Summary: The Future of the Office: Work from Home, Remote Work, and the Hard Choices We All Face by Peter Cappelli

The Future of the Office (2021) takes an analytical look at the current state of the traditional working office and what recent changes and developments may mean for the future. Drawing on research, anecdotes, and case studies of businesses responding to the global pandemic, it highlights the unique and exciting opportunities that we now have to fundamentally change the nature of where and how we work.

Recommendation

Companies are deciding whether to bring staff back to the office, go fully remote or create hybrid workplaces. Peter Cappelli warns that this decision requires considering significant variables that could affect retention, productivity and corporate culture. He cites baseline and current research, and explains the trade-offs of various models. Though COVID-19 forced many firms to have only remote workers in 2020 and 2021, today every firm and employee can determine whether remote or onsite works best for them. Cappelli outlines options, risks and rewards in this robust look at the issues you must ponder to determine where your workforce – or you – should work.

Take-Aways

• Tech companies are rethinking keeping staff in the office.
• During the pandemic, companies opted for temporary closures with no plans for long-term remote work.
• Working remotely has potential costs.
• Linking employee location to pay is not viable.
• Craft a two-tier hybrid work model or a unique set-up for your firm.
• Most companies will adopt a hybrid model.
• Take advantage of post-pandemic opportunities to change the office status quo.

Introduction: See how the global pandemic shook the foundations of how we work and what the future has in store

There was a time when tech giant Google was the epitome of the perfect office environment. In 2005 it was pioneering all the best perks – onsite meals, napping areas, and even options to bring your pet to work. It wanted people to work for Google, but more importantly, it wanted people to be in the office – and like it.

Jump forward to 2021 and 20 percent of Google employees are permanently working from home, another 20 percent are working in decentralized offices, and the rest are working a hybrid model – two days a week remote work with four weeks a year working from anywhere around the world.

There shouldn’t be any mystery as to what brought about Google’s shift in attitude. The COVID-19 pandemic was a revelation for many areas of our lives, not least of which was the role of the white-collar office worker.

While Google kept a positive, open-minded approach to working from home even after the restrictions began lifting, some other employers weren’t so enthusiastic. But no matter how you feel about the changing nature of work, it’s clear that something is happening.

In this summary, we’ll explore exactly what that something is and what it means for the future of the office. The world is in a unique situation and what we do or don’t do will affect the lives of a great number of employees and employers alike.

First off, let’s look at what actually happened during those tumultuous years of the pandemic.

What we learned from COVID-19

It’s April 2020. An ABC reporter is presenting the news from his home – a necessity with the recent COVID-19 restrictions. At the end of his piece, the camera zooms out to reveal the man isn’t wearing pants.

There was a time when this might have ruined his career. Instead, he laughed it off and – for the most part – the world laughed with him. This was an early sign that things were changing. By the final months of the pandemic, there was much that had come to be accepted as normal regarding work – not just going pantless on a Zoom call.

If we want any of these positive changes to continue, it’s important that we know what exactly happened during the pandemic.

Initially, many employers treated it like a bad storm. They just had to close up and wait it out – the public was saying no more than two weeks. The focus of a lot of businesses was on preparing financially for a stoppage, not on how to keep working.

As the realization sunk in that things might be like this for a while, companies started taking more drastic measures. The Marriott International hotel announced that two-thirds of its corporate staff would be suspended with 20 percent pay until further notice. Some big companies like Amazon and Walmart offered bonuses to encourage workers to stay, despite the risks.

The wiser businesses saw what was happening and started closing offices and letting employees work from home. Microsoft announced early on that it had no intention of reopening offices until 2021, and during the peak of the pandemic, it was reported that 35 percent of employees in the US were working remotely.

The general reception was positive – workers reported greater satisfaction in almost all areas. Even employers declared the whole work-from-home experience a success. It seems that the time employees saved by not having to commute was largely put into doing more work. People appreciated the trust that their bosses placed in them and they felt a certain obligation to maintain or even increase productivity.

