Return to Office Mandates: Real Insights into Space Utilization Rates: Ep 23

Jennifer Heath 0:14
Hello everyone and welcome. Thank you so much for joining us today for another episode of the Hybrid Hangout podcast. My name is Jennifer Heath. I’m the Director of Product Marketing here at FM:Systems.

Brian Haines 0:26
And I am Brian Haines. I’m the Chief Strategy Officer at FM:Systems.

Jennifer Heath 0:31
And today, we are going to continue on with a conversation that we started last time, because this just continues to be such a hot topic, and we continue to think of different applications and potential challenges, and that is the ever present return to office mandate. Just to kind of catch our audience up, probably, I don’t know, maybe four or five months ago it started really hitting the headlines that big organizations, Amazon, Twitter, big organizations were calling people back and then, of course, an executive order bringing back all federal employees. A lot of financial organizations have announced these mandates. What? Where are you on it today? Because I know we kind of go back and forth on different aspects of this.

Brian Haines 1:17
Well, Jen, it’s obviously something that we hear about every single day. I was going to share a couple of articles that I saw. I saw an article today. It was behind a paid, you know, pay wall. So I didn’t, I didn’t read it. I kind of got the gist, but it was like, JPMC doubles down on five day mandate. I’m not sure what doubling down is, because they’ve already mandated, you know, a few months ago that they would be back five days a week. So doubling down, I guess, I guess it means they mean it this time. I’m not quite sure what that means, but what we’ve been doing is obviously keeping, you know, our air to the trail, making sure that we understand what’s really going on. You know, we’ve been watching this trend go up from a utilization standpoint. And you know, now it’s at the tipping point where it seems more people are back to the office than not. More people are back than, you know, full time, than hybrid. The number of remote employees is kind of returned to probably what it was like, you know, five or six years ago, it’s dropping below 10% now, I think. So we’re really seeing a return, I think, to a much more traditional office utilization rate in terms of the number of people being in. We are not however, and I’ve said this before. I think to you, we’re not seeing a one to one correlation of utilization to number of days per week that companies are back. So you know, they may be saying five days a week, but when you look at utilization, you assume if they were five days a week and they were 100% occupied, then they would be, as long as everybody was coming back, they’d be 100% utilized. But that’s not true. Of course, there’s things that happen on a daily basis. People are on vacation, or, you know, they’ve got appointments, or they’re at a different office, they’re traveling. There’s reasons that would drive utilization down, of course, even in a five day mandate, but we’re still not seeing those utilization rates. We’re not seeing them hit really high levels. So that’s interesting, I think, and a point that we’re continuing to monitor.

Jennifer Heath 3:25
Yeah, we had a client example just recently that they had gone from three days a week to four days a week. So you would assume a 20% increase in their utilization, and there was a 2% increase. And what’s interesting in that is as facility managers, if you are looking at a mandate situation and thinking, okay, this means we’re going to be, you know, max occupancy, five days a week, eight to five. If you frame your energy strategy around that, you are going to be paying, seemingly, for a lot of energy, that is going nowhere. If you’ve got a 2% increase in utilization when you’re expecting 20, there’s a lot of dollar signs that follow along with that.

Brian Haines 4:12
Yeah, one thing that I think the market really needs to be looking at, in particular facilities and real estate, is that they need to be budgeted for higher utilization. And higher utilization is not just about having people sit at their desks, but it’s the cost that comes along with a lot more people being in your building. It could be increased costs around consumables. It could be increased waste and water management, it could be increased energy, but it can also be increased capital costs. I don’t think people are talking about this very much. When you start to run equipment harder, you’re using your building harder. Things capital costs are going to come into play, right? Things are going to wear out quicker. Even things like, furniture fixtures, equipment, finishes, you know, carpet, floors, all of that kind of stuff needs to be sort of factored into the reality of using our buildings at a much higher rate. So those are, those are sort of like tangential things that I think the facilities management profession needs to be thinking about. Everything in the news is like, do we have enough seats? Is it the right space, you know, etc. But I think there’s a lot more, a lot more that needs to be investigated.

Jennifer Heath 5:28
So what do you think is driving the mandate? Like, I turn this over in my mind all the time. Is it wanting to get a return on the investment of the real estate? Is it really about utilizing the space, or do we think there is some real benefit to employees? Do we think there’s a lift in engagement and productivity and all those warm and fuzzy ideas?

