Bosses in the City of London predict there will be a fundamental shift in how their companies will use offices in the future, with greater flexibility set to stay after the pandemic ends.
As white collar staff slowly trickle back to their workplaces, members of the FT’s City Network, a forum of more than 50 senior executives, argue that Covid-19 will have a long-term impact on office life — but believe that city centres will adapt and thrive to the new ways of working.
Is homeworking here to stay?
City Network members for the most part believe that working from home, at least part of the time, has become a permanent feature of white-collar life. Jean Pierre Mustier, chief executive of UniCredit, the Italian bank, said that lenders will need to accelerate efforts around “remote banking”, such as advisory and call centre services.
“This will impact as well how our team members will work, in the branches and in the headquarters,” he said, predicting that flexible hours and remote working will “remain permanent features”.
For many, the shift to working virtually has been positive. Anne Richards, chief executive of fund manager Fidelity International, said the past year had shown how to run a “distributed” rather than a “centralised” business.
“We’ve shown that many jobs can be successfully done from home for months at a time, whether running entirely virtual call centres or trading in securities within no loss of productivity,” she said, but added: “We don’t yet know if we can keep people motivated and energised in the long term.”
Members also agreed that existing trends towards flexible working will accelerate. Businesses telling “employees from where to work and in what hourly patterns to work seems unlikely to persist — businesses will emerge that offer hybrid and flexible working,” said Sir Douglas Flint, chairman of fund manager Standard Life Aberdeen.
There was broad acknowledgment that working from home was now seen as both “effective and acceptable”, said Robert Swannell, chairman of UK Government Investments, which oversees taxpayer-owned businesses. But he added that there were drawbacks: the lack of “chance conversations, social interactions and snippets overheard that allow networks to truly flourish, creativity to thrive and cultures to be grounded and ingrained”.
Others agreed that personal bonds will tether people to the office for at least some of the time. Paul Manduca, chair of insurer Prudential, said: “Working from home works for a time within communities that know one another well but it is very hard to get to know and assess new employees unless physical interaction takes place.”
Andreas Utermann, executive adviser to asset manager Allianz Global Investors, agreed that people need “consistent and frequent physical interaction, lunches, coffees and evenings out to bond and build the trust needed to be at their most effective”.
With levels of coronavirus increasing across the UK and many other rich nations, members acknowledged that the it will be some time before workers return even part time to the office. Winfried Bischoff, former chairman of Lloyds, warned that few companies “will want to take steps of even mild coercion before the effects of winter on Covid-19 and any derivative of it has been evaluated”.
How will the office change and will we need so many?
Most City Network contributors agreed that the configuration and even the purpose of offices will need to change to accommodate the changing patterns of work. Mr Swannell said “more episodic attendance” will “inevitably mean less office space is required to account for the fact that employees may routinely be spending 1, 2 or 3 days away from the office”.
He added said it was “easy to imagine that the UK needs 50 per cent less physical retail space than it had at its zenith”, but focused on “the wrong types of office space” that cannot provide “adaptable space that companies will need to provide for workers who are working at the office for only part of the time”.
Some network members suggested that workplaces may also need to be repurposed as occupancy becomes less predictable. “Offices will need to be inviting,” said Alison Carnwath, former chair of Land Securities. “They will need to provide that something which is impossible to create on your own or even at home — other colleagues, of course; new ways of learning.”
The pandemic has also caused some to question the nature of the office. Is it “a drop-in centre for those that find working from home challenging”? asked Ms Richards. “Or a connectivity hub for cross functional creativity? Or a place to reaffirm friendship and social contact? The answer is probably ‘all of the above’ for many,” she said.
Some members feared that shifting patterns of work could erode company identity. Mr Mustier worried that without branches and offices, and “without physical personal interaction, a company culture will fade away and we will not be able to engage properly with our clients”.
Are big cities in danger?
The City Network broadly agreed that London and New York would thrive under the new ways of working. “They certainly won’t just remain the cities for commuters and sandwich bars and power games,” said Ms Carnwath.
Paul Drechsler, chair of London First, the lobby group, predicted that homeworking was likely to end up at average of 1-2 days per week, a level that would allow the office market to recover and London to “adapt and continue to succeed brilliantly”.
Many network members said cities, like offices, could be reconfigured. More space would need to be set aside for leisure, entertainment, culture and the arts, said Mr Bischoff, who added that “mega cities like London and New York, or LA and Paris will adjust”.
The use of outdoor spaces during the pandemic is also prompting a rethink of how urban areas are organised, according to some members. “The value of outdoor space has become more evident as a result of the confinement measures and cities will need to double up on creating more public space,” said Mr Utermann.
Ms Richards also saw cities evolving “with a different, possibly more relaxed vibe and that . . . increased flexibility will lead to increased inclusivity”.
“Our cities have faced many challenges throughout their long history and have adapted to new circumstances. This is a big one, but they will reinvent themselves again.”