The new normal of office life

Change may be all around us but one aspect of modern life finally shows signs of inching towards stability: the office.

City buildings worldwide are still vastly emptier than before Covid struck, but as pandemic lockdowns drift ever further into the past, office use rates have been creeping to steadier levels.

The average office occupancy rate in the UK has consistently hovered around the 33 per cent mark in the 12 months to May, by one estimate, roughly half pre-pandemic levels.

In the US, average work-from-home rates are likewise far higher than they were before Covid, but have still been fairly stable since the middle of 2022, say researchers who have been tracking the seismic shifts in working patterns that the pandemic ushered in.

A little-noticed milestone was reached in May when a key measure — the share of paid full days worked from home — dropped to 26.6 per cent, the lowest level since the early stages of the pandemic. By June it was back up to 28.6 per cent, only a few points lower than the 31.6 per cent share in June 2022.

In other words, remote and hybrid working patterns have proved far more resilient than many employers predicted — or hoped — and though it’s too early to say where home-working levels will finally settle, a plateau may be in sight.

Personally, I am very fond of the shift to more flexible working, so it is dispiriting to see that the move may not be suiting everyone.

This year, Gallup researchers said employee engagement in the US had dropped to its lowest level in more than a decade, meaning workers felt more detached, less satisfied and less connected to their companies.

That is a worry since engagement is linked with productivity, customer service, safety and profitability.

The cause of the decline is not clear but it was most pronounced among younger workers; those working exclusively from home and, very interestingly, those who could do their jobs remotely but instead work entirely on-site.

What are the odds that workers in that last group were required to turn up to the office five days a week, as some employees have been at big US companies including Boeing, UPS and JPMorgan?

I suspect the chance is high, considering data from the likes of Cushman & Wakefield, a commercial property adviser. It found last year that return-to-office decrees can increase office attendance by as much as 14 percentage points, but push employee engagement scores down by 26 points.

That seems a bad trade-off to me. Happily, some firms are more than capable of creating hybrid structures that work for all staff, including younger employees needing in-person help to find their way.

And there are signs that an even more significant shift may be under way. As company leaders recognise the power of hybrid working to attract or retain top staff, some are also rethinking how they design or build office space.

Executives in charge of real estate are starting to be asked to focus on more than short-term cost savings, says Cushman & Wakefield’s Despina Katsikakis. Instead of reporting to the finance director, she says they are starting to work with “people and culture”, or human resources divisions, to create offices that people actively prefer to work in.

The CBRE property services group tells me 24 per cent of real estate executives reported directly to HR leaders in 2022, a 14 percentage point increase from the previous year, and the share probably rose further in 2023.

In the UK, the corporate real estate team at Barclays has long worked in the same division as the HR and finance groups. The bank recently opened a much-admired Glasgow “campus” building where attention to staff needs is so granular it has “low noise emission hand driers” and paper towels for people sensitive to noise, and “quieter” rooms with plain backgrounds for neurodiverse workers. Not to mention an array of tech and “creative spaces” to make hybrid working easier.

Not every employer can afford an office like this, of course, but not every employer needs to. Offering flexible working patterns in a decent place that makes it easy to do the job you’re paid for is a basic recipe for success in a world where we seem highly unlikely to go back to working the way we did before 2020.

— Copyright The Financial Times Limited 2024