Are Return to Office Mandates the New Normal? Ep 21

Jennifer Heath 0:14
Hello everyone and welcome it is the Hybrid Hangout Podcast. I am Jennifer Heath, Director of Product Marketing here at FM:Systems,

Brian Haines 0:23
And I am Brian Haines, the Chief Strategy Officer at FM:Systems.

Jennifer Heath 0:27
And Brian, we had been doing this podcast now a couple of years, and we’ve been calling it the Hybrid Hangout, but I think we might have to change the name to be Five Days a Week in the Office Hangout, because that seems to be a very popular change right now. What do you think about all these announcements and all these mandates five days a week? What do you think?

Brian Haines 0:48
Yeah, maybe the Office Mandate Hangout. Maybe that’s what we call it. It’s really picking up momentum, and it’s interesting, because we see a lot of mandates coming out. A lot of large corporations AT&T just announced. We know the federal government has gone back, and it really seems to be picking up speed. What’s interesting is, you look at our utilization data, which we’ve shared since 2019 over a specific data set, and we’ve seen, you know, obviously, we saw the pandemic drop off, and we saw this really gradual return. We weren’t really drilling into anything more than just utilization, how the offices are being utilized. We weren’t really breaking it down by were those people coming back five days a week that were in the utilization numbers? Were they coming back three days? Were they, you know, were they fully remote? Of course, they wouldn’t be showing up in utilization if they were. But it’s interesting, because when you start breaking it down by days of the week, we still see this bell shaped curve right where Mondays and Fridays are quite low, and Tuesday Wednesdays and Thursdays. We have to remember that there are a lot of companies and a lot of organizations in the world, and we hear these workplace mandates, and it feels like everybody’s going back to the traditional five day calendar. But, you know, we know that that’s not true. I think what’s happening is maybe the definition is evolving. So honestly, if you’re back five days, five days a week, and you go back to, like, maybe a traditional assigned seating, which is kind of like going back to the future 2019, that doesn’t sound like hybrid to me, that sounds different, right? What we found, though, excuse me, is that when looking at the data, and we got access to some third party data through an analyst that says, in 2025 ,and this is the part that really kind of surprised me, that there will be more people back at the office than hybrid and that remote workers will drop to less than 10% which is a significant change. And so, you know, anyway, I find it fascinating. I find a lot of organizations are going back. We’re still going to be in this kind of mixed world. But the truth is, it does appear to be picking up momentum.

Jennifer Heath 3:16
So one of the things that I immediately think about, and maybe this is showing that I’m a little cynical in my old age, but one of the things I immediately think is, why would they do that? Like, why would you demand five days a week when we know you can achieve certain levels of productivity from anywhere? You know? I mean, so many of us, we’re knowledge workers, we’re desk workers. Everything we need is right here on a laptop and a Wi Fi connection. So why do we have to force that physical location? And I think the cynical answer would be, well, they’re just trying to force people to leave, and then they won’t have to pay them a severance. And, you know, they’re able to kind of separate the wheat from the chaff, whatever they you know, think that is. And I thought about that phrase, and I think it’s interesting to think about it in terms of companies telling you what kind of culture they want to have, right? They want five days a week in the office. And a lot of people want five days a week in the office. They want that interaction with their coworkers, they’re not more productive from home. And I think these organizations are separating the personality types to a certain extent, the people who need that interaction, who thrive in those environments, and people who are more heads down, maybe more introverted, and are going to be higher functioning when they can control their environment a little bit. So I think it’s interesting to think about it in terms of kind of separating those personality types. But I also think it’s really interesting to think about it in terms of geography. So many years ago, I lived in New York City, and I had a 400 square foot apartment, and I can tell you right now, working from home in a 400 square foot apartment would not be appealing at all. Like now I live in the suburbs in Tennessee, and I don’t live in 400 square feet. I have a nice, big, dedicated office with windows and a nice bookcase, and working from home is very attractive because I have the space to do that. So one of the big organizations that has announced is JP Morgan Chase, and they specifically talked about in this article they are building- so they’re requiring five days, but they are constructing a new skyscraper in Manhattan, 60 stories, 14,000 employees, and it will have amenities including yoga and cycling rooms, meditation spaces, and a state of the art food hall. If I’m a New Yorker in 400 square feet, you bet I want to go there five days a week.

