Jim Kramer on CNBC Squawk Box recently rhetorically asked: will this mandated “work from home” be the Netfix for office buildings as Netflix was for movie theatres? I don’t think the analogy fits. Pre-COVID 19, tenants were laser-focused on collaborative spaces, amenity rich buildings all to foster company culture. I don’t see how technology can replace the human experience. Instead, I think we’ll see more of an evolution (versus revolution) of the workspace, including work from home as part of the strategy.
As Bisnow recently reported, CoreNet Global’s April 28, 2020 survey of corporate real estate professionals found that 69% of companies are planning to reduce their office foot print after the recent forced work from home experiment. By contrast, former Google CEO Eric Schmidt on a recent “Face the Nation” interview predicts that office space will be in greater demand due to social distancing and more smaller offices in a “hub and spoke” format. I question, will the appeal of remote work still be attractive to employees after this pandemic passes and they have a choice? While the jury is out on the long-term implication of remote work, in this post, I address the Pro’s and Con’s and what policies companies should consider implementing to have an effective work-from-home (“WFH”) strategy.
Pros – Employers
- Cost savings – It’s a no brainer that companies will save real estate costs. Assuming a 10,000 square foot office with annual rent of $30/sf and between 40 to 60 employees, the annual real estate cost per employee would range from $5,000 to $7,500. Beyond the pure real estate costs, there is also potential savings in increased productivity, reduced absenteeism, and lower attrition, assuming the appeal of work from home remains as the pandemic recedes.
- Improve employee satisfaction – A recent study from The Harris Poll found that since the shelter in place order began in many states, 51% of all employed Americans started to work from home as offices shut their doors to help flatten the curve. The poll surveyed 1,200 working adults and found that 80% of those workers feel managing interruptions from coworkers is easier when working from home, while 65% are finding they are more productive at home. On the flip side, 66% indicate they would prefer to work in the office. Interestingly, the survey found that 27% are working more hours now than when they were in the office. Another observation from 29% of the respondents is that some meetings have been relegated to emails.
- Fewer Distractions – Obviously not everyone working from home during the pandemic is working without distraction, particularly when other family members are also working/learning from home. However, employees report having fewer interruptions from co-workers during the course of the day, allowing them to be more focused
- Increase in productivity – Many companies report an increase in productivity from remote workers. Working from home eliminates commuting time and provides more time for work, allows employees the ability to be more flexible with their work schedules, take breaks when needed and they are not locked in to a set work schedule unless their job requires it. At the same time, some employees are finding that, with a more flexible schedule, they are spending more time working because work is always there as was reported in a US News article in February of 2019 citing one of the “cons” of work from home as “There is no physical separation between work and leisure time.”
- Less turnover and absenteeism – Studies suggest that a work from home policy results in a reduction in attrition and decreased absenteeism.
- Talent pool broadens – Companies can choose from a larger pool of potential employees when location is not an issue. Employers would also have access to disabled workers who might not be able to navigate the commute to an office.
- Disaster preparedness – Establishing a remote work policy now will allow companies to be prepared for the next “disaster” (pandemic or otherwise) that would require another mass work from home effort.
- Positive impact on the environment – Employees working from home can serve to enhance a company’s carbon footprint profile. Fewer employees commuting, either by train, bus or car, will reduce the impact on the environment.
Pros – Employees
- Cost/time savings – Remote workers will eliminate time spent commuting and will save on the cost of transportation and related expenses, e.g. gas, parking, train/bus.
- Savings on a “work wardrobe” – Even though many companies have a more relaxed dress code (compared to the days of suits and dresses), it will still allow employees to save money on having an expanded work wardrobe, particularly those who don’t have Zoom calls every day.
- Lower cost of living – When an employee works remotely, as long as they aren’t required to be in the office regularly, they have the option of residing in an area with a lower cost of living, maybe further from a major city than would be possible if the employee worked in the office on a daily basis.
- Flexibility – Working from home would allow employees to attend to appointments and personal matters, such as having a repair done at home, without having to take a day off to take care of these concerns. Employees would have more time and be able to create a better work/life balance without worrying about commute times, overtime and other work related events that keep them from being home to enjoy their free time, as long as they don’t fall into the trap of always being available for work because, at home, work is always there.
- Fewer meetings – Our “National Experiment” in working from home has gone a long way to show both employees and employers that not every situation requires a meeting. Meetings via teleconference can be more productive and more focused and sometimes, emails are sufficient.
- Less exposure to illness – This has become even more important since the outbreak of COVID 19. Without a crowded office where people work side by side, sometimes without any sort of barrier, there will be a significant decrease in everyone’s exposure to germs.
