Future Workplace Predictions: Ep 8

Jennifer Heath 0:15

Hello, everyone. Welcome. Thank you for joining us today for another episode of the Hybrid Hangout Podcast. I’m Jennifer Heath Director of Product Marketing here at FM:Systems.

 

Brian Haines 0:26

And I’m Brian Haines, the Chief Strategy Officer at FM:Systems.

 

Jennifer Heath 0:30

And we are excited to talk to you today about future predictions. We have been on quite a roller coaster the last few years, Brian and I have lots of ideas about what might be coming. And there’s lots of interesting things in the news right now as well. So let’s start off with mandates. Office mandate seem to be the word of the day right now, there’s been quite a bit in the headlines about different large organizations, IBM, UPS, really major players coming out with pretty strict mandates. Brian, what are your thoughts on some of these recent headlines?

 

Brian Haines 1:10

Interesting. First of all, predictions are always made to disappoint you later in the year, right? When you go back and look at them at whether or not your predictions were on or not. You know, I see this as sort of like Wave 2 of mandates. If you go back Jen, about a year or two ago, I think it was about two years ago. Apple was like the first big company to make a mandate that said, you know, employees had to be back X number of days. I think it was three and that they were going to check badge swipes. And there was this sort of collective gasp from the industry that people were like, how dare they insist that we go back to the office? Well, they did. And, you know, we saw a lot of companies sort of follow suit. And we, you know, we were watching utilization globally, tick up, and we were getting a little bit of momentum. And we were predicting, you know, the audience, if you’ve been on any of our webcasts over the last year, you know, we were really predicting that around now, we would be back to pre pandemic levels. And something happened last summer. I think that first wave of mandates lost steam, probably the impact that they were going to have on utilization sort of ran out, if you will, and that line just kind of flatlined with maybe a slight uptick. And there’s global discrepancies, you know. Asia Pacific, their utilization rates are much higher than they are in North America, in general, but, you know, there was sort of this flatlining, and it was sort of I think a lot of people were thinking, Alright, well, that’s, you know, we’re at where we’re going to be, and that’s the new normal. Well, you know, just this last week, Jen, you and I have both been sharing articles on IBM, shockingly said you’re coming back to the office, if you if you don’t live, I think it was 50 miles from the office. A n office that you can get to you’re welcome to exit the company. I mean, really heavy handed, in a way, almost like Twitter, which is now called X . You know, Elon Musk made the same sort of really hard line in the sand, you’re coming back. And then we saw the United States Postal Service. That’s what it was. Right, Jen, the Postal Service?

 

Jennifer Heath 3:32

No, UPS. The United Parcel Service.

 

Brian Haines 3:36

Oh right, yeah. Not to be confused with one another. Saying that their employees have to come back five days a week? I believe.

 

Jennifer Heath 3:43

Yeah, the UPS story is really interesting, because I think it really sort of turned around on union negotiations. Because these people, the union leaders were coming in on behalf of the warehouse workers, the drivers, saying, hey, these people have to show up five days a week and be in a physical location. Why are all of the corporate employees excused from that mandate, and that they, within the UPS leadership, they feel like there is some contention and some resentment there, which I think is an interesting point to consider. I also think that there are, there are certain jobs that simply require you to be in a physical location. If you’re a nurse, if you’re a factory worker, there are certain jobs that simply can’t be done remotely. But there’s a whole other class of workers, we’ve kind of coined the term knowledge workers in the last decade or so. People who their entire job is dependent on their brains and their Wi Fi connection. And it is a really interesting sort of conundrum of do we have to force that group to do something to make them equivalent to another group when there’s not really a clear cut benefit in doing that. And I think when you think about knowledge workers, forcing them to come into a, what is ultimately an arbitrary space, there’s nothing unique about the space that you know is required for their work. There are financial implications of having that. Of maintaining those spaces of operating those spaces. Is it not worth considering that some of that financial implication can come back into the company and be used in other ways? So I think there’s a real interesting kind of point counterpoint within the UPS story.

