Victor Hill takes a look at who will be the winners in the shift towards working from home.
The global coronavirus pandemic has accelerated the trend towards home working. Presenteeism – the need to be ‘seen and keen’ at the water cooler − is in rapid decline. Commuting is time-wasting, expensive, stressful and ecologically unsound. Most business travel is a waste of money. The office now seems so 20th century. This all has huge implications for how we work, live and enjoy our leisure time. But who will make this important social and economic transition possible? Clearly, we are going to become more reliant on communications software. But will we ever be able to dispense with the office altogether?
Last year, according to the Office for National Statistics in the UK, just 5.1 percent of adults in employment worked primarily from home, up from 4.3 percent in 2015. Some 12 percent spent part of the week working from home. Then, suddenly, a pandemic broke out…and Britain and the world would never be the same again.
The consulting firm Accenture has more than 500,000 employees worldwide. Before the pandemic, no more than 10 percent of these employees worked remotely on any given day. But by the middle of March nearly all had been sent home. The volume of video calls went up sixfold; the audio calls tripled, to 900 million minutes[i]. Yet productivity has risen.
New times, new practices
As Americans slowly return to their places of work in all 50 states, they are finding that the open-plan office – the model American workspace since the late 1960s – has been transformed. In compliance with new regulations laid down by the US Centers for Disease Control and Prevention (CDC), office managers must place all workstations at least six feet apart. If that is not possible then they must place screens – Perspex or Plexiglass − between them. Those two manufacturers have seen a massive increase in demand. Communal seating in breakout areas has been removed.
Staff should wear face masks at all times and companies should consider testing workers’ temperatures as they arrive and leave. Shift times must now be staggered to provide more space for essential staff. Offices, meeting rooms and even car parks contain multiple ’visual clues’ that social distancing should be maintained at all times. Water coolers – the location where, traditionally, employees discuss the latest Netflix box set and where gossip is exchanged – are now ‘out’. Bottled water delivered to individual workstations is ‘in’.
Needless to say, all tactile greetings are now a no-no. Handshaking, hugging (that outrageous pre-coronavirus practice) and even fist-bumping are now proscribed. There are strict limits on the number of people who may use the elevator at the same time – if you are fit enough you should take the stairs (but without excessive exhalation). Air conditioning is now suspect: a pre-industrial technology called opening the windows is now preferred, though only a few centenarians can remember how to do this. If windows cannot be physically opened, as is the case in most modern office blocks, then air filters are de rigueur.
It goes without saying that all workstations will be sanitised and disinfected overnight – and will regularly be zapped with ultraviolet light. The amount of surfactants and other toxic chemicals used in cleaning products ingested at the workplace will probably bequeath a legacy of its own (allergies, respiratory problems, cancer?) – but that is a problem for another day.
So, how to get to the office if that is really necessary? For decades, Americans – as Europeans – have been urged to use carpools and to embrace public transport on environmental grounds. Now the CDC wants people to drive to the office alone – and not even Ms Thunberg (remember her?) has come up for air on this one. However, it may not be as easy as it sounds. Numerous American cities, including Oakland and Boston, have made streets pedestrian-only so as to facilitate social distancing. Maybe it would be better to work from home, then.
Upwork, a San Francisco-based employment agency, predicts that 73 percent of all employers will have most of their employees working from home by 2028. And even when they come to the office they will be tracked. Density, another San Francisco start-up, has developed a software tool that tracks where employees are in the building and flags up crowded spaces to be avoided. Sales of this product have exploded during the lockdowns. Similarly, Humanyze creates software that lets an organisation map how communication flows internally.
Some business-school gurus such as Willy Shih of Harvard Business School have recently argued that productivity increases with home working. Many companies have already come to this conclusion and have started to ask whether they could reduce fixed costs by minimising their real-estate footprint – which is immensely costly.
Of course, there are some types of work that absolutely require a physical presence on site such as construction or nursing. But office staff no longer need to be located in a central building. In fact – isn’t there something odd (if not patriarchal) about cramming 7,000 people into one skyscraper (like Barclays PLC (LON:BARC) at Canary Wharf) and calling it a head office? That is so last century.
One alternative to travelling to work by car is to cycle to work. But, as anyone who has tried to cycle in London will know, cycling is dangerous because, even when there are cycle lanes, cyclists have to interact with cars. It follows that if more city streets are pedestrianised then there will be more cyclists.
It is estimated that 80 percent of the public space in London is made up by roads. But a huge percentage of this area is occupied by parked cars – possibly 19,000 acres in Greater London alone. In many countries, not least Japan and Singapore, it is a condition of car ownership that car owners provide their own garage or parking facility, as roads should not be used as car parks. That seems very reasonable to me.
An extension of traffic and car-free zones in cities would enable cyclists to get to the office (when they need to) safely and easily – not to mention people who favour electric scooters or even Segway personal transporters.
When Zoom came of age
The chief executive and billionaire founder of Zoom (NASDAQ:ZM), Eric Yuan, reportedly spends six hours a day using his brainchild. It seems that there are many people (not all billionaires) who spend even longer using this pandemic-coping tool. Zoom employees were all told to work from home way back on 5 March – well before President Trump and Prime Minister Johnson even learnt the new word ‘lockdown’. (OK, it’s often ‘shutdown’ in the US). Apparently, Mr Yuan gave up business travel long before that became fashionable – partly because of his concerns about climate change.
Even by comparison with the Big Five tech companies, Zoom’s share-price performance has been extraordinary. As I write this (in the last week of June) it is hovering at around $252 – that’s up from about $69 at the beginning of this year. The massively increased demand for Zoom’s software and network during the pandemic has forced the company to buy in services and capacity from Amazon Web Services (AWS), amongst others. As we all know, Amazon (NASDAQ:AMZN) has been one of the big-time winners of the pandemic.
It was while working on Cisco’s (NASDAQ:CSCO) WebEx product that Mr Yuan came up with a better alternative, though he struggled at first to raise sufficient funding. Mr Yuan came to the US from China in 1997. Early in May, the US Department of Homeland Security claimed that Zoom was vulnerable to being hacked by “foreign spies” – widely interpreted to mean the Chinese. House Majority Leader Nancy Pelosi even described Zoom as a “Chinese entity”. Charlie Kirk, founder of the conservative think tank and portal Turning Point USA, which has 1.7 million followers, announced that “The Chinese Communist Party is using Zoom to spy on our citizens”.
About 80 percent of Zoom’s users are in the US, with most of the remaining 20 percent in the UK, Australia and China. Zoom has about 2,500 employees, of which about 1,400 are located in the US and with a significant number of software engineers located in China. Microsoft’s Teams app, which has about 200 million users daily, was shown to have a security vulnerability in early May. But the revelation that Google bans its staff from using Zoom is concerning. According to Fortune, Zoom has been monitoring some calls and conferences and shut down the accounts of numerous Chinese dissidents in both the US and Hong Kong[ii].
Zoom is one of a number of very useful tools, but many people will say that using it to hold meetings is not the same as meeting colleagues face-to-face. Zoom sessions often lack a sense of togetherness, and can be dominated by a few individuals who talk the most. Who can deny that many (if not most) meetings are largely a waste of time, and where dominant personalities tend to prevail over creative and reflective ones? And then there is Zoom fatigue, and the fact that most people seem to feel compelled to stare at their PC cameras like startled zombies.
Also, when someone tells you that the chief executive is in wall-to-wall meetings and can’t communicate – then you know that is a signal to sell.
I want to work for Mr Zuckerberg…
During the lockdowns the digital-advertising markets slumped – at least at the beginning. As a result, both Google and Facebook cut their job listings by around 30 percent. According to the online jobs site Adzuna, tech jobs on offer were down by 40 percent in April.
Silicon Valley went into quarantine at least a week before the rest of America. As did Microsoft in Seattle, Washington state, which was one of the first states to record Covid-19 infections. In fact, Microsoft first sent employees home on 4 March. Apple had told its factory workers in Shenzhen, China, to all go home at the end of January. It is clear that Silicon Valley was well ahead of Wall Street in anticipating a major crisis. On the other hand, Silicon Valley workers have mostly had the option to work from home for years, although many choose to bus down from the Bay area to Palo Alto and Menlo Park for the buzz of seeing their colleagues.
Amazon is of course the exception. The company announced its intention to recruit another 100,000 people to work at their fulfilment centres worldwide in April.
Most tech titans, including Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), Shopify (NYSE:SHOP) and Box (NYSE:BOX) have said that they will allow most of their staff to work at home in future. In late May, Mr Zuckerberg said that he expected most of Facebook’s 45,000 employees to be working remotely on a permanent basis within a decade. He said that in future, staff would be paid in accordance with the cost of living at their location. There would be “severe ramifications” (ie disciplinary action) for any employee lying about where they live. The majority of Facebook’s 2,000 staff in the UK work in central London and enjoy an average salary of £117,000. Hiring at Facebook is to happen remotely at first in the US and then worldwide.
Facebook is located in the sixth most expensive county in the entire US, where salaries are nearly double the national average. Facebook expects that its sprawling HQ in Menlo Park will be only one quarter full by the end of this year. Employees will still be required to attend periodic conferences, seminars and training sessions, though presumably these could take place in hotels or other venues. So, the days of the prestigious company HQ are probably numbered.
Spotify said that its entire workforce could work from home for the rest of this year. Also in late May Royal Bank of Scotland (LON:RBS) announced that 50,000 staff can work from home for the next four months. RBS is installing thermal-imaging equipment, temperature checks and is imposing one-way systems (like supermarkets) in corridors to facilitate social distancing. Lifts will be restricted to just two people at a time. Employees who work from home will be permitted to claim expenses for office and IT equipment.
