How companies are shifting their office spend to lure reluctant workers back

https://www.cnbc.com/2022/06/04/how-companies-are-shifting-their-office-spend-to-lure-workers-back.html?fbclid=IwAR1FNeRFjdYvlJFWR7cFWRVmT4UTSHf06J3QmTLpLHBbO12o5XlCPnwDZwM

KEY POINTS

  • As companies navigate having both in-office and at-home workers, the role of the traditional office is being reconsidered.
  • Having less people in an office every day could mean cutting space, but those spaces need to better suit the workforce of today, executives say.
  • How that experience evolves could be the difference between workers coming back to the office smoothly or leaving their jobs.

As companies and workers continue to try to figure out where and how work will take place in a hybrid environment, the costs being spent on existing office spaces previously built around the 9-to-5, five-day workweek are being closely examined.

Flexibility has become the buzzword for both sides of the employee-employer power dynamic. Workers have been leveraging the empowerment gains they’ve made amid the pandemic and a tight labor market to maintain the personal time that has come with working from home. Companies, many fearful of eroding culture that could increase turnover as well as stifling innovation by having a mostly remote workforce, have tried to meet workers somewhere in the middle by gently prodding, not pushing, workers back to the office.

The question becomes then, how does that impact budgeting and spending on typically costly workspaces when a large portion of your workforce won’t be there every day, if it all? Is there an opportunity to cut costs, or do those spaces now require additional investment to try to draw workers who are at home back into the office?

Scott Dussault, the CFO of HR tech company Workhuman and himself a pandemic-era hire, is seeing the change firsthand.

“I always quote Larry Fink’s [2022] letter [to CEOs] where he said no relationship has been changed more by the pandemic than the one between employer and employee; that’s never going to change and we’re never going back,” Dussault, a member of the CNBC CFO Council, said. “The concept of 9-to-5 in the office five days a week is gone – the keyword is going to be flexibility.”

For many companies that means retrofitting offices to meet this new normal and employee demands, while also investing in other tools to make sure connections are still being made efficiently – efforts that could mean spending more money even if square footage or leases are adjusted.

“I’m not so sure it’s going to be a cost negative,” Dussault said. “I’m not sure if people are going to take less real estate; they’re just going to change the way that real estate works.”

Workhuman is currently coming towards the end of its lease in its Boston-area headquarters, and Dussault said the company is considering expanding its space, which would provide a “clean slate” to adjust to this new working environment.

He recalled his time at a job in the 1990s where it was a “football field of cubicles” – the kind of situation where you could “go to work and sit in a cube all day and never interact with anybody – you truly could lose that connection.”

Dussault said he sees the office becoming what he calls a “collaboration destination,” part of a hybrid environment where while you might work from home on days where you’re catching up on work or emails, the office can serve as a space that is “all about connection.”

“You’re going to see a lot more open spaces, collaboration spaces, conference rooms, meeting rooms, break areas where people can sit and get together,” he said. “It’s going be focused on connection which I think frankly is positive and it is evolution – it’s going to be about making those connections more meaningful.”

That would mean investing more in things like a gym, where employees could take a physical break, or other spaces that would provide a place to take an emotional break or meditate, Dussault said, something he said results in costs shifting “from one bucket to another.”

“We need to understand and recognize that when employees are home and productive, they have those things, and we need to try to make sure that those things exist in the office as well,” he said.

That also puts a further onus on the investment in digital tools, because there still needs to be ways for workers to connect with peers even when they’re not in person.

“Companies always talk about how important employees are and how employees are the most important investment – they haven’t always acted that way,” he said. “This is a good thing that’s come out of the pandemic.”

Neal Narayani, chief people officer at fintech company Brex, noted that in 2019 the company had people coming into offices five days a week in San Francisco, New York, Vancouver, and Salt Lake City. At that time, “nobody worked from home, because it was seen as a negative,” Narayani said. But as the pandemic forced employees to work from home, where they successfully took on several large projects, that view shifted.

