I’ve been thinking about this for awhile since remote work increased exponentially due to Covid and this recent article published by Harvard Business Review, “Does Your Company Have a Long-Term Plan for Remote Work?” has started to crystallize my thoughts.
As remote work has become more accepted by Corporate America – and in some cases now desired – what will be the effect of all this on the cities that survive on big corporate footprints? These excerpts from the article sets the stage –
- Will Apple’s new $5 billion HQ, aka The Spaceship, turn out to be a white elephant? Will Google abandon its Googleplex? Will corporations empty out their office buildings everywhere and shrink their physical footprints? Are we on the brink of a new paradigm for work?
- WFH (Work From Home) is helping them muddle through the immediate crisis, but what do they want from it in the long run? Higher productivity? Savings on office space, travel, and cost-of-living adjusted salaries for workers in cheaper locations? Better morale and higher retention rates?
As all businesses have lost revenue during this lockdown period they are looking at cost-cutting and it is not lost on them how much can be saved with implementing a remote work plan, especially since their workforce likes it and has been for the most part more productive. The article included what I like to call this sample “elevator speech” on the merits of pursuing a remote strategy –
- In order to expand our talent base to the four corners of the world and ensure that they are fully-motivated by 2022, 50% of our creative workforce will work remotely for up to 50% of their time. Employees will be fully reimbursed for the costs of their home offices and work-related travel; salaries will reflect local costs of living.
The 50/50 plan mentioned here is something now registering with companies as they have certainly seen the research that states that such a plan would save them $11,000 per employee annually. That adds up to a lot of savings.
All the big cities are still in lockdown mode trying to fight the pandemic and get back to normal. But they need to start thinking about what the new normal is. A shrinking workforce along with a shrinking real estate footprint due to a new remote work paradigm will cost them dearly in lost tax revenue. And don’t forget the loss of all the small businesses that those departing employees used to support; that’s even more lost tax revenue.
Some of this is already coming to fruition as statistics show people moving out of the cities and into the suburbs. It was announced on CNBC today that New York City estimates that over the next two years 16% of the local workforce will relocate, costing them $37 billion in lost revenue. This will no doubt be replicated in other big cities. What is their plan? And will you want your company to remain in a declining city? Lots to think about.
As the article asks, “Does Your Company Have a Long-Term Plan for Remote Work?” Check it out for their detailed guidance.