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Thanks for listening to the DNA of work podcast
00:00:01 Karen Plum
Hello everyone. In this episode, we look at the impact that new working patterns are having on organisations and cities like London, San Francisco and Mumbai and we see how individual life choices can enable organisations to downsize their portfolios. Here we go.
INTRO: Welcome to the Changing the World of Work podcast where we provide insightful, practical content to untangle and demystify workplace change. I'm Karen Plum, director at Advanced Workplace Associates, where we combine science with nearly 30 years’ experience, helping organisations change the way they work, for the better.
00:00:45 Karen Plum
Since the COVID-19 pandemic hit in the early part of 2020, people have been talking about the impact on cities. When Organisations closed their offices, there was a lot of concern about the local businesses that relied on office workers and commuters for their trade.
To some degree, there was a recognition that in times of change, some businesses and services spring up and others decline - it's the natural order of things. But it was probably felt in the early days that things would be like this for a couple of months and then the commuters would return. Some 18 months later, not only have the commuters not returned to previous volumes, but it seems unlikely they will do for the foreseeable future.
Changes in patterns of working mean that many people are now spending much more time working away from their office location. They're working from home or another space closer to home. Some have relocated away from the cities that they used to commute to either permanently or temporarily and they either work remotely for the same employer or have switched to another.
00:01:51 Karen Plum
At AWA we've been interested in these trends since the pandemic hit. We've been supporting organisations around the world to adapt to the new ways of working that were required by the stay-at-home orders and helping them plan and execute new approaches to take advantage of new opportunities.
Earlier this year, a report on the UK economy by PwC forecast that the London population would decline for the first time in the 21st Century. Research by the London Assembly had identified the trend of city dwellers to move away from the capital, having reevaluated their needs and the things that were most important to them - the need for bigger homes, access to green spaces and a sense of community were things identified as being sought by people looking to relocate from their current London homes.
While the London Assembly’s most recent research has shown a reduction in the number of people who intend to move out of London, it's clear that there is still a proportion of people that can see the opportunity to get more for their money and to have a better life elsewhere.
To put this into perspective, I talked to AWA’s Lara Al Ansari who recently co-authored a report on the impact of remote working on London Organisations. I started by asking what she'd found.
00:03:12 Lara Al Ansari
Around 41% of the population that lives and works in the inner boroughs of London could do their jobs at a distance i.e. remotely so this means around 830,500 people or jobs could move out of the centre of London and into other locations across the UK or even abroad.
00:03:31 Karen Plum
Wow, that's a big number! How did you come up with it?
00:03:34 Lara Al Ansari
In order to arrive at that number, we collected data sets from NOMIS, which is a service created by the Office for National Statistics. The datasets themselves contained the population of people living in inner London in the year of 2020 and their different employment types or categories.
What we then did was assign a probability to work remotely to each of these job categories based on an understanding of the nature and demands of the employment types. For example, admin and secretarial roles were deemed highly likely to be able to work remotely since their ability to complete their tasks isn't necessarily contingent on location. Whereas those employed within the healthcare sector, for example doctors or nurses were less likely to be able to work outside of their main office location because their ability to meet the role demands is more contingent on their presence in their work location.
00:04:31 Karen Plum
You were looking at roles rather than individual preferences - you've looked at the data and understood - these are the types of jobs - so this is our assessment of whether or not those could be worked away from the office, right?
00:04:45 Lara Al Ansari
Precisely yes.
00:04:46 Karen Plum
So what does that mean do you think for organisations that are based in London?
00:04:52 Lara Al Ansari
Well, many organisations are now choosing to move to a more flexible way of working even post Covid because the pandemic has shown that working from home is actually far from detrimental to productivity and long-term business continuity for many sectors. That being said, the office still provides many benefits that are less easily accessible remotely, for example, those serendipitous encounters, water cooler moments, that opportunity to socialize more informally and build that cohesion. And therefore many organisations are now opting to move to a hybrid way of working in order to reap both the benefits of home working and office-based working.
00:05:31 Karen Plum
So just for clarity Laura What do you mean by hybrid working?
00:05:36 Lara Al Ansari
So when we say hybrid working we mean a way of working which gives people more choice about where they work, so whether that's at home, in the office or a mix of both, it essentially allows people to decide their working styles based on needs and desires.
00:05:52 Karen Plum
OK.
00:05:54 Lara Al Ansari
With this type of arrangement the office space wouldn't necessarily need to cater for as many people and their organisations could downsize in terms of space costs and the number of support staff required to run the building. It also begs the question what sort of spaces would be available in the workspace.