Brian Haines 5:53
Guess what I’m going to be, I mean, we’re involved in that project, and I’m going to be touring it maybe tomorrow. So it’s going to be kind of interesting. So that’s kind of cool. Um, you know, it’s interesting. I love the way you, broke it out by personality type. Some people are going to want to go back. Some people are not. And often, when I see these, you know, releases, they give the reasons why they think, you know that they want their employees to come back, and sometimes they cite productivity, the increased productivity, which has already been sort of discounted in terms of a lot of research, saying that, you know, it doesn’t increase productivity. As a matter of fact, I’m going to be, I’m going to be leaving here shortly and driving to the to the office in Raleigh for a few meeting, and I’m going to be in my in my vehicle for an hour and a half, you know, I’ll probably try to dial into something. But the truth is, will I be as productive? No way. And the people who are commuting every day, you know, depending on what their commute looks like even in cities, even if it’s a tight geographic area, often, we’ll be commuting at least an hour due to traffic and train times and everything else, and you aren’t productive, you’re losing a couple of hours a day. So there’s other reasons. And those other reasons are, you know, I do like being around people. You know, when we do get together for meetings and things, and we have summits and we have planning meetings and we get together, I think there is a really rapid exchange of ideas that happens that’s really difficult when you’re sitting alone in your office. You know, an idea pops into your head, you’ll just go looking through the teams list to see who’s green so you can find someone to talk to. Those kinds of interactions do happen when you’re together and I think that that, you know, that is interesting. You know, some of these press releases say that the CEOs believe that water cooler conversations are really important to ideation and culture. And, you know, I’m not going to, I’m not going to discount the value of those things, but you can, you know, my personal opinion is you can create an environment where, you know, you could come together for meaningful events and meaningful things and important times, and have dedicated in office times that don’t require a strict five day a week, you know, schedule. There’s going to be, there’s going to be interesting fallout. A lot of people aren’t going to do it, you know. And it’s going to be really interesting to see if these organizations will give greater lead way to their greater talent. I mean, within all organizations, there’s sort of your top performers, and there’s people who aren’t the top performers. And it’s going to be interesting to see. Are they going to say, all right, if you’re rated five star, you can have, you don’t have to come Mondays and Friday. Who knows? Right? It’s just, it’s very interesting. Also, I will, betcha, some of it has to do with generations like who’s in charge, and their approach to things and what they’re used to, and what they’d like to maybe greater control and getting people back. We’ll see. But I read between the lines. You know, one of the CEOs’ said, listen, we know that there’s not enough seats for all our people. Find a place to sit. That’s gonna be an awesome experience, right? Well, I’m gonna sit in the cafeteria today, in a hallway tomorrow. These strategies are not being well thought out. I don’t think so. It’s going to be interesting to see. I think 2025 is an absolute pivotal year.

Jennifer Heath 9:47
Absolutely I think so too. We’re far enough away now from the experience of the pandemic, kind of adjusting to a different normal. And it’s like, we’re like you said, we’re going back to the future. We’re going back to this place where we’re reconsidering. Again, what it is the office needs to be and something else that’s interesting to me, when I think about the different organizations that are announcing, particularly JP Morgan Chase and other financial organizations, I think Goldman Sachs made a similar announcement. Financial services in particular seems to really be driving these mandates. And in a way, it does make sense. They do tend to be in large cities where you’re going to want to have that office space amenity, but it’s also the nature of that business to do business in person, right? You’re constantly meeting people and introducing people and having these different conversations. In different industries, though, I think it’s going to be harder to make it stick. In technology, our industry is a really good example. So our company is made up of series of acquisitions, right? There’s been companies and offices and people picked up along the way. Over the last 10 to 15 years, we’ve been a distributed, mobile workforce for 15 years now, you know, we’ve been doing this a really long time, and I think the nature of our business, it is important for us to have those meaningful events, to have, you know, conversations. But a lot of us do heads down work. We have to be able to sit down. I mean, developers, QA, they are not talking at the water cooler, you know, they are heads down, doing what they do, crunching numbers. Accounting, I think, is probably similar. A lot of that work, to your point about productivity, there’s no benefit to being in the office for a lot of those roles and a lot of the different organizations out there.