 

Brian Haines 5:35

Yeah, I agree with you. And it’s, there’s a lot of things right, like shifting the carbon footprint from the employee at home to the workplace. Facilities that frankly, probably aren’t necessarily ready to have everyone back, you know, there’s sort of that angle as well, the increased costs around energy usage and security and maybe updating building systems indoor air quality, it’s a complicated dynamic, I think, which is really interesting. So I think when, when I apply it to the prediction for the year, there was a lot of talk at the end of ‘23 about, you know, tougher corporate mandates, a lot of I think CEOs and leaders have been sending the signal that they were going to start maybe being a little bit tougher. And maybe this is the beginning of that. And so the natural progression of this, Jen, when we look at utilization of the office, when you’re required to come back, and people actually do come back, utilization goes up. So I’m going to predict that we’re going to see, you know, I’m not a rocket scientist, when I predict that utilization is going to increase when people say you have to be there. So I wouldn’t be surprised if we get a little bit more back on track this year when we look at the end of the year. Now, this may be an anomaly. Maybe it’s just a couple of, you know, organizations making big splashes the way Apple did a couple of years ago. And maybe it won’t, maybe it won’t continue. But I think we will continue to see people return in some ways. You know, I was on a I was on a Realcomm webcast yesterday, and there’s still discussion and disagreement on how to get people back. There’s, you know, people talking about it’s all it’s amenities, or it’s, you know, incentives. And I’m like, No, it’s I mean, I don’t agree with that. I think it’s if your co workers are going to be there, you’re incentivized to be there as well. Because, you know, FOMO and fear of missing out and wanting to be around the people that we work with in our teams, that’s the thing, I think, is really driving people back who have a choice. Now their mandates, if you want to stay employed, you got to go back, it doesn’t matter how you feel about it.

 

Jennifer Heath 7:55

Yeah, I think the other couple of interesting parts of it, if you have a mandate, how are you enforcing it? How are you measuring it? How are you tracking it? I also think it’s really interesting. I feel like when you look at some of these blanket announcements, in these mandates, wanting people to be back in the office, I think it really begs the question- What about companies that are largely distributed? FM:Systems is an excellent example. And we’re not an anomaly in that way. We were made up of a series of acquisitions over several years. And so we have offices, in different cities, we’ve always hired remote workers, I’ve been a 100%, remote worker for a long time. I don’t think that we’re really considering the impact these mandates have on some of these other cultures that have always embraced the hybrid flow. We didn’t call it hybrid back then you were a mobile worker, a remote worker, whatever you might have been. But a lot of companies for many years have had distributed teams. I’ve always had teammates in other time zones in other countries. There’s no amount of mandates that is ever going to get us in the same office space. Yet we continue to have great relationships to have great collaboration to have great successes together as a team. And so I think that we’re maybe being a little bit myopic, and how we’re looking at this, in really putting sort of too much importance almost on these localized offices being there five days a week, when there are so many companies and teams and individuals that have proven for years, that remote, distributed, hybrid arrangements work just fine. And it limits your talent pool significantly. I think that’s always the other big question. When you talk about hybrid and wanting to move away from hybrid is you’re limiting who your available talent is. If you’re only going to hire people in Nashville, Tennessee, and the best person for the job is in San Francisco. What do you do?

 

Brian Haines 10:09

Yeah, I think that works really well for our industry. You mentioned other industries where that’s not the case. I certainly hope that if I’m receiving medical care, my preference would be to be in person, I know that there’s a lot of TelaDoc stuff going on and the ability to be able, but when it comes down to, you know, things like surgery and stuff, always good to have that person in the room or people checking on patients who may be elderly or less abled, in some ways, you know, so interesting. For us, it honestly doesn’t matter, we kind of go through this, when we talk about it from a leadership perspective a little bit, we always come back to the same thing. And that is, we’re gonna hire where the talent is, we’re gonna get together for moments that matter. You’ve heard us mention that before moments that matter. This year, we got our sales organization together for our sales kickoff. And that was really a great time we brought everybody together and some, you know, sort of other parts of the organization together for that event. We’re going to be coming together for our User Conference, which is oddly not at an FM:System. Well, not oddly, but it’s not at an FM:Systems office, but it is that is at a location that, you know, hosts, things like conferences, and we’re going to come together for that. We’re going to continue to get together for team meetings and things like that. But you know, at this point, and I’ll make this one of my predictions for this year that we will not change that. This year, we’re going to continue to roll on. And one of the interesting points, you know, I mentioned the Realcomm webcast yesterday, one of the presenters was presenting data, some research that they had done that said, their data said productivity in this research was higher at home than in the office. And I’ve seen it kind of go both ways, it’s a little bit difficult to tell. But none of it is really, really like solidly one way or the other, it seems like we’re really close to being as productive, if not more productive. Regardless of where we are, as long as you said earlier, if you’re a knowledge worker, you’ve got access to internet. I’m working remotely right now you’re working remotely right now, things are going great. You know, I don’t see that as changing. For us.

