The amount of noise around remote and hybrid working over the past four years has led us to investigate the true impact on productivity, individual growth (or lack thereof), equity among job functions, and corporate profits. As we navigate new work realities with our clients, we have observed that office trends are settling into four broad categories—and each comes with its own pros and cons. Our research and analysis revealed some correlations among these evolving workforce models. Here’s what we learned.
The Flexible Hybrid Model
With this model, employees can choose their preferred work location (home or office) and schedule with no set in-office days. This method, in theory, creates a high degree of flexibility that should lead to greater employee satisfaction and work-life balance. It fosters trust and autonomy, which can enhance productivity and job satisfaction.
However, with independence and flexibility comes significant coordination issues for management, keeping track of employee schedules and integrations. Not only does this create logistical challenges, but we have also found it cuts down on spontaneous collaboration and conversations.
Further, it is difficult to manage and judge a company’s need for office space with a variety of schedules, which can prove costly to the bottom line. We have observed with some organizations that there is a negative effect on the equity among employees (i.e., who gets to work remotely and who does not and why). This has an impact on resources and can affect growth opportunities for employees depending upon their work location.
The Fixed Hybrid Model
This model has employees working specific days in the office and specific days at home. Despite arguments to the contrary, people instinctively like routines and structure. This model provides a set schedule that can contribute to a balance between collaboration and individual work. It cuts down on logistic coordination and ensures regular in-person interaction, which can be beneficial for team coordination and corporate culture.
Scott Morse, Citadel Partners
On the other side of the coin, however, this method lends itself to some levels of employee dissatisfaction given its rigidity. Specifically, with fixed schedules, employee flexibility is reduced, often resulting in a feeling of employees losing their autonomy over their work environment. Additionally, when employees are out of the office, the space is underutilized or simply not used at all, calling profitability into question.
Office-First Hybrid Model
This model establishes the office as the primary work location, but employees have the option to work remotely one more more days a week. We have found that this more traditional model tends to encourage a strong office culture while providing opportunities for casual collisions, creativity and business integration while still offering the employee some flexibility to attend to personal or family matters.
Of course, this model also tends to favor the way we operated before COVID-19, which can be a negative stimulus to some of the younger generations who may feel the model does not offer enough flexibility and autonomy, thus affecting morale and productivity.
Remote-First Hybrid Model
Remote work is the norm in this model, but employees can come to the office for specific purposes, such as team meetings, project kickoffs or company events.
With commute times and housing costs increasing, and in-town housing availabilities becoming tougher for employees, this model tends to maximize employee flexibility and allows the company to draw from a larger employee talent pool across a broader geographical area. It can potentially reduce overhead facility costs depending upon the executive team’s stance on remote working.
However, with this model, we have noted a feeling of isolation and lack of employee engagement while creating a lack of loyalty to the organization. This model tends to trend toward employee mobility and a perspective of “who can pay the most” and “offer the most flexibility?” Little regard appears to be given to the qualitative elements of an organization that can impact corporate culture. Bringing new employees into the fold, onboarding and training in a fullyremote setting proves challenging, as well.
Communication can also prove difficult given the art needed to effectively and articulately convey various messages and training for leadership development and mentorship of new employees. This ineffective communication can lead to misunderstandings and a feeling of discontent amongst the new staff.
Analyzing the Cost and Impact
Each workplace style has its pros and cons, and each can translate to a different impact on an organization’s bottom line. When it comes to the Flexible Hybrid Model, mismanaged schedules create inefficiencies and potentially higher costs due to unused real estate and missed timelines or critical dates.
With the Fixed Hybrid Model, we’ve seen higher turnover with people because of schedule and workflow rigidity. That impacts the ultimate work product and employee turnover, which translates to higher recruiting and training costs. Culture also takes a hit because of the revolving door. Additionally, we still have underutilized real estate that incurs maintenance and operational costs for facilities not in use.
Considering the Office First Model, we have the facilities in place, so operational and maintenance costs are high. There is discussion that this model offers less flexibility, which creates a lack of employee engagement coupled with lower productivity. What we have seen is an overall positive outcome with staff engagement and collaboration, providing the organization offers the flexibility for individuals to handle personal matters. We have seen higher equipment and technology costs incurred in this model as organizations provide tools for the employees in both the office and in the remote setting.
And then there’s the Remote-First Model. We have seen examples where an impromptu business matter needs attention, but the inability to coordinate schedules results in not only lower productivity but also slower speed to solutions than in other models. Technology costs are higher in this model than in other models, and we have seen a greater lack of engagement and loyalty that impacts corporate culture. Subsequently, this incurs more costs and time for the management team to resolve these areas of discontent or communication challenges.
We have clients that are utilizing each of these methods with varying degrees of success. Several factors impact the success of these alternative work models that vary based on whether a company is publicly or privately held, where they are headquartered, what industry vertical they are in, and the leadership perspective of the management team.
The Fixed Hybrid Model appears to be the most widely adopted practice. We have seen an acceptance on behalf of employees who like the adaptability and flexibility this model offers. Although this model is still evolving, we are watching to see the ultimate impact on profits and culture which is yet to be quantified.
As remote work and the flexible workplace continues to mature and evolve, we believe CEOs and other leaders need to view their options through the lens of their individual corporate performance and their strategy, culture/brand, human resources, operations, finance, and other business drivers.
D CEO Real Estate contributing editor Scott Morse is co-founder and managing partner of Citadel Partners.
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