Workplace 2.0: How CFOs are reimaging the office post-pandemic

The days of working in an office five days a week and it being the primary place of work for many organisations are long gone. Working patterns have changed significantly over the last couple of years, with employees able to work remotely anywhere in the world, allowing companies to expand their talent pools further afield.

To put it simply, the office is no longer the central place of work. Instead, it has become “more of a meeting place” where colleagues can huddle together to work on special projects, says Sheamus Toal, CFO at Saatva.

Revising salary structure

With physical location no longer a barrier to recruitment, companies are searching further afield to hire top talent for their teams. In some cases, this has meant attracting talent in areas with a lower market rates.

In fact, 20% of organisations said they will adjust pay when an employee moves to a location where the cost of living is lower, according to a survey by Gartner.

“The remote work environment has provided tremendous flexibility to organisations from a human capital standpoint,” says Toal. At Saatva, the company is longer restricted to a 50-mile radius around its offices to recruit talent.

“While we have not adjusted the salaries of our existing workforce, we have been able to secure talent in lower-cost markets, where the cost of living and salary structure may not be as high as in New York or Austin – but the bigger benefit for us has been the expanded talent pool.”

In other cases, as working habits evolve, some companies have gone as far as adjusting salaries to match the requirements of the firm’s new working strategy.

“This approach can work for some companies but CFOs need to work closely with HR and business leaders to understand employee sentiment and weigh the risks to engagement and retention,” says Emily Riley, director of research at Gartner.

At the beginning of the month, Stephenson Harwood announced that staff looking to work remotely would receive a 20% pay cut. Those taking the cut will be able to claim travel expenses from the firm to cover costs.

“During the pandemic, for a small number of roles in our London office, we looked beyond London and recruited people who lived elsewhere in the UK,” a spokesperson at the firm said. “It enabled us to access and attract talented candidates who might not otherwise have been available to us.

“The packages we offered – including salaries, but also expectations – were different from what we offer our people who regularly work from the office in London.”

Remaining compliant

Catering for the new remote office comes with compliance and security challenges.

“While the remote work environment provides tremendous flexibility, it does come with certain risks and challenges, primarily around data security and computer access controls, which need to be properly monitored and addressed,” says Toal.

“Companies want remote associates to have easy access to all the systems they would have access to in the office, but they need to make sure that they establish appropriate protocols to ensure that cyber security is a top priority and that no unauthorized access can occur.”

According to a study by Tenable, 80% of security and business leaders say their organisations are more exposed to risk as a result of remote work. This is driven by a lack of visibility into remote employee home networks and the expansion of the software supply chain migrating to the cloud.

“We have provided our staff with education about the changing risk profile due to working in multiple or non-office locations, including reminders around cyber security awareness and prevention,” says David Carrick, CFO at Apex Group.

Alongside this, firms have had to ensure they remain compliant with industry specific obligations such as record management requirements for financial services firms. The mass adoption of remote working has blurred the lines between official and personal communication channels, in turn making it harder for companies to control and remain compliant.

At the beginning of the pandemic, the Financial Conduct Authority (FCA) warned firms to remain compliant with the record regime SYSC 10A (Senior Management Arrangement, Systems and Controls) while teams are working remotely.

“We expect firms to have a rigorous monitoring regime, commensurate to the increased risks, where in-scope activities may be conducted outside the controlled office environment,” the FCA said.

Regulators were quick to react to the new working environment, and by providing robust but flexible guidance have supported the remote and hybrid working models, says Carrick.

“We have increased the frequency of team meetings and regular ‘all-hands’ meetings to ensure that our teams are up to speed on regulatory and company developments – I expect that this will continue as a matter of best practice,” he says.

Similarly, with many companies expanding their talent pools across various jurisdictions, businesses must ensure they are  compliant with various employment and tax law.

“Compliance in a remote environment can become complex when you have employees in 15 states,” says Sarah Roberts, head of finance and operations at Summer Friday, a branding and content agency. “Managing everchanging compensation laws, job posting requirements, and training obligations is no small task.

“While we may be saving in traditional office expenses, it is important to invest in partners and platforms that allow you to remain informed and in compliance.”

Tax nexus is another significant factor to take into consideration if you’re in a business that requires sales tax to be charged and paid, says Roberts. “Having a presence in a state, meaning one employee, could often result in a state considering the company responsible for reporting sales in that state.”

Transitioning to workplace 2.0

With the mandatory shift to remote working at the beginning of the pandemic and a reluctance from employees to return to the office full-time post-pandemic, some companies are reviewing their office portfolios or reimaging the workplace entirely.

“The amount of space dedicated to offices will decline in the future,” says Toal. “Many companies will likely move to a hotel or shared space concept, where most people don’t even have a dedicated office or workstation.”

In March, UK tech retailer Curry’s announced it was closing its headquarters after signing a deal with WeWork, the flexible office space. As part of the move, 1,400 of the tech retailer’s staff will be able to work across 50 WeWork locations in the UK.

The company said it was looking to shift to a more creative, agile workplace strategy that provides greater flexibility as its workforce moves away from the “old normal”.

Alex Baldock, CEO of Curry’s, said the move “embraces what genuine hybrid working means, not just where you work, but how you work”.

“We are not just paying lip service to hybrid working as we come out of the pandemic. We have listened to our colleagues, who have been outstanding through Covid’s many challenges, and have implemented the changes they wanted to see.”

Some companies have even chosen to move to a completely remote operating model. The money saved from reducing real estate costs can be redirected to support other parts of the business, says Roberts.

“While we have faced many new challenges navigating the fully remote workforce, we’ve learned the advantages that come with it as well,” she says.

“Where we would have had 5% of our revenue going to pay rent, we redirected those funds to tools and resources that enable the company to remain in compliance, and our team to perform optimally.”

However, giving up the office is not an option for all companies. Others have taken to reimagining the purpose of their office as the traditional environment of rows of desks is no longer an appealing option for employees.

“The office environment is essential to the sharing of ideas and collaboration at all levels, but especially for colleagues just starting in the industry,” says Carrick.

“The exact workplace model we will operate still remains flexible, however, as a company, we strongly believe in the superior value of in-person connections, training and team building and, as such, we will not be moving to a fully remote working model in the long-term.”

Offices still have their future assured as places to instill corporate identity, says Joanna Turner, head of property research at Canada Life Asset Management.

“Exactly what that will look like will depend on a number of variables, including the type of work carried out in a specific office and company culture, which may itself be undergoing change as a result of the pandemic.”

CFOs are uniquely positioned to provide a cost management and a long-term value lens to the conversations pertaining to the future role of the office, explains Gartner’s Riley. Therefore, finance leaders are vital to ensuring new working environments are fit for purpose and offices are equipped with the right technology and collaboration tools for employees.

According to a McKinsey report, Covid-19 was a “technology tipping point” for companies revising how they utilise technology to become more competitive. This innovative approach is set to continue post-pandemic as businesses look to upgrade their workplaces and digital offering.

“Technology will play a key role in ensuring the hybrid experience remains seamless by providing a level playing field between home-based and office-based workers,” says Canada Life Asset Management’s Turner.

“We may have only seen the tip of the iceberg so far – augmented reality offices, metaverse & meeting in Virtual Reality (VR) is yet to be a conventional form of hybrid working.”

As companies look to reimagine their office space, designers will need to consider how to integrate technologies like VR and Metaverse, adds Turner.

 

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