 

Jennifer Heath 12:39

I agree and I think that matter is such a good way to look at it. And the CEO of HP, Hewlett Packard, has said something similar. He thinks that there is so much value in in-office activities, trainings, collaborations, learning from your peers, you know, spending time with mentors. But he says in the same article that talks about UPS, he says, but you don’t need to be in the office five days a week, from 8 to 5, to do that. And I think that’s really where the whole term hybrid is so important, that we can have these in office experiences, these moments that matter, but still allow our employees that flexibility, there’s definitely a balance there. And that’s really my prediction that we are going to see mandates we are going to see people going in much more consistently than we have in the last couple of years. But I think organizations are going to continue to kind of meet their employees in the middle, because there is so much value in that flexibility, giving people the opportunity to have more work life balance, not requiring, you know, really laborious commutes. There are advantages to the employee’s productivity in allowing some of that flexibility. So I think we’re going to continue to see this kind of bell curve of organizations that have fully remote workers and fully in office workers are going to be, you know, kind of the small ends, and then you’re going to have this huge portion in the middle, I’d say maybe 60% of organizations are going to continue to offer some kind of flexibility. Maybe they’re going to have a mandate, maybe it’s going to be totally employee choice. But most people are gonna stay in this hybrid world, because it does impact your recruiting, it impacts your retention, and there are benefits to those employees.

 

Brian Haines 14:38

Yeah, and it’s interesting because what we’ve seen over the last couple of years is not only sort of the way worker patterns have changed, to be a lot more flexible, but the way that space and occupancy planners and analysts are looking at how our facilities are used has changed. And many of our clients have made big changes in the way they look at their space you know, they’ve really gotten rid of the cubicle farm and they’ve gone to the highly collaborative space. The get together space, the ideation space. And if you mandate without understanding the rebound impact of that you say, All right, everybody back? Well, I can tell you FM:Systems did that with our headquarters in Raleigh. And we’re not going to fit. If some if suddenly, someone said everybody back, we’re not going to fit. Because we don’t have the space we used to have, we have a very different space, we have a space for a different reason. And so that’s interesting. And I think short sighted probably. And it’s going to create some rebound, because there’s the people and then there’s the facilities that they have to interact inside of, and those, those have both, I think, changed over the last couple of years, in a way, that’s significant and capitally intensive, to try to go back to something that was proven not to be more effective. Right, it doesn’t make any sense. It’s not logical to me.

 

Jennifer Heath 16:04

Absolutely. And another part of this that I think a lot about is just the reality of how much it requires to operate a building 40 hours a week plus. And if you are recognizing the benefits to employees, in some degree of flexibility, even if it’s, you know, a flex Friday afternoon or a late start Monday, whatever it might be, there is an opportunity to more strategically manager buildings in that same timeframe. And if you are tracking utilization, whether it’s badge data, or sensors, whatever, you know, data source makes sense for you. If you have data to look at, and you can start to get predictive about the time that your building is most heavily occupied, most you know, in use, you can get a lot smarter about when do you power it up? When do you shut down certain floors? And there are so many cost savings there. Not to mention the environmental impact. Wjust did a webcast earlier this week, our internal research study, we saw that people are less concerned about sustainability and air quality this year than they have been in years past. And I think that that’s maybe a very temporary shift in priorities. I think people are simply looking at, okay, we’ve got to get people back in the office, how are we going to do that. They’re sort of shelving, the sustainability side of things. But it is going to continue to be important. And so that’s another one of my predictions is over the next few years, sustainability is going to come back up. Efforts to you know, push towards Net Zero to reduce your carbon footprint, those are going to come back up as a priority. And leveraging hybrid to better operate your facilities is going to get you closer to some of those goals.

