In digging into this a bit more, the first thing that I learned was that the majority of workers simply cannot work remotely. COVID responses will change the operations and physical layout of most of their workplaces but they will remain centralized. This leaves a minority of workers who are potentially part of the remote workplace transition.
MIT’s Elisabeth Reynolds states that roughly 40% of workers, largely from the higher educated quartile, are able to work remotely. That leaves 60% who can’t work from home – workers in the transportation, food service, cleaning and maintenance, retail and personal care industries.
These are not “office” workers as I understand the term so maybe we are dealing just with the location-flexible 40% here. There are about 160 million in the US labor force so that means roughly 64 million are to some extent location-flexible.
BLS data supports this estimate
The BLS has data by occupation that makes it a bit easier to see who these people might be:
Only the “Management, business, and financial operations occupations” category seems to be at least somewhat location-flexible, confirming the 64 million range from Reynolds.
That’s a whole bunch of folks who will need much less office space than in past, probably forever.
But there is another data point that tells a surprising office trend story.
Office space utilization was just 40% in 2018
According to office occupancy analytics software company VergeSense, average utilization of an office was just 40% in 2018 based on 1 million square feet of workspace. U.S. Census data says that 5.2%, or over 8 million people, worked from home in 2017.
This tells me that the trend away from centralized workspaces was well underway long before COVID days. Flexible schedules, reduction of commuting, and far better remote working technologies will certainly have been primary drivers for this longer-term trend.
Centralized office work in past was required to give employees access to costly support systems and facilities that could not be located in homes. The internet and new collaboration technologies have made it possible for much resource access to be done remotely.
The primary purpose of the traditional office is steadily going away, leaving only a core of functions that require centralized access and management. What can be done remotely will be increasingly done remotely.
COVID just gave this trend a major acceleration but was not its main cause.
Repurposing the office
Commercial real estate owners and managers are hard at work to “repurpose” millions of square feet of underutilized office space. VergeSense notes that:
“However, repurposing might be pointless if you don’t have enough people in the space to begin with. Another way people might repurpose their space in 2019 is by downsizing. With so many people working from home, chances are you just don’t need the same amount of desk space or conference room size that you did a few years ago.
Even if some employees work remotely at least a few days a week, an office can cut back on the number of desks that they have in the office. Changing the employee-to-desk ratio from 1-to-1 to 2- or 3-to-1 will have significant benefits on overall facility management costs, and will give you an idea of just how much you’ll be able to cut back on size.”
It seems pretty clear that downsizing will dominate repurposing for quite some time. Possibly forever.
Are you hub, club, roam, or home?
Hub employees work mostly from the office due to their need to access central resources directly.
Club employees work from both home and office.
Roam employees work mostly from the road.
Home employees work mostly or entirely from home.
This looks to me like redesigning of work itself, at least in terms of location. What was once a one-size-fits-all location design, today’s technology allows employees to match their primary location to the nature of their work.
Seems like a great leap forward, yes?
Consultant McKinsey & Company in its article “Reimagining the office and work life after COVID-19” has what seems to be a solid grasp of the challenge here:
“Leading organizations will boldly question long-held assumptions about how work should be done and the role of the office. There is no one-size-fits-all solution. The answer, different for every organization, will be based on what talent is needed, which roles are most important, how much collaboration is necessary for excellence, and where offices are located today, among other factors. Even within an organization, the answer could look different across geographies, businesses, and functions, so the exercise of determining what will be needed in the future must be a team sport across real estate, human resources, technology, and the business. Tough choices will come up and a leader must be empowered to drive the effort across individual functions and businesses. Permanent change will also require exceptional change-management skills and constant pivots based on how well the effort is working over time.”
McKinsey lists four steps to “reimagine work and workplaces”:
- Reconstruct how work is done
- Decide ‘people to work’ or ‘work to people’
- Redesign the workplace to support organizational priorities
- Resize the footprint creatively
What about our image?
Courtney Rubin in Marker (Medium) states the image issue quite nicely:
“If, in the old world, an office was a form of corporate peacocking — a flashy location in some iconic building with a boutique-hotel level of design for clients, employees, customers, and investors— in the new world, it is becoming a very costly line item that could be reduced to the equivalent of a single flagship store. Instead of a sprawling, capital-intensive, real-world footprint, all the work can be done virtually, with one scaled-down symbolic home base left for critical face-to-face conversations, like meeting with clients or wooing talent.”
Image coming from a big or flashy location has just become a whole lot more expensive. It would be an interesting exercise to estimate how much such an image really brings in revenues. You could think about the sales impact if that big office did not exist. Corporate peacocking indeed.
Even financial industry giant Goldman Sachs is planning to move its asset management division from New York City to South Florida where office rents are roughly 50% lower and the weather is much friendlier.
The attractions of remote working
You probably already know this but I just ran across an example of why employees favor remote working:
Note that this is from a 2018 pre-COVID article.
COVID seems to have simply accelerated this process by making remote work almost mandatory for many employees. A second vital driver is of course the huge advances in recent years of web-based collaborative technology.
Working from home is now highly practical
COVID forced the office of the future to become the office of now. Changes that might have taken a decade to implement under past circumstances were compressed into just a few months.
