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What Are the True Costs and Benefits of a Hybrid Workplace?

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There is no doubt that hybrid offices are perhaps the single biggest conversation of 2021 into 2022. It makes sense: the existential necessity of discussions about back-to-work strategies gradually gave way as vaccines were deployed to thinking about how to apply the lessons of COVID-19 while bracing for the future to come. 

Hybrid work is the answer to that proposition: Flexible workplaces with remote-friendly policies but vibrant, collaborative offices. In hybrid offices, workers are empowered to do their work the way that best suits them. This strategy stands to improve morale, boost job satisfaction, and increase productivity for the firms that adopt it. 

However, hybrid offices bring with them a litany of questions that occupiers need to thoroughly consider if they are to achieve success in their future work plans. First of all, are hybrid offices the right solution in the first place? 

Answering that question requires understanding the impacts to cost and value that hybrid offices typically provide. That’s the subject we planned this research report to focus on. Through our research, we uncovered insights into hybrid workplace strategies, tools, technologies, and tactics, and came to conclusions regarding the impacts of hybrid work to employee job satisfaction, collaboration, occupier budgets, and overall productivity. 

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Executive letter

2021 is drawing to a close as I write this and it feels like Groundhog Day with the latest Covid variant and wave creating uncertainty and causing companies to revisit their office re-openings and related policies. It’s that time when pundits are asked to make predictions about the year ahead. I won’t be drawn on that front save to make the following prediction: the only certainty is uncertainty. We are in uncharted waters from the macro environment of inflation, pandemic, supply chain impacts and labor shortages, to the micro environments of each company, their policies and actions. 

I liken the pandemic’s effect on workplace to be like someone shaking a snow globe. Each snowflake represents a company taking a slightly different approach to how they work. Some have famously gone fully remote. Others, like one large landlord, have been back at their desks since last July. Most other companies are somewhere in the ‘hybrid’ middle, trying to define what hybrid work is and how it manifests itself at the company. 

Today we are unlocking this report to add to the conversation and help others think through what hybrid could mean for them. Whatever the case, it’s important for workplace execs to understand the costs of hybrid, and importantly, to measure the usage of the office in this regard. Gone should be the days of ‘bed checks’ and clipboards to understand space utilization and the like. Technologies to understand occupancy, space utilization and workplace analytics, that are easy to deploy and affordable without violating privacy are here. Just ask our customers who are using Butlr-derived workplace analytics to make data-driven decisions in hybrid work environments based on actual usage and are thus able to adapt and stay nimble during these uncertain times. 

We’d love to hear from you in this regard.

All the best for 2022,

Rags Gupta
President
Butlr

SPONSOR

Executive summary

In this report, we first cover the strategies, tools, and technologies that underpin hybrid work. We start by exploring the broad strokes of back-to-work strategies that preempted our global hybrid work conversation. How did companies get people back to the office in the heat of the COVID-19 outbreak, and what lessons do those responses have for modern hybrid workplace strategies? In sum, companies took a wide range of approaches to getting back to work but many of these, like drastic physical adaptations to layout or closing down common areas, are not possible to continue using for the long term. 

Then, we will talk about the technologies and tools that enable tech work, namely space reservation tools, navigation and wayfinding solutions, touchless access, visitor management, occupancy sensors, and floorplan visualization tools. Understanding these systems is critical to conceptualize the challenge and possible solutions presented to occupiers thinking about moving to hybrid work arrangements. 

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Finally, we spend the rest of our report focusing on understanding costs, impacts, and value for hybrid workplaces. We dive deep into the implications of hybrid work on occupier real estate spending, tech needs and policies, staffing concerns, and productivity, and carefully discuss the need for clear communication between space planners and their individual space users. The reasons for this are straightforward: there are many ways to accomplish hybrid goals, through creative approaches to space, policies, and technology, and only by carefully listening to the voice of the employee can the optimal outcome be achieved without wasting money.

