One could say that today's business world exists in two parallel universes. On one side, there is the fixed physical presence and strict scheduling required to operate manufacturing facilities, laboratories, or retail establishments. On the other, there is the production of information, supported by knowledge workers who could do their jobs equally well from New York or Wichita, day or night. Most companies already operate, at least partially, on both planes. But the ability to distinguish between the two, and meet the unique needs of employees in both groups, will be an increasingly critical business issue for the next decade.
Since the dawn of the industrial revolution, companies have brought together armies of employees under one roof, creating economies of scale to be watched and managed to great efficiency. But the last 15 years of technological advancements have quickly rendered this "centralization" model all but obsolete. E-mail, the Internet, cell phones, videoconferencing, and other tech tools provide mobility and connectivity to virtually any employee who would normally sit in an office or cubicle. In many cases, there is no longer a need for these workers to reside down the hall from the manufacturing floor. This new reality creates a valuable opportunity for companies to re-evaluate their real estate needs and even improve business performance.
That's not to say it's as simple as letting employees work from home. Technology may have loosened the ties that once bound employees to the corporate office, but it takes more than laptops and broadband connections for companies to truly realize the high-performance potential of a distributed work force. While the ability to work from anywhere in the world holds value on its own, it is no substitute for providing employees with the complete resources, support, and human interaction they need to be most productive and build rewarding careers. In the future, the most successful companies will find a balance between mobility and the positive aspects of the traditional corporate facility.
The Changing Work Force
There is no question that today's networked world makes possible the vast numbers of telecommuters, workers in satellite offices, and those who do business from the road. Evidence suggests, however, that technology won't be the only factor driving this trend in the future.
Shifting demographics are also playing a role. The U.S. Bureau of Labor Statistics predicts a more than 20 percent increase in the number of professional and related jobs between 2004 and 2014. This represents a major shift toward "knowledge work," which will have a significant impact on our formerly traditional working practices. By its very nature, knowledge work is not tied to any specific location. Assuming they have a suitable technology and communications infrastructure, knowledge workers can operate from remote locations as effectively as they would in an office.
In addition, legions of aging baby boomers are tending to stay in their jobs longer, with many of them looking for part-time opportunities and flexible hours. Meanwhile, the next generation of our work force is already embracing the mobile philosophy, as most young people today have grown up with cell phones and the Internet.
These changing dynamics will alter the work landscape dramatically by bringing the relationship between living and working closer together. While big cities will remain important metropolitan hubs, regional and neighborhood workplaces will become an increasingly important part of the business location equation. Companies that understand and embrace these realities stand to gain a competitive advantage and benefit in a number of areas.
Greater Cost Efficiency
Aside from payroll, real estate represents the largest expense on the balance sheet of most large companies. Some of these costs may be unavoidable for companies with industrial or retail facilities, but nearly every business employs some percentage of office workers (core functions such as sales, marketing, communications, finance, human resources, etc.) whose physical location is largely irrelevant.
By mobilizing these workers and thereby reducing the need for company-owned office space, the opportunities for savings are enormous. In fact, studies show that as much as 50 percent of corporate office space sits empty at any given time, as knowledge workers travel for business, take vacations, or work some days from home. The distributed work force strategy helps reduce this office space waste in favor of a "pay only for what you use" model.
Furthermore, streamlining the corporate real estate portfolio makes businesses more agile in the marketplace. As companies move away from a fixed-cost structure to variable-cost models, they can reduce their capital requirements and risks to enter new markets, while maintaining the flexibility to expand or withdraw as business needs dictate.
For example, sometimes location is still important even for employees who aren't based in a central office. Salespeople and consultants may need to place themselves in close proximity to customers or business partners. By cutting the cord from the corporate campus, these employees are freed to go where they're most needed, without the expense of establishing and then uprooting an office with each move.