Brian Haines 5:55
This is loaded question. Jen there’s a lot of answers to this one which are pretty interesting. You know, there’s my cynical self, which sees things as I think they might actually be. And then there’s the sort of other things that we get from our, from the market, where people are telling us why, increased collaboration, better, better team building, better culture. You know, all those things are not wrong. When I go to the office, I have a very different experience than when I’m home, working by myself. You know, I don’t have coworkers here. It’s just me. You could count my chats, which tend to visit my monitor screen every time I’m on a call. That’s why I’m in a different space, because I can avoid them. But when you’re in the office, you know, it’s, there’s a lot of interaction that happens. So there’s value, there. There’s also, you know, some maybe legacy stuff around presenteeism, you know, like maybe you’re, somebody doesn’t believe you’re working hard enough if they can’t see you. I think that’s very old school. I think that maybe this is my cynical self coming in here, but I think there’s some reality to this. It’s a generational thing. I mean, the people who are making the decisions, the hard return to office decisions right now are late in their careers. They’ve been leaders for a long time. They saw the office at a different time in a different way, and there’s maybe a little bit of nostalgia for the past or something that’s kind of driving a little bit of that, and not necessarily looking at the value that we got from better balance. Um, what did somebody say on the webcast yesterday. I forget we used to say work life balance, but they say work life integration. I feel like, even though I’m in a hybrid workplace environment, you know, I do go into the office when I can, and I travel a lot, plus I work from home a lot, I’m getting as much done as I ever have. There’s, there’s no impact on that. So I don’t think there’s a lot to say about productivity. People say that there is, but I don’t really see I’ve read a lot, and I read a lot about this. I’m not seeing that as the primary driver. Now there’s industries you can’t build a car in your in your bedroom. Well, you can. You’re not going to build 10,000 cars or a million cars in your bedroom. You know that’s just that’s going to be a manufacturing plant. You’re not going to do open heart surgery in your bedroom. Let’s hope you’re not. It’s got to be in a hospital health care setting. There are reasons that people have to be there, and that’s not disputed. There are reasons that people have to be there, but there are also a lot of reasons why people don’t have to be there.

Jennifer Heath 8:41
Right. So to your point about maybe some nostalgia and wanting to, you know, maybe kind of go back to an idea of what the office was 10, 20, years ago. I think for a lot of us, we don’t have the best memories of the office. Cube farms were not awesome, right? Day to day, frustrations within the office, not having access to the resources you need, still having to dial into calls, even though you commuted an hour to be there. What do you think we need to be considering when we think about workplace experience? Now, if we have these mandates, we’re bringing everybody in, I’m going to say probably the quickest way to tank the morale of your workforce is to bring them back to a 1989 cube farm, zero amenities.

Brian Haines 9:33
Well, the good news is, is that we all left the office for like, several years and gave the great minds, the great design minds of the world, and the great planners like a clean slate to redesign the office experience. So now we’ve got a lot of organizations that have done very cool office space that’s a lot more flexible, a lot more centered around getting together in teams and ideation and creating, you know, quiet moments, and then moments that have energy. There’s, there’s, like, all of this thinking that’s going on, going into redefining what the office looks like. And you know, for the most part, that does not include giant cubicle walls. It just, it does it. Hopefully that’s just gone forever. I’m sure that some people came back and they were like, oh my goodness, look, they didn’t change a thing and some organizations, but for the most part, a lot of that stuff changed. We got phone booths and all of these things that have sort of grown out of grown out of it. Now my question to you, Jen is, is this a chicken or an egg thing? And I’ll tell you what I mean by that. Because, is it that, like, technology has changed and the office has changed due to the pandemic, or was this already happening before, and it’s now being realized and affected by. What are all the enablers that have changed that have allowed us to have a very different office experience, you know, I’ll call it workplace experience.

Jennifer Heath 11:03
Yeah, this is my favorite question, because it absolutely was already happening, and the original technology that changed everything was the cloud. As soon as your work systems moved to the cloud, you were not married to a local area network. You did not have to plug your computer in to that specific cord. All you had to do was connect to a Wi Fi connection from anywhere. And that’s what opened up everything. Like suddenly you could work from a coffee shop, you could work from home. You can travel and be in different offices and still access all the same systems. Like I am just old enough to remember, those on prem systems that were installed on a huge desktop, and it was the only computer in the world where you could get into that system, and it had to be plugged into that server.

