Thursday, October 22, 2020

Working from home: will it become a permanent reality?

 

Synchrony Financial has announced a permanent change to its corporate culture, one "allowing" (translation:  requiring) its employees to work from home at least part of the time, and many on a full-time basis.


Synchrony’s proposal ... :

  • Allows all its US employees to work from home permanently.
  • Requires some employees to work from home all the time with no access to an office.
  • Requires all employees to work from home at least some of the time.
  • Requires even management with “assigned seats” to work from home at least 1-2 days a week.

Citing “safety and maximum flexibility for employees as a backdrop,” CEO Margaret Keane explained that the company has embarked  on a cost-cutting mission, with cost savings of $150 million to $250 million in 2021, that entails an $89 million restructuring charge right off the bat, plus layoffs, work-from-home on a permanent basis, and drastically reducing its “physical footprint” – namely office space.

. . .

In a memo to employees ... CEO Keane and Synchrony President Brian Doubles explained that Synchrony will have three types of offices:

  • Virtual offices: employees will work from home permanently, and there is no office they can go to.
  • Hoteling offices: employees work at home permanently, but if they need to, can book a desk at a nearby office location.
  • Hybrid offices: employees can work from home but they have an assigned seat at a nearby office where they can work at least three days a week.

Even executives with assigned seats — so other executives don’t have assigned seats? — will be expected to work from home one or two days a week, to “role model our work-at-home mindset,” the memo said.


How will such policies affect other businesses, as well as households?


The more of these announcements we get, the more we realize that this isn’t a blip, but that the Pandemic has triggered a massive shift in corporate thinking, that what used to be dismissed as impossible has proven to work just fine of the past seven months, with some fine-tuning and lots of technology and some flexibility, hence the meeting places and temporary seats in an office and the like – the hybrid model that allows a company to drastically cut its office footprint while at least some employees are still able to get together.

If both adults in a household suddenly work at home most of the time, their home might not be big enough to accommodate their needs, and they’ll need to look for something larger. And they now have to buy their own toilet paper, coffee, office supplies, office furniture, lunches, and treadmill where you can “work while walking at home,” so to speak.

On the other hand, they can also move further away to less costly areas and still dodge the horrible commutes.

And office landlords and their lenders will have to do a lot of creative thinking quickly. There is already a huge amount of office space available. More is becoming available, and new office space is still being built. Landlords and creditors who are still thinking that work-from-home is just a blip, and that this too shall pass – just like mall-landlords thought ten years ago that ecommerce was just a blip – will undergo a reckoning in due time.


There's more at the link.

This is a very important issue, one that's likely to cause tens of billions of dollars in economic losses and/or damages to cities across America.  Many small and medium-size businesses have been established to cater to the corporate office environment;  restaurants and fast-food joints, food carts, indoor plant maintenance, office supply stores, delivery services, gyms and fitness establishments, etc.  What happens to them if their corporate marketplace goes away, or is drastically reduced in size?  They certainly won't find it as easy (or affordable) to market their services to working households, scattered all over the place.

Companies are effectively shifting the cost of administrative office space onto their employees' backs, making them use their homes as offices.  That means most of the costs involved will also devolve upon employees, as outlined in the excerpted article above.  There's also the cost of additional child care, to keep kids busy and out of the hair of their mothers and fathers as the latter work during the day.  Who pays for that?  If one spouse did that in the past, but the couple can't have their children at home any more because of the disturbance to "office routine" that they impose, it can be argued that it should be a corporate expense.  However, good luck selling that to the bean-counters!

Will companies expect their employees to pay such expenses as a "substitute" for the commuting costs they no longer have to pay?  My guess is, they probably will.  Companies may not be able to get blood from a stone, but they'll sure try their hardest.

This poses a lot of questions for all of us.
  • How is the IRS going to cope with the flood of increased claims for home office deductions?  How will it handle office expenses such as furniture, supplies, etc.?
  • Will employers provide computers, etc. to their staff, or will they expect them to use their own?  What about home Internet services?  Will companies pay that bill for their employees?
  • What about privacy?  If our homes are our offices, will our bosses expect to be able to reach us at any hour of the day or night for work requirements, even if it's "family time" and not office hours?
  • Many companies (for example, Facebook) have already said they'll allow employees to work from home anywhere they please, but will cut their salaries if they move to lower-cost-of-living locations.  However, those salary cuts don't take into account the expenses I've outlined above.  Should they?  Will they?
Miss D. and I already have our own offices at home;  it's one of the reasons we bought this house.  They're not big or luxurious rooms, but they're at opposite ends of the building, so that if we're trying to write, we can do so in peace and quiet, without bothering each other.  We have headphones so we can listen to our own music as we work, and we meet in passing in the kitchen as we "refuel" from time to time.  It works for us;  but we don't have kids racketing around.  If they were part of the picture, I think it'd be a lot more difficult.

