A shift to remote work at companies was underway even before the Covid-19 outbreak. New startups were being born that were fully “remote from the start.” Larger companies were experimenting with remote work to access talent outside major hubs.
But while the shift had started, few firms had fully embraced the change. Moving to a remote-work culture from an office culture requires an investment of culture, energy and money far above and beyond what most companies were willing to commit to, pre-Covid.
The last few months have, of course, changed all this. Nearly all knowledge-work–based companies have been forced to iterate through processes and technology to actually put at-home work into practice. For many companies, having been forced to make the investment, they are now finding that the strategy is working—and offers a very enticing template for how to continue in the future.
Many companies are not going to return to pre-Covid work patterns. The implications of that sea change are enormous. Here are a few of the most important things to keep in mind about the new reality of remote work:
* People are not going to return to going to offices five days a week, which is going to crush commercial real estate and adjacent businesses.
In an informal poll I recently ran of 500 participants, less than 20% of people thought they would return to working in an office five days a week in the future. More than 60% thought they would be in an office three days or fewer a week. This poll was by no means scientific, but I do believe it is directionally indicative of a major shift we will see in work culture.
There are reasons for teams and individuals to want to meet in person periodically. But if people don’t want to go back to the office routine, and companies benefit from work at home (more on this later), then there is no way that office culture will reemerge as it was on the other side of this episode.
The standard will flip to mostly remote work punctuated by in-person collaborations and meetings.
Needless to say, owners of commercial real estate, and businesses that rely upon high densities of daily workers in offices, are going to suffer a lot. So, too, will businesses like restaurants, cleaners and so forth that rely upon office cultures and downtown density of daily workers.
The model of long-term corporate leases and expensive build-outs for commercial real estate was already a deeply threatened model. But post-Covid, it simply doesn’t make sense as a business. Co-working is also not going to make very much sense unless the providers move away from desk and space rentals.
Instead, you can imagine teams renting shared generic space at defined times weekly or monthly, or hosting periodic global-style conferences using hotels and convention centers more frequently. This could be a new class of real estate or the reconstitution of what already exists. But any way you slice it, the physical footprint needed for office work is going to shrink if the number of office days declines a lot. And it might be that home design will change as well to better accommodate home workers.
* A flattening competitive curve for jobs, opening opportunity globally and likely lowering wages.
When some people work remotely but most people work in person, the people who are remote are at a decided disadvantage in succeeding at their jobs. When everyone is working remotely, that flattens the playing field, and everyone is equally well positioned to succeed.
What this means for the global talent pool is that many people will have way more access to job opportunities and greater prospects for success. This forced move to remote work, in a sense, is going to allow companies to access way more talent.
This will be good for creating opportunities for people worldwide, but it also likely means that the premium engineers have commanded in certain cities will drop. For companies, being forced to pay the one-time tax of moving to remote work could be a long-term benefit where they get access to better talent at lower costs.
For individual workers, of course, the impact is going to be interesting. For any engineer outside the core markets or with a nontraditional background, the move toward remote work will be positive. For certain engineers in the core markets, the net impact will likely be akin to the move toward the outsourcing of manufacturing a generation ago—they will lose pricing power and inside access to knowledge and opportunities.
* An increased focus on measuring and systematizing work so that it can be done remotely at high efficiency and quality.
The place where the shift to remote work is hardest is where processes are poorly documented and teams work collaboratively without structure. This is unavoidable no matter how much teams deploy and learn to use tools like Slack and Zoom.
What this means is that the shift to remote work is going to bring a shift toward more structured work processes and process documentation. Teams that used to work nearly ad hoc are going to have to work hard to make sure they clearly define and measure the tasks they ask of people, so that remote workers don’t need to constantly ping each other with questions.
At Fin Analytics, the company I have been building for the last few years, we see this very clearly with operations teams. Any processes that we used to do casually, or any questions that we used to answer by raising a hand and checking in quickly with a manager, are rapidly becoming highly process driven and structured in this remote work situation.
Similarly, training—which could be done nearly ad hoc by in-person osmosis, spending time with co-workers—must shift to more formal documented and followed processes.
This move toward documentation, standardization and measurement is related to the flattening of the competitive curve. It isn’t just that everyone will be working remotely. It is that jobs themselves will change so they can be done effectively from anywhere.
* Higher remote-work corporate profitability based on lower wages for knowledge-based jobs and lower real estate costs.
If what I suggest above comes to pass, the move toward remote work will mean that knowledge work–based firms will become more profitable.
This isn’t just because firms will be able to avoid expensive real estate outlays. It is also because of changing patterns of access to talent and job standardization.
As noted, to the extent that this period greatly expands the talent pool, then wages should drop, making firms more profitable.
To the extent that job processes become more documented, measured and standardized, you can expect that the costs of training and turnover will decrease. That again will lower the pricing power of knowledge workers and increase firm profitability.
* Suburbs and cities will likely decline and exurbs will rise.
Let’s imagine that people stop going to work in an office daily, but instead are checking in to an office or going to work with co-workers only a few times a week or month. Does that change where people want to live? My sense is that it absolutely will.
Some people are floating the theory that the long-term impact of Covid-19 will be a flight from big cities and a rise of the suburbs. This is after a major shift from trends of the last 20-plus years, when technology made cities more desirable.
I think this is wrong. Commuting-oriented suburbs are not the answer. People will want to return to the real country and live hours, not minutes, outside hubs.
My personal view is that we will see new forms of rural living where costs are low and land is abundant, and small towns might become the new social and connective tissue.
While any sort of shift of this magnitude will be very slow, it also would greatly change the logistical patterns in the U.S. and draw into question a lot of the current business models of companies like Uber, which require population density to work.
Conclusion
The shift from office cultures to truly remote cultures might have been a good idea even pre-Covid. But getting to that end state required organizations to invest an enormous amount up front—in tech, process and training—for the long-term advantages of remote work.
Nearly every company in the world, in the last few weeks, was forced to make the investment in remote work and overcome the up-front cost. Now that many have paid that cost, there is no going back.