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Understanding Remote Hierarchies and the Future of Work
Today, we’re exploring one of the ideas that’s reshaping our environment: remote corporate offices. As many of you know, I have an enduring passion for architecture and I am endlessly fascinated by the impact that our built environment has on our mental and physical well-being. COVID-19 has irreparably reshaped our work environment, and the built environment will be soon to follow. So, today we’re going to dissect the options that companies face when planning for the new era of remote work, soon-to-be “work.”
Alright, let’s dive in.
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Every day I gaze out of my living room window and into the large, aging, six-story structure that is the corporate headquarters of Zulily. On a normal day, the spaces experience the visible representations of what we’ve come to recognize as “work” — team meetings, hallway conversations, corporate presentations, coffee chats, and open office banter. But the physical indicators have stopped.
Over the last six months, I’ve sat back and watched the steady buzz of the well-oiled machine that is a corporate HQ slowly dissipate, sending its employees to their newly-christened home offices. The building now sits in silence, nestled between the calm waters of the Puget Sound and the quiet passages of the surrounding neighborhood.
Zulily is not alone. Many offices just like this sit in silence, waiting to be filled. Companies around the globe are staring down a challenge like never before. As companies work out their strategies for a post-COVID-19 world, employees are taking matters into their own hands, leaving the corporate campus behind.
Power to The People
Blind, an anonymous community of verified professionals with 3.6 million users, asked their community a simple question in May and August: “Do you plan to relocate or stay put?” Out of the 4,400 users surveyed in three major cities, 15% anticipated never returning to the office. Furthermore, 15% of Bay Area professionals have already relocated out of the city, according to results. Of those who have stayed, 59% would consider relocating if they had a choice to WFH as much as they’d like.
Not only are people interested in working from home, but they’re also reevaluating their living situation and considering relocation. This is a paradigm shift, as employees are no longer forced to limit their lifestyle choices.
Prior to COVID-19, the power-dynamics were heavily-weighted towards the employer. Employers influenced employee housing options, commute times, climate preferences, cost of living, access to outdoors, and many other import lifestyle choices. Why? Because they picked the location and therefore the lifestyle. As corporations react to the changing environment, I expect we’ll experience a bumpy transition period towards our new way of working.
There’s a stratification happening, creating three primary paths for the new normal:
The Crusaders (aka remote-only/first)
The Decentralized (aka remote-plus)
The Entrenched (aka remote-last)
Here’s how I see it breaking out in the near future.
I’ve been trying to come to terms with the dynamics and hierarchies associated with corporate remote work. To test and contemplate my perception of the hierarchies, I’ve created a little drawing.
Let’s expand on the differences and similarities between each level of remote work.
The Crusaders (aka Remote-Only/First)
The Crusaders represent a minority of the existing corporations. Seeing the writing on the wall, reading the tea leaves, call it what you want; they’re pioneering the next phase of corporate work. Like all pioneers, they’re taking the risk and fighting their way toward the future without a map or compass. It’s not an easy road, but their faith is energizing.
As the name suggests, remote-only companies provide one option for employee work location: remote. Nothing more, nothing less. Companies like InVision, Automattic, and more have been leading the way on remote-only culture for years. I like to think of these companies as the “preppers” for the future of work — they're not focused on how things will fall apart, and they are prepared to adapt in the face of uncertainty. They have plans and are actively leading the charge, from the safety of their home bunkers.
Transitioning to a remote-only environment is the most difficult of the available options. This is, in part, why companies and employees are experiencing a bit of growing pain right now; the COVID-19 pandemic forced them to skip the slightly easier remote-first level and go straight to remote-only.
Offices provide a safe refuge from the challenges of remote work. They can be a nice way to find comfort, connection, and diversity. For remote-only companies, this environment is difficult to recreate virtually. Not only physically, but psychologically — trust me, I’ve been there.
As we’ve recently learned, social interactions are more important than we imagined. It’s easy to forget that a well-designed physical workspace can act as a home away from home; a communal safe space. Where do you go, when there’s nowhere to go?
Remote-first is the prioritization of remote work and remote employees. The default state is remote, not in-person. This is the gateway drug of remote work; once you start, it’s hard to stop, and much easier to reach the next high.
A few companies that historically offered remote work are now making the shift to remote-first environments. Atlassian and Slack have decided to embrace a remote-first culture, making remote employees first-class citizens and allowing them to work from home indefinitely. The redistribution of talent is what drives many companies to shift to a remote-first culture, but there additional benefits that employers are attempting to capitalize on include:
Decreased Overhead. First and foremost, remote work decreases the overhead costs associated with office space. Chairs, desks, snacks, art, heating and A/C, parking, and maintenance are now the employee’s responsibility. Companies can either choose to reinvest this money into their employees in the form of salaries and revised perks, increase their growth, or simply increase profitability.
