Out of office: what the homeworking revolution means for our cities

Employees’ reluctance to return to full-time commuting after a year of Covid means change is afoot for companies

Susanna* has spent most of lockdown in back-to-back Zoom meetings. It is a major change for the senior banker, who used to commute to London from her home in rural Lincolnshire and regularly travelled across the country to meet business customers face to face.

The 55-year-old does not miss the 5.30am alarms or spending three nights a week away from her husband and son. And she appreciates the way the bank’s management has banned calls between noon and 1pm – now dubbed “golden hour” – and cuts video meetings off after 50 minutes to give staff a brief buffer. But working from home has felt relentless, and after nearly a year she is longing to return to some sort of normality.

Following the pandemic, Susanna is hoping for a middle ground where she can experience the buzz of central London and cross-country travel, while enjoying the extra downtime remote working permits. Her ideal scenario would be to meet her team of six just once a month in the office, and she would not be afraid to challenge bosses if they asked for more.

“Why would we need to do that,” she said, “with everything that we’ve proved over the past year in terms of how we’re able to conduct our business, and do it much quicker?”

Susanna is not alone in her desire for more flexibility in her post-pandemic life. Indeed many analysts believe a shift to remote working was already under way, with coronavirus accelerating it by around a decade.

Seven in 10 UK employees who have been working remotely during Covid-19 told a survey by Boston Consulting Group that they felt as productive at home as in the workplace. More than half (53%) of workers said they would prefer a hybrid model in future, splitting their time equally between their desk and a remote location.

Boris Johnson provided little new guidance on managing the return to workplaces last Monday when he presented his roadmap out of lockdown, promising only to review the advice on working from home by late June. Most social restrictions are expected to be relaxed in midsummer, but businesses are not anticipating a large-scale recolonisation of offices before September, provided coronavirus case rates continue to decline.

By then, office-based workers will have spent almost 18 months away from the watercooler, and few expect work to return to the way it was.

Some of the largest firms in the financial sector, for decades a bastion of an office-based corporate culture, seem ready to rethink the way things are done. They are also seizing the opportunity to cut costs by reducing the amount of office space they use.

Banking group HSBC revealed last week that it was taking advantage of the booming popularity of home working by cutting its global office space by 40%. Its floor-space footprint looks set to shrink in London: the lender said it was committed to its headquarters in the Canary Wharf financial district, but may not renew leases for other sites in the capital.

Competitor Lloyds followed with an announcement that it would slash its own desk numbers by a fifth over the next two years, following staff requests for home working to be made permanent.

The issue of remote working has divided opinion within the financial sector, however, with the chief executive of Goldman Sachs calling the trend an aberration. Although the US bank has operated successfully while its staff remained at home, David Solomon said this did not represent “a new normal” because firms like Goldman Sachs required face-to-face contact to foster innovation and collaboration, and to train and guide the next generation.

It may be younger members of staff, including millennials, who demand flexibility from their employers, including those in the financial sector, said Anita Rai, head of employment at law firm JMW. “As a business you have to make yourself attractive,” she said, “and that is the challenge for some of these financial institutions which are saying they are not really fans of agile working, because a lot of the generation coming through will be more resistant to that.”

Most firms are expected to embrace a hybrid model, which will be more difficult to implement and manage than having the entire workforce either at home or in the office.

“It’s going to be very difficult if we have a complete free-for-all,” said Nick South, expert on the future of work at Boston Consulting Group (BCG). “You have to think about people’s families and needs, people’s preferences, the practicalities, the guardrails you want to provide. There is quite a co-ordination job needed to make this work, and that’s before you think what tech do we need where, and how we will redesign our space.”

Another banker, Belinda*, is among those hoping to continue working remotely for at least half the week, from her home office in rural Devon. The mother-of-one, who is in her 40s, appreciates being able to spend time with her son as soon as she closes her laptop.

Her life before the pandemic consisted of commuting to various city-centre offices run by her employer, a high-street lender.