It's going to be interesting to see how all this plays out.

Peter


21 comments:

Bob said...

Knowing what I know of todays office worker, I would expect productivity to fall off a cliff. If there is no one to keep an eye on them as in an office environment, I expect many workers will just not "toe the line" without an overseer. The "work at home" experiment will probably fail miserably for many companies, not because its not a good idea, but because so many of today's employees are lazy.

The Raving Prophet said...

It will last right up until some rock star manager declares the remote office as not working for them and is going back to traditional cube farms. This happened a few years ago when Marisa Meyer of Yahoo made that declaration. Now, the technology is better now with some tools that weren't available then, but managers like to play that kind of yo-yo game.

On the expenses, I've seen some places willingly pay for things like extra monitors and good desk chairs for the employees- those are expenses they'd have anyway. I was talking with family last night and I expect this will change even how people shop for homes- those open floor plans won't be as desirable anymore. Extra bedrooms for work spaces (for adults AND school kids) will become more desirable. IMO, the shift away from "McMansions" is about to move right back. That 3000 sq. ft. home is going to look a heck of a lot more desirable if several members of the household need their own workspaces there.

Inventive said...

We've been full work at home since the middle of March. There's been some isolated issues with lack of productivity but the vast majority have handled it well and performed admirably.

When we do go back to "normal" it will be as a hybrid, two days in the office, three at home. I had a LONG commute, so this has saved a ton of time and money on my end, even accounting for heating/cooling my home office and all the other odds and ends.

Ultimately I think it's just another facet of the digital/AI revolution, it's going to disrupt things massively... Whether it ends up as a net positive or a net negative is anyone's guess at this point. For me and my family though, it's been a huge positive.

Silent Draco said...

What if they run the numbers and discover it's about the same for Mom to stop working outside but instead care for her own kids and manage the home? The second income carries a lot of parasitic costs.

Not ironicslly, this can lead to "mindfulness" and "wellness" in the classic sense, by monding one's own tasks and resuming traditional roles.

There's probably an unanticipated cost reduction to business, from removing the admin overburden and much of the "work-life" bribery.

Old NFO said...

This will also have personal tax implications. How will people 'claim' that home office? Something to think about. And yes, real estate in major metro areas are already taking a hit. See SFO, NYC, Seattle...

Tirno said...

You'll know this is permanent when new house and apartment construction has specific "work from home" features in the plans, and when prefab backyard office-sheds (including power, internet, heating/cooling and possibly ensuite half-baths and snack nooks in the luxury grades) become a mainstream offering. The 'tiny house' fad can easily become the 'backyard office' industry.

I think small businesses may adapt in the suburban environment with more innovation in the "delivery lunch" space. I was getting lunch through Amazon to my office just a couple years back.

Sam L. said...

I'm retired. I don't work ANYWHERE.

SiGraybeard said...

I think it would be interesting to know if the numbers of work hours goes up or down. I know they can track your activity on the computer, if you do your work on one, so they can compare your activity when you were in your cubicle vs at home.

Like Sam L. said, I'm retired so this doesn't apply to me.

I saw one guy saying, "am I working from home or living at work?" While it would be nice to save the commuting time, what if your commuting time had to become work time?

Mark said...

I've been working full-time from home since May of 2019, nearly a year before Covid mandated such for the rest of my co-workers. My thoughts:

On the individual level:
The cost of setting up your home office is likely offset by the cost of commuting. I know when I was commuting I paid about $350 a month to commute by public transportation, that'll buy a lot of internet access. Plus, for me I spent 4+ hours a day commuting, I now have that time back which is worth a lot.

We bought the house we did in large part because it has an office. I think builders will start considering home-office space in home design.

For people unable to work in their home, I suspect there will be a market for office space outside the home but also outside the cities. Buy a defunct strip mall, divide it into secure, 100-200 square foot spaces, supply reliable internet/phone/power/heat/AC and maybe basic furniture, let people supply their own computes/printers, etc. More of a distributed office environment, instead of having to make the long commute to the expensive part of the city.

On a more general level:
Covid only sped up the process that was already starting. Before she retired my wife worked from home at least 1-2 days a week, and the company encouraged everyone to telecommute when possible. In fact many people didn't have permanent offices, if they needed to be in the office they had to reserve office space.

Yes, companies are saving money. Properly planned for, the employees are saving too, like the aforementioned commuting costs. Win-win.

