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