What Does the Office of the Future Look Like?
Working from home has delivered so many business benefits that many organizations are now pondering if they still need physical premises.
The future of work is raising questions about the future of the office. Indeed, what is the future of offices when workers have a choice whether they work at home or on-site?
Historically, real estate has been one of the biggest costs of conducting business. But thanks to the productivity gains and uptick in employee experience delivered through the move to remote working, organizations are being presented with a huge opportunity to reexamine the very concept of a physical workplace. Maybe the office of the future is no office at all.
In some business sectors, the future of office buildings already looks unclear. Commercial leases and other associated real estate costs weighed heavily on many corporate balance sheets over the past two years. In fact, only the industrial segment of the commercial real estate market — i.e., factories, warehousing and logistics — came through 2020 unscathed in terms of occupancy, rent and property transactional values.
However, even pre-pandemic, beyond the business process outsourcing industry, very few large organizations were genuinely adept at optimizing their existing physical footprints in terms of occupancy, asset sweating or productivity per square foot.
Is the Office of the Future No Office at All?
Now consider that U.S. CEOs believe that even by the end of 2022, one-third of the labor force will continue working from home, and that just 21% of organizations see an immediate future where 100% of employees return to the office for 100% of the time. It’s clear that as we move to the future of work, the C-suite is contemplating the future of the office.
And organizations recognize that they have the chance for a real estate reset and are already taking steps regarding downsizing. Over half (55%) of organizations already intend to increase spending on the provision of remote working support and 76% of U.S. CEOs now believe that they need less office space.
Best of all, for organizations that don’t operate within the property market at least, these changes are happening in a time where the commercial real estate market is still under severe pressure and has little alternative but to work with clients to find a solution to their future office needs.
While potentially very exciting for corporate finance and accounting departments, reducing the size of offices in prime commercial real estate areas or full-on relocation to second-tier cities in search of cost efficiencies could have a potentially negative impact on the look and feel of even the world’s most iconic cities.
The Future of Office Buildings
If the office of the future is little or no office space at all, will London, Paris and New York lose their magnetism as they lose their physical businesses? Will the loss of architectural landmarks and ancillary spaces such as cafés, restaurants, hotels and other attractions make these cities less attractive as places to live, work or even visit?
Property developers will say that the future of office buildings is apartments and co-working spaces, but such spaces are only appealing when demand is at least equal to supply, and demand might be diminishing.
For the first time in three decades, the population of London fell in 2021 as more people moved out of the capital than moved to it. In doing so, a record $75 billion was spent by people living in the U.K. capital on properties outside of London. Likewise, 24% fewer people moved to San Francisco during 2020 while 21% more people left the area.
However, as well as a potential risk to café culture, there is a significant risk to business culture, if organizations decide that the office of the future is an employee’s home.
The corporate office plays an integral role not just in recruitment, training and onboarding but also in continuing professional development and, crucially, the transmission and reinforcement of culture and corporate values.
Is the Office of the Future a Classroom?
At the beginning of 2020, 90% of North American organizations were still reliant on face-to-face tuition as part of their wider learning and development program. Yet, when businesses had to transition to work from home, transitioning to videoconferencing as a means of digitizing analogue training wasn’t sufficient to solve the problem of training people who can’t attend a class in person.
Because, how could an organization re-skill and re-train hands-on managers to do their jobs at arms’ length? What’s the digital equivalent of a quick chat and a coffee or a simple catch about performance?
Likewise, how can employees benefit from on-the-job training when their only connection with colleagues is virtual? The McCall, Lombardo and Eichinger 70-20-10 learning model underlines the fact that the majority of professional learning and development is directly linked to being exposed to new professional situations and from seeing firsthand how more experienced co-workers perform a task.
Any discussion surrounding the future of the office needs to factor in these elements. Even when training is digital by default, an unconscious bias towards on-site workers has been observed. These employees are the ones most likely to have assimilated an organization’s values and culture and, as a result, the necessary motivation to continue to learn and develop through digital or remote channels.
Even if the future of work is about untethering employees so that they have more control over both the professional and personal aspects of their lives, office space is still going to be crucial to long-term business success.
The office of the future is a destination for engagement. A space for instilling and demonstrating company culture and values and for helping to strengthen relationships between employees and strengthen individual and collective skillsets.
Without this type of physical touchpoint, digital means of articulating an approach to employee experience may not be enough to continue growing the workforce. Indeed, despite the perceived advantages of being able to work from home and achieve greater work-life balance, moving away entirely from physical offices could actually compromise an organization’s ability to attract, onboard and retain talent. This is the future of the office.
To learn more about the changing role of the physical workspace and to understand the other factors that will be crucial in defining future business operations, download the latest Sitel Group® whitepaper “The Future of Work & Employee Experience: How Work from Anywhere Redefines CX Delivery.”