Summary of return to office strategies

Throughout the pandemic, companies made use of a wide range of strategies to get their employees back to the office. When the outbreak was in its full force, most of these strategies were borne out of a need to socially distance and improve occupier safety. 

Some occupiers chose to stagger work shifts so that different groups of employees worked out of the office at different times. This was meant to decrease overall virus contagiousness within the workplace while making it easier to contact trace outbreaks. However, work shift planning is difficult. According to Francesca Guerriero and Rosita Guido, researchers at the University of Calabria, the challenge in scheduling shifts occurs because of the difficulty balancing “demand requirements, employees’ personal and family responsibilities, and anti- Covid-19 measures.” While simply planning schedules based on the needs of the team might seem like an easy option, the reality is that taking into consideration elements like the presence of children, team members who have responsibilities with multiple functional units of the business, and simple preference make the challenge harder. Guerriero and Guido developed a sophisticated computational model to quickly develop work shifts but implementing a version of it manually would likely be too complicated for most managers. Some tech tools, such as major HR software providers including QuickBooks, Zoho, and Sage, offer their own shift scheduling solutions but for truly flexible offices, these more structured arrangements may not be the best solution. 

Others chose to bring only certain occupiers back, either on a part-time or full-time basis. Both work shifts and partial return strategies face the challenge of leaving firms to choose who to put into which group. The safest people to bring into the workplace aren’t always the ones who should be back together for productivity’s sake, and individual employee perspectives on in-person versus remote work are so varied that preferences likely won’t neatly line up with who managers would like to be in the office or remote for productivity’s sake. Case in point: A recent PwC survey of over 1,000 U.S. full and part-time employees found a fairly even distribution of work location preferences: 19 percent preferred an all-remote work plan while 22 percent preferred to work almost exclusively from the office.

Other tactics included changing up the physical space to restrict congregating and mitigate the risk of infection from touching contaminated surfaces. The COVID-19 pandemic saw a groundswell of interest in sanitation technologies like antiviral coatings for door handles and UV lighting to sanitize spaces overnight. Other spaces were changed by closing down food courts, lobbies, and lounge areas, and removing or otherwise inhibiting the use of furniture within these spaces. Other implementations, like one-way passages and transparent dividers between areas or above cubicles were also widely implemented. 

As the dialog surrounding back-to-work transitioned from maximizing safety to preparing for the future of the workplace, tactics changed and began to take on a more long-term nature. One-way hallways and plexiglass everywhere are not reasonable to maintain in an office for years on end, and so the future of back-to-work became more about hybrid strategies than simply limiting access to rooms here or there. 

Tech tools for hybrid work 

It is important to arrive at some term definitions before proceeding any further with our analysis. Return to work strategies are simply those that bring remote teams back to the office, typically in a post or during-COVID scenario. By contrast, we consider hybrid work to be long-term workplace strategies that emphasize employee productivity both in the office and at home, using novel approaches to maximize productivity within a workspace while allowing for remote work as just one component of an overall strategy. Many companies at one point employed return to work strategies and later moved on to embracing hybrid work strategies.

With that in mind, let’s consider the tech components occupiers typically use to plan their hybrid layouts and occupancy plans. 

Space reservation software

Since many hybrid workplaces lack the permanent assigned seating of traditional offices, and tend to emphasize collaborative work, challenges in ensuring everyone has access to the spaces they need can arise. Space reservation tools allow occupiers to book space (and in some cases, services) ahead of time. This means that people seeking to work in the office once or twice a week have the ability to book a hot desk for their time in the building, and groups small or large have the ability to book a meeting room, assuring them they will not face the challenge of a few people monopolizing the conference room when they need it most. 

