Is Flexible And Hybrid Work Here To Stay Permanently?

A recent Sensée webinar asked the question: “What’s the business case for 100% back-to-the-office?” The discussion covered a lot of ground, but it was clear that for most office-based professional workers there is a very weak case for a 100% return to the office.

The ongoing experiment with work-from-home (WFH) and hybrid work, where the employee mixes some office time with some time based at home, has led to a global oversupply of office space. The Financial Times reported recently that office vacancies are now higher than they have been for over 20 years – in both the UK and US.

The productivity and employee satisfaction data does support the case for WFH. Most employees prefer flexibility, rather than an employer insisting on their work location every day of the week.

However, one of the perennial arguments about the value of employees congregating in an office is that it uses less energy to heat and light a single building compared to all the individual homes many hundreds, or thousands, of employees would be using if they stayed at home all day.

Intuitively this sounds like a strong environmental argument, but it is undermined by a recent National Academy of Sciences study that found going from a 5-day in-office week to 2 days reduces carbon use by 11%, 4 days by 29% and 5 days a week by a whopping 58%. The analysis combines commuting and non-commuting travel (e.g. driving to run errands if you work remotely, etc.), office energy, home energy and ICT energy.

A recent study by the recruitment company Hays plc suggests that the situation in the UK is very finely balanced. Their data (published on October 23) suggests that the number of office-based professionals now working from an office has just passed the number of hybrid workers for the first time since the Covid pandemic.

The problem is that many employees are just ignoring back to the office mandates. Employees only come in for an average of two days a week when bosses are mandating three or four days, according to research by AWA. When companies try to enforce a complete return to the office, fewer than 70% of employees comply with the instruction, a recent BCG study found.

Mark Hall, UK head of LHH Recruitment Solutions, is quoted in the Hays research saying: “You may get a company saying ‘I want you in three-four days a week’ but the people that actually control the business — the actual line managers — will demonstrate flexibility because they want to retain talent. They’re doing a delicate balancing act.”

This balancing act may differ, depending on the industry, and even individual companies. If employees are ignoring company-wide ‘return to the office’ mandates then in most organisations they should expect a rebuke or penalty. However, as suggested, there is now a greater expectation of flexibility and many managers will want to hold on to their talent regardless of what the head office rules say.

Bloomberg reported in July that British employees want to work from home for at least 2.3 days per week – approximately half their working week at home and half in the office. What they want and what they get may depend on the strength of any economic recovery. If employers feel they have the power to demand strict compliance to corporate rules because the economy isn’t looking very strong, then more employers will feel they can make demands.

But this also leaves best practice employers and employees with hard-to-find skills in a strong position. An employer can quickly position their brand as an employer of choice by offering flexibility over work location and rejecting the dogmatic return to the office.

The Harvard Business Review has supported this view. In fact, their analysis also suggests that any employer that wants to truly support a diverse workforce that embraces disability and neurodivergent employees must offer flexibility over work location. Sensée noticed this long ago. There is a vast pool of talent out there that cannot – or does not want to – commute to an office and spend the next 8-10 hours working a shift in an office cubicle.

It’s worth remembering that most people don’t have a choice anyway. This entire debate is focused on office-based professionals that can work flexibly. Around 60% of jobs require a person to be in a specific place – you can’t perform heart surgery or a haircut on a Teams call – but it remains an important debate for all those who have now seen that flexibility works for their job.

The Covid pandemic has changed working patterns and flexibility around work location forever. Professor Nick Bloom of Stanford University has estimated that flexibility is worth around 8% in pay to most employees, so we may see people in very inflexible jobs start to demand more pay as an “inflexibility bonus.” 

In the US, employees are currently expecting annual pay increases of about 7%. Add another 8% on that for those who are told to get back into the office and it suddenly looks like flexibility might be a very attractive option for employers as well as employees.

Flexibility is here to stay, despite the pleas of the commercial real estate industry for a return to pre-covid normality.

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