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Many businesses are hoping the shift to remote working will enable them to downsize the office, but it’s too soon to count the savings, cautions Forbury’s chief revenue officer, Peter Rose.
Hands up if sending your team home with laptops was part of your company’s business continuity plan in 2020? If you answered in the affirmative, you’re far from alone. According to Roy Morgan research, almost a third of Australian workers were logging on in the home office or at the kitchen table in April and May 2020 when lockdowns were in force nationwide.
For scores of businesses, this unplanned experiment was a surprising success. So much so that many announced they would retain a more flexible working model long-term. For landlords, it was a development which seemed set to presage a serious slump in demand for commercial real estate. With fewer staff working at the office each day, businesses were expected to start reducing their real estate footprints at the earliest opportunity.
But operating a flexible workplace may not be as simple as ditching half the desks and chairs, instigating a hotdesking policy for employees who want to mix it up and banking the savings. In fact, there’s an argument to be made that flexible working models will see employers spending more, not less, than they did pre-pandemic.
Striking the right balance
Here’s why.
Every large workplace has its extroverts who revel in the camaraderie that comes with being part of an in-the-flesh team. And its dyed-in-the-wool introverts for whom the COVID lockdowns have been an unexpected period of grace. Then there’s the majority in the middle — folk who think a balance of working in company and toiling solo at home is the best of all worlds.
A local study published by Boston Consulting Group in mid-2020 found the most popular model, for those who were able to carry out their duties from home, was doing so for two to three days a week.
That’s in line with the anecdotal evidence we at Forbury have been hearing of late. The word on the street is that, given their choice, Australians and New Zealanders will opt for one or two days at home to get stuck in to their quiet work, with the balance of their time spent in the office, connecting and collaborating with colleagues.
If businesses want to maximise the benefits of those collaborative hours, allowing individual employees to choose how often and when they’ll front up to the office is unlikely to be the optimum approach. Mandating days and times when everyone is required to be present and correct is simpler and more productive than having teams and individuals straggle in, or stay home at will.
Flexibility costs
But what does that look like on the real estate front?
Given it’s impossible to expect an entire workforce to squeeze into a scaled-down space a couple of days a week, the answer is an office that’s at capacity some of the time and under-utilised for the remainder. For landlords, that means less wear and tear over time, but for tenants, there are no such financial benefits, given it’s impossible to take out a half-time lease.
In addition to kissing goodbye to those putative rent savings, businesses may well find that maintaining a flexible working model is more expensive than having everybody in the office full-time.
As well as the expense of maintaining dedicated desks for part-time use, there’s a reasonable expectation that home-based employees will be compensated for outgoings, such as electricity and internet, either via a regular reimbursement or a hike in salary.
Throw in the cost of hiring occupational therapists to monitor workplace health and safety, buying furniture for those whose home offices aren’t properly equipped and upgrading cyber security to ensure remote workers aren’t putting the enterprise at risk and you’re looking at a sizeable additional sum.
Squaring the books
Flexible working has plenty to recommend it, but contrary to initial perceptions, the benefits for businesses won’t necessarily include the opportunity to save big bucks. Observing enterprises arrive at arrangements that work for themselves and their employees promises to be one of 2021’s more interesting exercises.
Peter Rose is the chief revenue officer at Forbury.
