At PieLAB we have four core values, one of which is “Be Inquisitive”. This is based on our belief that to be truly successful investors and operators of businesses we must maintain an inquisitive learning mindset. We spend a lot of time talking to experts, reading reports, and learning from other people’s experiences and one common theme coming out of the many conversations we’ve been having is the change of mindset many businesses and employees have around remote working, brought on by their experiences during the COVID-19 pandemic.
The acceptance of remote working will have dramatic ramifications for both businesses and the property industry.
Remote working isn’t a new concept. Technology developments such as cloud based software, faster internet speeds, and improved video conferencing software had already started a trend towards increased acceptance of remote working, however the COVID-19 pandemic has accelerated this trend on a massive scale. As an example, video conferencing platform Zoom has gone from 10 million meeting participants per day to 400 million in just 3 months.
Businesses were forced to adopt this sort of new technology overnight, and they’ve been surprised by the results. According to the Australian Financial Review 84% of workers believe they work as effectively at home as they do at the office. Futurist Craig Rispin, a world renowned expert on technology and people, says companies are reporting that productivity is up on average 35% for their remote workers and businesses are starting to take notice.
Take for example Facebook who are building a new multi-billion dollar campus for their workers. In response to the remote working productivity gains they’ve had; they’ve scaled back their workable square footage in their new campus by 30%. They’ve also announced that moving forward employees are able to work from home permanently and Facebook will even be adjusting employee salaries to reflect the cost of living based on where employees are working from. For most employees that means a pay cut when they move out of the Silicon Valley area. Mark Zuckerberg expects that inside 10 years, half of their 48,000 strong work force will be working from home permanently.
And it is not just Facebook who are embracing remote workers. In the last 45 days, 1200 publicly listed companies have had the words “permanent remote working” mentioned in their market updates.
From a business perspective there are massive advantages to having your workforce work from home.
You can tap into a global talent pool, which means instead of employing the best possible candidate in your city, you can employee the best candidate in the world. And there’s other benefits to recruiting globally including adding diversity to the employee pool.
It’s cheaper, not because you can pay people less, but because offices are expensive. Not to mention the hidden cost of in office work, such as cleaning, toilet facilities, meals, treats, in office massages etc. You can still offer these perks, buy at a fraction of the cost.
And there’s the productivity gains. It’s easier to focus. Remote work increases the amount of time each person has in their day, not just by saving on commute time, but the reduction in general distractions. Additionally, remote workers are judged on their work output, not the number of hours they spend at the office.
Experts believe the most likely scenario moving into the future is that workers won’t be making a single choice to work from home or the office. The will work from 3 places, 1: the office, 2: home and 3: a third space, most likely a membership based co-working space, that companies will use to take advantage of meeting rooms, conference facilities without having to pay for them in their permanent downsized office.
This is expected to impact the property industry on a massive scale. The property institute of America have estimated that as a result of the COVID-19 pandemic that the need for commercial office space will decrease globally by 30% and that property prices will fall by at least 15%.
It will also impact the way that businesses manage their workforce. Adjustments will need to be made to solve problems, like workplace culture, collaboration, performance monitoring. The good news is that there are actually many organisations that have been doing this for years, and they are happy to share their experience. Take for example Matt Mullenweg the founder of WordPress who run a completely distributed workforce (meaning they all work from home). His 800 staff work from 67 countries around the world. Some of them don’t even have a permanent fixed address, they are nomads travelling the world.
Another example is Zapier who have 300 employees across 28 countries. They even share a free e-book on what they’ve learned about managing a business with remote staff. If it’s something you are considering doing in your business their e-book can be found here. https://zapier.com/learn/remote-work/
Any business that wants to remain competitive in the future has to consider permanent remote working as an option, because if you don’t you can be sure your competitors will, and if it reduces cost and improves productivity, you’ll soon find business falling behind.