Brian Haines 11:56
Yeah, that’s, this is one of my favorite topics, like seeing how technology has evolved that’s enabled us to be completely different, right? So the cloud is one, connectivity is another one, right? Just like Wi-Fi and cell phone signals are so much better than they used to be. The ability to be able to get, you know, internet access, anytime, anywhere. I mean, you go in and the other one is your phone, right? Like the mobility, or just the form factor of the devices are small. I was reading an article yesterday because I’m trying to think, should I get, like, an iPad, or should I get a laptop? Because I wanted to get something new for my, like, my personal stuff. And I was reading this, you know, the differences between the two, and they’re really kind of blending, like the technology is getting so strong, keyboards are really light and fast. Everything connects. Doesn’t matter where you are. So we’re seeing all of these enablers, right? All of these little things that have been happening that are, I think, enabling us to be completely different in the workplace, and that doesn’t even take into account measuring performance. I mean, 10 years ago, we were doing, you know, we called them bed checks, or, you know, you were walking through a space with a clipboard and saying, yep, Jen’s there, Brian’s there, you know, whoever’s there, somebody’s not there. And you were literally with a floor plan, like trying to figure out your utilization that way. Now it’s now it’s so easy with IoT devices in the cloud and connectivity being able to measure that to a really fine level. So that, plus all of the other components, I think, are creating something new around workplace experience that can make it better being there.

Jennifer Heath 13:35
And I think it’s interesting too, thinking about the bed checks and kind of the old way we did things. One of the reasons IoT sensors and the current state of analytics is so compelling is because it’s all real time, like you are getting a continuous measurement of what happens versus a snapshot. So if somebody came around and you and I are both at our desk, yep, we get, you know, our check mark for being there, if we immediately leave that person cannot assume that desk is utilized for the whole day that they would have. They were attributing utilization where it really maybe wasn’t there. They were checking occupancy, not measuring utilization. And that’s what we can do now.

Brian Haines 14:17
Yeah, so real time access to information is also part of the, I think, capabilities that’s changing everything. Because if you can present information to someone in a really easy to consume format, can that make their day better? So for instance, I’ll give you a couple of examples, just simple things around workplace experience, like availability, got that down right. We could see a floor plan. You walk into our office, there’s a giant display. It shows you what’s available, what’s not and it’s real time, it’s live. I sit down at a seat that seats no longer available. People can see that. And that goes way beyond like booking. Booking is like, I could book a space maybe six months. It’s in advance. I’m talking real time. If I sit down, you know that information is available. And to as an end, as another employee, I walk in, I see that, then I’m not going to go to that seat, because I know somebody’s already sitting there. I need to find, find another place. But think about all of the other stuff. Is especially when we start moving towards smarter buildings and indoor air quality, like we always talk about, IAQ sensors, but it’s more than that. It’s other data. So indoor air quality, you know, like temperature, humidity, all of those kinds of components, but there’s also noise levels. Like, do I want to be around 50 people that are talking and it’s loud? I remember going into an office before the pandemic. That was, I won’t mention the client. It was a really cool office, but it was designed in a kind of an alternative workplace. You know, remember that term alternative workplace activity based working way they got rid of all the cubicles. Had all these desks that you could move around. It was so flipping loud. I couldn’t I realized then that that was going to be a problem for a lot of people. It was, it was loud. And so if I’m if I need to have a private conversation, I could tell you now, if I go on to a meeting, a teams meeting, and you know, the first thing you do is start muting people if you can. Because, you know, there’s a lot of noise in the background, and it really disrupts, I think our tolerance for that has gotten low. So sound is one light access to light. Do I want it to be dark or light? I know a lot of developers throughout my career that just like to sit in the dark and write code. I know a lot of people who code like that, you know, or maybe a little bit bubblier or something that just want a little bit more, you know, more of the outdoor in kind of thing. So why not? Why not give people access to this? Why don’t? Why not let them understand where they’re going and what the experience is going to be when they get there? And I think that’s a big part of workplace experience that we’re seeing happening.

