A First Principles Approach to Return to Office
As if society needed another topic no one can agree on, Return to Office (RTO), and all the dispute it engenders, spiked, at the start of summer.
Unfortunately, so did CV-19, with daily average cases surpassing the 100K mark in late May and staying put since.
American workers have chewed plenty of popcorn watching business leaders twist-and-turn searching for the elusive RTO Goldilocks zone. There have been memorable reversals and at least one epic tweet, but no corporate position that feels just right.
What’s the deal? Furthermore, what’s an office?
First principles—if you’re not sick of hearing about them—can help organizations reach a conclusion.
The First Principle of an Office
An office is an application of a physical space.
Offices share this principle with department stores, sports arenas, bars, coffee shops, salons, laboratories, hospitals, and so on.
It’s crucial to take into account that offices are mostly leased to their tenants. The majority of businesses do not own real estate because most fail. Even successful businesses last just 15 years. In most metropolitan areas, that amounts to three lease cycles.
Offices are distinct from business locations in other ways. Have you noticed that the corner store in your neighborhood, your favorite clothing store, and the local pharmacy are open seven days a week? Not so the office.
Each month, before CV-19, an office was utilized about 68% of the time. Workers take off the weekend by federal mandate. Why? So they can spend their money at businesses open all week.
But while you are spending cash on the weekend, office-lease holders are not on a payment holiday. They do not owe their landlords for 68% of the month—they pay for the whole enchilada.
In the 80 years since government introduced the 40-hour work week, the 32% of office downtime was rationalized away for pretty good reasons. Offices do serve as storage for critical and confidential business documents. They also house depreciable assets businesses own, like furniture and tech equipment, as well as the physical ephemera of a company’s culture. Plenty of executives work weekends, too.
Two years and some odd months into the pandemic, executives have developed so-called “hybrid” approaches to the office. A common approach is to enforce two mandatory days in office with an optional day left to the worker’s noble discretion (a.k.a., two days). Another approach is three mandatory days.
Two days, three days—does it really matter? In the latter scenario, the office declines to a 38% utilization rate, doubling its pre-pandemic downtime, with business lessees paying 62% for un-utilized space instead of investing elsewhere. Offices are sounding mighty expensive these days, and worker resistance to return is yet to abate.
The Collision with Knowledge Work
If you write anything — code, articles, screenplays, sales emails, and so on— into a database, collaborate with teammates in a database, edit and refine your work in a database, and privately or publicly share your work from a database, you are a knowledge worker.
Knowledge work is not location absolute. Physical offices, however, are. And the results for the office relationship to knowledge-work productivity are in: there isn’t one.
Workers Don’t Actually Return to an Office
The decisions shaping Return to Office protocols are being made by executives and division leads; people who have—wait for it—offices.
The majority of workers will not return to offices but cubicles. RTO is actually RTC. In pop culture, cubicles have long been satirized as capitalism’s primary engine of spirit-devouring monotony. Executives accept this portrayal, just not out loud. Cue the incentives.
Do the Math
According to WSJ, Deloitte is planning to reimburse workers up to $1,000 (I assume this is per annum), for commuting costs.
In a recent Gartner survey, 25% of employers said they would offer free lunch or snacks to “lure” workers back to the office, against the backdrop of subway violence, a raging BA.5 variant, and a $5 gallon of gas.
Let’s get this straight: Businesses will spend to assume 100% of a physical location to utilize it just 38% of the time and then spend on additional incentives to get anyone to show up at all.
The Formula
Executive teams must ask themselves what they want to accomplish in an office. Employee mentorship? Collaborative sessions? Division progress check-ins? Whatever it may be, do the events require a permanent address to fulfill five days for in-person activity?
As a thought experiment, simply subtract the actual office utilization, based on your RTO policy, from the full-month expense. Look at your operating plan and see if the difference can be utilized elsewhere, as either investment or savings. If the results open your eyes, then guess what? You have an incredible opportunity to be creative. You can define what an office means for your business, and not for everybody else’s.
