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The future of the workplace – New ways of working and what it means for businesses and commercial real estate

The future of the workplace – How the way we work is changing and what it means for businesses and commercial real-estate

The future of the workplace – New ways of working and what it means for businesses and commercial real estate

2020 was the year that redefined the way we work and shaped the future of the workplace. The global pandemic resulted in dramatic shifts in how businesses operate, and how people are safely managed across shared spaces. As we near the end of FY21, hope is on the horizon with vaccine rollouts in progress around the world.

However, international peaks in COVID-19 cases, second waves, vaccine supply concerns and the threat of new strains indicate there is a significant degree of unpredictability and health concerns to manage for years to come, and long-term impacts to consider.

Distinct changes in office behaviour and protocol once born out of necessity have given way to more enduring shifts in workplace policy that will outlast COVID-19.

The global pandemic has changed the way we work for good. Companies have not only pivoted to an immediate existential threat; they have reconsidered how they function and operate

Erica Volini , Global Human Capital Leader,  Deloitte

How is the way we work changing?

Initially, most businesses were thrust into remote working scenarios due to safety concerns surrounding a world amid a global health crisis.

Although the pandemic endures, and the public health impact will continue, there is growing evidence to suggest COVID-19 has permanently changed employer and employee expectations around the way we work. Employees are no longer married to the concept of working in the office five days a week. Fundamentally, this is the future of the workplace.

The removal of strict in office attendance requirements and presentism has blown open traditional recruitment that has been restricted to location and inner city talent pools. At Unico, we have seen firsthand that the widespread acceptance of remote working has opened up the job market, allowing us to employ team members in locations where we don’t typically operate.

A 2021 Roy Morgan Research poll found that in Melbourne alone three quarters of city workers are reluctant to go back to work full time. The same poll found more than 30% of respondents would prefer to work mostly from home and 42% would like some regular days in the office. Roy Morgan’s research also found that in January 2021 CBD traffic had reduced by 72% in Melbourne and 66% in Sydney compared to the same time last year.

On a global scale, recent data from Linkedin’s Workforce Confidence Index showed 47% of US professionals believe their companies will allow them to work remotely, at least partially after the coronavirus pandemic subsides. Employees in tech and finance had even greater expectations of flexibility with 73% and 67% of individuals respectively sharing this belief.

As workers have experienced the extra time and flexibility working from home affords, their desire for a ‘flexible working model’ has continued to grow. Documented benefits to working from home include flexibility to juggle life, creating work-life balance, limiting distractions, and home based child care. Exposure to a new way of working has undoubtedly changed the way staff work and employers need to listen.

Employees will demand greater flexibility and organisations will require it

Ashley Williams, Assistant Professor – Harvard Business School

In July 2020 a Gartner survey amongst global business leaders revealed 82% of respondents plan to allow employees to work remotely some of the time. Experimentation with remote working has proven these work models can work effectively in certain scenarios and build more resilient business operations. Companies are beginning to apply a more agile and creative mindset to work policies and realise the employee experience is not necessarily limited to a traditional office environment.

Big tech is leading the charge with giants like Facebook, Microsoft, and Salesforce embracing flexible work models. Salesforce recently declared the “9-to-5 workday dead” and cited the employee experience as being “more than ping-pong tables and snacks”.

In our always-on, always-connected world, it no longer makes sense to expect employees to work an eight-hour shift and do their jobs successfully

Brent Hyder – Head of HR – Salesforce

Salesforce’s Head of HR Brent Hyder emphasised that workers need ‘flexibility to be successful’ which means striking a balance between personal and professional obligations. For many companies embracing this philosophy could mean the difference between losing or retaining their best talent as flexible working fast becomes the norm, not the exception.

One of the most popular models that are being embedded into corporate life is the 3-2-2 model or flex work model. This model allows employees to come into the office one to three days a week with a typical focus on collaborative tasks, customer meetings, and presentations. Research indicates that models such as these offer many benefits to both employees and employers.

Flexible work policies also act as an effective tool for improving employee engagement through empowerment and indicating respect. Those engaged with their jobs miss fewer days of work, have less turnover, and have improved career longevity. Engagement is a proven way business leaders can improve the KPI’s of their employees if they proactively work at it. Years of Gallup research has shown that when employees are engaged their performance improves dramatically, highly engaged workplaces can claim 41% lower absenteeism, 40% fewer quality defects, and 21% higher profitability.

What does that mean for the future of the workplace? How does this affect businesses reassessing their workplace needs and the wider commercial real estate market?

In Australia alone, it is forecast that in 2021 half of all office workers will spend two days at home. Consequently, a fall in net demand for office space of up to 5% will be triggered. Similarly, Gartner found an increase in remote working due to flexible working policies will allow some organisations to support up to 40% more workers in the same amount of space they use today.

These statistics indicate some significant shifts in commercial real estate for businesses which can be separated into two key areas:

1) A surplus of space in existing tenancies will drive down demand for larger office spaces

Due to changes in workplace norms many tenants will reduce their leased space needs as they expire and renewals transpire or slow demand as surplus capacity is absorbed. Businesses may even make the shift to smaller, cheaper premises without necessarily reducing the size of their workforce. To persuade tenants who are not set on changing their lease, property operators and developers will have to provide additional value to convince them to stay. A marketable point of difference for building owners will make leasable spaces more appealing for both new and existing tenants. This could come in the form of IoT-enabled SMART spaces and technology that can enhance the tenant experience and protect staff. Such technology can be offered in the form of tailored tenancy packages.

2) A need to manage a dynamic flow of people in and out of the office

As flexible working becomes increasingly normalised, challenges emerge for businesses seeking to manage staff across multiple sites and environments. A consistent flow of staff in and out of the office will be highly demanding for HR departments and management as well as a strain on company resources. From workforce planning and coordination to asset booking and desk allocation, there is a range of tasks that will be made overly difficult due to flexible working.

Shifts to a hybrid way of working will involve remote and on-site staff having to collaborate together virtually and physically, often simultaneously. Ensuring high quality audio visual facilities exist in offices will be crucial for businesses seeking to maintain the benefits of flexible working without sacrificing productivity or creativity.

Hot-desking once declared dead, will now become essential for many larger businesses looking to support a flexible workplace that allows for a dynamic flow of people. In a world beset by COVID-19 tracking, managing, and protecting staff compliantly is crucial but unnecessarily complex without the right tools.

Technology is the answer to the future of the workplace. Workplace management platforms, software, and the data-gathering potential of IoT offer a highly effective solution for these challenges when combined.

What next?

COVID-19 has led to enduring changes that have changed how we work and how we use our spaces. The new normal is flexible working. It is hot desking. It is creating a safe environment for our team. It is being supportive of employee wellbeing.

Whenever a major external event forces us to change, new opportunities and challenges emerge. Businesses have to grapple with change and technology is the best resource to effectively and efficiently deliver the results needed.

If you are interested in what your future workplace could look like, or how technology can help you prepare for flexible working we are happy to guide you through our technology solutions including JourneyHub.

Head of Innovation