H
ere’s some good news: After a 13-month span that went from: “This is another seasonal flu, it’ll be over in two weeks” to “July is the new normal for work re-entry!” to “Okay, October 2020 is the build back better date!” to “Hmm, 2021 seems more realistic…” we’re now, finally, seeing enough progress in the rate of vaccinations and an overall reduction in Covid-19 rates that the concept of a “new work normal” actually seems within reach. The exact date will vary by company, industry, and geographic distribution of offices, but after a year of postulating about what exactly a return to work might look like, we’re close enough that we can start chasing the idea more concretely.

What’s out there that seems right and wrong?

The elephant in the room: one sector of commercial real estate

There has been a lot of hand-wringing about the future of commercial real estate since the beginning of Covid, with a recent New York Times deep dive painting a grim picture:

According to Moody’s, the credit rating firm, commercial real estate values are projected to decline by 7.2 percent nationally from their pre-pandemic levels, bottoming out by the end of this year. The hardest-hit categories are the office and retail sectors, with values declining by 12.6 percent for offices and 16.5 percent for retailing.

True, the fate of the physical office space remains uncertain for much of white-collar America, but it’s also important to note that commercial real estate, overall, isn’t necessarily dead in the water — just that the sector has pivoted more from conventional office space (think HQs) to industrial and warehouse spaces, which are common for e-commerce and retail businesses that need more space to store their product inventory. Consider: Industrial property indices actually rose in 2020, by 7.4% year over year.

When you focus on a “hybrid” model, does that mean that neither experience (home and in-office) are inherently that great?

But the notion of a vibrant downtown urban core dotted with corporate HQs — with employees grabbing lunch and running errands — and the hidden trillion-dollar office economy attending to all of that activity? Well, that might be very slow to recover.

Yet in many cases, offices are big cultural investments for organizations, and there is a prevailing mentality that “having the team together” in real life has enough ROI for a company, or at least a greater amount of value than attending to Zoom fatigue, that they’ll keep them around. So to assume every COO or CFO will tear up their commercial lease agreement, post-pandemic, and send everyone to Bozeman, Montana is wishful thinking — plus there’s growing evidence that Bozeman (and other Zoom towns) can’t handle the influx of remote workers, anyway.

As large swaths of corporate America inevitably return to a physical work environment, we’ll see an increase in a hybrid-remote model: some in-office, some online, rotating by “pods” or days of the week.

This brings us to the second elephant residing in the room

Is the hybrid-remote office model even a good idea?

The Society for Human Resources Management, SHRM for short, has indicated the hybrid model might be “the new normal” for 2021 and beyond. But Wired has made a point echoed by many others: When you focus on a “hybrid” model, does that mean that neither experience (home and in-office) are inherently that great? Have you ever been to a restaurant with a 20-page, glossy menu, and decent enough ambiance but nothing about the food really stand out? (You basically leave the restaurant with a bland, “meh” experience.) Maybe that’s what the future of work would be like under a hybrid model. I call it the “The Cheesecake Factory Theory of The New Normal.”

As Byrne Hobart wrote in Marker earlier this year, wide-scale adoption of the part-time office model could “introduce an imbalanced power dynamic for employees who choose to return to the office versus those who may opt to continue working from home.” Are we really ready to contend with a new version of office politics and corporate angling? And “[w]hat will be the unintended blowback for employees who decide to come into the office only every other month versus those who make a point of being physically present every day?”

One area where hybrid-remote could shine: enabling workers to actually compartmentalize different work modes as Harvard Business Review contextualizes in its piece on how the pandemic has exposed the fallacy of the ideal worker:

What many knowledge workers need is spurts of unstructured interaction, followed by hours of quiet time to execute — time that’s often more productive done away from the office. Finding the optimal combination of telework and on-site work will vary from company to company, job to job, and person to person.

I agree. That’s the hybrid model we may see adopted by default in the coming weeks and months, one that keeps employees safe and distant, but also brings them together for pockets of social interaction and “brainstorming,” insofar as that even works.

