CFOs - Will real-estate costs decline because of COVID?
CFOs are watching costs closely, and real-estate may be one area to make reductions.
If Remote Work is Working Well...
At the beginning of the pandemic how many people would have guessed that remote work would be as effective as it is?
Typically, remote work is something that many employees sought (especially Millennials and Sandwich generations), and that employers resisted out of a concern over productivity, alignment and collaboration.
Well, in the world's largest forced experiment on the issue we've learned a few things.
First, technically, it's feasible. In general, people turn up for meetings on time. Decisions get made.The IT systems and Residential Networks coped (at least in larger communities - we acknowledge rural employees are struggling with bandwidth and overage fees for satellite and wireless connectivity).
Second, in many offices, productivity is holding. As the Globe reports, "rather than being slightly less effective, many of their employees actually seem to operating at a higher level. In other words, individual productivity hasn’t slowed down the way many expected – and, in some cases, it has increased."
Why Not Reduce Costs?
All of which has CFOs thinking that they can save on those real-estate costs and CEOs can promote wins on sustainability. Already many companies in the tech sector are looking to sell or sub-lease excess space.
But before jumping to book those savings, keep these points in mind.
While Shopify Inc. has called the era of “office centricity over,” and Facebook has promoted remote work, what is getting lost in the headlines is that they are not reducing their floorspace. Shopify is not looking to leave The Well project in Toronto (at least not yet) and Facebook is actually looking for more space.
Why might this be?
1. Employers will likely need to reduce the density of their office space, bringing in fewer staff at one time and allowing more space for each person while social distancing requirements remain. This trend could counterbalance some of the moves to jettison space.
2. Some employees don't like it, which makes it harder to attract talent for critical job functions. The fact is that, even with being allowed to dress casually and avoid a commute, many do not like remote work because their home environments may not provide optimal work conditions, they may require tools only available onsite or find collaboration is best face-to-face. Or quite simply, we don't like how home and work have blended together. And we're lonely. We miss our work friends. Given a choice, many of us will want to be back in the office.
3. It could make innovation harder. Yes, we've done amazing things in this crisis, but will that work over the long term? For thousands of years we've evolved and created in social ways. We need each other to innovate to be creative.
An Ideal Solution?
So what is the way forward? Prof. Nicholas Bloom, who helped launch the first major study of remote work believes he’s found the ideal recipe: working in the office Mondays, Wednesdays and Fridays (to create a buffer with the weekend), and spending Tuesdays and Thursdays at home. Cycling through A and B teams could feed innovation, give workers a respite from the office slog.
Under these conditions we might find a new, lower cost-equilibrium that employees actually like. Maybe only half of us have to show up on any given day. Unless we each need twice as much space as before, there is a net savings. All of that makes CFO's happy. By being able recapture the social benefits of being in the office, while avoiding the daily commute, could keep Chief Talent Officers happy.
I'd love to hear your thoughts? Do you want to go back to the office? Would you prefer only being there half of the time?