The corporate headquarters has traditionally been the focal point of any big business – an imposing building which competes to tower higher, or sprawl more widely, depending on its CBD or campus location.
But the coronavirus pandemic has pushed employees out of the office and into their home offices. These evacuees have found that not being in the office is not only possible but can even be better. 42% of US workers now work from home full-time, accounting for more than two-thirds of economic activity, according to Stanford Institute for Economic Policy Research (June 2020).
In April 2020, Barclays CEO Jes Staley said the age of big, expensive city offices, housing thousands of workers, was over. For good. In May, Twitter told employees they could work from home ‘forever’ if they wanted. Facebook and other tech firms followed suit. Others, like Google and Amazon, are keeping employees at home until 2021.
You don’t have to be a software company to be this radical. Telecoms, banks and music publishers have followed in Google’s footsteps. 99% of Barclays employees – that’s 85,000 people – will still be at home at the end of August 2020 . And it’s big companies like these that have historically invested in corporate headquarters.
Not everyone needed a pandemic to dispense with their headquarters. In 2017, WordPress’ owner Automattic closed its San Francisco office because employees preferred to work from home. Upworthy, GitHub and Basecamp allow people to work wherever they want.
Perhaps it’s surprising how corporates have clung to their real estate. In 1994, 100,000 people worked from home in the USA as part of a massive social experiment: they called it ‘telecommuting’. 32,000 of them were AT&T employees. By 1998, AT&T had saved $550 million in cash flow (a 30% improvement) by eliminating or consolidating offices and reducing related overheads. And in 2017, Gallup found that 20% of all American employees worked remotely 100% of the time. Yet it took a pandemic to really show the way.
The headquarters has always been…
Headquarters are expensive in terms of real estate. According to McKinsey, they can also suffer from “misguided influence, bureaucracy, delays, and time wasting,” which is why “spin-offs from large conglomerates often perform well after being released from the warm embrace of the parent company. ” And the ideas and contributions of outlier workers can struggle to be heard.
COVID-19 has not only fuelled a revolution in the way people want to work, but injured the economy, too. Businesses must be leaner, nimbler, smarter and more competitive than ever:
In response to the problems highlighted above, we think businesses will move to a more fluid, distributed and low-cost model, blending home working with multiple smaller hubs (often with flexible space and leases) and the use of co-working. Coming into the office, including headquarters, will be all about curated experiences.
Yes, but not as we know it. Rather than a workplace for thousands, we think the HQ will be: