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Michael MassadVice President

What Will the Office of the Future Actually Look Like?

Originally published in a slightly different form on LinkedIn.

Elsewhere Partners, like many companies today, is in the process of determining what our work set-up and office space will look like in 2021 and beyond. Since March, like many organizations, we've adopted a 100% WFH policy. We have managed to stay productive, thanks in large part to collaboration software tools (e.g. Zoom, Slack, Notion, Google Docs, LucidChart) and speedy internet connections.

But we understand that staying 100% remote forever isn't ideal for our business. As we look to grow the firm, add new team members, foster individual growth, and build a strong culture, it is important to facilitate in-person interactions. It creates an environment for creativity and innovation and ensures everyone on the team feels connected.

We are in the midst of asking ourselves questions like:

  • What should our next office space look like?
  • What is the ideal hybrid work model?
  • What is the core value proposition of a physical office space?

In this post, I examine the following four topics. I hope this provides you with a few interesting takeaways as your business explores similar questions and challenges in the near future.

  1. COVID's Impact on the Workplace: Although productivity has held up for knowledge workers, WFH fatigue has set in, many employees feel disconnected from coworkers and company culture, and some cite fewer opportunities to learn and grow in their careers.

  2. The Hybrid Office Model: Employees who have the flexibility to work both in an office and remotely are happiest, most satisfied with their jobs, and have the best work experiences. Many companies will shift to a hybrid model with the goal of improving team relationships, creativity, and problem-solving.

  3. The Changing Office Footprint: Many offices will (or already do) accommodate social distancing, additional cleaning practices, and better ventilation until the pandemic is completely under control. Longer-term, however, there will be a fundamental shift in how offices are designed and utilized. In-person work will shift towards collaboration and employees will demand multiple space types and amenities to facilitate this.

  4. Proactivity is Smart: Companies that deliberately determine which work processes are best suited for in-person vs. remote work and redesign their workplaces to ensure workers' wellbeing will be best positioned to thrive post-pandemic and beyond.

COVID's Impact on the Workplace

Many knowledge workers that had the luxury of working remotely during the pandemic have managed to stay productive, but that productivity has arguably come at a cost.

Productivity, Collaboration and Connectivity

We learned that much of daily office work can be done remotely and that technology tools are more than capable of supporting daily tasks. In fact, the pandemic pulled forward digital transformation timetables. Technology helped to fill the gap when more than half of all U.S. workers went 100% remote in the early stages of the pandemic. (Keep in mind that many jobs simply cannot be performed remotely.)

Digitization, laptops and mobile connectivity allowed teams to drive productivity in new ways. Artificial intelligence, robotic process automation, and other technologies were already changing the nature of work, but COVID has thrown this into clear relief. Employees are processing less paper and leveraging technology to perform mundane tasks like expense reporting and time tracking.

According to a survey in Cushman & Wakefield's series on the Future of Workplace, collaboration increased by more than 10% as technology tools including Slack, Zoom, and Teams made it easier and more convenient to communicate with team members.

Yet, despite a bump in digital collaboration, human connectivity decreased. With minimal face-to-face interactions, many company cultures were negatively impacted. It became much harder to build personal relationships with colleagues, and even harder for new hires to assimilate into their new workplaces.

Many technology companies have stellar records of 100% remote work. HashiCorp, GitLab, and Zapier are all incredibly successful distributed companies. This can be an attractive option, just make sure you take deliberate action to assess what is best for your company.

Remote work as the norm

The pandemic-induced remote work shift has been very widespread. Some have worried aloud about the impacts on long-term productivity, innovation, and creativity caused by the sudden remote shift. Yet knowledge workers have benefitted from the fact that we are "all in the same boat." In other words, while there may be some decreases in work satisfaction or human connection, everyone is feeling these.

Still, WFH fatigue has set in. The expanded use of video conference call technology sustained connectivity but also led to meeting sprawl and general weariness, now widely known as “Zoom fatigue.”

It begs the question: What will the new normal look like? Once there is a broader return to the office, dynamics may change for remote employees. Someone connecting to a meeting via Zoom could be at a disadvantage when the other participants are all in the same conference room—and have the option of a post-mortem around the watercooler.

