Is working from home the future of business?
The pandemic is proving employees don't need to work in cubicles to be successful
BUSTLING skyscrapers and office parks packed with workers could be a relic of the pre-pandemic world.
The health crisis has forced millions of Americans to abandon their offices in favour of working from home, for better or worse.
Now there are signs this may not be a short-term phenomenon, but more of a permanent shift (the world over) in favour of remote work – even after a Covid-19 vaccine is in place.
More than two-thirds (68%) of large company CEOs plan to downsize their office space, according to a survey released by KPMG.
The pandemic is proving employees don’t need to work in cubicles to be successful. And that in turn raises questions about the value of expensive office space, especially in high-priced cities like New York and San Francisco.
‘We’ve proven we can be very effective and productive in virtual work environments,’ KPMG CEO Paul Knopp told CNN Business.
The survey, which captured responses mostly from companies with more than $1-billion in annual revenue, suggests that despite vaccines, the shift to a more nimble virtual work model is not going away.
Corporate America is accelerating its investments in digital transformation.
Nearly three-quarters of the CEOs surveyed said they plan to spend more on the digitisation of operations and the creation of a next-generation operating model. Two-thirds of the CEOs plan to invest more on the creation of a new workforce model, increasing the use of automation and artificial intelligence alongside human workers.
‘This is a longer-term trend, but it’s here to stay,’ said Knopp, who added that everything from human resources and sales to customer service is being digitised.
‘Companies are focused on reducing real estate footprints.’
Employees, however, have mixed feelings about working from home. Some feel liberated by ditching their long commutes and stuffy office attire.
Others are struggling to work from home while taking care of children and elderly parents. But, for companies, embracing remote work can be a way to save money and simultaneously deepen their talent pool.
The KPMG survey findings are alarming for commercial real estate companies that own prime office buildings in major cities – not to mention the bars, restaurants and other small businesses that cater to office workers.
Hopes that empty office buildings get repopulated in a post-vaccine world may be dashed.
Investors are already steering clear of many commercial real estate companies. Shares of Vornado Realty Trust (VNO), which owns and operates offices and retail properties in New York City, have lost nearly half their value this year.
SL Green Realty (SLG), another New York real estate investment trust that owns office and retail space, is down 46% in 2020.
Yet, some real estate executives are confident the pandemic won’t doom office buildings. They note that remote work is no replacement for the intimacy and collaboration offered by in-person working.
‘It is ludicrous to think that companies will not return to office. Anyone who says they’re not going to be in offices is naïve about how company culture is built,’ Brookfield Asset Management (BAM) CEO, Bruce Flatt, told Reuters last month.
The KPMG survey didn’t ask CEOs whether they will pull the plug on office buildings entirely. Even if they wanted to, most companies can’t do that because of the long-term nature of leases.
* Source: CNN Business
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