 

Brian Haines 18:01

Yeah, I completely agree with you. And as we continue to roll on, obviously, our vision got a lot bigger when we joined, Johnson Controls who has a global presence and focus on sustainability and energy management at a really big level, really big systems level. It’s kind of opened our eyes to the possibilities of how we can use our sort of utilization, knowledge because FM:Systems, you know, there’s really I don’t think anybody in the world who can measure facility utilization, as good as we can and then apply that utilization to other real estate functions. We’re now able to start imagining and realize, applying it to actual physical operations of buildings, anything from energy to sustainability, indoor air quality, employee wellness, security. Really connecting actual occupant interaction to what happens in the building and the buildings listening, right. It’s not like a human listening, but it’s using things, knowledge, AI, which we’ve talked about machine learning to really start to understand usage patterns and ways that it can, you know, proactively begin to manage itself. And that’s a prediction for me is that we’re just going to see buildings get smarter and smarter. Eventually, that’s going to flip autonomous. I think that’s going to happen in the next handful of years. But really, smart building trajectory this year, is definitely one of my big predictions.

 

Jennifer Heath 19:33

I totally agree. And I think for the next probably couple of years the focus is really going to be on getting a handle on the data. What is the utilization, what data sources are we relying on? And how are we plugging that data back into our systems to start to achieve some of those goals? Another stat, this is kind of on a different topic. But I just read this yesterday, and I thought it was so interesting. So CBRE, just recently released their global workplace and occupancy Insights report, and this stat really stood out to me. Average global occupancy, the number of people assigned to the number of seats, has surpassed 100%, for the first time ever. So for the first time ever, we have individual desks that are being used by multiple people. And it’s, they attribute it to a couple of things, they say there’s been about a 44% increase in space sharing. So the whole concept of hoteling and activity based work, you know, desk sharing, all those sorts of concepts are becoming more, not just accepted, but they’ve become more incorporated into those corporate strategies. And at the same time, within the CBRE client base, they’ve seen a 22% reduction in the square footage per person. So there’s a really interesting kind of merger right now where we’re seeing hard statistics that support that desk sharing is becoming more popular. And that’s a key part of hybrid work. I don’t see us backing away from that, because there is so much financial implication, I know I’ve said that like five times in the last 20 minutes. But now that we’ve kind of crossed that threshold, I don’t see it coming back down. So again, another prediction for me, the whole concept of desk sharing, and hoteling, it’s going to continue to grow. I don’t think we’re ever going to go back to that one-to-one employee to death ratio where everybody has their own space. I just don’t think that’s going to make sense in our landscape going forward.

 

Brian Haines 21:50

I completely agree Jen.

 

Jennifer Heath 21:55

Other thoughts? Brian, what else do you think is coming in the world of workplace management?

 

Brian Haines 22:01

Well, you know, it’s interesting, because FM:Systems is doing our own transformation right now. We’re going to be moving into our new headquarters in April, which I’m really excited about. Because I’m part of the project team and have seen it from the first initial meetings we have with our architect and project planner. It’s been pretty exciting. And I was just I was kind of stuck on the information that you were just talking about from CBRE because actually we’re realizing that right now. We’re going to have about 1/10, the number of potentially assigned seats in our office design that we that we had. 1/10. Now we’re not going to do any assigned seating, we’re going to do all, you know, reservable flex space. We’ve got a lot of other kinds of seating, we’ve got benches, we’ve got booths, we’ve got huddle spaces, we’ve got phone booths, we’ve got a lot of places to work. We’ve even got an outdoor deck where you can go out and sit outside, which is something we didn’t have before. But in terms of the number of actual seats, it’s crazy, compared to what it was a couple of years ago. And the number of people in our Raleigh physical location, you know, in that region is not that different, it’s pretty much the same. So it’s interesting, if suddenly, our CEO Kurt von Koch said tomorrow, all right, everyone back, like, where are we gonna sit? We’d have to tear all the walls down and do it all over again. So anyway, I got kind of stuck on that because my prediction is, the office that we’re going to and the one that we’ve designed is the one we need and the one we want to meet the needs of our organization, because we are a hybrid organization, and we do value and respect all of our talent wherever they are. And we know that we’re going to be successful doing that and getting together for those moments that matter. So, you know, I think, I think a prediction is that, you know, the hard work that we put in on sort of reimagining our own workspace is going to be a really positive reaction when we go there, which is coming up really quite quickly right before user conferences matter of fact, same week. So hopefully we’re gonna be able to show people what we’ve done there.

