This article by Laura Bougourd and Niamh Crotty, lawyers in Lewis Silkin LLP’s Real Estate and Employment practice, explores the extent to which 2020 changed our working lives and how we view our offices. As employees across the globe adapt their homes into new workspaces, the pandemic has challenged established norms and forced organisations to re-evaluate the purpose and design of the workplace as we know it.
Introduction - Reimagining the office of the future
For the whole of our working lives we have taken the office for granted. Every working day, we commuted into cities and towns across the country to attend our workplaces and to sit in our offices – to have good days, bad days, indifferent days. For many, whether we loved or hated it, the office was a staple of life.
It is fair to say that 2020 has changed our everyday lives beyond recognition. Offices all over the world were shut down overnight. A global home working experiment began, and the future of the office was turned on its head. Workforces left offices and dispersed across countries and borders, employees have set up make-shift workstations in their bedrooms, and interactions with colleagues now take place over the internet, rather than in person. But rather than mourn the loss of the office as it once was, organisations should take advantage of this breathing space to challenge the established norms and to evaluate the purpose and design of the workplace as we know it.
There has never been a better opportunity for workplace transformation.
WHAT WAS THE OFFICE OF THE FUTURE?
There is evidence to suggest that the first ‘offices’ originated in ancient Rome as spaces where official work was carried out. However, dedicated office buildings weren’t created until the 18th century. For generations, people have speculated about what the office of the future will look like. Some ideas that have been around for decades still dominate today’s discussions about the office of the future. One prediction for the future office which existed long before the Covid-19 pandemic was that advancements in technology would lead to increased home working, ultimately resulting in the demise of the physical office. Julie Whelan of CBRE comments that “offices made up of grey walls, cubicle farms and antiquated technology are obsolete. But that is because we are in the 21st century, not because of COVID-19”.
Office of the future: from 1940s to present
In a 1945 article in Life magazine, US scientist Dr Vannevar attempted to predict the future of the workplace. One of the key features of his future office was the ‘memex’; a device in which an individual “stores all his books, records and communications, and which is mechanized so that it may be consulted with exceeding speed and flexibility. It is an enlarged intimate supplement to his memory”.
Twenty years later, Walter Cronkite reported that in the 21st century no home will be complete without a computer and video conferencing system which would allow employees to carry out their business activities without ever going into an office away from home. Scientist and author Arthur C Clarke went even further and on the BBC’s Horizon programme in 1964 he predicted that, due to technological advancements allowing people to be in instant contact with other people all over the world, work in the year 2000 could be carried out from “Tahiti or Bali, just as well as it can be from London” resulting in the traditional “city” and office becoming obsolete.
Although many of these predictions seem dated to our eyes, it is true that some people foresaw the virtualisation of work, flexible working and the erosion of the workplace over 70 years ago. Yet, even now, the debate is still very much alive as to the genuine shape of the future digitalised office environment and these topics look set to continue to dominate our discussions about the office of the future as we move into 2021.
The future of the office: ideas prior to the pandemic
Before the pandemic, there were plenty of discussions around the future of the office and which version was the best for collaboration, productivity and employee engagement. We saw the rise of coworking spaces and break out areas designed to foster creativity, innovation and collaboration. The growth of hot desking and open-plan offices in particular was heralded as a revolution for boosting collaboration. Now, the notion of sharing desks seems to be at odds with social distancing guidelines. In the UK, government advice to employers says: “Workstations should be assigned to an individual and not shared” and, where sharing is unavoidable, “they should be shared by the smallest possible number of people”. Further, a 2018 study found a 73% decrease in face-to-face interactions and a 67% increase in email and instant messaging amongst employees in open plan offices.
FUTURE OF THE OFFICE: IMPACT OF HOME WORKING
Nationwide lockdowns and business closures have necessitated universal home working around the world, but home working was on agendas long before the Covid-19 pandemic. Some companies were well set up for home working to begin with, others had to adapt quickly. For many industries, particularly professional services, the home working experiment has largely been a success.
Accelerated home working has both solved and created future workplace problems
A survey of 2,000 people in Britain found that 34% preferred doing their jobs from home and did not want to return to the office. A further one-third expressed a preference for a hybrid arrangement of working remotely and from the office. Research has shown that the Baby Boomer generation are faring the best when it comes to home working; they are reporting increased productivity and the lowest rates of work stress compared to office working. As Baby Boomers tend to be the decision makers in most organisations, it seems likely that home working will play a key part in the office of the future.
Home working comes with its own challenges, however, and ditching the physical office altogether may be overhasty. Working from home is likely to affect different groups in different ways and employers will have to work hard to mitigate the diversity implications of a shift away from office working. Younger, digitally native generations traditionally led the debate in favour of flexible and home working. However they are reporting higher levels of anxiety, burnout and difficulty communicating with colleagues than their older counterparts. While the increase in home working as a result of Covid-19 may be facilitating some couples to divide childcare and housework more evenly, research has indicated that the burden of additional caring imposed by the pandemic seems to be falling disproportionately on women. Some are concerned that the pandemic may even trigger a widening of the gender pay gap in the future. For this reason, we may see more women wanting to return to office-based work because of the difficulties balancing increased caring responsibilities and working from home.
While the focus of many debates on the future of the workplace (including this article) is the future of the office, the pandemic has had a disproportionate impact on those employees whose jobs are unable to be done from home. During the pandemic, they have either had to go to work and risk getting the virus or not work at all. Moreover, certain categories of vulnerable employees may not be in a position to return to work due to health conditions, at least in the immediate term or until such a time as they can be vaccinated. Studies have also shown that individuals in BAME groups are at a higher risk from Covid-19, as are those living in more deprived areas. Concerns about the risk of a future two-tier workforce (those who have the opportunity to benefit from home working and flexibility and those who don’t) are increasing. The CIPD notes that “It is often essential workers and lower paid front line staff who are not able to work from home and it is crucial these workers are not left behind when we think about flexible working” and indeed in our discussions about the future of the workplace. Employers will need to take into account a wide range of different (sometimes competing) interests and circumstances when making decisions about the future office and home working may not be the magic bullet as it was once thought.
The above suggests that there will still be a place for the physical office in the future workplace, albeit with a redefined purpose. When designing the office of the future, organisations will be tasked with creating an “ecosystem”. This ecosystem will contain physical and virtual workspaces intended to overcome the disadvantages and harness the benefits of both home working and office-based work.
Problems with home working could save the future office
A more fundamental question about the office of the future centres upon the actual purpose of the workplace going forward. Employers and employees will need to come together to map out their collective vision for the future of the office in the wake of the Covid-19 revolution. For some, home working will remain attractive for tasks which can be completed alone, or which require quiet thinking time. But many will also be yearning for a return to the buzz of the office and for those oft-lauded water-cooler moments, for the experiences that technology cannot replicate, for interaction and innovation, and for a real-life working community to help relieve feelings of loneliness and virtual isolation. These are the things which make the physical office experience unique and which employers will look to build upon with their future office plans in order to rejuvenate their workforce and foster greater connectivity. Employers should use this time to gather information on employees’ experiences of working from home to inform their decisions about the purpose of the future office.
Suitability of home offices will affect the office of the future
The availability and suitability of working spaces are important issues for younger workers who are more likely to live in shared apartments with less-than-ideal home working environments. In an effort to improve home offices, many organisations are contributing towards employees’ home office equipment, but this has little benefit if an employee has no space in their shared apartment for an ergonomic chair and display screen. Bernard Harbor, of Fórsa trade union in Ireland said Millennials and their particular circumstances have been totally overlooked in the national discussion about a shift to home working. For these employees, the availability of a physical workplace will be vital to their productivity and wellbeing, and a key component of the future office.
Corporate culture, connection and trust in the office of the future
As we have seen, full-time home working has also naturally led to feelings of isolation and disconnection, but perhaps just as crucial to an employee’s wellbeing is feeling trusted and valued when working at a distance from colleagues and management. Cushman and Wakefield report that “Trust is the most important element that underpins flexible working programmes so companies that have a culture of trust have more success”. For home working to have a permanent place in the future office, organisations must focus on how they can create effective communication channels between managers and their team when working from home and should consider putting in place training for managers on how to manage teams away from the office.
Communication will be a particular challenge for the hybrid future office, with some employees working in the office and some working from home. A common concern amongst employees is that they will get overlooked for projects if they are not physically present in the office when plans are being drawn up. Employers must address management’s propensity to reward office presenteeism in their organisations in order for the hybrid future office to truly be a success.
Furthermore, for many organisations corporate culture has been under threat during the Covid-19 pandemic and long-term home working risks continuing this trend. The strength of an organisation’s culture and employees’ connection to that culture can be an important competitive advantage. On the flipside, poor cultural connection can result in high turnover, lower productivity, lack of motivation and reduced employee wellbeing. The office of the future may well be the backbone of corporate culture going forward, as organisations grapple with increasingly flexible working arrangements and fragmented workforces.