Jennifer Heath 17:04
Yeah, just giving people access to that information. Because, going back to the point about productivity, you know, how do you encourage productivity? It’s tricky, because everybody is unique. Everybody has different work styles and different preferences. And so being able to let someone see, hey, this is a cold, dark, quiet corner. Like, maybe that’s just what I’m looking for. A particular task that I have today, we’ve talked a lot about activity based work, which I always thought made so much sense, you know, and even in my own home office, depending on if I’m going to do something kind of different, I may move out to the kitchen table. I may go sit on my back patio, because I just want some fresh air while I’m, you know, drafting an article or whatever it is. It’s nice sometimes to be able to move around and change your environment or your scene, and to have that information in real time, just maybe, like, right there on an app, or I can pull up a floor plan and see where it’s, you know, warmer in the building, maybe I’m freezing to death.

Brian Haines 18:05
Right. You know, it’s interesting, because I think about our office now compared to what our office was, and the experiences when people come to our office now, they’re really enjoying it a lot more than the old one, right? The old one was cube farm, new one, modern office design, lot of collaboration. I will say, however, Jennifer that we have one ninth it’s actually one ninth. I know it’s splitting hairs. It’s not one tenth. It’s one ninth. The number of workstations that we had in the old office, but the number of people is similar. It’s similar, but we’ve also got a lot more breakout spaces. We’ve got counters, we’ve got bank seating in our in our break room. We even have an outdoor deck that’s got all kinds of, you been there. It’s really super flexible. We’ve got booths, we’ve got phone rooms, we’ve got all of those things. It will be interesting, because I worked on that project. I helped design it with our architect, and because we wanted a different experience. But we’re owned by a different company now. We’re owned by Johnson Controls, and if they ever say, five days a week, everyone’s back.

Jennifer Heath 19:19
You’re back to the drawing board.

Brian Haines 19:21
Well, it’s either back to the drawing board or people are sitting outside and like on a bench next to the pizza place, because we’re not going to fit. So I’m wondering. So there’s a lot of companies that say, come back, right? And so what’s that experience like when you go in? One of the articles I read was 1.4 to one. And that was, that was, let’s say they have 1400 employees. They only had 1000 seats because they got rid of a lot of it, or they reconfigured during, you know, during the time when we were all away from the office. So like, what’s that experience like? If you come back in and you can’t find a place to sit, that’s not good. I don’t think it’s good.

Jennifer Heath 20:02
It’s definitely not productive.

Brian Haines 20:04
No it’s not productive. You spend half of your day looking for a place to sit, and then you end up sitting on a stool in a hallway somewhere. I don’t know what it’s going to look like, so I’m going to be fascinated, because, you know these return to office mandates, really, they started slowly through ‘24 or ‘25 they’re just kind of going crazy. It’s like every time I read a news article or financial times or something like that, somebody’s announced a much more aggressive return to office policy. And you know, the entire federal government. You know, I was at the IFMA executive summit last week, and I heard some overheard a woman who works in DC saying she’s never seen the traffic so bad ever. Look we’ve got, like, a couple million federal workers less than there used to be, but they’re going back in, there’s all these things that are leading to me, to me, it’s like a really bad experience. And I’m wondering, we’ve got to look at the flip side. And for me as a long term thinker, I think to myself, is the experience like so bad that it overrides the benefits.

Jennifer Heath 21:10
Right. And that’s the risk like, that’s the huge risk in it. Are you? Are you risking all that productivity? Are you risking, potentially, some of your top talent? Are you risking, kind of that spread of, you know, just bad morale through your teams, and how do you combat that? And I do think that there are a lot of solutions. I think people probably need to kind of step back a little bit and think and kind of decide, what do we want to prioritize in experience? First and foremost is absolutely your layout, your floor plan. You do have to be able to accommodate everyone to your point earlier. You know there’s always going to be people that are traveling or on vacation or whatever. It doesn’t have to specifically be one to one, but you’re going to have to be fairly close if you’re really talking about five days. And we talked about this a little bit yesterday, if you’re talking about 40 hours, that’s a big consideration, too, because if you’re talking 40 hours now, you have to have that private space that head down space for every individual, because everybody has that point in the day where they have to just sit down and lock in and answer the emails or, you know, whatever it is you’re doing, it’s a really different consideration when it’s everybody all the time. And so you’ve got to decide what are, what do you want to prioritize in terms of experience and what technology solutions are going to get me there?