Navigation and wayfinding

Because hybrid offices tend to feature less permanent employees working in-person than traditional offices, simply getting around can be a bigger challenge than might seem obvious. Employees who only come in once in a while may not know where certain rooms are, and employees who come in even once a week may not be aware of where things like office supplies are stored. Reducing friction for these employees can be achieved through the implementation of navigation and wayfinding tools, typically in a mobile app (but occasionally also using physical digital signage). These tools display directions, either with static maps or with custom step-by-step directions to help space users find their destinations quickly and efficiently.

Touchless access and visitor management

Finally, hybrid offices, with their large number of people coming in and out at all times, also benefit from advanced touchless access and visitor management solutions. These are in many cases two different pieces of technology but they share similar functionality: ensuring that space users have smooth, pain-free access to the building and its rooms. 

Touchless access systems allow space occupiers to get into the property and different spaces within it without needing to use a key, keycard, or in the fullest implementation of the tech, even touching a door handle. This tech was first introduced well before COVID-19 but it was the outbreak that catapulted it into the forefront of many occupiers’ consciousnesses. Touchless access typically relies on one or more authentication signals from an individual’s mobile phone to grant building access. It is useful because it reduces occupier friction but also because it allows managers to credential (or de-credential) occupiers at any time from anywhere, making onboarding or offboarding new employees easier for every occupier in the building. 

Meanwhile, visitor management systems allow occupiers to remotely grant access to their guests. This decreases reception staff workloads, increases speed through the lobby, and in theory improves the guest’s experience within the building. In some cases, this tech is combined with wayfinding, meaning guests have access to directions to reach their host’s suites more easily. 

Occupancy sensors

Occupancy sensors collect data on where people are located within a space and when they leave. This data is crucial for understanding the most-used areas within a building. Different occupancy sensors can be based around different technologies, such as the opening and closing of a door, motion detection through passive infrared technology, optical cameras, temperature sensors, and beyond. 

“Is that one person using a 12-person room or is it really 12 people? Using tech we can answer that question, and then all of that data and insight can be fed back to strategic planning teams to make better decisions.”

Danny Klein, Global Technology Scout for Verizon’s Real Tech Group

These sensors can be used to activate other devices, like lighting systems, share information with space planners and managers, or prominently display the current occupant count visually, for instance on the door or nearby wall, in order to promote social distancing measures. The data from these sensors is useful for a variety of reasons, such as developing sophisticated models of space user trends, in order to more effectively allocate space in the future, or to calibrate HVAC systems and lighting fixtures to be more energy efficient. According to Danny Klein, Global Technology Scout for Verizon’s Real Tech Group, by using occupancy sensors “you can see that 4-5 people are huddled together before breaking apart, and we can infer that maybe they were collaborating.” He added that there is a similar use case in meeting rooms. Without occupancy sensors, managers can see when rooms are reserved, but without having an occupancy sensor as part of the system, “is that one person using a 12-person room or is it really 12 people? Using tech we can answer that question, and then all of that data and insight can be fed back to strategic planning teams to make better decisions.” 

Floorplan planning tools

Floorplan visualization tools help occupiers identify how their spaces should be set up, from cubicles to lounge spaces to amenity areas and beyond. Providing similar top-down floorplan views to what an architect might draft, these tools allow workplace teams to boost productivity by physically redesigning the workplace itself. With these visualization tools, it is easier to cluster employees based on their team memberships, functional area, or personal preference than with pen and paper. 

Strategic considerations

How can companies actually determine how much value a given hybrid layout offers compared to their traditional office? Any workplace might cost more or less based on the specifics involved in its design and execution but we can identify a number of high-level concepts that are important to consider when establishing what these spaces are worth. 

We will review these concepts by analyzing the diverse implications of hybrid workplaces in three areas: real estate, tech, and staffing.

Real estate

Hybrid offices impact real estate in several ways. The most obvious implication of less people in the office at any one time is the opportunity to potentially shrink a floorplan, which may make some decision makers excited about the opportunity to reduce real estate costs. But for many enterprise occupiers, the reality is that real estate costs are much smaller than the total cost of human capital. With that in mind, occupiers should think long and hard about downsizing. Is the best use of the flexibility provided by hybrid a cost reduction, or a productivity boost? For this reason, occupiers should be cautioned against equating hybrid with lower real estate costs. 