Some other interesting trends were noticed. The number of meetings increased but they were shorter and more efficient – made possible by the fact that video conferencing was better than ever. Some companies also noticed an increase in remote work in the evening, presumably after parents had put their kids to bed. People were working the way they wanted.

So what did the pandemic teach us? Not only is working from home a viable option but it can actually be better. But this does depend largely on how it’s executed. Now, in the waning years of the pandemic, this style of work has gone from a necessity to an option. It’s time to think about what you can expect when given this option to work from home.

Some key questions we should be asking about remote work

The headline of the Washington Post declared that we’ll never have to go to work again. The article went on to explain how developments in IT mean you can work from anywhere you like. The most remarkable thing about this news article is that it was actually published in 1969.

The idea isn’t new. The Los Angeles smog crisis of the 1970s took work to the telephone, leading to the term “telecommuting.” The issues surrounding it and the lessons we’ve learned from remote work have remained largely unchanged since then.

Now that it could be here to stay, what should you do when faced with the prospect of remote work? There are a few questions to ask.

First, think about who is actually still working from the office. It’s been shown that people who work from home are slower to receive new information, can have lower-quality relationships with their coworkers, and often miss out on opportunities for advancement because they’re less visible to management. This is less of a problem when everyone is working from home, but if it’s just a few people, it’s easy for them to feel isolated from the core of the workforce.

Another question to ask is what kind of work is being done remotely? The tasks best suited for remote work are those of individual contributors who don’t have to regularly collaborate with others. Unfortunately, this is also work that can easily be done by external contractors, bringing job security into question.

When remote teamwork is necessary, there are other problems to consider. Communication can be an issue, with office workers being slow to respond to their remote colleagues, or silence being misinterpreted. Issues of fairness sometimes come up, as supervisors have been known to be reluctant to contact remote workers for last-minute tasks for fear of intruding on their homelife.

Finally, remote workers must consider the question of who their boss is. Interestingly, it seems that less experienced supervisors are more suited to managing those working from home. New bosses are known to micromanage, a bad habit which is more difficult in a remote setting. But if the work is especially complicated, an experienced supervisor with the right knowledge and connections might be necessary.

If you find yourself in a position to work remotely, look at how your employer handled things during the pandemic. If it invested heavily in software to monitor computer usage and keep workers at their desks, it suggests a lack of trust that might negate any benefit of remote work. On the other hand, if it focused on clearly explaining performance expectations and how that would be monitored, then it suggests a healthy attitude to working from home.

That’s what you should consider now that it’s becoming more commonplace.

In the next section, we’ll discuss the two main models that remote work is likely to take.

The two hybrid models of remote work

There was a time when Facebook would give bonuses to encourage employees to work close to the office. This attitude has changed recently with workers now being sourced from further and further away.

This has interesting implications. If a company can source workers from outside national borders, then it greatly changes its hiring options. Likewise, it gives employees more opportunities to job-hop.

But how this unfolds largely depends on what model of remote work is adopted. At the moment there appear to be two main hybrid models of combining remote and office work, each with their own pros and cons.

First, there’s the two-tier system, which is the simpler and most predictable route. This involves having two separate classes of workers – those onsite at the office and those working from home. These remote workers will have a role slightly more than that of a contractor but still without easy access to the managers, internal knowledge, and advancement opportunities seen by those remaining in the office.

While this may involve a bit more supervision for those working remotely, the savings for employers are clear: fewer costs caught up in office space and other associated necessities, like parking or food.

The second hybrid option is the choose-your-own model. This is where the workers choose when they work from home, and for how long. Understandably, this is what most employees opt for as it offers the most flexibility and freedom while also maintaining useful ties to the office environment.

On the other hand, it’s the most administratively tricky. This model was relatively commonplace before the pandemic – though it was more of an informal arrangement at the discretion of the boss. Once it becomes more widespread and fair, things get complicated.

Even though everyone has the possibility to work like this, there’ll still have to be some criteria and restrictions when writing up the policies, and it’ll be important to make sure that such policies don’t unfairly discriminate on factors such as race, gender, or religion, for example.

