Cutting CRE Costs? Reinvest in your human capital.

Still figuring out what you’re going to do with your team? Or rather, where you’re going to put them? Yeah, join the club. Hybrid work is the hottest topic in CRE right now, and if you’ve been on LinkedIn recently, you know exactly what I mean. There are tons of passionate arguments (on both sides) weighing the pros and cons of the hybrid work model – but very few of them are actually backed by data. Scrolling through the comments on LinkedIn posts you’ll see many “I feel…” comments – which to me, don’t matter. Now I’m not saying I’m apathetic to how employees/employers feel – keeping employee experience positive and letting your workforce know they’re being heard is imperative to the health of your organization. But when you’re making huge corporate decisions with rippling effects, you need to back it up with hard data, and objective feedback from your team.

Speaking of data, Blackhawk Network recently published a piece on hybrid work which included some interesting takeaways. Of the 1,560 Americans surveyed, 42% were working virtually. Of those people, nearly 75% want to keep it that way. But what about attracting new talent? According to their survey, 84% of all the respondents will require some virtual flexibility from their next employer. That’s a lot. Now, what are employers going to do about that?

Now, one of the main arguments you’ll read about in this debate is employee productivity. Don’t get me wrong, that’s a valid question, and one of the most important qualities in employees for the health of the company. The physical office proponents tend to think just seeing bodies in the office equates to productivity at work. But does it? A lot of remote employees consider themselves more productive than they were in the office space. Again, hearsay – and we continue to go round and round on this debate. I want to see actual data measuring productivity, and with a little help from Google, I found an AI company that seems to have solved that. Enaible created a way for teams to measure their productivity based on data, not opinion (or the color of your Slack icon!) I haven’t personally used their product, but would encourage trying it to a CEO who is still deciding between virtual work and the physical office.

Speaking of that sneaky little Slack icon, let’s talk about “presentee-ism” – which is basically performative productivity. BBC published an article on the subject (and the toxic culture it can create) – which remote work employees say is still felt at times. While they’re not dressed up and sitting in the office from 9-5, they’re “on” – or at least feel like they should be – all the time with no work life balance. Heck, I’ve experienced it myself. While we have fantastic leadership and the most understanding company culture, I too feel a little anxious when my Slack icon goes grey. Is that warranted? No. Has anyone ever said anything? Of course not. Why? Because if you’re hiring the right people, you should trust them, and know that just because you can’t physically see them, they’re acting in the best interests of your company, and sometimes that means taking a 15 minute break to throw the ball for the dog. What can you do to ensure employee satisfaction?

Now let’s talk cash. Let’s just say you’re spending $100,000/year on your office lease, and you have 15 employees. Over the past year and a half, we’ve all realized that the remote work model is totally possible. Employers/employees may not like the hybrid work model, but we can do it. As a finance guy and an advocate of data-driven decisions, this cost would be the #1 factor contributing to my decision on the hybrid work model. Obviously, employee-feedback is important here, and it’s unlikely they’ll know how much the company could be saving, but let’s say your team wants to stay (or return) to the physical office. But what if you proposed to them that you planned on reinvesting that $100,000/year back into your most valuable asset (your employees!)? Maybe it’s a raise for everyone, or maybe you fully cover their health insurance. At what point does it become worth it to them? Do they not have a great remote working setup? Give them an allowance to make it how they want! Do they still want the feel of going into a workplace? Give them monthly credits for a flex workspace to work at a hot desk and get the human interaction they might need. There’s also the option to downsize the office and create a centralized collaboration space that’s more fit for group meetings and creative time. RefineRE’s FLEX Module helps with this very case by allowing CRE teams to run WFH/traditional office/flex space scenarios that weigh direct and indirect costs of switching to flex spaces. The tool also identifies prime lease candidates that would be optimal for the transition to coworking space.

Basically, if you’re employing majority knowledge workers, everyone doesn’t need to be in the workplace.

According to Forbes, “Knowledge workers use analytical, theoretical or otherwise high-level knowledge to develop services or products, usually online. They often have acquired this knowledge through formal training, such as college or professional certification.”

You can save some capital on your lease and re-invest it back into your employees. Odds are, they’ll be happier, and you just might see productivity (data-based!) increase.

– Davis Wells