 

Jennifer Heath 24:29

Yeah, I know I personally am very excited to come in and see the space and I know we’re planning to do a podcast live on location at our new office, so everyone else will get to hear about it as well. My final prediction for today is that this is going to continue to go like this, I think we’re gonna continue to see ebbs and flows in utilization and in what organizations are focusing on. So something else that came out in our internal research report, something like 65% of the people we surveyed, said that they expect nearly a full return to the office five days a week over the next several years. But Deloitte also just released a survey where 65%, so nearly the same number, 65% of CFOs specifically said that they expect hybrid work to remain for the next year. And again, it’s the CFO, it’s the financial implication. CFOs are very attune to the financial bottom line impact of allowing more hybrid work, whether that’s reducing your real estate, getting smarter about your building operations, there are financial gains to be had. At the same time, we’re going to continue to see changes in the workforce. I think the upcoming generations are going to have a huge impact on this. Because when you think about Gen Z, and whoever comes after that, I don’t even know if we’ve named that generation yet.

 

Brian Haines 26:07

We’re out of letters.

 

Jennifer Heath 26:08

We’re out of letters, I’ve heard from Gen alpha that we’re just going back to the beginning now. But those younger generations, two things are gonna happen with them. And I’m sure I’ve talked about this before I think about it all the time. Those younger generations are so much more comfortable with this kind of interaction, they’ve lived through their phones and the internet their entire lives. Whereas our generations are more accustomed to 40 hours in a week in the cube farm. And so there’s varying expectations there. But what I think is really interesting is that the younger generations are the ones that benefit the most from being in the physical office. They have those social connections, they have the opportunity to learn from peers and mentors, there’s a huge benefit to them to come into the office every day. But they’re probably the least likely to want to because they’ve grown up in this highly flexible, highly connected world. So I think organizations are going to have to continue to balance that executive HR need for culture and productivity, which are incredibly important, with the CFOs need for financial smarts that we’re you know, making good decisions to impact the bottom line. But then in the middle, we’re always going to have the workforce, which is going to continue to change and have unique requirements. And the two sides of the coin and the leadership room are going to have to find a way to continue to listen to their employees, and work together to achieve all those goals. And I think that’s what is so exciting about this time is we have the technology to achieve all these goals, we can keep people connected, we can be smarter about our building operations. And we can still be highly productive and connected and have great culture. So I think it’s going to always be this iterative process and this sort of meeting in the middle to serve everyone and everyone’s goals.

 

Brian Haines 28:12

Yeah. And I think Jen, the only thing, this will be a bold prediction, or maybe a bold statement. The only thing that’s going to drive pre pandemic occupancy levels back to what they were or higher is the absence of choice. As long as we have the choice on a daily basis where and how we’re going to work. It’s going to remain the way it is now. That’s it. I mean, honestly, that may be the answer. The only way that we’re ever gonna get to 100% utilization is I f somebody says you have no other choice, you’ve got to be here.

 

Jennifer Heath 28:45

And that’s interesting that we never had 100% utilization. If you go back to 2017 2018, maybe.

 

Brian Haines 28:54

Yeah. I think people have this idea that we were way higher than we were, but we weren’t.

 

Jennifer Heath 28:59

Yeah, there’s a real kind of rose-colored glasses happening when we look back on the pre pandemic days. Because utilization was not great. The technology was already there. To keep us connected. We already had our systems in the cloud. We already had, you know, video calls and it’s not like all this technology evolved because we had to go remote. It was already there. People were already using it. And already thinking in terms of hybrid and desk sharing and flexibility.

 

Brian Haines 29:30

Yeah. Great.

 

Jennifer Heath 29:34

Brian, it is always fun to get in here and talk about these things. I know you and I both are just mulling this stuff over all the time.

 

Brian Haines 29:41

Always thinking about it.

 

Jennifer Heath 29:43

Yeah, I love having this forum to come in and just unload all these ideas and see what you think about them. Thank you always for the time today and thank you to all of our listeners and we will look forward to seeing you next time.