“We recognized very quickly that we were able to actually work more productively and faster, and that video collaboration is a very productive tool when you don’t have to commute somewhere to search the office for a conference room,” he said.

With a belief that a remote-first approach was the future of work, Brex leaned in. Of the company’s more than 1,200 employees, 45% are fully remote. The company still maintains those four office location hubs where workers can go if they want, but the company has altered its approach so that every process is designed for remote workers.

That also changed the thinking that went into those spaces as Brex planned out its growth.

“When you unwind the real estate costs, we were able to look at how many people would come into an office if we were to make it fully optional, and it was about 10%,” Narayani said. “So, we were able to move into a 10%, maybe even less, real estate option, and then take the rest of those dollars and repurpose that towards travel, towards talent development, towards diversity and inclusion efforts, and towards anything else that makes the employee experience better.”

“It turns out to be a much better experience for us because that real estate cost was very high, and those markets are very expensive,” he added.

Roughly a third of the cost of the company’s previous real estate strategy has been put into the company’s new off-site strategy, Narayani said, with other portions of that being used to pay for the four office spaces and other co-working spaces.

Larry Gadea, CEO of workplace technology company Envoy, said that he thinks many companies are looking at ways they can reduce costs right now, with office space spending as one area potentially ripe for cuts.

However, Gadea warns that “people need to be together with each other, they need to know each other.”

“They need to have a sense of purpose that’s unified, and you need to bring people together for that,” he said. “How are you going to bring people together when they’re all around the country? I think that there is a substantial amount of people thinking they’re going to be saving money on real estate, but United and other airlines and Hilton and other hotels are getting it instead.”

Gadea said that as companies try to manage a tight labor environment as well as other market challenges, more time needs to be spent on “thinking about how to bring teams together.”

“The number one reason that most people stick with a company is that they love the people they work with,” he said. “It can be a lot harder to love those people if you don’t ever see them because they turned off their video on Zoom or if they don’t even know them at all.”

The in-person interactions CEOs prioritize in the workplace

The Pandemic Conversations That Leaders Need to Have Now - HBS Working  Knowledge

A lot of communication in the workplace is conducted electronically. However, it is essential for hospital and health system leaders to have face-to-face conversations with employees in some situations.

Becker’s asked healthcare executives to share the interactions they prioritize when they’re in person at their organizations. Many expressed their preference for the deeper connections in-person interactions allow, citing inspiration and team building as reasons to facilitate face-to-face communication. Below are their responses:

Russell F. Cox. President and CEO of Norton Healthcare (Louisville, Ky.): Healthcare, by its very nature, requires in-person interactions.

With the onset of the COVID-19 pandemic, we made a quick and successful shift to virtual visits for the safety of our patients and providers. This enabled patients with a variety of time and transportation constraints to receive convenient care from a trusted provider. However, telemedicine will never completely replace in-person visits, and the opportunity for our patients and community to interact in-person with our patient care providers is very important to me, and to our team.

And, although the pandemic created the need for virtual meetings, I have always prioritized in-person interactions and meetings with all team members. Whether that be rounding in our  hospitals and facilities, holding in-person meetings, celebrating employee accomplishments or milestones, or dropping by one of our community vaccine or testing centers — web meetings will never replace what can be accomplished face to face. It became even more important to interact in person with our caregivers and employees during the pandemic. It was important to show my support for their hard work and extraordinary sacrifices during this time. I’m thankful that with the vaccine, more in-person events, with proper safety precautions, are resuming.

Our motto has been and continues to be: Stay safe. Keep the faith.