Many organisations we've found are opting to swap traditional desk space for collaborative space so that the office becomes a hub for interaction and socialization, whereas the home becomes that place that we undertake focused work or work that requires concentration.
With many people across the nation seeing first hand the benefits of remote working, many people may want to continue working this way. In fact, 41% of people working and living in inner London may want to continue working this way. And so, if organisations then revert to pre Covid ways of working they may lose out on talent to competitors who do offer more flexible ways of working.
Finally, a recent study by AWA found that employees in the UK on average want to work 2 to 3 days a week with those 2 to 3 days being Tuesday through Thursday. This means that potentially on Mondays and Fridays, the office could be quite an empty space. Therefore, organisations need to carefully think through how operations are going to work if they plan to embrace a hybrid work style.
00:07:22 Karen Plum
So that gives organisations, I guess, a bit of a headache in terms of managing demand in the office and that's something that we're going to come back to in a future podcast because it is potentially quite a challenge, although at the moment I guess a lot of organisations aren't bringing people back in in droves!
00:07:29 Lara Al Ansari
Yep, definitely.
00:07:42 Karen Plum
Or insisting on people coming back.
So finally Lara, what do you think this means for London and other UK Cities? Is it potentially positive for the UK economy?
00:07:53 Lara Al Ansari
At an individual level, more people moving out of inner London and into other areas across the nation may result in a decrease in spending in the center of the capital and an increase in spending on local businesses elsewhere, which is in line with Boris Johnson’s leveling up agenda.
For example, some of the prime lunchtime spots here in the center of London, such as Leon or Eat, they may suffer a little bit, whereas other local businesses across the country may see a gradual increase in sales.
Additionally, this may have potential implications for transportation in and around London as fewer people travel into the office every day. Finally, with more organisations shifting to a hybrid way of working post Covid and consequently downsizing their office spaces, a lot of that previous office space frees up, so there is a potential for that commercial space to be converted into residential space, which would have its own implications on the housing market as demand for housing in inner London decreases, while supply increases.
00:09:05 Karen Plum
Clearly, the research shows a headline number of potential people and roles that could work away from London. This number is subject to lots of different forces – individual, organizational, cultural and societal. But it hints at the opportunities available and the challenge faced by cities in planning for the future. If you'd like to know more, there are links to the London report and the other report Lara mentioned in our show notes.
For an organizational perspective, I asked Kerry Smith, London based Director of People and Organizational Development at the British Heart Foundation, whether they're seeing people moving away from London.
00:09:45 Kerry Smith
We saw a lot of people moving back to family homes or back with their parents, giving up rented accommodation in London, in lockdown and moving back and that could be to anywhere in the UK, they've not necessary made a permanent relocation, but they've made temporary arrangements to be out of London. Anecdotally, I do know a number of people who have actually made that permanent move. They have moved to places like, you know, beautiful places across the UK - I get very envious - places like the New Forest or coastal places, places of natural beauty really.
I actually do see it as an opportunity because I feel that if people are able to do that and still deliver what the organization needs, then we're going to have a happier workforce and they're probably going to stay with us for longer if they're able to have that kind of, you know, that flexibility to be able to do the job that they love, the job that they're skilled to do in a new location that's out of London, that's their choice.
00:10:53 Karen Plum
What impact is this having on the quantity of space that you need in your office?
00:10:59 Kerry Smith
We have used the feedback that we've had through our staff engagement surveys to kind of understand what people are looking for from the future of their workplace, what it means for those that have moved away and people that are contemplating that as well. And we’ve just recently launched our new program - based on that feedback - which is called “Flexibly connected” and it's flexibly connected because we do want to move to a blended way of operating where we are imagining around 80% of our workforce will be on blended contracts.
Which means they'll be on dual location contracts. So it could be home and London or home and Northampton Office or wherever it is they might be based so we're offering that and we're going to be working through what that means for us. We're doing that right across the UK.
By doing that it's enabled us to take an opportunity, which rather fortuitously came our way, which is that the building that we currently occupy in London had another smaller space that they were able to suggest to us that we might be interested in. So it means that we are able to downsize our office without moving, so we're going to be relocating but within the same building, which is fantastic.
We were on 2 floors, so it puts us all onto one and as I say it's a smaller space so it actually gives us the chance to really land and realize the flexibly connected approach that we want to take and showcase it in our biggest office, which is our London office.
00:12:37 Karen Plum
According to the PwC report mentioned earlier, it seems that cities may also see a decline in the number of graduates that come to work in them. Of course, this could be a chicken and egg situation because graduates of course go to where the jobs are and if the jobs are advertised as having a remote or virtual aspect, then they may not need to relocate in order to take them up.
