How offices are using less, better space

Featured in today's briefing:

• How to optimize an office used just three days a week.
• Layoffs are targeting middle managers.
• Employees are secretly using ChatGPT at work.

The Macro Context

• Some half of Americans say they’re now financially worse off than they were a year ago, the most since the 2008-2009 recession, according to a new Gallup survey.
• While many people are withdrawing or borrowing from their retirement savings to cover the current cost of living amid still-high inflation, both behaviors declined toward the end of last year, as did the dollar amounts for those withdrawals and loans.
• Americans’ 401k contributions also dipped slightly last year, from 6.6% in December 2021 to 6.4% in December 2022, a new pulse report from Bank of America found.

Focus on How Offices are Using Less, Better Space

How does your organization get the most out of your office spaces? Where can you save money? And what improvements should you really invest in?

Many organizations are facing these questions as leases come up for renewal, and they settle into flexible work configurations for the long haul. For a perspective on this, we spoke recently with Neil Murray, CEO of work dynamics at JLL, where his team advises many Fortune 1000 companies on their office locations and handles their configuration and facilities management. Here are excerpts from that conversation, edited for clarity and space:

We're hearing from organizations that have leases coming up for renewal now and their offices are relatively empty. They anticipate a flexible work arrangement, but don't know where it's going to settle. Some workers don't seem to want office space, but maybe they'll resent it if dedicated space is taken away from them...

It's super complex.

How are you advising people in this situation?

First of all, it's evolving. If you asked me this six months ago, I probably would have given you a different answer.

I would say there's a 'why' to all this. You get clients who say 'I want my people back. How do I get them back?' And the first question is why? What are you missing? What are you lacking? What are you concerned about? Because that's the fundamental question.

You get the other end of the spectrum—which we see less of—which is, 'I'm going 100% remote and I don't want to own my office space. Can you help me deal with it?' The shift has been towards, 'We want people back,' to the point where in the last three months alone, 40% of our clients have come out with mandates of at least three days a week in the office.

The problem with the three-days-a-week thing and the flexibility thing is, can you shed space when you're still packed on Tuesday, Wednesday, and Thursday? You're also thinking about talent in different ways. Where do you need space and where is your future talent coming from?

Our research says that the single most important amenity that attracts people back to the workplace is other people. That may seem obvious, but in the various experiments we've done, we've tried everything on behalf of our clients. Overwhelming evidence says people are really enjoying other human beings and the connection with them. The challenge with that is if you give total flexibility to employees, they miss one another. The advice I generally give to our clients is, please be prescriptive if you want people back. Bring teams back together as opposed to allowing them to choose when, because that human connection is what will fuel.

If you bring in teams three days a week, is there any way to optimize your space?

In 2020—we're a public company, so you can read this—our revenues with the offices empty stayed pretty solid in my part of the business. That immediately begs the question, why? Why is there not enough flexibility? Why are these fixed costs? The truth is they're fixed costs because the services dimensions have never been occupancy-dependent. You had a janitorial contract, a security contract, an access contract, HVAC, etc.

We have introduced dynamic scheduling for everything we do now based on occupancy. We started doing it with postage-stamp-size sensors in the simplest form under a desk that says if someone was there. Or if nobody has been there, let's not clean it. So you start to shift the janitorial, which is a big cost, by the way. Then you start to get predictive about what space is used, when you can be more directive about where you put people. From a sustainability perspective, it's about being able to turn off an entire floor by filling a building up more intentionally.

It sounds like that's not an answer to the real-estate footprint, but it's an answer to overhead cost...

In terms of footprint, our clients want less space, but better space. I'm going to be much more intentional that the office is a manifestation of my brand, of my purpose, of my identity, of my culture, as opposed to a factor of production. It's no longer seen as a factor of production. So yes, I'm going to see how I can consolidate departments and certain geographies, consolidate space, cut leases. But the leases I do have, I want better premium space. That's been reflected on the other side of our business where we're breaking records on high-watermark rents in most cities in the United States now. Average rents not so much because if you're in the wrong part of town, in a 1950s building... There's this flight to quality, everybody pursuing high-quality space.

What makes premium space?

The sustainability credentials of space are hugely important. It goes back to, 'Is this a manifestation of who I want to be as a firm?' We're seeing real deltas emerging in BREEAM- or LEED-certified space. So high-quality, sustainably built, well-run space. In terms of amenities, it's all the things you would expect. It's air quality, quality of light in the space, which is a problem in some previously built buildings. I wouldn't recommend a particular set of amenities, just quality of space, location, sustainability of it.

Bear in mind a lot of people are making the transition from home. So the notion of it being commute-worthy, much more collaboration space, much more warmth, is a theme. I don't mean that from a temperature perspective. People are used to working in home environments and they've gone back to very sterile, cold spaces. That doesn't work for them. So warmer, more welcoming spaces.

What Else You Need to Know

Middle managers are on the chopping block. Many organizations currently undergoing or considering layoffs, including Meta and FedEx, are focusing their cuts largely on managers.