Jim Dunn, PhD. Executive Vice President and Chief People and Culture Officer of Atrium Health (Charlotte, N.C.): Recognition is part of our organizational DNA, and in-person delivery is an essential component of that — especially as we continue working through the COVID-19 pandemic. One thing our teammates love is the “Surprise Patrol,” which we employ for some of our most special and meaningful awards, such as our annual Pinnacle Award — the highest award given by our organization to those who best exemplify our Culture Commitments: Belong, Work as One, Trust, Innovate and Excellence. Executives, leaders, teammates and loved ones come together to celebrate honorees with balloons, cupcakes, cheers and even a few happy tears. Our honorees are shocked, uplifted and proud to be recognized in-person for their outstanding accomplishments, and our “Surprise Patrol” participants are honored to be a part of such a special moment. Whether we’re celebrating small wins, personal successes, birthdays or prestigious awards, in-person recognition — where and when possible — is a vital part of the teammate experience and culture at Atrium Health.

Robert Gardner. CEO of Banner Ironwood Medical Center (Queen Creek, Ariz.) and Banner Goldfield Medical Center (Apache Junction, Ariz.): Over the past few years in particular, I’ve spent some time reflecting on the differences between motivation and inspiration. More often than not, it seems like leaders don’t know the differences and often confuse the two as being synonymous or interchangeable. Put in overly simplified terms, I see motivation as being the metaphorical carrot or the stick. We can motivate with reward (aka the carrot) and with discipline (aka the stick), and both are used frequently in life. Motivation tends to be more surface level. However, inspiration is something much deeper, more intimate, and therefore much more complex. Inspiration is getting to a point of genuinely desiring to change, do more, be better, etc.

For me, knowing the differences is critical when it comes to prioritizing being in person in the workplace. Virtual meetings, emails, newsletters and other forms of electronic communication can work incredibly well when it comes to items of motivation; and believe me, there are plenty of these items. However, when it comes time to inspire the team, I heavily prioritize these meetings to take place in person. Items that fall into this category will be mission-critical initiatives and overall reminders on living our mission, purpose values, etc. It’s so ironic to me that despite the increasing complexity, regulation, bureaucracy and proverbial red tape that healthcare has become famous for, that an inspirational dose of simplicity has more effect on change than any other bestseller leadership book on how to motivate performance through some sort of complicated multistep process.

Brian Koppy. Chief Financial Officer of Cano Health (Miami): As a rapidly growing primary care provider, we have found that face-to-face interactions at our offices are as essential as they are in our medical centers. Our providers provide the best care when they see patients in person because it builds lifelong bonds that improve patient outcomes. In our offices, our team members feel more connected and integrated into the Cano Health family when we are together, both formally and informally. This, of course, does not mean we do not have a flexible work environment, which we do. It simply means our priority is on the employee benefits and outcomes that come from working in the office.

At the beginning of the pandemic, we moved many corporate employees to remote work and moved about 95 percent of our patient interactions to televisits. That did not last long, however. Within a month or two, our employees were asking to come back to the office. Our medical centers never closed their doors, and our visits rapidly returned to mostly in person. 

It’s the seemingly inconsequential daily interactions that often have the greatest impact on a company’s employees and their connection to the mission, values and culture of the organization. The quick stop-ins to someone’s workstation, the chance hallway encounters, the team lunches — these are so important in developing relationships and, in turn, maximizing efficiency. Employees who know and personally interact with each other work better together.  They discuss ideas, they strategize freely, and they execute on the company’s goals together and more effectively. 

At Cano Health, our high-touch approach to primary care is key to our success. And we believe that daily face-to-face interactions among employees are equally important to create a rewarding experience for our employees, but also expanding Cano Health’s services across the country.

Christopher O’Connor. President and incoming CEO of Yale New Haven (Conn.) Health:We are prioritizing one-on-one meetings and small groups. With our vaccination mandate, we feel it is critical to have that in-person contact and fill that void that video can’t replicate. This is a relationship business, and spending the time to build and nurture those relationships is critical.

Thomas J. Senker. President of MedStar Montgomery Medical Center (Olney, Md.): Before and especially during the pandemic our priority has been the well-being and engagement of our front-line staff and essential personnel. And while in-person activities have been limited, our executive team makes regular rounds visiting each unit, expressing gratitude, providing snacks and refreshments, and sharing important hospital updates directly. We believe these face-to-face interactions are critical opportunities to gain feedback and focus on areas of improvement across different areas of MedStar Montgomery Medical Center’s operations.

