Will We Knock Down Our Office Towers and Build Parks?

Resignation?

Reset?

Reimagination?

Realization?

Take your pick.

All have preceded the phrase “The Great” to describe the current mood of the workforce as some estimate there are 1.5 jobs available for every person out of work.

The big question then is, will we rid ourselves of all commercial real estate?

• Office
• Warehouse
• Entertainment
• Retail
• Manufacturing

Seems to me, that with the exception of the descriptive Resignation, the other terms are more the wishful thinking of:

• policy wonks
• pundits
• self-serving powerful investors 
• Op-Ed authors 

They love the idea…if not the actuality…of a radically reformed work environment that is less about the purpose of work and the respect for employees, but one where the relationship balance between employer and employee has shifted, changed, or reversed. The employee is in control, not the employer. Think consumers in control…yeah right, the marketing trick is to make them think that…you beat Amazon lately? Now, apply that thinking to workers…

KNEE JERK ALERT…don’t get me wrong, I’m as much a “Champagne Socialist” as anyone…even BlackRock’s Larry Fink in his annual letter includes the worker in “Stakeholder Capitalism”, their term for the same thought I just expressed. And, bottom line, he is right…although I’d wager on how much leeway they will actually give companies to reinvest in doing what’s right versus quarterly profits… 

Mr. Fink writes:

“No relationship has been changed more by the pandemic than the one between employers and employees. The quit rate in the US and the UK is at historic highs. And in the US, we are seeing some of the highest wage growth in decades. Workers seizing new opportunities is a good thing: It demonstrates their confidence in a growing economy.

While turnover and rising pay are not a feature of every region or sector, employees across the globe are looking for more from their employer – including more flexibility and more meaningful work. As companies rebuild themselves coming out of the pandemic, CEOs face a profoundly different paradigm than we are used to. Companies expected workers to come to the office five days a week. Mental health was rarely discussed in the workplace. And wages for those on low and middle incomes barely grew.

That world is gone.

Workers demanding more from their employers is an essential feature of effective capitalism. It drives prosperity and creates a more competitive landscape for talent, pushing companies to create better, more innovative environments for their employees – actions that will help them achieve greater profits for their shareholders. Companies that deliver are reaping the rewards. Our research shows that companies who forged strong bonds with their employees have seen lower levels of turnover and higher returns through the pandemic.

Companies not adjusting to this new reality and responding to their workers do so at their own peril. Turnover drives up expenses, drives down productivity, and erodes culture and corporate memory. CEOs need to be asking themselves whether they are creating an environment that helps them compete for talent. At BlackRock we are doing the same: working with our own employees to navigate this new world of work.

Creating that environment is more complex than ever and reaches beyond issues of pay and flexibility. In addition to upending our relationship with where we physically work, the pandemic also shone a light on issues like racial equity, childcare, and mental health – and revealed the gap between generational expectations at work. These themes are now center stage for CEOs, who must be thoughtful about how they use their voice and connect on social issues important to their employees. Those who show humility and stay grounded in their purpose are more likely to build the kind of bond that endures the span of someone’s career.”

Frankly, how could one argue? And I won’t, as it's not my point. I agree with this all…yet I feel it's missing facts and consequences.

It seems to me we need to understand who we are really talking about here…who is really resigning in droves and why.

• Just to put one “why” to bed…according to the latest Harris Poll, over 70% of Americans enjoy bars, restaurants, and shopping out…even now…fear of Covid seems to be relative.
• I’m not sure that the BlackRock crew fully understands the life issues of the lower wage market where childcare isn’t solved by a nanny and a housekeeper…where parents struggle with multiple jobs to make ends meet, often facing “care insecurity” due to unpredictable schedules because of school closures and sick children. 
• While it's a good story to opine about empowered workers, the closer in truth is that many employees are facing a precarious work environment; the end of benefits and a need to work despite the tragedy of not being able to keep the jobs they have. 
• Yes, while it's a great story to include the higher paid in the general round up and suggest a revolution of sorts…or burn-out…there is enough evidence to suggest that higher-pay, better work environment, and in some instances self-employment are the key motivators for that class…meaning leaving one job for another and not bailing from the workplace. This paints a completely different picture with a completely different set of issues as it relates to the job market. 

