Stanford University professor Nicholas Bloom couldn’t have summed up the value of hybrid working any better than in a recent interview with Time magazine: “As an economist, I’d point out that firms don’t do things that lose them money. They do things that make them money. That’s why every firm just about out there is doing hybrid, because it’s such a no-brainer to increase profit.”
He’s spot on – and in total agreement with the findings of a recent IWG survey among 250 CFOs. It revealed that 80% of respondents believe hybrid working is an important cost saving as they prepare for the recession, which more than 90% are expecting.
Unless they resize their real estate footprint, CFOs will be paying for an underused resource that doesn’t increase productivity. So it’s no shock that 97% of CFOs plan to or are already implementing annual cost-cutting measures of more than 10%, with hybrid working playing an important part – 87% say they regard it as a more affordable business model.
For years I’ve believed global capitalism would move to a hybrid model, with people given flexibility to work wherever they’re most productive. And it’s no longer just about intentions. CFO behaviour is changing, with half telling us they have already opted for short-term leases or shared workspaces.
This approach gives them flexibility without being locked into lengthy contracts. And it’s also a no-brainer for profit, with a Global Analytics survey showing that hybrid working can save companies more than $11,000 (£9,800) per employee per year. Savings of that scale ramp up dramatically. Cisco went hybrid five years ago, and it’s estimated that it saved around $500m (£440m) by cutting half of its real estate footprint.
The switch to hybrid not only addresses cost issues; it delivers a productivity boost thanks to more engaged employees working in the way that suits them, without the expense, stress and pollution of the commute. Bloom also talks about productivity increases delivered by happier employees who see hybrid working as the equivalent of a 7% to 8% pay rise. This data shows companies everywhere are waking up to the need to become more efficient in their use of office space.
The hybrid model is also an effective means of broadening recruitment, enabling business leaders to hire from a much wider geographic and diverse pool, which is more cost effective.
Flexible workspaces are springing up in communities of every size across the world, placing advanced facilities close to where people spend their lives. Hybrid working is making the restrictions of geography redundant because CFOs recognise that reducing space in capital cities is cost effective. That’s why most new sites in our network are in small towns – in the UK, Gerrards Cross and Evesham, for example, or Kodak, Tennessee, in the US with a population of just 10,000.
Something very significant is happening as hybrid working delivers a win-win for CFOs and employees. Quit rates are down 35%, while CFOs save on their bottom lines. As we navigate an uncertain economic landscape, gains like these will only get more important, valuable and difficult to ignore.
Mark Dixon is founder and chief executive of workspace provider IWG
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