“I have been really impressed with how productive we can be without being together in a building,” she said. “But there are times, if I’m really honest, that I miss doing some creative thinking together.”

New ways of working will make new demands of managers and human resources teams, according to psychologist Prof Cary Cooper of Alliance Manchester Business School, who is also president of the Chartered Institute of Personnel and Development (CIPD).

“You have to have line managers who can manage people, who can tolerate ambiguity,” Cooper said. “They will need social and interpersonal skills, to recognise when people aren’t coping well because they are working too much from home. But all this is doable.”

During the pandemic, UK office workers have adopted remote working more readily than their European counterparts, according to several surveys from US bank Morgan Stanley’s Alphawise research unit. British employees also intend to request more days at home in future than those in France, Germany, Italy and Spain.

It is not entirely clear why this should be, though the length of the average commute in the UK, especially in south-east England, could be a deciding factor, as well as the hours worked in the UK, which has a longer average working week than most European countries.

The shift in the world of work will have lasting consequences, not just for organisations and their staff, but also for our city centres and the service businesses – including sandwich shops, coffee stands and dry cleaners – which before Covid relied on steady footfall from office workers

Those businesses may find town centres less attractive in future, said Catherine McGuinness, chair of policy and resources at the Corporation of London, the governing body of the Square Mile.

“We are pretty confident about people wanting to keep their big headquarters,” she said. “I worry what this means for the smaller supporting businesses. We may see a shakeout from the centre to the areas where people are basing themselves for the other days. It’s inevitable, I suppose.”

Remote possibilities for big tech

The speed with which Silicon Valley embraced Covid-enforced working from home as a permanent cultural shift made what is a challenging transition for many businesses look easy. In February last year, weeks before coronavirus had achieved official pandemic status and ahead of government-mandated emptying of offices, companies from Google to Twitter had told their employees to stay at home.

As restrictions stretched into months, the need to adapt sparked a remote-working arms race between the digital giants, underpinned by the notion that more flexible employers are better employers.

For tech companies with existing resilient, internet-based working practices in place, and employees familiar with chat groups and video calls, the initial switch was frictionless. In May, with most traditional companies still grappling with the logistics of remote working, Jack Dorsey, Twitter’s chief executive, proclaimed that employees would be allowed to work from home “forever” if they wished. Google and Facebook have followed, announcing a permanent extension to their remote-working policies.

But while tech firms have been quick to adapt to a decentralised, distributed model, the shift has proved a surprising cultural upheaval.

“[Tech companies] weren’t as far ahead as you might think with remote working before,” says Joseph Evans of UK-based Enders Analysis. “They had that image, but expectations at these companies, particularly in head office, were the same as in other sectors – to be present in the office. The pandemic changed that, and unquestionably companies such as Facebook have embraced the change.”

Now that vaccinations look likely to allow a return to offices later this year, Silicon Valley companies are looking at “hybrid” models. Sundar Pichai, chief executive of Google’s parent company, Alphabet, is developing a model where staff work three days in the office for “collaboration” and two days from home. “No company at our scale has ever created a fully hybrid workforce model,” Pichai said in an email to staff in December. “It will be interesting to try.”

Facebook’s Mark Zuckerberg has said the pandemic is fuelling a geographical diversification away from Silicon Valley, with about half the company’s workforce probably working remotely over the next five to 10 years. “We are going to be the most forward-leaning company on remote work at our scale,” he said.

But the flexibility does not stretch as far as some may wish. Alphabet’s model would require employees to live within commuting distance, and a fully remote option is reportedly off the table. And while the Facebook and Twitter plans open huge opportunities for those living outside Silicon Valley, the companies have said employees who choose to relocate to cheaper areas will take a pay cut. The moves have sparked a wider debate on localised pay rates across cities and regions.

“All the tech companies have gone on a back and forth journey regarding remote working,” says Evans. “They are settling on the idea that it has worked better than hoped, but that fully distributed teams on a permanent basis isn’t an optimum situation.