Brian Haines 11:44
Yeah, and there’s variables, and you kind of touched upon one with financial services. I was talking to someone recently, and they said some of the financial services at least a certain part of their population, there’s compliance issues, like, they have to be there, right? There’s like, rules and things that say you have to be in person for specific activities. It’s really tough to get, you know, if you’re- it’s really tough to get a physical exam in healthcare if you’re not there. There’s a lot of e-doctor stuff and things like that. But you know, the e-doctor is not going to be touch your elbow, did that hurt when you touched your elbow. No, they would prefer that you be in there. I think you know, in a lot of instances, you know, the dynamic around things like classrooms for students is really different when they’re in the room versus everybody you know, piling into a meeting. You don’t know people are paying attention. It’s obvious when they’re when you’re in the same room, if someone’s not paying attention, it’s really, it’s really easy to pick up on that queue, right? So, there’s a lot of dynamics here that are, that are really interesting and I guess my big question Jen, when, when they go back, are they expecting it to be kind of like what it was in the past? Because I don’t think, I don’t think people want that in a lot of ways. Maybe some people do, and I will guarantee you there have been people who maybe spent their entire career in that world. But the truth is, I think for the most part, this whole idea around a better workplace experience has taken flight,right?

Jennifer Heath 13:18
Definitely, it’s we’re not giving back to cube farms.

Brian Haines 13:22
Nobody wants a six foot high cubicle wall with books piled, you know, a mile high and you’re hiding in there that just doesn’t, it just doesn’t feel like our current world. It feels much different than that. So, you know, some people may be pining for like the office of the past, but the truth is, the number of people, the different generations, and we’ve talked about this in previous webcasts, all the different generations that are going back in are going to expect, I think, a superior, or at least better, workplace experience that’s going to really be broken down into a lot of things, including, you know, accessibility of space and assets and team members, and knowing where those things are, knowing how to find things in the office, especially if you’re in an environment where you could be potentially sitting in different places, often depending on teams coming together or breaking up, or, you know, some people were hybrid. Some people aren’t hoteling all those things, right, like having access to information. Plus, you know, phone as a badge is becoming a really big thing. Being able to badge into things, get through doors, get into the parking deck, you know, all of those capabilities, as well as our ability to be able to measure the performance of the workplace from a number of different areas, you know, the way that their assets are performing, the way that our space is performing, the way that indoor air quality is maybe affecting health, all of those things are becoming really, really super important, which means the return office experience, to me, needs to be better, right? To really keep people happy.

Jennifer Heath 15:01
Definitely, you have to offset the kind of negative connotation of the mandate, like you have to do this, but we’re going to make it a great experience for you. We’re going to make it seamless and easy and accessible. The other side of that talking about, you know, thinking about how our space is performing. To me, one of the big downsides of these mandates is if you’re in the office five days a week, then you are powering all that real estate five days a week. That was always one of the real benefits of hybrid work is that you do have that bell curve. You have opportunities, to me, be more strategic in how you’re delivering energy. You have opportunities to reduce your consumption, reduce your overall emissions. Of course, there’s cost savings that goes along with all of that. I think organizations are kind of leaving a lot on the table in these five day mandates in terms of better managing their energy, and I wonder if they’re taking that into account, like, are they also looking at, how do we make our operations more efficient? Are we just sending our emissions through the roof with these mandates, or are we doing something to counterbalance that?

Brian Haines 16:19
Yeah, it’s interesting, because you brought up something that I’ve been thinking about recently, are these organizations who are mandating prepared for the costs associated with everyone being back. Buildings are going to be getting used in really hard, intense ways. Equipment’s going to be on a lot more things are going to break down. It’s interesting. I was thinking about ourselves in our Raleigh office, because I had to put in some service tickets last week because it was like 59 degrees in this office. And it was really, it’s a new it’s a new office, eight months old, that there’s something wrong with the HVAC system. Well, the, you know, the developer and property owner of that very cool facility that we’re in, they weren’t paying, you know, I mean we had that space, but we weren’t in it very much. You know, there’s the pandemic, where everyone went home, and then there we were. We were building a new office, so we weren’t in there until it was completed. Now we’re in there. And, my goodness, we’re putting in service tickets. We’re requesting things get fixed. We had a broken door, we’ve had, we’ve had all sorts of things that are costing money. You know? Why? Because we’re using it. So there’s a real, you know, we are getting a lot of interest from the market, and things like extending the life of assets and looking at what we can do to better, you know, better help our buildings perform. But the truth is, there is going to be a cost impact to these mandates, and I’m wondering if they have done that not only cost impact, but also personnel impact. If people are there and there are more problems, you’re probably going to need more people to solve it, right? Or more technology solutions, something is going to be involved with helping these buildings operate more effectively. It’s like a vehicle, you know, if you’ve got a car in your driveway, and you’re only putting a few 1000 miles a year on it, which who does that, that car is probably going to last forever. But if you’re commuting every single day and you’re putting it through its bases and maintenance costs, it all goes up. And it’s the same for buildings, right? The more you use it, the more it costs. Well, that’s going to be an interesting metric to see if that’s being taken into account with all the mandates. Are they prepared for costs.