• Intel recently cut managers’ pay along with executives’. Meta is also reorganizing itself into a flatter structure, giving many of its middle managers a choice between becoming individual contributors and leaving.
• These strategies are classic short-term cost-savings moves. But research shows they’re generally net negative for organizations over time. And middle managers are clearly more important than ever for ensuring the effectiveness and wellbeing of employees. (Our briefing on the 2022 book Why Managers Matter discusses some of the reasons why, and we’ve also covered ways to better support middle managers.)
• These moves come at an already-stressful time for managers, 43% of whom are suffering from burnout, according to Future Forum’s most recent pulse survey. This stress can trickle down through an organization, as managers play a large role in their direct reports’ mental health—on par with one’s spouse, according to research from UKG.
• Tech companies are also disproportionately targeting diversity, equity, and inclusion teams for cuts, according to new analysis by Revelio Labs.
  

Employers are increasingly unsure how to navigate the political climate. Some 78% of chief legal officers and government-affairs executives said that doing so is “extremely” or “very” difficult, up from 47% in 2021, in a survey of 100 such leaders from the Conference Board’s ESG Center.

• Some 42% also said they expected the political landscape to become even more challenging for corporations over the next three years, with respondents pointing to polarization, anti-corporate laws and rhetoric, and abuse of government power for political purposes.
• Heightened employee expectations are also putting pressure on employers regarding social and political action. The majority of younger workers say it’s “extremely important” for their employers to have a positive social and environmental impact, new Gallup research shows.

The ongoing child-care shortage is keeping parents out of the workforce. With a child-care workforce that has lost some 58,000 workers over the course of the pandemic, lengthy waitlists at daycares, and sky-high costs of care, many parents who would otherwise choose to seek employment are left with few options but to stay home.

• In many cities, child-care costs can comprise one-fifth of median household income, according to a Labor Department report. In major metropolitan areas, the median annual cost of care is more than $17,000.
• At the same time, the child-care industry is struggling to pay workers enough to attract and retain a large enough workforce to support demand. On average, daycare employees earn an hourly wage of $19.74, less than two-thirds the hourly wage for private-sector workers in general.
• Public funding for child care proposed by the White House stalled last year after Democratic Senator Joe Manchin and Senate Republicans blocked the bill.

President Biden called on Congress to pass legislation that supports workers during his State of the Union address. During his speech, he urged legislators to build “an economy from the bottom up and the middle out, not from the top down.”

• Days after the 30th anniversary of the Family and Medical Leave Act, which created a right to job-protected, unpaid leave, Biden called on legislators to pass paid family- and medical-leave legislation.
• Biden also encouraged Congress to pass the Pro Act to strengthen workers’ right to organize, and to ban non-compete agreements.

Return to workplace speed round:

• The share of LinkedIn users working on site fell from 55% in November 2022 to just 50% in January after nine straight months of steadily increasing, according to LinkedIn’s Workforce Confidence Index, which surveyed more than 5,000 US members.
• Authors of a new academic study argue that workers who find themselves missing their commutes miss the “liminal space” that comes from transiting between work and home, giving them the time to detach from work and recover from the workday. For remote employees, they suggest scheduling a 15-minute walk before or after work to recover that mental transition.
• Remote and hybrid work areshifting the way homes and apartments are designed. Well-lit workspaces, attractive Zoom backgrounds, and remote-work lounges within apartment complexes have become more popular.
• Hybrid-work management startup Scoop launched the Flex Index, a tool for job seekers that documents remote and hybrid work policies at various companies.
• An analysis of the Flex Index data found that remote work is more commonly allowed in both liberal states and areas of the country where home prices are higher.
• YouTube Music contractors employed by Cognizant protested a return-to-office order by striking outside Google’s office in Austin, Texas this week, arguing that the company’s return-to-office plan does not provide adequate support and pay to cover costs of relocation, child care, and commuting for remote workers.

Here are some of the best tips and insights from the past week for managing yourself and your team:

• Pick up the phone. When live conversation is key, consider forgoing a Zoom chat for a telephone call, which is less cognitively taxing on participants.
• Streamline your email notifications. Cut down on distraction by setting your email account to notify you only for particularly important messages. In Gmail, you can filter for “high priority only.” In Outlook, you can manually build a list of people whose emails make it through the filter.
• Use the four Ls to structure your retrospectives. Those would be “loved,” “loathed” (or “lacked”), “longed for,” and “learned.” After a major project, invite all involved to share their answers for each category, then discuss as a group how you’ll use those answers to improve your processes going forward.
• Bring in a “neutral change facilitator” for help navigating big shifts. During large-scale organizational change, having an outside consultant or contractor to run point—moderating disagreements, addressing concerns, ensuring decisions are made fairly—can help ease colleagues’ inevitable discomfort.

Coda

That new hire sounded different in the phone interview. Employers are falling victim to “bait-and-switch” interviews, in which candidates have someone else pose as them for the hiring process, then show up as themselves for the job.

• While some people use their friends as their stand-ins, others hire paid proxies.

Can a chatbot keep a secret? Some 43% of employees now use generative artificial-intelligence tools such as ChatGPT at work, according to a recent Fishbowl survey of more than 11,000 workers—but of those, around 70% haven’t told their managers.

A role by any other name… The recruiting-analytics firm Datapeople analyzed 2.4 million listings to find that over the past four years, jobs with the word “principal” have risen by 57%, while those with the word “junior” have decreased by half.