The convenience and swiftness with which people can now purchase almost anything online — literally, anything — is often accepted without a second thought: not only groceries, but cars, houses, blue-chip artwork, even a college degree. Over the last 30 years, we have come to rely on the internet in a way that would have seemed unimaginable back in the dial-up era. In only three decades, virtual retail has outmatched physical stores in scale, efficiency, and performance.
I think the same shift is underway with remote firms — e-companies, if you like — compared with today’s in-person, physically based businesses. From 2008 to 2018, remote work grew 400 percent, leading to nearly 4 million remote workers in the US. Estimates suggest that by 2030, 50 to 80 million of the world’s 255 million desk jobs will be done remotely most of the time.
A remote-work problem is taking shape. Any company that is less remote than its strongest rival risks losing its best talent to that competitor. Jeff Bezos once said, “Your margin is my opportunity.” Today, your office is your competitor’s opportunity.
Recent surveys say about 40 percent of workers are thinking about leaving their jobs — and that nearly 75 percent of the millions who already have left do not regret doing so. The Great Resignation is not happening because people don’t want to work. It is happening because workers are departing companies that mistreat them, underpay them, or damage their quality of life because of a barely disguised lack of trust. Some estimates suggest that requiring employees to return to the office could lead employers to lose as much as 39 percent of their workforce. When workers have the freedom and flexibility to shape work around life, instead of life around work, a new model appears.
Against this momentum, management that chooses tired defenses and vague, hand-waving language instead of genuine organizational change will lose.
“We do our best work around the water cooler.”
Personally, the most progress I’ve seen made around the water cooler was choosing lunch. A study done on the main campus of a Fortune 500 company found that only 10 percent of all communication took place among employees whose desks were more than 500 meters apart. That implies that once companies are spread across multiple floors, buildings, or campuses, they have already forfeited much of the collaborative benefit of being “in the office” together.
“Our office culture is special.” “We are social animals, we need the social connection of the office.”
It is the office that has helped create a disconnected world. In fact, a Gartner survey of 5,000 workers found that remote and hybrid employees reported greater culture satisfaction than on-site employees. Today, US workers commute nearly 30 minutes each way on average, taking time away from hobbies and relationships outside work. Does anyone, aside from company management, think it is a good thing to treat coworkers as your closest social ties?
And over the past 20 years, as companies hurried to turn themselves into the equivalent of adult kids’ clubs and the commercial cost per square foot climbed more than 50 percent in tech-centered cities, the office has become a distraction factory of epic size. A wide range of research has shown that open offices create more stress and lower productivity. The office has become the enemy of deep, focused work. There is a reason people arrived early and left late: it was the only time they had to do real work.
Ironically, in yet another blow to the “spontaneous collaboration” claim, a study of two Fortune 500 headquarters found that moving from cubicles to an open-plan office actually cut face-to-face interactions by 70 percent.
There is another aspect of this that is not often talked about in Silicon Valley: A company’s remote and flexible work policies can tell you everything you need to know about how serious it is about DE&I. Offices are good for certain demographics. For others — parents of young children or people with health conditions or disabilities, to name just a few examples — they make it nearly impossible to reach the best opportunities.
Maybe you are a company leader patting yourself on the back because you’ve decided to go hybrid, which is what a steady flow of news stories and company surveys over the past three years said most workers want.
The issue? When workers say hybrid, they usually mean they want the freedom to decide where they work from and when, all the time. (As a sign of how unsettling this idea is to deeply rooted expectations, Gartner calls this “radical flexibility.”) On average, that means three days a week from home and two from somewhere else. Studies show that when employees have flexibility over where, when, and how much they work — rather than the 40 hours in office standard — the share of high performers in the organization rises sharply. But when many companies adopt hybrid, they often prescribe which days and hours teams must be present. Both sides are using the same word, but it means very different things.
The mix of portable computing, strong communication and collaboration software, and the internet has made it possible for new ways of working and living to emerge. In the face of this, companies that do not adapt will lose talent to their competitors, and companies that embrace remote work will replace companies that do not. Maybe not today, perhaps not tomorrow, but it is a movement that will not be reversed. Just as e-commerce has crushed many physical stores, virtual companies will crush office-based companies.