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In-person mandates are up. Bosses have more power to enforce face time. Yet after years of remote work, the role of the office has fundamentally changed, prompting a vast rethinking of what the ‘workplace’ is really for.
By Jena McGregor, Forbes Staff
For more than five decades, 92-year-old insurance giant Allstate had a sprawling 2-million square foot headquarters in suburban Chicago that by 2020 housed some 5,200 people across roughly 280 acres. But last year, the company sold the Northbrook, Illinois campus. With 83% of its employees now remote, the complex was a ghost town on the average weekday.
Instead, Allstate has been downsizing its real estate by about 50% globally and modernizing smaller spaces it calls “pods” rather than “offices.” The word “‘office’ has been around for hundreds of years and it has a very distinct connotation,” says Bob Toohey, Allstate’s chief human resources officer. “You commuted, you did your work, you got up, you left, you were seen. That is not anymore.”
If a big corporate headquarters at an old-line business like Allstate is no longer a place to get noticed and get work done, what’s the real role of the office today anyways?
“When I ask CEOs and executives ‘what is the purpose of your office?,’ I am—eight out of ten times—met with blank stares.”
– Kelly Colón, a Boston-based workplace consultant
It’s a question that’s been puzzling executives, frustrating workers and causing headaches for H.R. “When I ask CEOs and executives ‘what is the purpose of your office?,’ I am—eight out of ten times—met with blank stares,” says Kelly Colón, a Boston-based workplace consultant and former adviser with office furniture maker Allsteel.
For decades—centuries, perhaps—no one had to ask about the office’s purpose. Before laptops, cell phones and the Internet, it was the place for people to get work done in the same room, for managers to keep a watchful eye on their people and for companies to splash their name on a building that highlighted their brand, cemented their culture and showcased their status.
Along the way, it also became a place that fed executive egos and convinced some of them management meant little more than “wandering around.” “Neurologically— behaviorally, as a society—we train CEOs and leaders of organizations to chase, to reach this top level of their organization,” Colón says. “The workplace became a representative and proverbial crown by which they assimilated their success.”
The pandemic changed that, decoupling management from facetime and accelerating technology’s untethering of professionals from the office. Prior to 2020 teams had already been getting more distributed, but Covid put the trend on steroids. Microsoft, for instance, reported recently that pre-pandemic, 61% of its teams were based in the same physical location; today that number is only 27%.
Now, many white-collar workplaces exist in a hybrid purgatory, torn between managerial nostalgia and CEO opinions about remote work’s downsides, and the real need of workers to avoid crippling commutes while meeting life’s many commitments. Meanwhile, plenty of employees want or even need a place to work that’s not their cramped apartment, and many agree that physically being with colleagues helps build relationships, ease collaboration and speed up certain work. The problem: There’s not enough consensus between workers and managers on how often—or where—that time together should happen.
“Work is a vocation, not a location.”
– Atlassian co-founder and co-CEO Scott Farquhar
Companies are not tone deaf. They know they’ll struggle to lure people back to old-school cubicles. Many are rethinking how offices work, making more room for meetings and socialization. They’re adding booths or private rooms for Zoom calls, reducing square footage and renting real estate on-demand. Some are even rejecting the “headquarters” concept altogether. “A headquarters used to be the center of power,” Allstate’s CEO, Tom Wilson, said at this year’s Aspen Ideas Festival. “You came there to get noticed and be seen by people and move up. We don’t have one of those anymore.”
Accenture, which doesn’t have company-wide mandates for in-office time, calls its new offices in New York an “innovation hub” rather than an office. It features ample flexible space for clients and consultants to work on projects together, a set-up that’s become a model for other locations. “Almost all our offices, as we refurbish them or grow them, are built as collaboration spaces,” says Stuart Henderson, who runs Accenture’s northeastern U.S. business.
The near religious rhetoric about “return to office” and “remote work” obscures a simple fact: Much of this comes down to common sense. Not all businesses are the same. What works for an established law firm may make no sense for a startup toy company. Consulting firms have decades of experience working remotely at client sites. Insurance companies long have had armies of field-based employees. A biotech startup might need a physical lab. A software company typically doesn’t.
Early in the pandemic, Atlassian, which makes software to help people collaborate with colleagues, decided it would commit to making offices optional, finding in employee surveys that workers still felt connected as long as they were intentionally brought together for team building every few months. “We told our employees—hand on heart, sign in blood—that you won’t have to go back to an office,” says co-founder and co-CEO Scott Farquhar.
The company created a “cost-per-visit” metric, dividing the cost of running each office—leases, infrastructure, keeping the lights on—by the number of visits people make each quarter. If the metric was more than three times higher post-pandemic than before, says Annie Dean, Atlassian’s head of “team anywhere,” “we figured this office is something we need to consider downsizing or reducing its footprint, so we can go reinvest this where there are new communities that are popping up.”
