing, work-life balance, corporate responsibility, and a sense of purpose have become more important than compensation alone as motivations for working and must be reflected in day-to-day work experience. Companies must determine how and where to provide the right kinds of workplace and workspace options for their unique talent networks.
Our researchv shows that most companies plan to embrace a new hybrid workplace strategy, in which the office will remain central and critical in an ecosystem of workers and workplaces (see Figure 1.1). New strategies are essential to meeting employee expectations,