Yesterday we hosted our latest CIO Insight Call on the topic of the future role of the office and the hybrid working model with Nick Bloom. Nick is an economics professor at Stanford University, is an expert researcher on remote and hybrid working models, even prior to the COVID-19 pandemic. These days it has become increasingly clear that these new modes of work are both widespread and here to stay – particularly within IT and security organizations. Unfortunately, while hybrid work can free up employee time by reducing commutes and office prep, it can also create organizational friction with difficult logistical, strategic, and managerial challenges. Nick led a discussion around his research and guidelines on implementing effective hybrid work plans, for both managers, employees and organizations. See below for a few of our key takeaways and the recording from the call.
Key Takeaways
- We’re heading to a world where we’re 25% WFH home – that is a five-fold increase pre-pandemic (previously 5%). A lot of that 25% will be felt the heaviest in tech and finance – with other industries like construction, retail, and agriculture mostly returning to on-site positions
- Front-line/recent graduates will be on-site the most, and specialized roles like IT/payroll/etc. will likely stay fully remote. Professionals/managers/higher-paid tech roles will mostly be hybrid
- Hybrid is popular because it is seen as combining the best of both worlds (Tim Cook, for example, announced coming in Mon/Tues/Thurs, WFH Wed/Fri). A big driver is saving on commute – the average American saves 70 minutes a day if they work from home, higher in the Bay Area. 60 min is commuting, and 10 min less time getting ready for work. This stat is closer to 90 minutes in the Bay Area. And employers are motivated to care about commute savings, because 40 minutes of that time is typically spent working more
- Hybrid work improves productivity about 3-5%, and people are only getting more effective at working from home, now that they have adapted to it over the last two years. Additionally, hybrid work is worth about an 8% pay increase on average – and in tech and finance it’s worth even more (~10-11%). Hybrid-WFH is also supportive of diversity. Desire for flexibility remains strongest among underrepresented groups (Women, Hispanic, Asian, and Black employees). So ultimately there are three core advantages to hybrid: Productivity, Employee Happiness (and therefore reduced attrition) & Diversity
- Employers are shifting to hybrid en-masse post-pandemic – the typical employee now gets to WFH 2-3 days per week. Apart from Goldman Sachs, no major companies have raised their hand to push full-time return to the office
- How do you avoid a two class system? This is a problem that has been around a long time, even pre-pandemic. You can train managers to avoid bias based on facetime (if certain employees choose to come in more often, or some employees are full-remote). Otherwise, ensuring that technology at the office is up to par to facilitate conversations with people on Zoom is a good start. Pre-pandemic, people who WFH more got promoted less, even if they had the same reviews
- How do deal with outlier employees that want to stay fully remote on larger teams that intend to remain onsite? It’s situational, but you probably have to give them 6 months to come in – better to lose them now than later
- What are employees thinking? 22.7% of people never want to WFH again, 32% want to remain permanently WFH, the rest are somewhere in between (45.3%). Normally preferences are a bell curve, but this is a dumbbell and it makes it incredibly hard to manage.
- People give poor feedback on “Mixed Mode” hybrid models – It’s better to decide on hybrid vs. remote on a team by team or company level. Smaller teams may be able to get away with letting individuals choose, but it’s hard on larger teams
- What motivates people to want to come into the office? The overwhelming reason is to work with or socialize with colleagues – without that, there is no real reason to come in
- What is the safest policy today? Try the vanilla hybrid option: 3-2 or 2-3 policy. Set 2-3 days when everyone comes in. M/F are the most popular WFH days. Have everyone come in Tues-Thurs or Tues/Thurs, tell people everything is very unclear, and that you will do a survey EOY and make a decision for 2023
- Do you need to incentivize people who are coming back in? Meeting your manager, perks, and equipment, were all pretty low on why people wanted to come into the office when surveyed. The highest reason by far, as mentioned prior, is socializing and working with colleagues. Perks are not radically diff pre-pandemic – hybrid just needs to be coordinated so that people feel they are benefitting from the days they come in
- What are the implications for office size? Footfall will be down 30% – most people will be hybrid. But if you survey firms, they report their reduction in office space to be only 1-1.5%. This entirely comes down to scheduling – either they will let employees choose or they’ll have the same days, so it’s not possible to actually reduce your office space. Pre-pandemic offices still weren’t used more than 50 hours a week, and now it’ll just be like 30 hours a week or something. So, efficiency is down, but office space will stay
- There have been net-flows of employees to the suburbs. If you only need to go in 2x a week you can put up with a longer commute, but you really want space for an office and a yard. Offices are focusing on higher quality space so that people can come in somewhere nice. The changes you are seeing are around design – moving away from madmen style individual offices to zoom cubicles, more meeting rooms, a more open plan, etc.
- Post-pandemic we could see a pickup in outsourcing and offshoring in general as US remote teams seem to do well, why not kick those employees to somewhere cheaper etc.?
- Fully remote is also an option that firms are exploring – it just comes down to a tradeoff. You save money, have better recruiting opportunities, etc. – that being said, most full remote firms have full-time meetups every 3-6 months, typically, in order to maintain culture