Brian Haines 22:37
Yeah, so I was thinking about that because there’s, there’s only so much you can do, right? So you do the space redesign, you provide this really wonderful office environment. You do all those kinds of things. And I think about technology, and like the experience of our old office versus our new office, because our old office was used before the pandemic and our new office is used after the pandemic. There’s several years in between those two. My experience is so much different. I badge in with my phone. I can book space. I could see who’s available. I can do teams meetings. I can do all of this stuff that if I really think hard, I was not doing in the old office. And it’s because and that’s providing, to me, frankly, a better experience, because I’ve got access to all of this data, and we’ve got you and I both know we’ve got a really wonderful workplace experience application that we’re going to be sharing more broadly in the near future, that we have here at Johnson Controls and FM:Systems, that I’m excited about, and it’s taking no account all those things. Being able to find space really easily, find your colleagues, book a space, put a service ticket in, log a visitor, like all of that stuff, used to be in separate, disparate systems, and they certainly weren’t. Most of them weren’t available on your phone. I mean, I remember some old visitor management and security systems that you even our old one, like you had to use a key fob and all of that, all that stuff that’s kind of like those days are gone, right? Yeah, we’re providing this which is helping, and I think, I think that’s an area where we can make a big impact.

Jennifer Heath 24:14
So in talking about experience, you mentioned visitors, and that’s actually a topic that has come up several times this week, people you know, expressing interest in visitor solutions, and it has made me think about how much it’s all coming full circle, like 2018 2019 the concept of digitizing and simplifying and streamlining visitor management solutions was important, like a lot of people were talking about it, It was a hot topic, and then the pandemic happened, and it was like, well, visitors are not really a problem anymore. It’s the same with kind of this swing that we’re seeing between people wanting to book desks and, you know, manage their workstation utilization, swinging over to, oh, we need to pay more attention to our collaborative space. What do people need? We’re kind of going in this big cycle. But what’s great about it is we all remember how it was before we know the problems we were trying to solve in the first place. But now the technology is even better. We have more opportunities to inform these different decisions. We have more options to simplify these processes. I think it’s really an interesting time. I’m thankful that I work from home. I appreciate that I don’t have to go into an office five days a week, but I also appreciate that it is important in organizational cultures. You know, I was a part of the office for many years before I went remote. I think when you’re young in your career, it’s probably a little bit more important than when you’re more senior. I think the mandates will kind of work themselves out. But no matter what side you fall on, there is so much technology that can improve the experience and that can let us as facility people, let us manage and operate so much more efficiently.

Brian Haines 26:03
Yeah, I think also planning for resiliency is really an important key here. And resiliency is not just about like managing disasters and things like that, but it’s about technology resiliency as well. If you have a situation where you’re underutilized, like we have been for the last couple of years, and you start dumping solutions like a room and desk booking or sensors to measure utilization, things like that. You may be missing out on the fact that suddenly everyone’s coming back, and space is going to get tighter, and people are going to, you’re going to have to go to probably neighborhoods and desk sharing ratios and things like that, more visitors are going to be coming back. The more people you have in your office, the more times they’re going to have visitors, right? So those kinds of things, we’re actually seeing a big uptick in that right now, by the way. We’re seeing a lot of lot of interest around that, but there’s also a lack of interest in things that aren’t connected. So integration between systems, whether or not they all become, you know, part of a platform, one system, or the ability to be able to connect data seamlessly through the cloud is absolutely imperative right now to providing that experience. So those things, I think, you know, from a facilities perspective, it can’t be just like feature, function, short term memory, right? It’s got to be like you got to really design and select the solutions that are going to be able to handle changing conditions. Because they do change they I mean, if I’ve, it’s proven to me over the last half dozen years that conditions can change super, super fast. I’ll even say that the return to office mandates could have gone a different way. You know, with different, you know, political conditions in certain parts of the world, those kinds of things, you know, different elections, things like that, changes the way you look at your real estate portfolio, and the requirement for people to be back. It literally has, that’s another component that has something to do with it. So resiliency, technology choices, making sure that you’re picking solutions that help you to kind of bob and weave, you know as things change and you look like a facility superhero, because you don’t get caught flat footed right when you’ve got that sort of broader view.

Jennifer Heath 28:19
Absolutely, when you have that data to just continually inform the next decision in the face of whatever the new condition is as things change, you always have that objective data set to go back to and say, okay, what do I do in this scenario? All right. Brian, I think we are out of time for today, but a great discussion as always. Thank you, everyone for tuning in, and we will see you next time.

Brian Haines 28:44
Jen, it’s always been great. Thank you, everyone.