Scheduling also becomes a problem. What if everyone wants to come in on Tuesday, Wednesday, or Thursday, but work from home around the weekend? The offices may become overcrowded during busy times and empty the rest of the week.

While there are solutions to these sorts of problems – mandatory office days, or preference-based algorithms for example – it’s something to consider moving forward. Another common practice is flextime, where schedules are negotiated among individual teams.

Overall, which method gets implemented will be a weigh-up between what’s more important for the employer and what employees want.

Either way, there’s going to be some planning to make the transition as smooth as possible; if it’s not handled carefully, a great opportunity may be missed.

In the final section, you’ll see what managers will need to consider to make sure this works.

We have an opportunity we can’t afford to miss

It’s fitting that one of the most clever and forward-thinking corporate responses to the COVID-19 pandemic came from a company whose product was inexorably tied to it. Clorox – producer of the all-too-necessary disinfectant products that boomed during those first few months – saw the future potential of remote work, and acted.

It adjusted the planned renovation of its Oakland headquarters to better accommodate a remote work model – mainly by getting rid of private offices and replacing them with workspaces with an emphasis on being able to engage with remote workers. By having a core group of onsite workers organized around the needs of the remote workers, its aim was to value all employees and end up with the best outcomes for the company.

It took advantage of an opportunity that was – and still is – there for many employers: to change the way things work and operate. Getting rid of old habits is one of the hardest parts of organizational development and the pandemic offered the opportunity to test one of the oldest habits in the book – the necessity of the office.

Winston Churchill once noted that one must never let a good crisis go to waste – so what things do we need to watch out for to make sure that this opportunity isn’t missed?

First, organizational culture needs to be adapted. It’s hard to learn the rules and conventions of a company when you’re not around other people, so it’s crucial that companies learn how to identify risks to the company culture and mitigate them as best they can. This can only really be done through more vigorous hiring and training programs, where company values and norms are clearly taught. Recruiting with “cultural fit” in mind will be of utmost importance.

It’s also necessary to change the way we think about performance appraisals. It’s no longer reasonable to rely on personal interactions and the work that a supervisor sees an employee do. It may be necessary to have more check-ins with remote workers or create a more formal appraisal system based on performance outcomes.

The norms around wages may also change. With employees separated from one another, it’ll be harder for them to know how much other workers are contributing and therefore harder to complain about pay or bonus discrepancies. Unless laws are implemented and enforced, we may see a greater variety of pay for similar work.

There are other things to consider, such as what would career advancement opportunities look like for remote workers? The truth is, remote workers are always going to miss out on many informal opportunities for development and promotion. A solution is to make it clear from the start that remote workers are less eligible for these opportunities.

Overall, companies that did better going into the pandemic were those with better management policies. The same can only be true as we come out of it.

Summary

Tech companies are rethinking keeping staff in the office.

New 2005 college graduates selected Google as the number one place to work because of the extras it offered. At the time, Google gave employees food and personal assistants, and it let them bring their dogs to work in order to boost retention, increase creativity and improve staff interactions. Many companies regarded similar policies as best practices until the pandemic struck.

In spring 2021, Google shifted to a hybrid work model, announcing that some employees could permanently work remotely, while others could do so part-time.

“Working from home could change more about office work than anything in a century…and we have to choose fast.”

Post-pandemic, many employees want to keep working remotely, but not all employers concur. The three options available today are to return to the traditional in-person offices, shift to a fully remote workforce or create a hybrid approach. Generally, employers prefer the first option, employees the second, and the third offers a happy medium that may not fully satisfy either bosses or employees, but serves the interests of both.

“This could be the moment to redefine what work means for employees and how it fits into society.”

The pandemic fomented monumental change. Employees proved they could be productive at home, and companies survived. While working remotely has not become the new normal, the way companies move forward will define the workplace of the future. Giving employees the choice of working remotely or in an office is a momentous change.

During the pandemic, companies opted for temporary closures with no plans for long-term remote work.