In May, Atlassian closed its Boston office after the metric got too high. It is opening a Seattle space, where the company’s population has been growing, in February. “Work is a vocation, not a location,” Farquhar says.
Other tech leaders, of course, don’t see it that way. As companies like Meta and Amazon have issued stricter mandates, many are watching to see the impact on office occupancy. So far, the mandates aren’t making a broader dent. For the week ended Oct. 11, data from Kastle Systems, which tracks badge swipes at office buildings, showed that average occupancy across 10 major cities was still only about 50% of pre-pandemic levels. That’s only slightly higher than the weeks preceding Labor Day, when it hovered around 47%. “More businesses are feeling that their performance is being impacted by people not being together,” says Kastle’s chairman, Mark Ein.
People tend to forget that lots of folks didn’t always use the office regularly, even before Covid. “It’s important to remember that pre-pandemic, typical office utilization was never more than about 60 to 65%,” says Despina Katsikakis, commercial real estate firm Cushman & Wakefield’s global head of total workplace consulting. (Utilization rates track the percentage of time office space is used across a typical workday.) The firm predicts a staggering excess of 330 million square feet of vacant space by the end of this decade due to the impacts of hybrid work, a 55% higher vacancy rate than before the pandemic.
In short, leased office space by employers is getting smaller just as “return to office” mandates are getting more strict. When it comes to the tug-of-war over remote work in the C-suite, says Brian Elliott, who advises executive teams on flexible work, “the CFO, I think more often than not, is winning,” he says, due to cost savings. “As leases expire, [they’re] basically cutting back on the amount of space—to the point where that four-day-a-week mandate may not be physically possible.”
Cushman & Wakefield’s data also shows that “occupiers”—what commercial real estate types often call employers—are doubling the gathering spaces in offices, with 40 to 50% of the average office’s floor plan set aside for communal space, up from 20 to 30% in 2019.
“Offices are optional for us. But that doesn’t mean they don’t matter.”
– Atlassian head of “team anywhere,” Annie Dean
Cisco has made even more drastic changes, replacing or renovating older real estate in Atlanta and New York with new high-tech “Talent and Collaboration Centers” that showcase its products for hybrid offices. Pre-pandemic, about 70% of its New York space was for individual work and 30% was communal. Now that desk-to-meeting room ratio has been reversed.
Then there’s Dropbox, which calls itself “virtual first” and is subleasing nearly 400,000 square feet—a majority of its pre-pandemic San Francisco space. But it retains part of the space as one of three redesigned “studios”—the others are in Dublin and Seattle—where people are encouraged to gather in person on a quarterly basis. These “studios” were redesigned to include more open spaces, classrooms, coffee shop areas and meeting rooms that can be adapted to various sizes—but few individual workstations. “We do have a handful of desks, but it’s very small,” says Allison Vendt, the company’s Global Head of Virtual First.
If all the talk of “connection” and “collaboration” sounds a little vague and repetitive—no doubt you’ve heard the platitude “moments that matter” as a directive for in-office time—it is. The drumbeat of announcements about post-pandemic office spaces, says Phil Kirschner, who advises executives on real estate and workplace issues at McKinsey & Co., are so similar that if you take out the name or location of the company, “you basically can’t tell them apart.”
Meanwhile, being collaborative—and making time for connection—doesn’t always have to happen in a company’s office. Offsite retreats are booming, demand for flexible space is soaring and platforms for office alternatives are proliferating. Entrepreneurs are getting creative. The Portland, Ore.-based startup Radious, for instance, acts like an Airbnb for offices, with homeowners renting out their houses during the day to professional workers. With the commute a big barrier for many employees, “I don’t think proximity is getting enough attention in the conversation about the future of work,” says cofounder Amina Moreau. “What we’re able to tell employers is we’ve got spaces right in your employees’ neighborhoods.”
In the end, rethinking where offices are located, how they’re designed or how often they’re used doesn’t mean they’re not needed at all. Even though Atlassian has no mandates for attendance, 26% of employees who live within two hours of an office come in at least once a week, the company says, and 72% visit one to four times a month. Over the past year, 70% of employees, regardless of their home base, visited an office at least once each quarter.
Farquhar, who says he only makes it to the office about once a quarter, is still a big believer in getting people together, especially for intentional gatherings. “We do believe that social bonds are built in person,” says Farquhar. “It just doesn’t happen best by sitting next to someone in an office every single day.”
For Dean, Atlassian’s “team anywhere” head, offices have two main purposes: Building connections between employees, and “enabling people to get shit done in a new environment,” especially workers who may not have home offices themselves. “Offices are optional for us. But that doesn’t mean they don’t matter.”