Mental health and home working
A report by Eurofound and the International Labour Office showed that, even before the pandemic, home workers were prone to longer hours and reported comparatively high stress levels (41% of home workers compared to 25% of office workers). Lines between work and life are certainly becoming more blurred as many employees continue to work from home full time; employees are increasingly feeling that, rather than working from home, they are living at work. This will become even more of an issue as winter sets in and people are likely to get less exercise and less daylight. A recent study carried out by Oracle and Workplace Intelligence found that 78% of the global workforce reported negative impacts to their mental health this year. For many, a swift return to the stability of an office routine and defined boundaries between work and home life are crucial ingredients for their mental health. This could prove to be a lifeline for the physical office in the future workplace.
IDEAS FOR THE OFFICE OF THE FUTURE
It will be difficult for employers, especially larger corporates, to make any significant decisions about the future of their offices with confidence in the short term. We know that some tenant companies are keen to shed redundant office floor space and save overhead costs given the current market. But, unless those tenants have contractual rights to terminate their leases or to ‘offer back’ empty office floors, such deals are likely to be tricky to negotiate, not least because very few landlords will have tenants waiting to snap up extra space at the moment.
That said, we can see that there are major strategic decisions on the horizon for tenants and with that there real are opportunities ahead for savvy building and office owners. In particular, the ‘Covid pause’ allows office owners time to reflect on how their buildings can be improved to meet the requirements of the office of the future. At the same time, the ‘pause’ allows tenants opportunities to plan their future office portfolios, as well as the very purpose of the workplace – from both business and employee perspectives.
In the meantime, and given the uncertainty in the current climate, it seems logical that flexible office space will play more of a significant role for the immediate future. After all, there have been a range of flexible models on the market for a while. This type of office space will, however, need to remain Covid-secure, at least in the short term, and so office tenants may want more control over their space and the operation of any common facilities than they once did. But there are clear benefits from utilising flexible office options: they can offer tenants a temporary solution before undertaking any long-term changes to their future office footprint.
LOCAL OFFICES – ARE “HUB AND SPOKE” ARRANGEMENTS THE OFFICES OF THE FUTURE?
One key consideration for employers going forward is likely to be office location. With many employees now fully immersed in their home-working set-ups and reluctant to play roulette with public transport, it may be that we see a wider variety of workplace facilities closer to home. Although there will always be a need for central, urban-based office headquarters in the future, some companies are already open-minded about exploring options for suburban office locations. Indeed, in recent CBRE survey about the future of the office, one quarter of respondents confirmed that they are actively considering satellite strategies for their workforces.
‘Hub and spoke’ model of the offices of the future
In particular, this ‘hub and spoke’ model would allow employees to work either from a city ‘hub’ or from a smaller suburban ‘spoke’ office. The implementation of this type of model could be a win-win for employers and employees alike. Employees would benefit from a better work/life balance with less time commuting coupled with the advantages of a purpose-built working environment, while employers would reap the rewards of lower overhead costs for smaller ‘spoke’ offices and hopefully higher productivity from a less stressed workforce. Furthermore, the decentralisation of offices and increase in home working will help to reduce spatial hierarchy; traditional seats of power like London, New York, Shanghai may become less important, resulting in more diverse voices being heard from different locations.
Implementing “hub and spoke” office model
One way to achieve a ‘hub and spoke’ model in the future could be to create new offices in empty high street retail units, allowing employees to work closer to home and support their local community. In fact, the trend for retail-to-office conversions is not a particularly new one: it has been on the agenda for a while, with various prominent retailers, including John Lewis and House of Fraser, having already been given green lights to convert parts of their flagship department stores into office spaces.
Relaxation of planning law will make opening local offices easier in future
Additionally, recent changes to the planning system, making it easier to change the uses of commercial properties, will undoubtedly help accelerate this trend more widely across the country and bring a new type of office stock to the market for employers to consider.
DESIGNING THE OFFICE OF THE FUTURE TO BE SUSTAINABLE
The office itself is likely to look and feel different when we return in the post-pandemic landscape. Many expect employers to demand a greater future return from their bricks-and-mortar office investments once the fog of 2020 has lifted and they have re-assessed their requirements. More specifically, 'healthy' buildings, green issues and sustainability are likely to be prioritised, and landlords will need to do what they can to ensure that their buildings meet the high-level specifications and biophilic designs required.
Sustainability and green issues will be more important for future office workplaces
In a survey of 1,000 employees at large U.S. companies, more than 70% said that they were more likely to choose to work at a company with a strong environmental agenda and nearly 40% said they had chosen a job because of a company’s position on sustainability. The future of the planet is, therefore, high on employees’ list of concerns and this will undoubtedly influence future boardroom decisions, if it has not already done so.