Increased Talent Pool. Not everyone wants to live in San Francisco, New York, Seattle, or one of the major tech hubs. In fact, high-leverage employees who know their worth have been pushing employers to realize that their value is not dictated by the office they inhabit, but rather the skills and experience they bring to the table.
Even Playing Field. This isn’t just a win for large companies, it can be a boon for smaller companies and startups, as they can compete on an even playing field. By not trying to compete with the perks that Google and Facebook offer, employees are free to make decisions that allow them to design the best life, not just the most practical life. Entrepreneurs learned this early, and corporate employees are taking notice.
Transition time. Companies that embrace remote work early will also reap the benefits and make the transition smoother. The early adoption forces companies to build rules and norms from the more difficult constraints of remote work. Remote-first companies will build a completely different culture.
While there are startups and SMBs who have operated in the remote-first/only world for years, the shift is far more complex for large and enterprise corporations. Imagine onboarding hundreds of remote-only employees each week, or coordinating team-building events or corporate outings. These are just a few of the challenges companies are attempting to tackle. Those who choose to face these challenges head-on will reap the benefits of their early investment over time.
The Decentralized (aka Remote-Plus)
One way or another, the shift to remote-work is happening. While some companies are going all-in on remote work, others are looking to blend the old world with the new, creating decentralized workspaces that allow for a hybrid workforce. These Decentralized corporations are simply buying themselves time to adjust, devise a more strategic plan, and see where things end up; they’re creating optionality.
In a recent example, Amazon, a company notorious for maintaining optionality but rarely supporting remote work, indicated that they may be changing their tune when it comes to corporate real estate. On Thursday, Amazon asked which communities near Seattle — including Tacoma and Redmond, Washington — they’d prefer. And thus, the canary in the coalmine sings.
The Entrenched (aka Remote-Last)
Never say never. Or at least not right now. Most corporations realize that now is certainly not the time to take a strong stance against remote work. That doesn’t mean they’re not against it, it just means they’re not actively announcing their position. Conversely, the longer these companies choose to hold out on building a culture that supports remote work, the harder it will be for them to make the transition. As we slowly find our new normal, I suspect many corporations to require their employees to return to the office, leaning heavily on the old tropes of “increased collaboration” and “stronger culture.” I expect this to be short-lived.
Not all companies or jobs can actively support remote work. Factories, healthcare employees, and construction workers are in no position to work virtually (yet). This will become increasingly evident as more corporations go remote, creating a hard, bold dividing line for the virtual and physical workforce.
Where do we go from here?
Corporations are about to experience a massive shift in workforce strategy. And, while there are many unforeseen changes that are difficult to predict, here are a few that I expect in the next 18 months.
Decentralization: Co-Op-ting Out of The Corporate HQ
Instead of massive headquarters that absorb entire zip codes, you can expect to see satellites, hubs, or mini-campuses. Where massive campuses once reigned supreme, smaller, more flexible offices in multiple locations will start to emerge, allowing employees to drop-in for meetings, social engagement, or respite from the home [office].
Last week, REI recently announced plans to sell its new corporate campus in Bellevue, Washington.
“The dramatic events of 2020 have challenged us to reexamine and rethink every aspect of our business and many of the assumptions of the past. That includes where and how we work,” REI President and CEO Eric Artz said in a video call with employees, according to a company statement.
The campus, which began construction in 2018, was hailed as the “most outdoorsy HQ ever”, featuring outdoor walkways, rooftop meeting areas, fire pits, and a plethora of native plants. Like most major retailers, COVID-19 has forced a rapid evolution in real estate decisions. With the release of this office, REI stated that they’ll move to multiple “satellite” locations across the Seattle area.
“The owners of big corporate buildings are really starting to see that their employees really don’t want to come to work in the office anymore,” said Rick Mirza, a commercial real estate investor and CEO of Daulat, a private-equity firm. “That feeling that we work somewhere, and it’s this whole big-tribe mentality — [some are] realizing that’s not that necessary."
But “this year has shown us our home is not a building. Our home is wherever we find ourselves doing our best work, pursuing our outdoor passions, serving our communities.”
They’re right — our home is wherever we find ourselves doing our best work, pursuing our passions, and serving our communities. I’ve been bullish on the idea of finding your tribe as a remote employee or free agent, as the physical barriers of our environment reshape themselves, and REI is taking the right approach.
The End of Free Lunch
Facebook and Google have decided to take a slightly less aggressive position. This week, Facebook announced that it’ll allow employees to work from home until July 2021. In addition to extending the policy, Facebook also said it will provide employees with an additional $1,000 to spend on “home office needs.” In doing so, they’ve joined Google, who also extended its coronavirus remote work provision, saying staff would be able to continue working from home until the end of June 2021.
