5 years post-COVID, how will work continue to evolve?

Humanity has encountered countless crises, and many have led to profound and sometimes unexpected change. As the economist Milton Friedman once said, “Only a crisis – actual or perceived – produces real change”, writes Mark Dixon.

In 2020, a crisis that would change many things forever hit the world. Offices stood empty. Cars, previously stuck in motorway jams on the daily commute, idled on driveways. Trains and buses ran empty, if at all. Planes were grounded. As smog cleared from cities like Los Angeles and Mumbai, people started to see views that had been lost for decades. The airwaves chattered with billions of meetings as technologies like Zoom and Teams went through baptisms of fire to keep businesses running. For many people across the globe, work would never be the same again.

Even before COVID-19, the rapid rate of change transforming the workplace over the past 50 years was extraordinary. In the 1970s – when I started my working life, there were typewriters, landline phones and filing cabinets. In the ’80s, the fax machine came and went. Then, some lucky people got their hands on a mobile phone, often big and heavy enough to warrant a built-in carrying handle.

The “information superhighway” arrived, and with it, email, social media, cloud storage and collaboration software like SharePoint became the new normal. Desktop technology gave way to mobile working. Digital natives were the majority; digital nomads were on the rise. There were apps for everything. Flexible working and work/life balance were hot topics.

But, in many ways, the COVID-19 pandemic has been remarkable. It has compressed the impact equivalent to all the changes of the previous half a century into a few short years, and it has been to the great benefit of both companies and their people.

The office as a digital construct

With rapid advancements in technology, where work is conducted is no longer confined to a singular place. The workplace is now a digital construct. The office is on the cloud, and people are increasingly linked by technology. All the information, resources, and connectivity that billions of us need to do our jobs are distilled into a single portable device, and people can now use an app to find their workplace – for the hour, the day, or the week.

This shift is radically transforming how and where people work, and a company’s head office no longer has the monopoly on where work can take place. Companies are increasingly prioritising the happiness and productivity of their employees by empowering them to work where they are happiest and most effective. As a result, hybrid and more flexible ways of working have become the default model for a significant proportion of white-collar workers, with companies enabling their employees to work across multiple locations.

The groundbreaking research of Professor Bloom of Stanford has shown that hybrid is very profitable for firms. His compelling findings have highlighted that hybrid has no negative effect on productivity while significantly reducing costly employee turnover. This is why some 80 per cent of Fortune 500 companies are hybrid for managers and professionals.

The office isn’t dead

Recent discussions around return-to-office (RTO) mandates and how these have been gaining significant momentum among companies of all sizes have dominated media headlines over the past few months.

While these headlines miss some of the nuances of the shift towards RTO, the trend is unmistakably taking place with companies prioritising time for their teams to collaborate in person on a regular basis. However, where and how people work is far more nuanced than much of the current conversation implies. It’s not just a binary choice between working from a traditional city centre office and from home.

There’s a third option: working out of a local co-working space or office, near to home, with other like-minded people. In fact, most white-collar employees are working from a combination of all three of these locations, and this is driving excellent growth for the IWG business, with our centres in the heart of the suburbs and local communities showing the strongest increase in demand from across the network, while cities also continue to thrive.

Better for the bottom line and better for the planet

A very clear advantage of today’s hybrid revolution is a reduction in costs, for businesses and employees alike. Independent research from Global Workplace Analytics reveals that reducing their traditional property footprint by adopting hybrid working enables companies to realise average annual savings per employee of $11,000.

The financial implications of more localised working are also sizeable for employees. Research conducted by IWG and Development Economics has shown that workers could save as much as $30,000 per year if they switch from commuting to a city centre daily to working locally four days a week – something that’s particularly relevant for younger, lower-paid workers facing the challenging combination of student debt and the stubbornly high cost of living.

Even these wins fade into insignificance when compared with the savings that reduced commuting will make to the environmental price our planet is paying for those who are able to reduce their commutes and work closer to home. Businesses can also cut energy usage by a fifth (19 per cent) because of the more efficient use of office space or by providing teams access to flexible workspace.

Furthermore, International Workplace Group research conducted with sustainable development consultancy Arup has shown that a hybrid working model that combines a local flexspace and home produces fewer carbon emissions than any other permutation of working. The study found that, in cities in both the US and the UK, the reduction in emissions brought by this model could be as high as 90 per cent in the US (Atlanta, GA) and 80 per cent in the UK (Glasgow).

The productivity gains of hybrid working and tackling proximity bias

The recent shift to more flexible ways of working has resulted in some instances of what academics describe as “proximity bias”. This is where business leaders and senior managers tend to treat workers who are physically closer to them more favourably, stemming in some instances from an outdated assumption that those who work remotely are less productive than those who work from a company’s headquarters. All business leaders should remember that what your people are doing and how you’re managing them are by far the most important factors in performance and productivity.

If work isn’t being carried out effectively, it’s not the fault of the location. It’s generally the fault of management not making the job clear or setting good KPIs. Those problems will be the same whether your teams are sitting 10 metres away from you, or a local office or even 1,000 kilometres away.

Dr Gleb Tsipursky, in the Havard Business Review, articulately spoke of the need to instil an “excellence from anywhere” culture and warned that if businesses do not tackle any overt or covert proximity bias, they will be hurting employee morale, retention, productivity, and ultimately company bottom lines.

Several convincing studies – including by Professor Bloom – have shown productivity increases (3-4 per cent) and reduced quit rates (35 per cent) as a hallmark of hybrid working. International Workplace Group’s own research with business leaders backs up these findings and more. More than six in 10 cite improved productivity as one of the key business benefits, while seven in 10 CEOs highlight that employee happiness has increased through the adoption of hybrid working.

Looking to the future

When, close to 20 years ago now, I made that comment about the rise of hybrid and more flexible ways of working, I didn’t predict the precise forces that would bring it about. In years to come, the COVID-19 pandemic will rightfully be seen as having one of the most transformative impacts on the world of work as any other event in the past 100 years. It compressed the impact equivalent to all the changes of the previous half a century into a few short years.

We are now seeing companies rapidly learn how to manage dispersed workforces using the latest technology and new management techniques while improving the happiness and the work/life balance of their teams.

I can safely say that the office will always play a crucial role in corporate life. HQs have evolved to become hubs of creativity and connection, with intentional spaces and activities to maximise collaboration. At the same time, companies are increasingly empowering their teams to stay productive by working closer to home in workspaces near to where people live. These permanent shifts are providing incredible momentum for the IWG business and the flexible workspace sector more broadly. We are seeing the most rapid growth we have experienced in our 35 years of operations. The reality is the office isn’t dead – and never will be – it’s just moved to a much more convenient place.

Mark Dixon is the founder and chief executive of International Workplace Group.