Big city real estate will nose-dive, and probably speed up the descent of places like NYC into Detroit.

Mark D

Billy said...

I think for most workers this will not be nirvana most think it will be. “I know it’s 8pm or Thanksgiving Day or Saturday or your day off this won’t take long can you take care of this?” Don’t think it can or will happen I had it happen to me for 20 years doing IT for a law firm. “Oh just take your laptop on vacation so you can be available in case of an emergency”. Also gone is the hearing about a issue while passing by someone in the break room or walking down the hall. I don’t know how many issues I found out that way.

Jonathan H said...

My company has had work from home options for over a decade; we have been almost entirely work from home since mid March.

One thing NOT mentioned above is that this is another sign of a 'digital divide' that separates knowledge industries from almost everyone else - if you are in most service industries, you can't work from home. If you work in a factory, mine, lab, etc - you can't work from home. I'd be curious to see how many jobs can practically be done remotely; I don't believe the claims that 70% of jobs can be done remotely...

While this will be a big change for the cities that are dependent on big expensive offices for banks, web companies, financial firms, etc, it will be much less of a change for smaller cities and towns.

As mentioned above, productivity will be a big issue, as will working hours and privacy. We have seen schools make ridiculous pronouncements about homes being 'school property' and setting unreasonable rules there; I suspect we see this with big companies also, especially as companies with liberal mindsets pick up employees in conservative areas - for one example, will they ban guns from all 'offices'? If so, there will be pushback - as others have mentioned, there are many legal and tax implications of more widespread remote work that will play out over the next decade.

Sherm said...

Costs of a home office are simply an unreimbursed business expense, a miscellaneous itemized deduction. At present miscellaneous itemized deductions are not a deductible. That's one of those things that changed with the tax law changes a couple of years ago. It's different if you are self-employed.
Commuting costs aren't deductible either so I suspect it'll be a wash for most people. They stop one non-deductible cost and incur another.

Dad29 said...

...other executives don’t have assigned seats?

Pro Tip: HAVE A CURRENT RESUME!!

Unknown said...

David Lang says:

home office expenses are no longer deductable. But most of the time they are not as high as people make them out to be.

At my last job (just started looking), everyone on my team worked from home at least days a week and half worked from home almost all the time (a week a quarter visit to the office type of thing) It actually can work very well for some jobs.

I fail to see how working from home rather than from an office can generate _more_ child care costs.

And while there is some cost/hassle to setting up an 'office' (which for many people, including some execs as I've seen over the last 7 months, is the kitchen table) the savings in hassle due to commuting costs (stress, wear and tear on vehicles, etc) far outweighs it.

Yes, there are advantages to being in an office with the rest of the team and the ability to wander over to talk to folks. However, I've seen a lot of offices where everyone is hunkered down at the desk (or cube if the company grants them one) wearing headphones, and rather than standing up to talk to the person across from them, insist on electronic communication.

Over the next few years we are going to be seeing some companies push for people to move back to the office, and others will embrace remote work. It will be interesting to see what happens.

While there are bunch of small businesses that setup around the big offices (restaurants for lunch, etc), the people still need to eat, and most don't want to fix their own lunches, so expect to see more small food places pop up in more residential areas.

EricW said...

My Houston engineering company just returned to a full five day week at the office. My buddy's company just up the road is still 100% work at home. YMMV

Sadly it just took me two full minutes to get through the darned Captcha b.s.

Nick Flandrey said...

I have been 'work from home' and 'work on the customer's site' my entire career. I've never had an office or desk at the company that paid my salary.

I work different hours when working at home. I tended to do things late at night that I might have done during the day if I was in an office. I had to do meetings and calls, drawings and design reviews with our in office and remote staff during the days. Being in central time zone, and with customers and offices in all the US time zones I tended to start casually a bit earlier with the East coast, and work casually later until the West coast was done. I typically was near the computer and work phone for about 10 hours a day, but they we're often not very intense hours.

When I went into the field (project based work and customer support onsite) I would often be in the customer's office 8-5, then after dinner spend several hours doing my office work at the hotel.

I was working 80 hours a week routinely, often much more than that, and traveling all over the US and internationally.

Work from home purely would be a nice break. It also wasn't possible to avoid traveling to the customer as I installed and serviced physical systems.

Many years ago I found myself doing a conference call sitting on the floor at walgreens, at 11pm, my time. I realized then that the ability to work anywhere meant we'd be working everywhere. And that has been the case for me. I've taken calls while in line at Disneyworld, while in Scotland with a customer, and while in China. I've worked in hotels, airports, conference centers, ice arenas, restaurants, hallways, warehouses, trucks, and too many other places.