In March 2020, companies operated as if COVID-19 restrictions would end by Memorial Day. Companies focused on having employees work at home as a short-term solution rather than taking steps to consolidate remote work into their normal procedures. Companies made impromptu decisions to cope with the pandemic’s ever-changing parameters.

Some companies, such as Marriott International, furloughed 66% of their corporate employees for two months. Some corporations that depend on onsite workers (such as Amazon and Walmart) initially offered bonuses to staff members who stayed onsite and unpaid leave for those who didn’t. As shutdown orders continued into June, such corporate generosity ended. Microsoft stunned the industry by closing its offices until the summer of 2021.

Many employees reported improved relations with their managers during this time. That could be due to seeing less of them, or it could show the benefit of companies ordering supervisors to reach out to remote employees.

In May 2020, 50 million people in the United States said they had been unable to work during April due to COVID-19. As a result, remote employees put in extra effort to help their firms stay viable. The percentage of remote work versus onsite work in various industries correlates to the number of white-collar jobs in those sectors. In terms of the number of hours people worked, surveys taken during the pandemic show conflicting results: some at-home employees reported working reduced hours while others indicated increased hours.

Microsoft found that Zoom meetings increased in number but decreased in duration. The company also reported an increase in evening and weekend work.

“The lack of privacy, of personal space, and of quiet are all reasons employees tend to hate open office plans.”

The idea of working remotely is not new. From the 1970s to early 2010s, the size of offices shrank by 33% as workspaces became more modular, enabling companies to downsize at will. In 2009, 40% of IBM’s staff worked remotely at a real estate savings to the company of $100 million.

Tech companies moved to more open-plan spaces with no private offices or desks, relying on shared “common” tables to increase collaboration. The notion that greater proximity leads to greater team work proved untrue. Instead, workers wore headphones to block the noise of their nearby colleagues. The idea still persists, however, because enforcing that fantasy turns out to be cheaper for employers than delineating separate offices.

Working remotely has potential costs.

In 2000, researchers considered how working virtually might affect employees and their performance. Remote staff had problems when their colleagues remained in the office. Employees who weren’t in-office missed vital information, social interactions and potential promotions. When managers don’t see employees, they tend to assume those people lack commitment.

“If you want to climb the corporate ladder, the path to the top is still greased by proximity to those in power.”

If you work in a hybrid situation, consider why the company gives you that opportunity. A corollary is considering who will return to the office. The more you work remotely, the more likely it is that your relationships with your colleagues will deteriorate. To cement relationships, especially with managers, remote workers report that they agree to inconvenient meetings, take on projects they don’t really want to do and make more personal sacrifices than their in-office coworkers. Working remotely curtails mentoring and other learning opportunities because team communication suffers. With remote workers, project completion times runs longer.

“Remote teams have more conflicts within the team…because of communication challenges.”

Consider what you do within your company. Do you work independently or on a team? If you are an individual contributor, working remotely may be easier for you than for others who work on projects or teams. Beware, however, that companies usually transition such jobs to contract positions.

Employees who want to work remotely must know who to report to and what your routine will be. If you have an inexperienced boss, working remotely may enable you to avoid micromanagement. However, if you’re involved in a complex project, you need a boss who ably and willingly navigates the company’s information channels and makes sure you are informed.

Working from home may mean that your company will keep you continually on call.And if your company relies on “tattle” software that keeps it apprised of your every keystroke at home, you’re better off returning to the office. Being tethered to your desk offsite under constant monitoring defeats the flexibility benefits of working from home. The best option for you is for your company to define performance criteria clearly and for your manager to check in with you regularly.

“The benefits to employers from remote work…seem to be related to a high-trust approach from management.”

For sound work-life balance, your company’s culture matters more than its policies. Whether working in the office or remotely, employees relish having some control. That is one of the most important factors in lowering stress and increasing well being.

Linking employee location to pay is not viable.

Some companies that allow remote work tie employee compensation to employee location, which is a fundamentally nonsensical approach. Early in the pandemic, Facebook, Twitter and some other companies implemented this policy. Stripe, for example, offered $20,000 bonuses to staff members who moved to less expensive locations. The pandemic proved that people in IT have unique skills for which the market will pay top dollar.

Facebook had previously paid bonuses to employees who lived near its Silicon Valley headquarters. Now, employees who are approved for remote work can live anywhere, which grants Facebook a deeper, more geographically diverse talent pool.While embracing remote work could also allow companies to hire less expensive overseas workers, shifting to a totally remote workforce raises the specter of a turnstile hiring system with continual turnover.

“If you think your employees are job-hoppers now, wait until they can change employer without relocating.”

In industries in which employees are aware of what rival companies offer, job applicants push for remote work options. In 2021, new law school graduates pressed the law firms recruiting them for information about their remote work policies.

Craft a two-tier hybrid work model or a unique set-up for your firm.

You can implement one of two kinds of hybrid models. The “Two-Tier Hybrid Model” positions some employees as full-time remote workers time and keeps the rest onsite. This can result in remote workers becoming corporate “second-class citizens” – more like contractors than employees. Managing remote staff requires more effort from managers and complicates tracking job performance, but it also reduces real estate expenses and other in-office employee costs.

“Even modest amounts of occasional work-from-home benefit employees.”

The second option, which proves more popular with employees, is the “Choose-Your-Own Hybrid Model,” which is logistically more difficult for companies to implement and manage. It allows employees to determine when they will work remotely or in the office. Some companies, including Citigroup and KPMG, have already implemented such a system. In some cases, companies have adopted this approach to keep up with their competitors.

“If everyone gets to work at home one or two days a week, coordinating a project becomes a much bigger challenge.”

The more options employees have, the greater the difficulty managers face in scheduling work.Problems occur when too many employees chose the same option on the same day. However, vendors are working on scheduling algorithms to make this process work better. Although coordinating flextime is initially tricky, when employees understand their firm’s methods and collaborate, it works fairly well.

Most companies will adopt a hybrid model.

A recent Conference Board survey indicated that 11% of companies expect all employees to return to the office post-pandemic, but the vast majority of the remaining 88% plan to implement some type of hybrid model. Planning a smooth transition to the model you choose is crucial. When you bring employees back into the office, tell them why, so they don’t think you’ve made a thoughtless decision based on management’s convenience. A majority of US employers surveyed by WorldatWork and Salary.com reported that they plan to be transparent with their employees about how the pandemic affected their company’s financial picture.

“Treat the return to the office as a massive organizational change.”

After you inform employees, give them “structured time” in smaller groups to share their experiences about working from home.Apply their feedback to determine what worked and what needs to change. At least initially, emphasize the positive aspects of working in-person by providing food or time to socialize. The University of Pennsylvania, for example, planned various activities, including a staff retreat and a “move-in day,” when people helped staffers move back into their offices.

“The more we can tell employees about our intentions going forward, the better.”

The majority of companies plan to adopt a hybrid model, and some have hired directors of remote work to help coordinate and define off-site work. Because hybrid models vary widely, waiting to see what other companies implement isn’t feasible because anxious employees may not be willing to wait for your decision.

Take advantage of post-pandemic opportunities to change the office status quo.

The pandemic offers organizations a chance to rethink the nature of office work, how their offices operate and what an office should be.For example, when Clorox realized remote work increased staff morale, it redesigned its planned renovations. It eliminated private offices and built more meeting rooms equipped with software to connect remote team members. Its leaders decided to vest in promoting collaboration; their renovations support that objective.

“The pandemic has shaken us out of our office routines, which provides an opportunity to change how we operate.”

People learn organizational culture primarily by emulating other people.That can be difficult for remote workers. Only strong, onsite onboarding can provide the structure and training newly hired remote workers need. Companies that are moving their onboarding processes online to cut costs should be aware that reinforcing corporate culture with remote workers takes continual effort and in-person training.

“The more remote our new workforce is likely to be, the more effort we need to put into managing our culture.”