As CEOs push for office returns, CFOs don’t mind staying put

The past year and a half has brought prolonged hand-wringing from executives about whether working from home is sustainable over the long-term. 

Perhaps no voice on the issue has been louder than that of Jamie Dimon, CEO of JPMorgan Chase, who is against working from home as a new standard. 

Remote work, Dimon has said, could hurt company culture and prevent some employees from advancement, especially younger bankers who may lose out on mentorship and training opportunities. 

Working from home “doesn’t work for those who want to hustle. It doesn’t work for spontaneous idea generation. It doesn’t work for culture,” Dimon said in May, according to Banking Dive.

David Solomon, CEO of Goldman Sachs, believes the same. Remotely onboarding new analysts is “an aberration that we are going to correct as quickly as possible,” he said in February. “For a business like ours, which is an innovative, collaborative apprenticeship culture, this is not ideal … and it’s not a new normal.”

No concerns 

The same sentiments have not held true on the finance side. CFO Dive has spoken with finance chiefs working at mid-size and large companies throughout the U.S., Canada and Oceania, who reported no problems with remote work, maintaining the trend has not materially impacted their bottom lines. 

With the advent of technology that allows for bridging the gap between remote and in-person work, most agile companies, particularly those who invested in digital before the pandemic made it an imperative, the finance team’s ability to accomplish tasks has remained largely uncompromised. 

Some CFOs have even said that the migration to digital-first has come as a welcome respite from unnecessary meetings or in-person commitments.

“I’m a convert to remote work,” Justin Coulombe, CFO of Momentive, formerly known as SurveyMonkey, said. “Pre-pandemic, I believed teams worked best in the office, but I’ve come to realize that point of view was more shaped by my preferences and leadership style [rather than] our team’s actual ability to work effectively.”

Flexible working arrangements bring great value to Coulombe’s finance team, which spans beyond the company’s traditional geographic hubs. 

“My current working theory: generally, the teams that may find in-office work more effective are those with heavy business partnering roles, like procurement and FP&A,” he said. “We’re a service function, so many times we’ll align to where our partners are and how they work.” 

The world’s largest brewery, AB InBev, which owns Corona, Modelo, Stella Artois and Budweiser, currently operates in a flexible hybrid environment, its CFO, Fernando Tennenbaum, said, but he sees pros and cons to all approaches. 

“Probably, in the future, there will be some combination of remote and in-person work,” he said. “Definitely, sometimes meeting in person is valuable, but it’s also possible to work remotely.”

At the start of the pandemic, when AB InBev was forced to close the books remotely for the first time, Tennenbaum was worried about everything coming together. But because his team paid a great deal of attention to the quarterly close process, on account of it being the first time they’d done it, everything went smoothly, which he took as “a great sign.”

Even so, Tennenbaum wouldn’t be able to pinpoint one role over another that would be best suited to return to in-person work permanently. “It’s more about maintaining people’s interactions than about any specific task,” he said. 

“If anything, the pandemic proved remote work is essentially just as good as in-person; all jobs got done on time without sacrificing quality,” Kirsty Godfrey-Billy, CFO of New Zealand-based cloud accounting company Xero said. “Cloud accounting [allows for] pretty much all finance-related tasks to be done anywhere, anytime on a single, up-to-date general ledger.” 

But in order to keep evolving and thriving as a profession, accountants must truly embrace technology and the changes that come with it, Godfrey-Billy added.

Laura Mineo says the longtime-distributed workforce at Rokt, an ecommerce tech company where she is CFO, positioned it well for the hybrid mode it currently uses.

“In my view, the importance of in-person work isn’t necessarily related to completing certain tasks, but to everything that surrounds those tasks and allows us to complete them more effectively and efficiently as we scale,” she said. “Things like knowledge sharing across functions, onboarding new employees, supporting other departments throughout our organization and maintaining the apprenticeship culture we prioritize are all easier and more effective in person.”