Jennifer Heath 18:32
Yeah, does it counterbalance the perceived increase in productivity? Do they feel that they are gaining so much from a business advancement standpoint that it offsets all this additional cost. I don’t know, I don’t know that you do.

Brian Haines 18:51
It’s interesting because we can measure it, right? I mean, it’s simple. We’ve got an analytics platform. We put utilization data into that based upon a lot of different inputs, sensors, Wi-Fi, you know, badge, you name it. We can measure utilization really, really well, but we can also track things like maintenance costs, project costs, lease costs, all of those things we can see. And I’m going to be as a matter of fact, I’m going to do this now as a project. I’m going to look into this, because we should be able to see a correlation between increased utilization and increased operating costs. We should be able to easily see that.

Jennifer Heath 19:26
Yeah, just the service order tickets. I mean, it should just write alongside.

Brian Haines 19:34
I’m gonna write the flip side of the five day mandate and talk about how much it costs. Nobody’s mentioning that are they?

Jennifer Heath 19:43
And I will say the other thing that I don’t think anybody mentions, and we’ve alluded to it a couple of times, this is like the dark underbelly of the return-to-office mandate is the commute. The commute. I mean, anyone who has ever had a hard commute. Like, just the thought of it kind of chills you a little. Like, if you’ve ever sat for an hour and a half to go three miles just staring at the same license like the whole time, it is stressful. And I remember the first time I ever drove in LA that I anticipated that, that it was bumper to bumper. You know, crawling along. It is bumper to bumper, but you’re going 80 miles an hour, it is much more stressful than going 40 miles an hour.

Brian Haines 20:30
Yeah. And there’s the impact to well, there’s stress, right? There’s, there’s stress that we bring to work and then stress that we bring home. There’s impact on families. There’s a lot of things that we’re not really talking about, you know, the commute, but also, you know, hey, when I’m when I’m home, I can, I can walk my dog or take care of the kids or, you know, whatever that is. But if I’m not there, somebody else gotta do it, somebody’s like, that’s got to get put somewhere else, increasing stress, really affecting work life balance. Don’t hear, a lot of talk about that as well. A lot of people have really fallen in love with the workplace, with the work life balance that hybrid has provided .

Jennifer Heath 21:18
Absolutely and parents, I think, probably more than anyone else. Like having that flexibility to get your kid on the school bus and still make your first meeting without feeling like a crazy person in between the two activities is a gift. I mean, that’s a wonderful thing to enable parents to have that additional time with their kids. It’s a gift to those kids. Big sacrifice, I think, for folks to do that. And I will say, I read somewhere that there is some expectation that the workday will be shortened as a part of these five day a week office mandates. It’s not necessarily going to be an eight hour day, which that creates a little bit of that work life balance. So I’ll be interested to see.

Brian Haines 22:06
I’ll be really surprised if that happens. The other one that’s floating around a lot is a reduction to four day work week. And is it, is it really a four day work week, or is it, we’re going to be in the office four days a week, and we’re going to work from home on the fifth day. That’s probably more likely than, you know, organizations just going, you know what we’re gonna pay you the same for less. We’ll see. I’ve been proven wrong a lot of times, but on this one, I think I’m probably pretty close though.

Jennifer Heath 22:49
Well, we will keep talking about it. We’ll keep reading these headlines and bringing it all together. And it’s going to be really interesting to see how the next year unfolds. I agree. It’s going to be a really pivotal time that kind of dictates where we’re going to go the next five years.

Brian Haines 23:01
Yeah, we’ll call it the Mandated Hybrid Hangout, or something like that. I’m not sure, but it will be fascinating. This one’s interesting. I’ve got a real close eye on it in ‘25 so it’s gonna be fun.

Jennifer Heath 23:17
All right, Brian, always good to catch up. Have a great rest of your day. Thanks everyone for joining us.

Brian Haines 23:22
Thank you, Jen, thanks everybody.