Rani Mola writing for Vox Recode in “Office work will never be the same” gets into some solid detail on where offices are headed:
“When the world eventually opens back up after the Covid-19 pandemic, many parts of society, the economy, and the workplace will not be what we remember. For so-called knowledge workers, people whose jobs typically require analytical thinking as well as computers, not only will their offices look different, but the way in which they work will be altered, too. It might never be the same.
The giant forced experiment of remote working en masse brought about by the pandemic will likely last longer than many thought. Tech companies seem to be taking the concept especially seriously. Facebook recently told employees they could work from home for the rest of the year. Twitter and Square said they could do so indefinitely. But the trend extends well beyond Silicon Valley.
Of the 34 percent of workers who are estimated to be working from home, many will not go back. A survey of senior finance leaders by research firm Gartner found that 74 percent of organizations plan to shift some employees to remote work permanently. Consulting company Global Workplace Analytics estimates that when the pandemic is over, 30 percent of the entire workforce will work from home at least a couple times a week. Before the pandemic, that number was in the low single digits.”
We now have a handle on the remote worker size
Mola’s figure of 34% (May 2020) working from home probably gives a rough estimate of the maximum extent of remote working potential. This was in the time of a very severe lockdown so it includes many workers who will return to office-based activities in the near future.
This means that the office in traditional terms will be dead for roughly a third of former office workers. It will be dramatically reconfigured, or reimagined if you prefer, for the remaining majority.
That’s a whole lot of reconfigured, but not-yet-dead, office space.
Will reconfigured office space work?
There seems to be little question that a great deal of office space is going to be reconfigured simply because of urgent downsizing pressures. Downsizing will drive office reconfiguration for several years at least as office leases expire.
Meanwhile, there will be a great deal of empty space to fill with … something. Many of these will be experiments that will ultimately not work well enough to adopt long term. Others will be left in place by the ever-present corporate inertia.
These minimally effective office spaces will be the walking dead, or zombies.
It will likely take years for businesses to carry out the necessary and costly changed needed to adapt to the new working world.
COVID-19 simply accelerated a major long-term transition in the structure and use of offices. The traditional office has been terminally ill for many years. In its place will be dramatically changed workplaces for millions of office workers – both for those who are able to work remotely and for those who must return more or less fulltime to somewhat centralized office space. But the latter will be very different from the past.
Jacob Morgan writing in Forbes in 2013 had this to say about the declining need for traditional office space: ” 8 Indisputable Reasons Why We Don’t Need Office”:
“Looking back a decade or so ago it was absolutely essential to have an office, or more likely, a cubicle. That’s where we had meetings, saw our coworkers, and just got work done. But today do we really need corporate offices? New technologies allow us to “connect to work,” meaning that all we need to get work done is an internet connection. Employees are working from co-working spots, cafes, and home offices all over the world without ever having to step foot into a corporate office. In fact the 2013 Regus Global Economic Indicator of 26,000 business managers across 90 countries, revealed that 48% of them are now working remotely for at least half of their work-week.”
“New technologies are allowing employees to “connect to work,” meaning that the only thing we need to get our jobs done is an internet connection. From there we can access all the people and information we need to do our jobs. We can have virtual meetings, create assets (documents, presentations, or anything else), get updates from our team, and stay connected to our global workforce without daily face to face interaction. Additionally collaborative technologies allow us to work while we are on the go from our mobile devices.”
Good article. Did I mention that it was written in 2013?
Bob Fox in WorkDesign magazine in 2010 had much the same take: “Do We Really *Need* Office Space Anymore?”:
“Plus, younger staffers entering the work force are not using office space the way their parents did. The big office is no longer the perk it once was; instead, what is important to these generations is the quality of their interaction. They increasingly are evolving today’s work place by defining how, when, where, and with whom they want to work.
Today’s office is not just about space. It is about how we work, where we work, and the tools that enable us to work efficiently and effectively (from virtually anywhere). Therefore, we think about office space very differently, asking questions like:
Do people really need to be in the office to do their work?
How can space be optimized for efficiency, technology integration, and collaboration?
How is the space being used – and why is the unused space being ignored?
How often is office space empty – and why?”
FastCompany in mid-2020 had a somewhat different and more current take on what is happening to offices in “In the era of remote work, we still need offices”:
“The COVID-19 crisis has laid bare a truth about offices that has long been known but mostly remained unsaid: They have become obsolete in their current form.
WORK SPACES FOSTER COLLABORATION AND BIG IDEAS
Yet in spite of everything, the atomization of a solely work-from-home model is anathema to a flourishing company culture. Ginger, a mental health benefits platform, reported that 70% of employees are less productive at home than at work. Another recent study showed that more than 80% of Generation Z and millennial employees feel less connected to their coworkers since transitioning to work from home. Companies are finding that a 100% remote workforce is not a sustainable answer as struggles begin to show through the cracks in areas like collaboration, onboarding, and team management.
In short, offices will still need to exist to foster the ideation and collaboration that serve as the foundations for company and team culture.
As companies adopt a remote working model and reduce in-office capacity, the office of the future will be purpose-driven. Gone are the days where employees show up to the office out of obligation. Instead, the office will serve as a hub for productivity, collaboration, maintaining culture, and in-person connectivity, with considerations made to enhance sanitation, safety, and physical distancing.”