Instead of lower costs, it is totally feasible that occupiers moving toward hybrid may not downsize their spaces but instead maintain their existing spaces while decreasing density. This would occur as a result of increasing collaborative spaces and reducing the number of permanent assigned workspaces. These occupiers may see their total overhead costs increase as spaces need to be reconfigured and more tech platforms engaged. This must be measured against the productivity and worker quality of life (and consequently, hiring) improvements that hybrid offers. 

Tech and IT

Hybrid offices also cast a long shadow when it comes to the tech platforms and policies needed in a workplace. First, hybrid offices need more flexibility in their technologies to allow employees to be able to do their work from anywhere. For a true hybrid workplace to succeed, employees need to be just as productive from their remote work location of choice as from the office. The work performed may differ, with focus work at home and collaborative work in the office, but occupiers need to ensure that their employees are productive from either place. 

Ensuring that flexibility has a cost, though. This can be potentially mitigated by making more educated tech decisions, perhaps resulting in integrated solutions, instead of seeking out individual providers for every feature a workplace needs. 

This means that there is even more pressure in hybrid workplaces to prevent IT issues, every hour of every day. It’s one thing if an employee can’t get onto the VPN network if they are working from the office, but if they were planning on spending the week working from home, it is an immediate challenge to be resolved. With that, IT workloads may well increase, or at least become more diverse and unpredictable, as hybrid workplaces need to keep employees in hundreds or thousands of locations connected every day. 

Even beyond the staffing cost, other IT costs can begin piling up based on the pressures of moving to a hybrid work strategy. According to data from the cloud management platform Cloudcheckr, gathered in a survey of business and IT leaders at companies with 500 or more employees, 94 percent have experienced unexpected cloud costs such as lack of right sizing, unused instances continuing to be run and continuing to incur costs, or unused storage. It is likely that costs like this would increase as organizations transition to a hybrid arrangement.

While some costs may increase, hybrid strategies also present some cost-cutting opportunities. Occupiers may be able to save money by switching to a needs-based provisioning strategy instead of simply equipping each desk with the same equipment. Employees at hybrid firms likely do not each need their own desk phone, chair, and monitor, but before estimating potential savings from this area, managers need to find out exactly what sort of tech resources and infrastructure their workers need.

Staffing and productivity

Staffing and HR considerations are an integral part of hybrid workplace plans. A large volume of research surveys including the aforementioned PwC report show that most workers want to be able to work from home as well as from the office. Whether or not they really want to move to hybrid arrangements, occupier managers need to realize that the amount to which they implement hybrid work strategies will have a direct and immediate impact on hiring success. 

According to Joslyn Osborn, head of the Accounting & Finance Direct Hire division for VACO, a staffing and consulting firm, “If your company is in-office five days a week and that policy is out of your control, hiring may require more time than previously needed to find a candidate willing to be on-site full time.” And according to research and a survey shared in a recent Gartner webinar, 39 percent of workers would be willing to quit their jobs if asked to return full time to the office.

On the flip side, occupier firms that provide hybrid working options not only dodge this bullet but open themselves to potentially much broader, geographically distributed talent pools. Without the need to be in the office every week, companies can greatly expand their hiring radius, increasing the quantity and potentially the quality of prospective hires. This is a benefit occupiers should certainly keep in mind when considering the value impacts of going hybrid, although it is important to keep in mind the dynamics of employee clustering. If a company transitions from traditional in-office working to hybrid, most employees may still be in just a handful of cities, Taking on employees far outside of the area may lead to some feelings of exclusion and possibly higher turnover if they are not properly supported by the management team and purposefully integrated into the community. 