We did good work and interesting projects, but I don't want to go back to that lifestyle. I'm happy enough working entirely from home now.

WRT office space, technology, etc, at various times, with different companies, they have paid all or part of those things. Corporate made sure I had an ergonomic workstation so I couldn't sue for RSI. IT made sure I was secure thru a VPN. It's not hard, and if it is that says more about the company than the workers.

The current paradigm of office or factory work didn't spring into existence fully formed, it evolved. Work at home/ co-work spaces/ etc will evolve too.

Those companies that can't figure it out will die. Those workers who were never effective but had a herd to hide in will be exposed and have to either work or find a new job. And yes, maybe we'll get back to a more traditional family.

nick

Unknown said...

David Lang says:

I resemble Nick's description at times :-)

That said, many of the people I have been working with do NOT work extended hours, and it's very common for them to have a regularly scheduled gap in their workday when they take their kids to school/football/etc.

For me, I tend to get a very slow start to the day, and only actually start doing anything other than meetings mid-afternoon (even if there are not meetings scheduled before that), but commonly will take a break early evening when others knock off for few hours before diving in and actually getting the hard stuff done.

John T. Block said...

Cant skeer me, I'm retard- er, retired, yeah thats the ticket... 😎

Unknown said...

I've been working from home for years now. My customers are all remote, and nearly all the work I do is on a server that doesn't have a keyboard or monitor. Other than interviewing the users during discovery, there's no need to be anywhere in particular.

I worked for the same company, in more or less the same position, for 18 years. When I started, it was in the office, button-up shirt and tie, every day. The commute was 15 miles one-way and took me between 35 and 55 minutes, depending up on the time of year. We started at 8, I usually arrived shortly after 7. At 5:00:30pm, you were the last person in the building. If I was working with a customer, it was either by phone or I traveled to their location. Servicing more than 3 customers onsite (and they were local) per day was nearly impossible. If I was implementing software, it was onsite, one customer that day.

A few years later, we were providing support remotely much of the time. There were still times when onsite presence was required, but that was mostly for implementations. I did spend several days in a server room on a conversion. It was noisy and cold.

Over time, the dress code softened to khakis and collared shirts (golf or button-up). We split support and implementations. Support worked in the office, implementations might be onsite, in the office, or remote. We started working from home three days a week. When they switched us back to two days at home, our productivity suffered. The combination of commmute, supporting sales staff, and supporting helpdesk staff reduced our billable time. It wasn't too long before we went back to 3 days at home. I think we even had a period where it was one day in the office, for team meetings in such.

After 12, maybe 13 years of this, we moved to working from home almost entirely. I didn't see the office for months at a time. It negatively affected sales and helpdesk. We were no longer around to train, chat with, ride along, or answer questions for them. Billable productivity, however, got much better. I could switch from one customer to another, juggling many projects. If there were a work blockage for one project, I could move on to another within minutes.

I certainly put it more time than I did at the beginning. I start earlier, end later, and sometimes work weekends. I don't travel so much, and put very few miles on the vehicles. My time is also flexible. If I don't have a meeting, I can run an errand, start late, or end early. Corona-chan didn't change work all that much for me. Yet I'm a computer nerd. Not every job is like mine; not every job can be like mine. There are drawbacks to a completely remote workforce, even for 'knowledge-workers.'

I also recognize that not everyone handles being remote the same. I love it. I don't like smalltalk and never kept up with the latest sports news or television fads. I do think this is going to escalate remote work in certain industries. It isn't an unalloyed good, but it's also inevitable. These trends were already happening, just more slowly. We'll learn to adapt to the changing environment. There'll be significant upheaval in people's lives. The benefits and drawbacks will be unevenly distributed. And some people, who are far more precient than I, will see the future and profit off it.
Σd00d

Jimmy the Saint said...

Should do wonders for cutting down on sick days, too. Don't have to commute in, no risk to other employees, etc.

Further, HR departments will also likely become pretty unnecessary, too.

Mikey said...

I work for a big company and have been working from home since March of this year. Per our metrics our department productivity has gone up. I'm only going to work for about another year so this is the end state for me. Some of the initiatives of the past are hilariously out the window. Inter office gossip and backstabbing have halted. Nobody cares about so called "diversity" when the only thing anybody sees is work content. I realized that of the hundreds of people I work with and used to see every day I couldn't care less about ever seeing most of them ever again. I have connected with the ones I actually value on LinkedIn. As far as I am concerned the toxic, the backstabbers and the do nothing sycophant's are out of sight and out of mind. HR departments are discovering what the rest of us already knew. We don't need them and their whole "profession" is phoney.