Whether younger people will still want to live in cities for the nightlife entertainment, easy transport options and other social benefits remains to be seen. The attraction of wide open green spaces may not fulfill all their desires in the same way they would for families, for example.
That said, it's clear that it all depends on whether you can afford to live in the city, although prices may reduce if demand drops, and what quality of life you have. Here's my colleague Partha on the situation in parts of India.
00:13:31 Partha Sarma
It's largely from the younger generation mainly because when you are like you know in your 20s or early 30s, you're not married maybe, so you're living in a small apartment in Mumbai or Bangalore with 3 other mates, you know? And you've kind of left your family and you’re there because there's a promise of a better life, more money and all of that. And they have suddenly realized that you know they can actually go back home, save a lot of money, have home food and be generally happy you know, and they're actually getting much more money and there's little option to spend, so they're very happy with this quality of life and they want to stay there.
The more senior people because they're more settled they have kids, they cannot go because their kids have to go to a certain school and all of that. I think it's not really coming from that section, but coming more from the youngest one.
00:14:21 Karen Plum
Another example comes from the Bay Area in California, where many of the tech giants are embracing choice and flexibility in where people work. Here's Nida, our market leader in California.
00:14:33 Nida Mehtab
San Francisco - we all know it's a 7 square mile city. It's concentrated - it's very packed. So when people found out through their employers that they have almost a year when they're not going to be back, of course I want to venture out and be closer to the mountains, be close to the national parks will sit to the ocean because I can and I don't have to commute into the city or into Silicon Valley 3 days, 5 days a week.
The other fact - more of the workforce in the Bay Area at least is Millennial and X-Gen, for which of course, the city brings a different vibrancy to that demographic. That has been the reason why people have been wanting to stay in San Francisco, too. And I don't think that factor is going to go away anywhere. And we are hearing Google, Facebook giving some level of flexibility to employees, yet expecting employees to come to work at least 3-4 days a week, so that really doesn't allow people to work from a different state and commute from their work from 200 miles away, and commute from there.
So what we are seeing right now is every workforce’s reaction to pandemic and it's temporary. This whole trending of California or Bay Area or anywhere in the world is gonna be re- baselined once the organizations or the anchor employers in that respective market end their voluntary work from home, or bring people back to work. We haven't hit that mark yet! For some companies that's September 2021 for other companies it's January 2022.
00:16:11 Karen Plum
Clearly this is a complex subject, but as with the opening up of different ways to work, there are many more options and possibilities for the wider aspects of life, individual, family and community. In turn, these will have an impact on climate change as decisions about property portfolios and transport choices are made.
Perhaps we'll no longer have to give up or sacrifice things we value for the sake of being near to the office. Hopefully we'll be the richer for it.
00:16:40 Karen Plum
Thanks to everyone that contributed in this part of the podcast. You can find their details in our show notes and now it's time for a quick break. And then we'll hear about how things are progressing in Switzerland, where, interestingly, people already tend to live outside the big cities. See you soon.
ADVERT: If you're changing the world of work in your organization, we'd love to introduce you to the Advanced Workplace Institute. A membership group dedicated to supporting people tackling the challenges of change designed for leaders from the disciplines of HR corporate real estate IT operations and facilities management. We share insights and research, facilitate peer to peer discussions on a wide range of topics and support members in their personal and their organizational development.
I'm David Smalley and I'd be delighted to invite you to an AWI event as my guest. If you're interested there are details in our show notes. I look forward to hearing from you!
00:17:46 Karen Plum
Welcome back now we're going to find out what's going on in Switzerland and I'm delighted to welcome our senior associate in Geneva, Clark Elliott. Hello Clark.
00:17:57 Clark Elliott
Hi Karen, nice to see you.
00:17:59 Karen Plum
Good to see you too. So Clark, can you share with us the main trends that you're seeing in Switzerland at the moment? Are offices generally open now?
00:18:10 Clark Elliott
Actually, most offices are still not open in Switzerland, Karen. People are waiting I think for the summer to come and go and people are looking at September - children back to school and the typical European kind of - get back to work after the summer.
00:18:31 Karen Plum
Are they watching what's happening in other countries or are they very much comfortable with taking their own path?
00:18:38 Clark Elliott
Oh, I think it's a mix you know. Switzerland has a very high number of international headquarters of some of the world’s largest organizations and a lot of small medium sized enterprises, too, so we have a mix and there's a big public sector and especially in Geneva, you have the international community with the United Nations and the NGO, so it's quite a mixed bag.
00:19:06 Karen Plum
So what sort of trend have you seen in terms of people perhaps feeling comfortable to move away from the big cities with all of the homeworking that's gone on, I believe it's been quite successful for a lot of people based in in Switzerland.