This approach buys them time to evaluate their position and decide what to do with their existing properties. REI was in a more favorable position, as they had yet to move into their new campus. Meanwhile, both Facebook and Google have continued to expand their physical footprint throughout the COVID-19 pandemic and still seem to promote the in-office culture. But what happens to the employee perks that reside within these locations?
☝️ Facebook Tel Aviv
When I first started working in tech, luxurious offices were on the rise. Tech companies were following the startup trend and investing heavily in the work environment. Designed by world-renowned architects like Frank Gehry and Bjarke Engles, these offices are filled with luxuries like barbershops, dry cleaners, and more. All with the purpose of making work feel a bit less like, well, work.
The trend was, in large part, due to an increased demand for design and engineering talent, which forced tech companies to compete beyond compensation. Companies like Google and Facebook led the way, providing workers with access to cafeterias, fully stocked kitchens with professional chefs, complimentary drinks and snacks, barbershops, and more. The expenditure was backed by the data that revealed how food-related perks can improve employee morale and help keep workers energized, comfortable, and on-site longer. It was clear that the office was the place to be. But in a remote-first or remote-only company, these perks effectively go to zero. Employees' homes become their lives.
Companies that carry office leases without employees are betting on a future that may never come. As employees adapt to their new work environments, we can expect employers to transition the in-office perks to their at-home work environments. Chairs, desks, plants, and other amenities will become a top-request for remote workers looking to recreate the in-office amenities they’re accustomed to. Furthermore, expect employees to push employers to fit their needs for childcare, PTO, and offline time. Companies will need to reimagine perks and culture altogether.
Local Economic Free Fall
Where Google and Facebook have over-prioritized office perks, Amazon has refused to participate. In a 2014 interview with Business Insider, Amazon CEO Jeff Bezos maintained that he offers employees a much more valuable perk: a well-located urban office. Bezos noted that the urban campus is a “spectacular benefit” to Amazon’s employees, as it allows 15% of them to live in the same zip code as their office and 20% to walk to work. In addition to offering a “spectacular” urban office, Bezos has held a strict no-free-lunch policy, saying that this policy promotes a thriving independent food scene around their campus.
“We have an unbelievable food truck scene around our headquarters,” he said. “It’s out of control, actually.”
With nearly 50,000 employees now working from home until 2021, I suspect the food truck scene is slowly fading. But it’s not just the food trucks that are exposed.
For many small businesses built on a clientele of Amazon workers in South Lake Union and the Denny Regrade, their absence for the remainder of the year could be an existential threat.
Urban campuses create a micro-culture of economic growth, predicated on the idea that the corporations that prop them up will be around to see them through hard economic times. With companies like Amazon playing fast and loose with their real estate strategy for years, they’re creating a false sense of security for the smaller business that surround and support their campus.
A Healthier (and Cleaner) Workplace
The uncertainty around the current COVID-19 epidemic is forcing companies to prioritize safety, health, and mental and physical well-being for those employees that do return to the office. The long-overdue refocus on employee mental health is finally being pushed to the forefront and I suspect it will be the next competitive advantage in the remote-first work environment. We can expect to see a demand for workplace amenities that focus on flexible work locations and hours, in-house counseling services, and mandatory vacations and PTO. The HR team is about to become a key asset for sustainable growth.
In addition to mental health, employees who are required or interested in returning to work for the dithering will expect their employers to take further precautions with new HVAC systems, UVC lamps, surface coating, and antimicrobial treatments. This may be enough to push employers over the edge to fully embrace some form of remote work, but again, not every organization will have this option.
Repurposed Social Spaces
I’ve been bullish on Starbucks taking a seat at the co-working space table (pun intended) for a while — and the time has finally come. Starbucks recently announced they are officially testing a new co-working space in Japan that is essentially a WeWork + Starbucks. I love this direction and expect more companies to create something similar, possibly in partnership with Starbucks.
Starbucks owns the mindshare for the urban safe haven. It’s a trusted location where conversation happens. It’s a place of comfort and security. People know and love Starbucks. And when we need a break from the home office, we trust that Starbucks is there for us with an overpriced cup of coffee, a chic chair, and open wifi. Add in a way to book a desk or conference room, and you’ve effectively recreated what many corporations strive for with their HQ build-out. What more could we want?
While we are all anxious to return to some sort form of normalcy, the reality is that we’re not going back. The world is changing, and so are we. Instead of retreating, it’s time to set up strategies and plan for uncertainty. Whether you prefer the office or plan to work from home, be ready to adapt.
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Thanks for reading, and see you next week,
— Kevin K.