Ever since the pandemic up ended the status quo and changed the definition of “work”, the business community has been attempting to sort through the detritus to find the new status quo. A few years of data are now available, and answers to the question “what comes next” are starting to emerge.

A recent report by Scoop, a hybrid work management startup, has tracked revenue growth at 554 public companies. The report finds that companies that offer employees a choice of whether to commute to the office or commit to another option outperformed the revenue growth of their more restrictive (in-office) competitors by 16%. To ensure unbiased results, revenue growth was normalized for industry performance to eliminate differences between high- and low-growth sectors.

Although more data is needed for definite confirmation, the facts at least suggest that flexible work policies do lead to increased revenue growth. As Nicholas Bloom, an economist and professor at Stanford University and an advisor to Scoop, states: "But whether higher revenue prompts firms to need to hire faster—and choose flexible policies to do so—or more flexible policies are engaging workers and leading them to do better work, in some ways it doesn’t matter so much. If I’m reading this (study) as a manager, the interpretation is pretty (clear). Flexible employment practices are going to help support growth.”

Forbes, reporting on the same study, quotes: “The report shows that the three-year industry-adjusted revenue growth rate of companies that have what Scoop calls a “fully flexible” policy—meaning they allow employees or teams to choose when or whether they come to the office, or are fully remote—is 21%. “

In a related article, Why the return-to-office push from businesses is losing steam, published in Inc., the authors reveal the following findings:

• Hybrid work policies are taking hold, with 61% of U.S. businesses now offering flexible work arrangements.
• Only 39% of U.S. businesses now require employees to work in the office five days a week (down from 42% in April and 49% in January 2023).
• Average in-office requirement is now 2.56 days per week.
• Smaller businesses are leading the tread (76% of companies with >500 employees are either fully remote or do not require employees to come into the office.
• Flexible polices increase recruiting and retention, as well as more than doubling headcount growth.

Office occupancy in the top 10 most populous U.S. cities was just 49.9% of pre-pandemic levels the first week of May, according to data from Kastle Systems, which tracks keycard swipes across 2,600 buildings. One result of that trend is that consumer spending has plummeted in center cities in places like New York, Los Angeles, and Washington, D.C.—meanwhile, home values in exurbs and suburbs have continued to surge.

The commercial real estate market hasn’t completely tanked yet because many companies are signed into long-term leases. What’s more, the format of structured hybrid work means they can’t dramatically shrink their spaces yet. If every employee comes in three days a week, but they’re the same three days a week, the company still needs the same amount of space as it did before the pandemic. It’s just paying for empty office space on certain days of the week.

Bloom expects the share of people working from home more frequently to only trend upward as technology advances. With better video calls, augmented reality, and virtual reality, there may start to be less of a difference from working in an office and being at home, he says. Office occupancy rates may go up to 55%, he says, but he predicts they’ll start trending down again by the end of 2024.

The Times They Are A-Changing

Bob Dylan had it right. Few, if any things stay the same. The evolution of industry tells the story. It started with the Industry of Steam in England (1760s), which in turn gave way to the Technological Revolution in the 1870s. That lasted about 100 years, and was pushed aside by the Digital Revolution, which is now being replaced by what experts are calling the era of Humans, Technology, and Sustainability.

We may want to catch our breath and get our bearings before we more on, but it doesn't look like we'll get the chance. Apparently, the rise of AI, with it and humans working side-by-side is almost upon us and will usher in yet another era.

ASN Can Help

If all this sounds alarming, we can help. While you run your business, we will be continually monitoring the changes in the world of work so we can advise you every step of the way. If you have any questions, just give us a call. We would love to help.