Is Working from Home the Future?

James Penn
July 8, 2021

The Zoom call continues for the time being. Given full opening of the UK economy did not occur as planned on 19th June, and has been delayed until mid-July, the return of office workers to city centres has been put back once again. While in the Isle of Man we are used to being back in the office, colleagues in Britain are still largely working from home at this stage.

Furthermore, UK workers’ average amount of time spent in the office is still lagging the rest of Europe at 45%, versus nearly 65% for office workers in Spain and Italy.

The office has been the main place of work for the developed world since the Second World War, succeeding the factory before that, and fields in the centuries preceding the industrial revolution.

But is working from home the future?

While there has already been much debate on this, the issue remains relatively opaque, with a variety of responses proposed by different companies. We will look at some of these later.

It seems that among the workforce there are radically different views on a mass return to the office. Bosses are keen for people to come back in the interests of productivity, the nurturing of young talent, and of utilising surplus real estate.

The staff themselves, however, seem to have enjoyed the working from home phenomenon, and are keen to perpetuate it. This was summed up well by the FT columnist, Pilita Clark, recently in an article called ‘Don’t make me go back to hard pants five days a week.’ Apparently, Americans now refer to the track suit bottoms and yoga trousers used at home as ‘soft pants’, while ‘hard pants’ are more formal attire such as suit trousers. The latter could soon become de rigueur again.

Governments haven’t stepped in yet, and in the UK ministers recently rejected a post-pandemic right to work from home. But they may do in time, and it is not difficult to see the Tories, or an opposition party, insisting on this in the future.

Whatever the balance of work in future, negotiating with a workforce that is partly remote, and partly on-site, will be problematic. The Financial Times has devoted much column space to this recently, and said in a June editorial, ‘Initially, at least, blended working will be much more difficult to manage than a fiat demanding total attendance, or that everyone stay at home.’

The disparity in views on this issue was illustrated by a recent survey by Boston Consulting Group, which found that only 24% of staff wanted a permanent return to the office. Meanwhile, just 7% wanted a pre-set schedule of any kind.

Companies seem to need to incentivise people to come back. Newspapers in the past month have carried stories about US furniture manufacturer Steelcase playing bagpipe music in order to lure staff back to the office, while Compass, the contract caterer which operates many staff canteens, says many client companies have been offering staff free coffee and food. One US real estate company called Costar for a time randomly awarded a US employee $10,000 every day, provided they were vaccinated and in the office at least one day per week.

Longer term, it looks as if the nature of job perks will change. Incentives to get people back are altering. Out go ping pong tables and gyms, in come private healthcare, financial advice, access to online therapy, plenty of cycle parking, and even debt relief (for student loans).

There are continuing questions about office organisation: traditional banks and rows of desks are being replaced by more friendly arrangements of desktops, with perhaps fewer desk spaces and more room for meetings. There are also questions about cliques, the promotional advantage that ‘residents’ may have over ‘remoters’, the usage of lifts, and flexible working.

Differences in approach are surprisingly marked among financial institutions, where firms are taking contrary approaches. Goldman Sachs, for instance, had most staff back in the office in mid-June (staff also had to disclose whether or not they had received a vaccination). SocGen, the French bank, has staff back three days a week. Citi has a similar model – up to three days ‘in’, with staff branded as ‘resident workers’, who need to be there as much as possible, or ‘remote workers’, who do not.

Other banks, such as Morgan Stanley, Barclays and JP Morgan, expect the majority of staff back by September. Morgan Stanley CEO James Gorman has said, ‘If you can go to a restaurant in New York city, you can come into the office,’ while Goldman CEO David Solomon has described working from home as an ‘aberration’. But at retail banks, rather than the ‘Alpha Male’ dominated investment banks, the situation is different. Some 80% of Lloyds staff, for example, expect to work from home three days a week, while at NatWest only 13% expect to come back into the office full time, with 32% primarily working from home, and 55% adopting the hybrid model.

HSBC falls somewhere in the middle. It is both retail and investment bank, is yet to set an office return date and has extended flexible working for the time being. Both Lloyds and HSBC are planning to significantly reduce their office footprint.

For staff who do insist on working from home, there may be associated costs. Facebook, for example, has said that all staff can work remotely, but salaries will be ‘recalibrated’ if they move to lower cost regions. In that case, boosting one’s net pay by getting one’s costs down may not be a possibility.

Most of the big real estate companies, meanwhile, are confident that people will come back, and construction starts in London were up 20% in March. Already this year, plans for over 2m square foot of new developments in the Square Mile have been approved. Completions have been running at 18-year highs.

A survey by Deloitte found that while developers expect new working patterns to reduce office demand by 10-15% of space, this will be offset by requirements for larger offices to give staff more space and more collaborative work areas. Having said that, demand for the ‘flexible office space’ offered by IWG, Workspace and WeWork will continue, and average lease lengths will surely reduce.

The outlook certainly looks better. It seems unlikely, with the UK population vaccinated and case rates stable, that we will see another huge third wave this winter. In which case, there should be no more national lockdowns and no more Stay at Home orders. A return to the office looks likely, or at least possible.

But there remain big questions over the nature of office working going forwards.