- Flexible work schedule – Employees who aren’t required to work during a specified time frame, say 9:00-5:00, will have the opportunity to create a more flexible work schedule that will allow people to work at a time that’s more amenable to their lifestyle. Maybe they are more productive very early in the morning or later at night, perhaps their daycare situation isn’t compatible with the typical 9-5 work hours, some employees find that working in shorter spurts is a better fit. As long as productivity remains the same, when you work shouldn’t make a difference.
Cons – Employers
- Employee Loyalty – Up until the current pandemic, much of the push-back to transitioning to a work from home model was due to a mistrust by employers that employees would remain productive. If the work from home trend continues, it will be important for companies to establish a results metric to ensure employees are maintaining productivity. Another situation that will need to be addressed is that, in this era of “gig” work, employees can easily stray and work for others, including competitors.
- Confidentiality issues – Remote workers may not have secure networks set up at home or may be working from a local coffee shop that does not provide a secure network. Companies will have to establish a security policy to make sure data is safe. There will also be situations where HIPPAA policies and other privacy issues may be compromised when working from home where there are family and friends nearby that may have access to computers or documents. To maintain attorney-client privilege, attorneys must be mindful of how they communicate working remotely.
- Cost-benefit analysis – For companies that choose to incorporate a work from home policy for many or all employees, thought about what work related items a company would provide for workers will need to be addressed, for example, office equipment, postage, supplies, money for incidentals normally provided to in-office employees.
- Work-space issues – Employees may not have a dedicated place in their home to set up an office. Companies would want to make sure that their employees are working in work and ergonomic-friendly environments.
- Liability – Companies may be liable for accidents or thefts that occur in an employee’s home. A work from home situation may make determining liability and establishing fault difficult.
- Workers’ Compensation – Again, determining responsibility would be difficult – was the employee engaged in work related activities or were they attending to a personal matter?
- Overtime – Guidelines would need to be established regarding tracking overtime.
- Collaboration/Company culture – As many companies like to talk about creating and cultivating an engaging company culture, that might be difficult to maintain with employees working remotely.
Cons – Employees
- Work Life Balance – As previously stated under the pros, remote work could provide employees with a greater work/life balance. On the downside, some will feel the pull to finish that one last assignment or get ahead on another. Without a clear-cut start/finish time and a need to “get home”, some will feel they are always working.
- Isolation – While some would prefer, and even flourish, working solo, others thrive on companionship and engagement and will miss that aspect of going into the office should work from home become a standard policy.
- Impact on career – Some employees fear that being “out-of-sight-out-of-mind” may impact their career when it comes time for decisions on promotions and choice assignments.
- Must be tech-savvy – One reality of more people working from home is the need for them to be comfortable and knowledgeable using technology. Rather than walking into the conference room and sitting down to a meeting, people are attending meetings and communicating with colleagues via video conference, with all the technology glitches that that can entail and with no IT guy just down the hall.
- Missing out on camaraderie with co-workers – Feelings of isolation aside, employees will also miss out on all those impromptu gatherings and connections made during and after work. Working remotely may change the dynamics between co-workers, not providing an opportunity for friendships and a “we’re all in this together” climate to develop.
- Self-direction required – Not everyone is cut out to work independently and stay focused, which are beneficial traits to have when working from home. Others will find they are more productive without the distraction of a bustling office.
- Distractions – While there are plenty of distractions in the office, for some, those at-home disruptions might not be as easy to ignore. Mounting laundry, needy kids, noisy neighbors are just a few of the things to divert one from their work.
Important things for a company to consider when creating an effective WFH policy:
- Need to establish a written remote work policy for all employees.
- Increase communication with remote workers – be sure to keep them in the loop. Establish policies for methods and channels for communication (email, teleconference, etc.).
- Is there flexibility in the WFH policy for adjustments if needed?
- Define metrics for determining success of a remote work situation, i.e. performance indicators.
- Establishing whether work schedules are fixed or flexible?
- What will the company provide in terms of supplies, equipment, internet connectivity, furniture, technology, etc.
- Are there requirements for the physical office set-up?
- Define health and safety issues that must be addressed
- Establish policies concerning Liability and Workers Compensation
- Are there any confidentiality needs that should be addressed?
- Establishing tech support protocols.
- What situations will require the remote worker to come to the office?
Time will certainly tell the impact of WFH on the office leasing industry as well as for businesses. While we are in the midst of this storm, these words attributed to Winston Churchill should be kept in mind “True genius resides in the capacity for evaluation of uncertain, hazardous, and conflicting information.”
Blackacre Advisors LLC
DISCLAIMER. Our writings are from a real estate transaction perspective and for informational purposes only. Nothing herein shall be considered legal, accounting, tax, or architectural advice. Please consult with the appropriate professional(s).