In-person potential

Marten Abrahamsen, CFO of financial services platform Fundbox, agrees. “As a whole, our finance team functions very well remotely,” he said. 

However, Abrahamsen, who joined Fundbox weeks before the pandemic, has found the company’s strategic finance and corporate development teams stand to benefit most from in-person collaboration and discussion. 

“These teams, in particular, engage in frequent white boarding sessions and healthy, back-and-forth debates that are best done in person,” he said.

Vanessa Kanu joined Canadian telecom giant TELUS International as CFO one year ago. In that time, completely virtually, TELUS pulled off the largest technology IPO in the history of the Toronto Stock Exchange, participated in investor roadshows and hosted its first two earnings calls. 

She credits the company’s carrier-grade infrastructure, backed by cloud technologies, with allowing her and her team to simulate an in-office experience from home. 

“That said, I do believe in-person meetings and events are valuable and offer unique moments for team-building and establishing more personal connections,” Kanu added. “Those interactions are especially helpful for new team member onboarding, training, and reinforcing a company’s culture.”

A new divide is making the workforce crisis worse

https://mailchi.mp/bfba3731d0e6/the-weekly-gist-july-2-2021?e=d1e747d2d8

How the Hybrid Workforce will Drive the Future of Work

Health system executives continue to tell us that the top issue now keeping them up at night is workforce engagement.

Exhausted from the COVID experience, facing renewed cost pressures, and in the midst of a once-in-a-generation rethink of work-life balance among employees, health systems are having increasing difficulty filling vacant positions, and holding on to key staff—particularly clinical talent. One flashpoint that has emerged recently, according to leaders we work with, is the growing divide between those working a “hybrid” schedule—part at home, part in the office—and those who must show up in person for work because of their roles. Largely this split has administrative staff on one side and clinical workers on the other, leading doctors, nurses, and other clinicians to complain that they have to come into work (and have throughout the pandemic), while their administrative colleagues can continue to “Zoom in”. There’s growing resentment among those who don’t have the flexibility to take a kid to baseball practice at 3 o’clock, or let the cable guy in at noon without scheduling time off, making the sense of burnout and malaise even more intense. Add to that the resurgence in COVID admissions in some markets, and the “help wanted” situation in the broader economy, and the health system workforce crisis looks worse and worse. Beyond raising wages, which is likely inevitable for most organizations, there is a need to rethink job design and work patterns, to allow a tired, frustrated, and—thanks to the in-person/WFH divide—envious workforce the chance to recover from an incredibly difficult year.

An “employee diaspora” is complicating network contracting

https://mailchi.mp/bade80e9bbb7/the-weekly-gist-june-18-2021?e=d1e747d2d8

Home - Diaspora Dialogues

This week we caught up with a benefits consultant colleague to get her perspective on how employers are thinking about health benefits as they come out of the pandemic. “It seems like employers and health systems have switched places in their enthusiasm for direct contracting,” she shared.

Prior to the pandemic, employer interest in working directly with a health system around a narrow network product to deliver coordinated care was growing, but there were few systems offering attractive solutions. Now more health systems are ready, but the number of employees working remotely has created a new obstacle for direct contracting.

One chief people officer for a large employer noted that while some employees have relocated permanently, others are still hopping from one Airbnb to another: “It’s at the point where I have no idea where half of our people are living on any given day.” In this new “employee diaspora”, some firms are seeing ten percent or more of their formerly office-based workforce now located outside the market, creating challenges for a geographically concentrated network to meet their needs.

How many companies will allow permanent telework, and how many employees will take them up on it, remains to be seen (our colleague suggested we’ll know more in the fall, after the return to school anchors many families in place). But for now, the best employer partners for direct contracting efforts are likely mid-sized regional employers, who are more likely to retain a local workforce, and face fewer obstacles to making benefit design changes.