This isn’t to say that remote work shouldn’t be an option long-term, or that no one should ever work remotely 100% of the time, but it’s worth considering how to bridge these cultural gaps. It’s worth building a plan to keep all employees engaged and feeling like part of the team.

Creativity, innovation and culture happen in-person

Unlike operational tasks and project management, the creative process is often less structured, less scheduled, and more organic. It’s also often more social in nature. Asking people to be creative on a conference call isn't always ideal. Impromptu collaboration and serendipitous discussions that occur in-office can play a key role in creativity and innovation.

Beyond creativity and innovation, research shows that corporate culture is crucial to a company's success. In some cases, remote work can negatively impact culture. Organizations tapped into the “reservoir of cultural capital” to manage through the crisis in 2020, but this could eventually erode without sufficient face-to-face interactions. Understanding and integrating into an organizational culture can be even harder for new team members who have never interacted with their colleagues in-person.

Place still matters

Though some have posited a long-term mass exodus from urban centers as a result of COVID, it’s our belief that walkability will continue to be prized. In a world where people are in the office less frequently and look to the office to provide what they can't get when working remotely, office locations and environments will be more important than ever.

What will the next “normal” for the office look like? Here’s my prediction:

  • Variety of locations: The workplace will no longer be a single location but an ecosystem of places and experiences to support convenience, functionality and well-being.
  • Offices still play a major role: Offices will continue to thrive and provide inspiring destinations that strengthen cultural connections and learning. They may just look a little different.

The Hybrid Office Model

Many organizations and employees have expressed a desire to return to the office in some capacity. Let's examine the how and the why.

Benefits of being in the office

Employees miss meetings with colleagues, connecting face-to-face, and being part of a broader community. Nearly all workers listed people-focused reasons as the most important benefits of coming into the workplace. Despite the rapid adoption of virtual collaboration tools, it is clear that people still value face-to-face interactions and miss the company of coworkers.

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While Millennial and Gen-Z workers had a leg up in the transition to WFH given their familiarity with technology and collaboration tools, they report a far more challenging experience with remote work than older peers. They report:

  • Feeling less accomplished at the end of the day
  • Being less aware of what's expected of them
  • Being unsure how to stay productive
  • Struggling to maintain work-life balance
  • Struggling to avoid distractions at home

It may sound counterintuitive, but, no matter how tech-savvy they are, the youngest generations of workers may be the ones who need at least a hybrid office option the most.

The Goldilocks Approach: Hybrid Office Environments

The future of work is hybrid. Employees want choice. It’s my belief that, post-pandemic, 100% remote work will be the exception, not the rule. While employers can access broader talent pools remotely, it will also require additional resources to manage and retain those employees.

Still, companies will find value in offering flexible spaces to their employees.

This could include:

  • additional conference rooms
  • private and semi-private spaces for conference calls or deep work
  • plenty of flex space and amenities to facilitate both collaboration and social distancing

According to Cushman & Wakefield's report on Workplace Ecosystems, companies will move away from binary solutions (office-first or remote-first) and embrace hybrid models.

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As the report puts it, "The right mix will vary by organization, department, team and the individual. However, it is reasonable to expect reaching an equilibrium where the average employee works remotely approximately two days a week."

Beware of FOMO

While most surveys show that employees value working from home, I believe this sentiment will change when more people return to the office. Workers will inevitably worry that their colleagues in the office are having a better experience and that they, as remote workers, are missing out on learnings, interactions, promotions. They may worry that their careers are suffering as a result.

This FOMO could create negative results and undermine hybrid models long-term.

How to mitigate FOMO? Two primary ways:

  1. Top-Down Culture: Ensure that managers are following the same rules. Similar to unlimited vacation policies where a full week off is looked down upon if the boss barely takes a weekend off, so too will employees feel less confident in a hybrid work model if their boss is in the office every day despite company policy.
  2. Active Management: Ensure effective communication across the team regardless of location. Employ technology to manage workspaces, facilitate in-person and virtual meetings, and collect relevant data.

The Changing Office Footprint

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Historical Evolution of Remote Work & Office Environments

Prior to COVID-19, there was a push for more agile and innovative workplace designs. "Cube farms" turned into "open concepts" that both increased utilization and fostered collaboration.

Average space per employee moved down from an average of 180-200 square feet to 130-140 square feet, according to Avison Young. With office space utilization closer to 5-10% during the pandemic, it's important for organizations to find equilibrium. We must balance efficiency, worker preferences, and health and safety as businesses consider the long term.

Additionally, over the last decade, coworking spaces have emerged to provide smaller and more flexible shared office spaces, although they only represent a small fraction of corporate work spaces (about22,000 spaces servicing about 2 million workers). According to the Harvard Business Review, coworking-esque options are an exemplary model for what a more distributed network of workspaces could look like.

Changing Layouts

Short-term, we probably won’t see a lot of change to the modern office beyond accommodating social distancing, as well as sanitation features like touchless bathroom fixtures and doors, publicly available hand sanitizer and air purification systems.

Long-term, we’d expect to see more communal space such as conference rooms of various sizes, huddle rooms, and social areas for people to congregate including cafés, sitting areas, greenspaces, and more.

Density, geometry, and divisions can all be tools to solve post-pandemic design challenges. Steelcase outlines a conference room example below:

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Desk Setups

Before the pandemic, 50% of American workers who had an unassigned seat wanted their seats back. The trend of unassigned seating arose for jobs that relied heavily on in-person collaboration. Now, there are more workers than ever that want an assigned seat at 90%+ according to a Gensler survey.

In fact, 60%+ of workers would be willing to trade away WFH flexibility if it meant they would have their own dedicated workspace in the office. Those currently working in unassigned seating report struggling to find privacy and to maintain social distancing.

Amenities

Most workers demand highly pragmatic amenities, such as parking, a technology help desk, and coffee. In fact, parking tops the list as now almost nine out of 10 employees who are making the trek to the office are commuting by car since public transportation could present additional health risks. Other amenities ranked in the top 10 included access to a gym, outdoor space, food service, and health/wellness resources.

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How to Take Action

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In the wake of the pandemic, companies of all sizes will question long-held assumptions about how to work and the role of the office. McKinsey thoughtfully lays out a framework in reimagining the office and work life after COVID-19. In a nutshell, their advice is as follows:

1. Reconstruct how work is done

Companies should identify their most important processes and re-envision them. Examine their professional-development journeys and how projects are completed. Reflect on values and culture and on the interactions, practices, and rituals that promote that culture. How is that culture manifested in a digital setting? How can we maximize employee experiences even with more limited in-person interactions?

2. Decide whether to bring “people to work” or “work to people”

As competition for talent increases, it's important that companies are able to access diverse talent pools. Distributed work has facilitated this. But it's important that organizations identify up-front what can be done remotely and which roles must be carried out in person.

Roles can be reclassified into segments based on the value of remote work:

  • Fully remote (net positive value-creating outcome)
  • Hybrid remote (net neutral outcome)
  • Hybrid remote by exception (net negative outcome but can be done remotely if needed)
  • On-site (not eligible for remote work)

For the first two types of roles, upskilling is critical, but talent sourcing may become easier as geographical constraints are removed.

3. Redesign the workplace to support organizational priorities

Companies should create workspaces specifically designed to support the kinds of interactions that cannot happen remotely. Technology will be key: managing which employees can come to the office, how often the office is cleaned, whether airflow is adequate and the booking of conference spaces. It will be important to seamlessly facilitate hybrid meetings. The boundaries between being physically in the office and out of the office must collapse as much as possible.

4. Resize the footprint creatively

Instead of adjusting the existing footprint incrementally, companies should take a fresh look at how much and where space is required. These changes could also reduce real estate costs significantly as hybrid models are deployed.

When the future will arrive

At the time of writing, COVID-19 is still widespread across the globe. Vaccine roll-outs have begun, but it will likely be a long time before we reach herd immunity. Many cities and states are implementing stricter lockdowns. The "future of work" may feel like a distant dream. But, as a hopeful optimist, I personally hope we will be back in the office sooner than later.


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About the Author

Michael Massad

Michael is a software investor at Elsewhere Partners where he co-leads all sourcing and diligence efforts in the IT infrastructure and cybersecurity sectors. Michael strives to connect capital and operational expertise with growing software companies across industries that are located outside of traditional VC hubs.