Could we make the hybrid model more “fun,” perhaps?

Here’s an idea: Every Friday on Zoom, carve out some time for a lottery or office roulette of sorts, where employees draw numbers or letters and then have those letters correspond to the days they come into the office.

“Oh, Randy got a ‘B’ as well! Haven’t seen you in a bit! Excited for Tuesday!”

This gives people a mix of at-home and in-office, and the teams and people coming together might just be random enough that spurts of serendipitous innovation could happen cross-functionally.

Now, some managers might hate this approach because they likely want their entire team physically present, together, on any given day. And, sadly, one of the worst pieces of research that keep circulating during Covid is that in-office workers get promoted significantly more. The notion of “seat time” is a relic, but it never actually died.

Consider doing 1/2/3 or A/B/C teams in terms of rotating people back in, allowing for some distance and some random connections to be formed and experiences to be shared. Everyone else, relative to their job, can be remote for a minute. While you’re doing this, try to cap Zoom calls at three, max four times, per day. People really do burn out on those.

A hybrid model also means you need to retain your physical space for “on” days and/or larger group gatherings (all-hands meetings), so it helps justify the decision to retain the physical space financially.

Beyond the hybrid-remote office model, what else should we be thinking about differently for a “New Normal?”

A few things jump out:

  • We assume a mental health reckoning is coming, but perhaps it’s not? One interesting study from the EU based on first-year Covid data studied people’s feelings of social connection and relatedness under quarantine. After a few weeks, the vast majority of people reported little to no drop in feelings of social connectedness, including extroverts. And while many people reported increased feelings of lethargy, overall life satisfaction was barely affected. In fact, early on, mental health problems slightly decreased. There’s a belief that people might emerge from Covid with healthy savings accounts and a pent-up desire for travel and a new roaring 20s, so maybe that joy will carry over to in-work engagement as well.
  • We need to do something for working moms, and post-haste: The Minneapolis Federal Reserve actually wrote a paper during Covid called “Why Is Mommy So Stressed?” and many have taken to calling this not a recession but a “she-cession.” The author of that Minneapolis Fed paper did an interview with UPenn’s Wharton School of business recently, and noted: “I think, as soon as possible, there have to be some temporary and extraordinary measures to provide child care.” Some of the child tax credit proposals in the $1.9 trillion stimuli may help, but more discussion and reckoning here is needed.
  • Automation — a tipping point we need to consider: Sales of automation software are projected to rise 20% this year, up from 12% last year. Increasingly, corporations are looking to automate white-collar jobs that otherwise haven’t been disrupted through the rollout of a robot. McKinsey, prior to the pandemic, predicted 37 million U.S. workers would be displaced by automation by 2030, but over the course of the pandemic actually went ahead and upped that to 45 million. At the same time, economists are predicting it will take four years and seven months to replace the currently missing 10 million American jobs at our current pace. When you combine the speed of automation with the semi-sluggish jobs recovery, we have a major problem to consider. What’s the answer there? More incentives to create small businesses, perhaps? Entrepreneurial incubators like we’ve tried in North Carolina and other places? Throughout human history, we’ve been able to respond to automated processes with new human jobs — think the Industrial Revolution, Mobile Phone Revolution, etc. — but the pace of automation is accelerating as various job types are eroding, and how we handle that is a major post-Covid storyline.

The bottom line

We honestly won’t know much about Covid’s long-term impacts — on our collective mental health, commercial real estate, corporate relocations, or on kids who participated in “Zoom school” — for at least a decade, if not more. It will take time to suss out exactly what happened to us, our connections to work, our views on money and its relationship to the greater economy, our views on the legitimacy of experts, and many more wide-reaching and salient issues. But in the short-term, the implications of the hybrid-remote model, the future of urban downtown business hubs, and the race to automate will be among the most interesting trends to keep an eye on.