A shorter working week
Many economists and analysts had foreseen a move to a four-day working week even before the pandemic unfolded. The economist Roger Bootle in The AI Economy, published last year, predicted that a four-day working week would become the norm during the next decade because it leads to greater productivity. Recently the New Zealand Prime Minister, Jacinda Ardern, speculated that this may happen in her country sooner rather than later.
As we work more from home, so the internet infrastructure and cybersecurity will move centre stage. One UK company that is benefiting from greater government spending on the 5G network is Spirent Communications (LON:SPT).
This trend towards home working means that people will no longer be compelled to live in big cities unless they choose to do so. Those people who like the countryside can move out to rural locations. Presumably, this will have a knock-on effect on house prices.
But cities will still have their uses. In particular, they shall remain the centre of the cultural world with opera houses, theatres and museums at their core. Cities will also continue to host major sporting events such as football matches and athletics tournaments. Crucially, cities will continue to offer social activities – restaurants, bars, gyms and clubs – that are unavailable to country dwellers, even in an age of increased social distancing. Universities will continue to be located in large cities even if the livestreaming of lectures will become standard.
If most people are working from home, then there is going to be much less commuting and thus demand for trains and buses will decline. Commuting is, in any case, one of the things that most people hate about their work – especially in big cities. That will save people a lot of money – especially in the UK where many workers pay many thousands of pounds for train season tickets out of taxed income. More senior workers, who hate commuting even more than younger workers, will remain in the jobs market.
And if we don’t drive to work either, perhaps we shall not have to invest so much in our road network as we thought. Many people will wish to modify their homes to accommodate a home office – that will mean more opportunities for builders and suppliers of office equipment. Periodic bonding sessions of employees meeting in the flesh (at least one metre apart, of course) will generate repeat business for sections of the hospitality sector. And with fewer bodies milling around Canary Wharf, the City and other commercial centres, what happens to Starbucks (NASDAQ:SBUX), Costa (now owned by Coca-Cola (NYSE:KO)) and Greggs (LON:GRG)? Low-budget eateries are likely to lose out, even if big hotel chains such as Marriott (NASAQ:MAR) profit.
The shift from formal wear (eg suits) to smart casual will intensify – with the emphasis on smart rather than casual. (Try Googling how to dress for a webinar).
But there are challenges – some people find working from home distracting, especially if they have children at home from school. And there are concerns about maintaining team culture without face-to-face interactions, which engender a more collaborative corporate culture. Many people prefer to spend time away from their partners and children – it depends on the dynamics of individual families.
But, according to a study in Australia from productivity consultancy Building20[iii], based on a survey of 423 Australian office workers between May 12 and May 22, most workers believe they are either more productive working from home or have maintained similar levels of productivity to when they were in the office. On average, those surveyed wanted to work remotely about half of the time, indicating that increased flexibility in working arrangements could be the norm rather than a permanent shift to full-time home working.
Conclusion and action
It is clear that our internet connections have got to be fit for purpose. That means rolling out 5G nationwide (preferably without the involvement of Huawei). Investment in connectivity will be critical and will drive the ultimate triumph of contactless payments in a cashless society, internet-driven healthcare (going to a GP appointment will become history very soon) and extended online education. Many youngsters will increasingly tune in to online lessons and lectures. But you will never be able to play physical football, rugby or cricket online.
The post-pandemic world (which is hopefully imminent) will be a good place to reassess the balance of work, leisure, money and personal freedom. If we enjoy our work it is not just a source of money but it reinforces our identity too: one of the biggest burdens of unemployment is low self-esteem.
It’s great that modern work culture means that we can spend much of the week at home. There is, however, the danger that, by working at home we feel on call all the time and therefore stress out more. On the one hand the working day is getting longer – just consider the last day you worked at home the time at which you logged onto your computer and the time that you shut it down. I bet it was 12-16 hours. On the other hand, how many breaks did you take − taking the dogs out; ferrying the kids to and from school (assuming schools are open); doing household chores; and catching up with friends on social media?
That’s modern life: the nine-to-five grind is well and truly over. Dead commuting time can be work time or family time. Instead, we are living richer, more textured lives – much as Marx predicted we would in Das Kapital, though (hopefully) without the socialism. The office is a cognitive paradigm of an early industrial factory, such as a textile mill. To the extent that we have left it behind we have now returned to the modus vivendi before the Industrial Revolution when there was no concept of a brittle fracture between work and leisure.
If there is no office to go to once in a while to catch up with colleagues, then some of us will miss it. But it’s great to be in charge of one’s own time and still get paid.
[i] See: https://www.nytimes.com/interactive/2020/06/09/magazine/remote-work-covid.html