Expanded hiring radiuses is a plus for occupiers, but it comes with competitive implications as well. In theory, if one company in a given space is able to hire from more areas by going hybrid, so too are its competitors. This could result in overall higher hiring costs and human capital expenses as competition for talent increases everywhere, with less and less restrictions based on location. On the other hand, according to the Gartner data, of the respondents who said they would consider moving away from the office if given the chance, 62 percent said they would be willing to consider taking a pay cut tied to the cost of living in their new area. While the specifics of that would come down to the differential in cost of living between the original city and the destination one, it represents a possible source of cost savings for enterprise occupiers. 

The research on productivity, collaboration, and teamwork of remote work has found mixed results. Remote alone results in such a varied experience based on the home life of the specific employee, the presence of children or pets, the quality of the workplace, the support of the spouse, and so many other factors that some rigorous studies have found that remote boosts productivity, like this one from Mercer, while others like this research from the University of Chicago find that it hurts productivity. Meanwhile, remote work has noted negative impacts on things like manager facetime and socialization opportunities across and up the organization, potentially making companies that lean too heavily into this strategy less competitive and attractive to talent over the long term.

The best location for me to work comes as the resultant of an equation that considers the work I need to do, the people I need to meet, and what I want to accomplish.”

Brennan McReynolds, Global Lead, CBRE Host

Hybrid work, by contrast, should not be seen as one single solution but rather an acknowledgement that different employees perform better in different environments, have different home lives, and are motivated by different things. According to Brennan McReynolds, Global Lead for CBRE Host, under a hybrid work plan, “The best location for me to work comes as the resultant of an equation that considers the work I need to do, the people I need to meet, and what I want to accomplish.” As the previously-referenced PwC report found, many employees enjoy a mostly remote work style, and many enjoy being in the office as much as possible. Properly implemented, hybrid work gives each of these employees the ability to work in the way that best suits them, while retaining the office’s ability to improve collaboration and spontaneous creativity.

“You also have to think about all the knowns and unknowns,” Brennan added.” There may be spatial constraints and multiple personas like a new employee and the desire to get them collaborating. Plus, the challenge of providing an equitable experience at an individual level that enables managers to support their teams and organization at scale.” It is easy to lose sight of the forest for the trees when planning hybrid workplace strategies, but this approach to working prioritizes space user flexibility. It is just as important that the actual hybrid approach is developed flexibly, as well. 

Costs, productivity, and monitoring

The strategic takeaway of the HR, IT, and real estate elements here is unfortunately not as simple as being able to tie a single dollar impact to a specific hybrid workplace strategy. To illustrate, according to “The Business Case For Remote Work,” a report by research firm Global Workplace Analytics, the typical U.S. employer could save around $10,767 per employee under a half-time remote work arrangement of the sort typical in hybrid workplaces. But this figure and others like it are based on a large number of assumptions, such as an expected 25 percent reduction in office space, 30 percent drop in absenteeism, and 15 percent increase in productivity. 

Few companies will line up close to these figures. Even in terms of real estate alone, the field for cost savings is so wide open as to make any broad conclusions difficult to generate. Consider McKinsey’s research, which finds that organizations adopting hybrid strategies could save 30 percent of their real estate costs, but that organizations that completely eliminate their in-person presence could almost entirely remove them. Clearly, companies that adopt a hybrid working arrangement could stand to save some to almost all of their real estate costs. 

Outside of real estate, other costs can crop up as well. Tech company Cisco, which has had a hybrid strategy in place for a decade and a half, saved hundreds of millions over the last five years but noted increases in other costs. “Pandemic work is not hybrid work,” said Vaughan Klein, Cisco’s Director of Collaboration for Europe, Middle East, Africa and Russia. “And some of the savings that you make need to be redeployed in making home offices good areas for you to work in.” With all of this in mind, estimating cost savings (or expense increases) for a hybrid strategy should be considered impossible without plenty of details about the specific situation. 