During the pandemic, many companies required supervisors to conduct informal weekly check-ins with remote staff, proving that social connection can remain strong if companies prioritize it. Companies must be mindful that remote workers will have fewer informal development opportunities. Whether you use an in-office, remote or hybrid approach, understand its benefits and limitations.Build the processes and practices necessary to support your employees whether they are in the office or off-site.

Conclusion

We’re at a crucial moment for deciding the future of the office. The COVID-19 pandemic is one of the most significant and pervasive events in recent history and it has left us with a rare opportunity to create a positive and long-lasting change in what was supposedly one of the greatest constants in the nature of white-collar work.

But success isn’t guaranteed. Establishing productive and functional remote work systems will require dedicated and proactive management. Onboarding practices will have to be perfected, to ensure that employees are a good fit for the company and that they can be trusted to remain engaged without being monitored.

There’ll have to be more effort on the part of supervisors and managers to keep in touch with the workers and performance-based appraisal methods to keep everyone on track.

As more and more people return to work, we’re faced with this new normal. Whether a business tries to bring everyone back or opts for one of the hybrid models available, the decisions going forward will set the precedent for what the modern office will look like.

Are you ready for the future?

About the author

Peter Cappelli is a professor at the Wharton School and director of its Center for Human Resources.

Review

“The Future of the Office” by Peter Cappelli is a thought-provoking book that examines the evolving landscape of work, focusing on the impact of remote work and the choices organizations and employees face. Cappelli, a renowned management professor, delves into the history, challenges, and potential consequences of remote work, shedding light on the complexities surrounding this paradigm shift.

The book explores the rise of remote work, accelerated by the COVID-19 pandemic, and its implications for both employers and employees. Cappelli discusses the benefits and drawbacks of remote work, including issues related to productivity, collaboration, and employee well-being. He also addresses the broader societal implications of remote work on cities, real estate, and the future of office spaces.

Cappelli suggests that remote work is not a one-size-fits-all solution and emphasizes the importance of considering individual and organizational needs when making decisions about remote work arrangements. He also provides insights into the challenges of managing remote teams and maintaining organizational culture in a virtual environment.

Key Takeaways:

• Remote Work Complexity: Cappelli highlights that remote work is a complex issue, and it’s crucial to weigh its advantages and disadvantages carefully before making decisions about its adoption.
• Individual Needs: The book underscores the importance of recognizing that remote work may suit some individuals more than others, depending on their roles, personalities, and work preferences.
• Organizational Culture: Cappelli discusses the challenges of preserving and cultivating organizational culture when employees work remotely, emphasizing the need for intentional efforts in this regard.
• Future of Offices: The book explores the potential scenarios for the future of physical office spaces and their roles in a post-pandemic world.
• Real Estate and Economic Impact: Cappelli examines how the shift to remote work might affect cities, commercial real estate, and the broader economy.

“The Future of the Office” by Peter Cappelli offers a well-researched and insightful exploration of the remote work phenomenon and its impact on the workplace. Cappelli’s expertise as a management professor shines through in his ability to provide a balanced and comprehensive view of the subject.

One of the book’s strengths is its recognition of the multifaceted nature of remote work. Cappelli acknowledges that there is no one-size-fits-all solution, and he encourages organizations to consider the unique needs and circumstances of their employees when making decisions about remote work policies.

Cappelli’s discussion of the challenges of managing remote teams and maintaining organizational culture in a virtual environment is particularly valuable for leaders and managers navigating the transition to remote work.

While the book provides a thorough analysis of remote work, some readers may find it relatively dense and academic in its approach, with a focus on research and analysis rather than practical solutions. Additionally, given the rapidly evolving nature of remote work, some of the data and examples presented in the book may become outdated over time.

In conclusion, “The Future of the Office” is a valuable resource for individuals, leaders, and organizations seeking to understand the complexities of remote work and its implications. Peter Cappelli’s in-depth exploration of the topic, combined with his thoughtful analysis, makes this book a worthwhile read for those interested in the future of work and the role of remote work in it.