00:19:23 Clark Elliott
Well actually in Switzerland, a lot of people moved away a while ago anyway. There is a great desire to live in villages. You know people have country houses, people tend to drive between 30 and 50 minutes to be able to live in a village.
Especially in the Geneva, Lausanne areas and the Zurich area too - there are lots of lovely villages. The cities are rather small and there's lots of villages around all of the major cities. We're very well connected by rail, but people tend to still want to drive and be independent to drive home to the village.
Another issue is altitude. We have great weather, especially in Geneva and if you live above 600 or 800 meters you see the sun, you see the Alps, you see the clouds below you and there's a lot of people haven't wanted to live in the pea soup so they have moved away. What we're seeing now is just less commuters. They're working from home.
We've confirmed in Switzerland, the desire to work from home 2 or 3 days a week that we're seeing in other countries holding up for the Swiss and also in the public sector as in the private sector.
00:20:46 Karen Plum
I was looking at a survey that Deloitte did a few months ago and I think they were a little surprised that the appetite for remote working amongst the younger age groups was quite strong. I think probably about a third of them were expressing this desire to work remotely.
00:21:05 Clark Elliott
The desire to work remotely is very highly connected to flexibility and work life balance that people got used to during lockdown and during the months and months and months of pandemic. Just like all the other countries, we were expecting things to go back to normal much sooner. And now people don't want things to go back to normal.
I think this statistic that I talk about a lot, is nearly 70% of knowledge workers are ready to change jobs if they don't find flexibility in their current job situation. Some of the big consulting companies talk about this big risk of people just moving with their feet if they're not finding the flexibility they've grown to appreciate and I think that's something that's also very Swiss Karen, that work life balance, you know Switzerland, the lakes, the mountains, countryside I think we've got more walks in the woods per person, per kilometer than anywhere else in the world!
It's really quite dense, but we live it. And that actually makes me think of 2 projects I'm doing - biophilia is showing up in projects and I'm not surprised by that.
00:22:39 Karen Plum
Yes, we hear a lot about the benefits of being in nature, don't we? And the positive effect on mental well-being.
00:22:47 Clark Elliott
And that's a Swiss tradition for 150 years already as soon as railroads were invented. You'd have people taking the Grand Tour across Europe and going to the Swiss mountains and just being in nature, and that's part of our DNA here.
00:23:00 Karen Plum
And air quality!
00:23:08 Clark Elliott
And the air quality.
00:23:09 Karen Plum
Up in the mountains! I was thinking actually about the impact on the expat community. And of course if we don't have to move for work, then perhaps there'll be less people relocating to other countries in order to take up positions. But I guess from what you're saying, Switzerland seems like a bit of a magnet for all sorts of reasons, and people actually do want to be there.
00:23:35 Clark Elliott
Well people do want to be here. It's always traditionally been a big problem for international relocations - people don't want to leave after 3 years of living in Switzerland. It's another issue. But today, I mean, Switzerland is a very expensive country to live in in fact I know quite a few people in the financial sector who actually commute. They live in the UK, work in Geneva or in Zurich and they fly in Tuesday morning, go to work and fly home Thursday evening after work and there's an interesting possibility there.
It's another kind of a mix, but the problem of traveling by air has made that model quite questionable. And I don't know what's going to happen. Early in September there will be a very interesting one to look at in terms of carbon footprint. Swiss are extremely sensitive about sustainability and that is this I think it's showing up on the radar.
00:24:42 Karen Plum
And of course, if people are flying in at the moment, there's still quarantine considerations, so I guess those people that used to fly in and work for the week and then go back to the UK, they've probably been doing none of that in in the last sort of 15 / 16 months, so I wonder whether that model will change.
00:25:00 Clark Elliott
Yeah, exactly correct. It's anyone's guess. I guess that's it's another reason why people are waiting till September and the traditional back to school. Back to work. End of the holidays period. You know. Hoping to get? See some clarity? Certainly the quarantine issues, as you mentioned, is a major factor.
00:25:22 Karen Plum
Well Clark it's been wonderful hearing your thoughts and getting to know what's going on in Switzerland. I guess the end of the summer is going to be the next interesting step, so perhaps we'll come back and have a further chat then. Thank you very much.
00:25:36 Clark Elliott
Thank you, Karen. Looking forward to another chat.
00:25:41 Karen Plum
And that's it for this episode. See you next time.
CLOSE: Thank you for listening to this episode of the Changing the World of Work Podcast. Please follow or like the show so you don't miss any of our content. You can find more information on this episode in our show notes, including a link to the AWA website, if you'd like to know more about us. Hope to see you next time. Goodbye.