Instead of focusing on costs, occupier firms should consider outcomes more generally. According to Simon Davis, Senior Vice President of Work for workplace consulting firm Impec, “One of the biggest changes we will see in the future is that companies become less concerned about cost per square foot and more about workplace outcomes.” The ultimate goal of hybrid workplace arrangements can be defined as increasing overall productivity per dollar spent. Increasing retention, promoting worker happiness, keeping teams together, promoting collaboration and beyond, each of these factors boils down, in the end, to net productivity per dollar. Studies indicate that hybrid workplaces boost this figure, but optimizing it requires paying close attention to the needs and opinions of the workers themselves. 

Since it is usually managers and facility managers who are responsible for setting group policy or communication needs and requests to landlords, these professionals need to be particularly diligent to ensure that they understand what their employees actually want and what their infrastructure actually demands, and avoid simply making decisions based on their own preconceived notions or listening but doing nothing with the information gained. For instance, back to the IT world, according to the Cloudcheckr data, 62 percent of respondents say they monitor the costs of their cloud systems but are unable to always translate this data into optimization approaches.

Any workplace strategy that is fear-based is bad. If you ask employees to commit to using their designated office space three times a week lest they run the risk of losing it, they will say yes and still just come in once a week.”

Simon Davis, Senior Vice President of Work, Impec

According to the Gartner research, 72 percent of firms are increasing their monitoring efforts by instituting more frequent manager check-ins in order to try to keep employees on track while working with a hybrid plan, but those conversations need to be strategic, purposeful, and oriented around opportunities and success instead of negative emotions. Simon added that “Any workplace strategy that is fear-based is bad. If you ask employees to commit to using their designated office space three times a week lest they run the risk of losing it, they will say yes and still just come in once a week.” Instead, manager-employee conversations on space use and hybrid working should be based around outcomes, preferences, and flexibility, instead of framing things like a zero-sum game where it is employees versus managers. 

Monitoring and listening to the voice of the occupier also helps dodge several other workplace planning bullets. 

Top-down approaches seldom work well

Occupiers need look no further than the negative coverage surrounding open-plan offices to see how poorly top-down office decision making can turn out to be. Sometimes, solutions that look good on paper completely miss the mark when it comes to user needs. Paying attention to the voice of the user is therefore critical to ensure a proper solution for the challenge at hand.

More than one way to accomplish hybrid goals

Hybrid goals, like incentivizing collaboration and boosting productivity, can be achieved through a variety of approaches. Providing more advanced scheduling software can offer some of the same benefits of building new rooms and equipping new physical spaces, for instance. And introducing some tech features ad hoc may be unnecessary when certain platforms, which provide bundles of services, wind up being engaged. 

Conclusion

In this report we discussed different strategies, tactics and tools for hybrid work before diving into the factors occupiers need to consider when implementing and estimating the impacts of a hybrid workplace strategy.

In sum, attempting to determine the value of a hybrid workplace is challenging because so much of the equation comes down to specifics in implementation and the business situation of the occupier attempting to gauge appropriateness of the strategy. But while the jury is out on the productivity, collaboration, and other impacts of remote working, hybrid work should be viewed as a flexible, almost a la carte solution that blends the best of in-person and remote work, not just one specific type of working where everyone needs to be in the office two days a week.

Hybrid work is one way to increase worker job satisfaction, thus boosting retention, while also expanding the talent pool for companies to consider hiring from. Hybrid work can result in less time wasted for all parties, from managers needing to be on-site every day to occupiers reducing their time spent in traffic. And making the right tech platform decisions can be a solid way to ensure that all the resources in a building are ready when people need to use them, whether once a week or every day. 

In conclusion, hybrid work arrangements are an excellent option for thoughtful occupiers who want to boost productivity and worker job satisfaction while doing more with less. But the complexities of the strategy mean that it is not the kind of thing occupiers can back into without the proper planning. Managing a hybrid office may not be harder than managing a traditional one, but setting it up takes forethought, careful listening and monitoring, and a strong vision for the future of the firm.

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