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3 questions to ask about return-to-office plans

Hybrid work is established yet still evolving. How can you structure your physical space and management model to meet your company’s needs?


In brief

  • Contrasting opinions exist between C-suite executives favoring office work and employees desiring more flexibility.
  • Returning to the office can boost creativity, encourage team collaboration and foster a shared sense of purpose.
  • Company leaders should communicate the rationale behind office returns, set a clear schedule and uphold their decisions.

As we continue to navigate the post-pandemic business environment, it’s clear that the knowledge workforce has gotten comfortable with the new level of flexibility offered by remote work options. But they may not be fully aware of — or willing to acknowledge — what they’re missing by staying home at their laptops.

At the other end of the spectrum, many C-suite executives are eager to reinvigorate the interactive office and make good on the hefty corporate real estate investment they have sustained since 2019. But they’re hesitant to issue mandates that may upset a new and delicate balance for valued employees. And middle managers are bearing the brunt of a tricky power dynamic.

The third annual EY Future Workplace Index, a national research survey of C-suite corporate leaders conducted by Ernst & Young LLP, offers an eye-opening window into the ongoing evolution of the workplace and real estate during the past year. Perhaps most remarkable is that the number of survey respondents reporting nearly full-time remote work has plummeted from 34% in 2022 to 1% in 2023. C-suite leaders are recognizing the need to take a firm position on return-to-work policies, informed by what they know about their workforce. Whether it’s mandating two days a week in the office, or three, or five, they are taking steps to ensure that’s time well spent for those making the trek — not more videoconference calls, but live interaction and creative collaboration among employee teams.

Who’s making the hybrid work call?

Since 2020, the labor market has seen a very gradual rebalancing, but it’s not uniform across all sectors. “We had a massive shock in the labor market back in 2020; we lost 22 million jobs in two months. That was the same number of jobs that we had added in the decade before the pandemic, so a decade lost in two months,” says Greg Daco, EY-Parthenon Chief Economist. “And then we had a very rapid recovery in the labor market. We regained all those jobs in just 27 months, which is an amazing feat.”

 

This seesawing labor demand is one reason why workers are more likely to demand flexibility. In turn, corporate organizations across industries are striving and, in many cases, struggling to strike the right hybrid work balance. Greg Schementi, President of global corporate real estate company Cresa, believes this is a critical moment of opportunity for business executives.

 

“C-level executives want people back in the office at a very high percentage. They became a CEO managing people in the office. It’s just who they are, and it’s also the age of the firm and it’s across industries,” Schementi says. “When you ask the people who are actually the frontline people that are doing the work, they want much more flexibility, much more remote work, and then you put the middle manager between the CEO’s mandate and the people they are trying to manage.”

 

Workplace expectations and policies have been in flux for almost three years. During that time, employees at all levels have made new arrangements for children, aging parents, pets, spouses’ schedules and budgets. The realities of life and routine have changed in concrete, material ways. Employees need, and deserve, clarity and stability moving forward to continue to have confidence in organizational leadership.

 

“You need to have a plan. Maybe your policy used to be this, and now it’s that, and no one is enforcing it,” says Jenny West, Vice President of Workplace and Management at Cresa. “So there’s a lack of trust that casts a shadow on leadership. Mid-level management deserves a lot of attention right now.”

 

How do you maintain or rebuild organizational trust?

The economic impact of corporate real estate capacity and occupation cannot be underestimated. In a desynchronized labor market, with a high degree of differentiation among sectors, it is more important than ever to take a leadership stance on corporate real estate.

 

The good news is that more people from HR are involved in real estate discussions than ever before, which is extremely helpful to the business real estate market. In leasing colocation, there has been a general shrinkage in size, but also greater attention to redesign and making the best use of space relevant to work that needs to be done.

 

“There’s never been a time when the space you occupy is less in line with the space you should,” Schementi says. “It’s an incredibly unique opportunity. If you get this right, this hybrid-remote mix, you get this right and you win. And your competitors don’t win.”

 

In the end, it’s possible that businesses will occupy 20% to 30% less office space long term, including the companies that will keep 100% but with flexibility in the lease. So in the past five to 10 years, leaders are opening up to more limited options, reduced space and more flexible career options for their people.

 

Where do you draw the line?

The bottom line is always defined at the top. Across sectors, employees need clear expectations to follow when it comes to having a presence in the office. Leaders need to listen, clarify the “why” of a mandated return to the office, define a schedule and then stand firm. There are sound reasons for employees to rejoin a collective workspace, at least some of the time.

Summary

The work landscape is evolving as C-suite leaders advocate for a return to the office and employees prefer flexible work schedules. As businesses navigate these shifts, firm leadership is crucial, especially in decisions surrounding corporate real estate. Striking a balance through clear guidelines can retain the benefits of a shared workspace.


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