Clients are making big decisions about where to base staff, post-pandemic. Here, we assess how embracing the hybrid approach can position businesses for success in our new world of work.
As cobwebs are dusted off desks in anticipation of employees’ return to the office, many business leaders are pondering the future of the corporate HQ. Over the past 18 months, long periods of remote working have convincingly demonstrated that firms operating a hybrid working model can thrive – and increasingly, the advantages of cramming hundreds of employees into a single city-centre space seem scant.
Since the pandemic struck, energy giant BP has confirmed the sale of its London head office, announcing plans to lease back the property in the short-term while a new, more flexible way of working is developed. However, many forward-looking firms have already made plans to commit to hybrid models such as hub-and-spoke.
Standard Chartered bank and NTT are just two of the major multinational companies that have signed groundbreaking deals with IWG during the first half of 2021. New partnerships have added a million users to its global network of flexible workspaces so far this year.
The importance of agility
As we emerge from the chaos of Covid-19, agile businesses – those that are most adaptive and flexible – seem best placed for financial recovery.
Being responsive to change, anticipating market shifts and identifying emerging opportunities always sharpen a firm’s competitive edge. Post-pandemic, though, cultivating a culture of continuous learning, effective decision-making and resilience is sure to be vital.
According to Scaled Agile Inc., creator of the well-established Scaled Agile Framework® (SAFe), the benefits of digital agility alone are remarkable. It reports a 20-50% increase in productivity, 25-75% improvements in product quality, 30-75% time-to-market improvements and 10-50% increases in employee engagement.
Agility extends beyond a firm’s office atmosphere and online offering, however. Businesses that are hampered by archaic organisation, old-fashioned processes and costly real estate commitments will find it difficult to react to events as quickly and effectively as forward-looking rivals.
Lloyds Banking Group and HSBC have stated that, post-pandemic, their office space will shrink by 20% and 40% respectively, while Jamie Dimon, JPMorgan Chase’s Chief Executive, expects that, for every 100 employees, the firm may ultimately need seats for only 60. The ability to scale floor space up or down at short notice, without the need for commitment to a costly, long-term lease, is the sort of practical agility that will make a real difference to the bottom line.
The benefits of hybrid working
Adopting a hub-and-spoke approach also enables businesses to extend their geographic reach, establishing their presence in multiple locations at the same time as providing more convenient workspaces that bolster employees’ work-life balance.
Hybrid working offers significant advantages in terms of staff recruitment and retention, too. No longer bound by limiting their search to specific locations, firms can begin looking beyond their usual talent pools to find true best-fit candidates for posts. Recruitment via digital means, rather than face-to-face meetings, can even speed up and streamline the hiring process.
Moreover, flexible working is a key benefit that many prospective employees will look for, post-pandemic. A report from Absolute Personnel shows that almost two-thirds of candidates already consider it the most important perk.
On a similar note, many professionals now scrutinise a potential employer’s environmental credentials before committing to a role. Adopting a hybrid working model is a key way for any firm to cut its carbon footprint – an increasingly important priority for staff, investors and customers.
People who feel their health and happiness is supported at work are also less likely to leave an organisation – and the savings associated with a lower employee turnover can be significant. Research from the Society for Human Resource Management suggests that every time a business replaces a salaried employee, it costs six-to-nine months’ pay.
Finally, there’s the bottom line to consider. Flexible workspaces provide the antidote to the bane of many executives’ lives: long-term lock-ins to costly real estate commitments. Such high costs now seem unnecessarily burdensome. It’s hardly surprising, says IWG Founder and CEO Mark Dixon, that “people that can get out of leases do so, and move to this more flexible way of working.”
A study reported by EY shows that companies can save about $11,000 for each employee that works in a hybrid manner – proof that improved agility can quite literally pay dividends.
The future of the corporate HQ
“Iconic HQs will still be there in the future, but they'll be smaller,” predicts Dixon. “You’ll have an iconic building where you bring together your team from time to time to get them to imbibe the company culture.”
Dialling down the day-to-day importance of the traditional headquarters goes hand in hand with an increase in demand for suburban and rural flexspace. In the UK, interest in IWG workspaces in some M25 commuter hotspots surged during the pandemic. For example, in Uxbridge it increased by 175%, in High Wycombe it rose by 52% and Hayes saw an increase of 24%. By contrast, demand for space in some parts of London dropped by 10-20%.
“In the past year, we’ve seen a significant number of companies dropping their headquarters and downsizing to our buildings,” confirms Dixon. “They’ve gone from having lots of people in the city to a smaller number, with many people working remotely.”
Ultimately, Dixon argues, the changes businesses are seeing in global working culture are “irreversible and accelerating fast”. However, the new normal promises exciting opportunities for those firms agile enough to embrace it. “The future of work is already with us,” Dixon says. “And it’s only going to improve.”