Defining the workplace of the future: virtual-first, but not place-less

By Phil Kirschner, Senior Expert and Associate Partner, McKinsey & Company New York

Two-plus years since companies turned to remote work in a rush, it has become a norm. The topic is the subject of significant discussion, from CEO roundtables to the coffee room. Even so, there has been a lack of solid evidence to inform the conversation and — more importantly — the decision-making around how companies should address this issue.

Now there is: McKinsey’s most recent American Opportunity Survey asked more than 25,000 US workers about their experience of remote work. And a second survey asked 12,000 people — from all regions and occupations, not just office workers — about how much it mattered.

Here are some highlights of this research: 58 percent of US workers — or about 92 million people — can work remotely at least part of the time. Of those who can, 87 percent do, a third of them full-time. Men are more likely (61 percent) to be able to work from home than women (52 percent), and so are higher-income workers. And here’s food for thought: the ability to work flexibly is both a major reason Americans will take a new job, or to leave their current one. It must give pause that 40 percent of Americans surveyed — the same as in 2021 — are at least somewhat likely to look for a new job in the next six months. Again, this is not just white-collar workers.

The shift in flexible working preferences guarantees that some colleagues will be collaborating remotely all or most of the time. This means companies must set an intention that all work must be inclusive of those who may not be present at the same time or place. That said, we firmly believe real estate can be a source of competitive advantage — to attract talent, to appeal to clients, to improve efficiency, even to reach sustainability goals — not just as a cost to be managed with the increased distribution and digitization of work.

To strike this delicate balance and reap the benefits of a generational opportunity to transform the workplace and company culture, leaders need to make decisions in three key areas.

How space is used: Those who work remotely still spend an average two days in the office. So place still matters — just in a different way than in 2019. As a result, every building, and the space within, needs a clearly defined purpose. As the CEO of a cloud-based data platform company put it, offices are “not a place to hang out 9 to 5.”

We believe the chief function of a workplace should be to create a sense of belonging and to support the “moments that matter” — the times when being together improves outcomes, such as higher productivity or greater engagement. Once these moments are determined, based on data, experimentation, and feedback. organizations can make smart decisions on whether and when to recommend an in-person presence.

The overarching principle is to make the office magnetic enough to inspire presence. Think nudges, not mandates: knowing when colleagues plan to be in the office can lure others in, too. Meeting spaces should be positioned at the heart of the building’s circulatory system, and personal desks could be cut back in favor of upgraded common areas. Spaces to be creative and solve challenging problems should be highly visible, to encourage collaboration and to show that the company values innovation and teamwork.

In all cases, the point is to make the office a source of differentiation, and then to deploy technology and design to that effect. The key is to understand the historical utilization of various space types; determine how much space should be allocated; and then monitor whether these configurations function, testing new ideas all along the way.

How work is done: To integrate those working remotely and those working on-site, digital skills and capabilities need to be developed that enable productive, value-creating collaboration from anywhere and anytime.

The same principles apply externally. Even before the pandemic, hybrid sales models were becoming more common. By 2024, hybrid will be the dominant B2B sales strategy. Just as workers want the flexibility to work when and where they want, so do customers. By enabling companies to hire staff anywhere, remote working practices can, perhaps paradoxically, increase proximity to the customer. That can help organizations’ innovation talent avoid the corporate echo chamber and test new ideas faster.

Articulating the work to be done is also another way to communicate the purpose of a place. After a rigorous bottom-up analysis, one pharmaceutical company decided not to reduce its headquarters footprint, but instead to invest in it. The theme was “follow the molecule,” so the discovery, research, development, scaling up, and manufacturing teams work in spaces that flow from one to the next. Video conferencing and augmented reality technologies enable labs across sites to seamlessly collaborate with each other.

How leaders engage. Employees are making their preferences known. It is up to leaders, however, to establish the guidelines. Specifically. CEOs must be involved, because these decisions require broad coordination, for instance among the real estate, human resources, and technology functions. The CEO needs to communicate a “North Star” — a set of clear but adaptable principles that articulate the purpose of the office not only for employees, but for clients, competitors, efficiency, and performance. For example, one financial services company began by stating that it would be “flexible first,” neither fully remote nor fully in person. Then it defined the office as a place of creation, collaboration, and celebration, rather than as a setting for individual work.

This is not to say that CEOs must make every decision. Rather, they can assign explicit decision rights to individuals, and make them accountable for implementation. The tech industry is ahead in this regard. From 2020–21, the number of tech companies with a designated leader for remote work rose seven-fold.

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The hunt for talent is intense, and those in high-demand fields can afford to be picky. According to McKinsey research, candidates were three times more likely to apply if a position came with flexible and hybrid options. Getting remote work right, then, can’t be a matter of muddling through, or leaving it to the HR specialists. It must be seen as what it is: an essential element of long-term strategy.

Think of it as a chance to boldly go in a new direction — and to end in a better place.

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