In addition, widespread concerns for the environment may also help swing the pendulum in favour of office working: although it is generally believed that home working is more environmentally friendly than working in an office (with no commute and fewer seats to heat and cool in offices), it may actually be less sustainable than people originally assumed. A recent BBC article explained that due to technological advances, electric vehicles becoming cheaper, and renewable energy being more widely used to power premises, office work may be more ecological than working at home.
Offices of the future and the importance of fresh air
Other recent drivers for corporate change have, of course, focussed on the importance of mental-health and wellbeing. In fact, wellbeing was identified as the most important trend for 2020, according to Deloitte’s 2020 Global Human Capital Trends survey. The Covid-19 pandemic has also brought into focus the importance of office design in ensuring the physical wellbeing of employees. Darren Comber, chief executive of Scott Brownrigg, an international design practice specialising in the built environment stated that currently “only 10% of the air, typically, in an air-conditioned building is fresh, and 90% is recirculating. We’re going to see that flip around completely, because people want cleaner, healthier environments, and are less tolerant of somebody getting a cold at one end of an air-conditioned space, and then everyone getting it.”
As such, we expect that light, air, ventilation and green space will all continue to attract rental premiums as employers seek to tick an increasing number of wellbeing boxes. Employees more than ever will want to open windows and breathe fresh air – which could see less reliance on air-conditioning and possibly even greater demand for offices in less central locations, provided they have good transport links. Buildings will need to be appealing and foster interaction and collaboration, while still factoring in the potential for longer term social distancing. The conundrum facing landlords and building managers, of course, is how these two opposing requirements can be facilitated.
HOW WILL TECHNOLOGY AFFECT THE OFFICE OF THE FUTURE?
Technology will, of course, continue to be the linchpin holding everything and everyone together, not just for employee meetings when working from home or from a ‘spoke’ office, but also with file sharing and data transfer. Will businesses need to think twice about when or whether to bring people together? Will clients and customers want to meet digitally, or will company-wide presentations be made online? Will the mix of digital and in-person conversation mean not just connecting individual computers but the need to connect whole groups or rooms together more fluidly? How will employers use technology to manage a hybrid workforce on a day-to-day basis? These are the sorts of questions both landlords and tenants will need to ask themselves as they redefine the office of the future.
After all, many companies have already gone “paperless”, instead relying solely on technology to store their documentation and intellectual property. Hard-copy files are being dusted-off and scanned in to make everything, in theory at least, available at the click of a button, and this has inevitably led to changes to the ways in which everyday office tasks are conducted and managed. Indeed, if it is not the case already, data and internet capabilities will be the most important assets for businesses to invest in for the office of the future.
Furthermore, this article by TDS gives some practical examples of how technology may be utilised to create a truly smart office of the future. These examples include the use of QR codes for clients and visitors to check themselves into meeting rooms and the expanded use of fingerprint and iris scanning technologies to do away with security codes and identity cards. Indeed, it seems that we may soon never need to worry about forgetting our security passes or system passwords again.
THE OFFICE OF THE FUTURE – NO ONE-SIZE-FITS-ALL APPROACH
It certainly feels as if this is a watershed moment for the traditional office model and that its purpose is being scrutinised in a way in which it has never been before. While Covid-19 has created many challenges in the world this year, the resulting hiatus in office working has also gifted employers a unique opportunity to throw the rule book out of the window and really assess - and reassess - what the purpose of the future workplace will be for their business, brand and culture going forwards.
A well-planned return to the office in the future could reap many rewards for both employers and employees, especially if there is genuine enthusiasm and commitment on both sides to embrace new hybrid ways of working. Employers will most certainly look to use future office space as efficiently and effectively as possible and, although there may be some trial and error involved, the array of choices in the market can only help to redefine office footprints for the better.
We can expect that the future workplace will develop as an ‘ecosystem’ of office space, home offices, virtual spaces and third spaces, such as cafes and hotels, depending on the needs and demands of employers and employees at any given time. Indeed, there is unlikely to be a one-size-fits-all office model anymore and offices will no longer be used just by reason of habit - there will now need to be purpose to bring people together.
Laura Bougourd and Niamh Crotty are lawyers in Lewis Silkin LLP’s Real Estate and Employment practice.
Over the Summer, the Future of Work Hub hosted a three-part discussion series in collaboration with the RSA looking at how the pandemic is accelerating future of work trends. We discussed the future of the office in this series and you can access a summary of the key themes and perspectives we discussed here. We’ve also shared further perspectives on the future of the office from our Future of Work Hub community on our website.
We’ll be continuing the conversation on these important issues in discussions with leading thinkers, innovators and practitioners in our new Future of Work Hub podcast series which launched in January 2021. Find our podcast series here.