The bottom line is, I wish this was all about taking control as I do agree with Mr. Fink that all will benefit from a better balance between employer and employee…although do read between the lines, I know I’m cynical… as my readers know…

So, what does this all mean? And what do we do? For one segment, some thoughts:

1. The real crisis is in leisure, hospitality, retail, and healthcare where there are more job openings than workers. Many of these workers either lost their jobs during the lockdowns, or were forced to work under harsh conditions. When you can’t take care of your family, and the delta between working and not is low, it's an easier choice.
2. Some employers have stepped up and offer advancement tracks, tuition assistance, better hours, child-care, and more money. Of course, it costs more…but the upside is less turn-over, a more motivated workforce, and a better investment story. It doesn’t put the worker in charge, but it certainly increases self-respect.
3. Enough with the disruption BS, the never-ending investments, and stupid valuations of companies that exploit workers and the market. This needs one big fix.
4. Have you been following the 15-minute delivery services? Notice the electric bikes skidding through the rain and snow? The hand-pulled Amazon carts struggling up your block? Your UBER driver? So much for my purposeful behavior and investment thesis. Are they in charge? Reimagining the workplace? Don’t get me started. Time to step back. Demand that all workers be fairly treated…even if your package comes 20 minutes later and a three trillion dollar valuation goes back to two.

Yet, seemingly the focus is still (surprise) on the other end of the market. The folks who want to work from home, who according to some never want to see an office again…and wherever they chose to work from…want to be trusted to finish their work in their own time…feel they are way more productive today than before. 

As you have seen, commercial space, as in warehousing and manufacturing, will continue to be strong. The real question is, what about office space? 

• Will we be taking down the big towers across the world and creating more parks for all the new time we will all have and to increase climate rightness?
• Will we be turning office space into affordable housing as some have suggested?
• Will Amazon buy it all with all your businesses and bring people back to work on their terms…joking…maybe?

What is a CEO to do? Or BTW, any manager or employee? Some thoughts… Get with the program:

• Many physical workplaces suck. The non-personalized, agile hotdesked, hoteled, so-called modern environment is cold, remote, and not fun. I also might add, it’s old and tired. I might as well work from Starbucks. Open concept is fine. Three feet of pick-up space isn’t. 
• Take a look at your management practices—false deadlines; abusive hierarchy; bad politics encouraged; raises and rewards held off until demanded; not enough people to get the work done; profit demands that benefit the few but are generated by the many.
• Diversity, Equity, and Inclusion are actually strategies to grow, but you know that…
• Don’t equivocate. Make it clear what you want. Do you think that some face-to-face time is valuable? Or have you abdicated completely? If so, sell your lease and get another computer. People want direction and inspiration.
• Enough with how wonderful ZOOM is, not even they believe that…and as for productivity, if you really do believe that you are way more productive with everyone remote, see the sell your lease above.
• How important is culture to your unique differentiation? What’s the value of experience and passing down institutional knowledge? Or don’t you care anymore? I can tell you that all of the Start-Ups I’m working with obsess over that.
• If you are worried about turn-over and loyalty, you need to have some center…some DNA to share with all…if I work for you and never meet anyone, never see an office, it's no wonder I’m also working three freelance projects at the same time I’m working for you…why not? I’m incredibly efficient, no?

As for employees, it's a simple discussion in my view:

1. See all the points above.
2. Added to a better workplace, mental health, pay, and all else… 
3. Don’t you want to learn alongside a team? 
4. Have the serendipity of discovery of people and thinking?
5. Grow with people you like?
6. Belong to something cool?
7. Get out occasionally?
8. Be part of something bigger that you can be proud of?

I know some of it might sound hokey to you…but this isn’t a digital thing…it's a life issue. If you like restaurants as much as you like underpaid/exploited people (sorry) bringing you a meal, and see the difference between the two, then apply the same logic and emotion to your workplace.

I haven’t touched work/life balance as I’ve written about that before and will again…just be in the moment…whatever you do.

In summation, the BIG WHATEVER is not as simply put as some would have it. Social divides change the very nature of the issue, and as far as I’m concerned, make the discussions so many are having irrelevant as the root causes and consequences are in different universes. On one side, we have entitlement, and the other, a need to eat…it changes the story…no?

There is a huge workplace problem out there, make no mistake…but don’t fall into the trap of homogenization… As for knocking down office towers and building parks, if you value your business, and if you value a real career of learning and advancement, my strong suggestion is that you become part of the—yes, HYBRID (KNEE JERK ALERT)—but return to office movement. My bet still is that the most successful companies going forward will be the ones where people:

• know each other
• know how to work together
• learn how to read a room (meaning human emotion)
• eat together, drink together, and have fun together
• Have a company space that reflects and enhances their company culture and their own personal ability to learn and advance

What do you say?