This Guide is the ultimate showdown of workplace policy approaches. What's best for your company: Hybrid, In-Office or Remote? We break it down based on priorities ranging from employees happiness to the environment.
COVID-19 has disrupted the way we work. Work is no longer seen as a destination, but as an activity, with scores of employees working from homes and cafes either part-time or permanently. It’s no longer a binary choice between working in-office and 100% remotely. Business owners and employees want choice, freedom, and flexibility.
The million (or more) dollar question is — which model is best for you or your business? Hybrid, remote, or in-office?
Grab a coffee and a quiet corner. This is an in-depth look at the three working models. If you’d like a quick refresher on these workmodels, check this out. From the benefits for employees to cost savings for the business, we’ll cover it all, and by the end, you’ll know which is best for your use case and why.
Table of Contents1. High Growth Companies
4. Younger Employees
5. HR Professionals
6. Real Estate Costs
7. IT Spending
8. Workplace Distractions Cost
9. Employees Savings
10. Business Running Cost
11. Mental Health
12. The Environment
Highlights and Vital Statistics
A Summary of Winners and Losers
High Growth Companies
If you’re choosing between a hybrid model and a completely on-site or remote way of working, it makes sense to see what the big boys are doing. And you might be surprised by the result.
According to Accenture’s Future of Work Report:
- 63% of high-growth companies have adopted hybrid or “productive anywhere” models, and
- 69% of companies with negative or no growth reject the hybrid working model and prefer all on-site or remote work.
That’s what the stats say, but what’s the picture like in the real world?
For Dropbox, for example, going hybrid was an easy decision. As they shifted to a hybrid work model, they conducted a research project on the side that showed that remote workers appeared happier, more focused, and no less productive than in-office ones. In fact, Dropbox has decided to become Virtual First. All people processes are digital, and workers can choose their geographic location, with office space available to all.
Like Dropbox, Spotify also moved to hybrid working with the argument that it boosts employee effectiveness, offers a great work-life balance, and encourages efficient working methods.
Spotify employees are offered a choice between working full-time at home, in-office, or a combination of the two. Workers living away from a Spotify office receive a membership to a co-working space if they prefer the in-office experience.
It’s clear that the biggest and best companies are opting for hybrid, begging the question: are high growth companies choosing hybrid or are the companies high growth due to the model?
The cause and effect relationship is not (yet) clear. However, it is clear for high growth companies that hybrid makes sense. Why?
According to HSBC:
- High growth companies make savings on office overheads if employees work from home partially.
- 77% of high growth companies report increased productivity levels with a hybrid model.
- 66% of the same companies claim it will help them move into new locations and markets.
The Winner: Hybrid
High growth companies are reaping the rewards of moving to a hybrid model. It’s good for employee morale, productivity, profitability, and more. If you’re still on the fence, consider that many brands from Spotify to Dropbox have made the move and are confident in the results.
That’s high growth businesses, but what about their most important asset, the workers? There’s little point in moving to a new model only to find out your teams are reluctant to make the change, so before we jump ship and move to hybrid, let’s look at what employees think.
Do they prefer working in the office with the option to chat with co-workers, or do they prefer working from home?
According to a study by Stanford, only 25% of workers want to work from home full-time, and, even fewer, 20% want to work exclusively on-site. The study found that many employees tried working from home exclusively but found it was too lonely and exhibited negative behaviors (including eating or sleeping too much).
The Stanford study also found that employees didn’t want to be forced to work in the office full-time, so choice is key. When employees feel like they have no choice or autonomy, they are more likely to feel stressed, depressed, and lack morale.
Given what the boffins at Stanford found, it shouldn’t surprise that a similar study by Prudential showed that 68% of US workers believe that a hybrid approach is the perfect work model, allowing them to work both remotely and on-site is the perfect model.
But the stats don’t stop there:
- 87% of American employees working remotely during the pandemic would prefer to continue working remotely post-pandemic for at least one day a week.
- 42% of current remote workers stress that if their current company doesn’t let them work remotely in the future, they will seek to join a company that does. This could lead to a talent war, as employers need to address their employees’ needs, including their preference for remote occupation.
To sum up, the Prudential study found that talent migration is on the horizon with workers looking for greater flexibility, as well as opportunities for career growth. Flexible working is becoming an essential employee benefit, as hybrid employees can save more money than their in-office counterparts, save time by not commuting, get more sleep, spend more time with their family, and reduce their overall stress levels.
The Winner: Hybrid
Again, it’s hybrid for the win. The preferred model of many workers is hybrid, although, of course, there are outliers who want fully remote or full on-site options. Turns out, allowing employees the flexibility to choose which option suits them best is the most effective way of keeping the workforce happy.
Employees prefer the option to work flexibly instead of completely in one location. But, what about their bosses? What do the execs think?
- 68% of executives still feel that employees should be in the office at least three days a week to maintain their company culture.
- 65% believe that the office is very important to maintain and increase productivity.
- More than half believe that the office is still important for collaboration and provides spaces to meet with clients and one another.
Executives have a strong preference for time in the office, even on a part-time basis, and science backs them up too. Studies consistently show that the ability to connect meaningfully to others is less satisfying when we are not physically present.
The absence of shared context (like body language and shared experiences) can dilute the non-verbal signals that convey culture, and relationships are also more likely to “drift” when employees don’t spend time together physically.
Interestingly, although the executives do want want time in the office, like employees, they agree this can be on a part time basis.
The Winner: Hybrid
To maintain healthy company culture, employees should spend at least some time together in person. Even if you move towards a more remote experience, make some room for employees to physically meet and share experiences.
You’d be forgiven for assuming that younger, more digitally aware, but less experienced workers prefer to work in a remote or hybrid model. It would make sense; younger people are far more used to communicating online, but the studies don’t agree.
In fact, they completely disagree:
- 84% of Gen Z employees prefer interacting with colleagues face-to-face, despite growing up in the digital era of virtual reality, texting, and selfies.
- 42% of Gen Z respondents supported that they don’t want to work remotely more than two days per week.
- 30% of employees with 0-5 years of experience prefer working in the office for 3-4 days per week. These workers are also far more likely to feel less productive when working remotely (34%) than their more experienced counterparts (23%).
Even though youngsters are used to chatting with friends, making plans, and even conducting educational activities online, there is an overwhelming preference for working in-office, at least part-time.
The Winner: In-Office or Hybrid
If you mainly employ Gen Zers, perhaps you shouldn’t be tempted to default to a fully remote model. As shown above, the younger and less experienced generation prefer face-to-face guidance and communication, even though they’re digital natives. If you’re set on some form of home working, hybrid is definitely the best option.
According to Crain’s Future of Work survey, 78% of HR professionals feel that flexible working hours and the ability to work remotely are effective ways to retain workers without spending additional money.
As well as being an effective way to work, Cielo Talent’s survey of HR professionals found that talent acquisition teams are adopting new recruitment practices to match the new normal. Talent teams are interviewing respondents over video (59%), making offers without having to meet the relevant candidate personally (65%). At the same time, 67% are using virtual onboarding programs. Some of the professionals surveyed also said that remote working results in more effective recruitment practices (59%), especially in terms of cost (60%).
The talent teams also praised the fact that remote working opens up new talent pools, with hiring managers (64%) being more eager to employ remote workers. It’s not without its downsides, though. 21% of talent team managers seem to worry about increased drop-off rates due to remote working, while 62% believe companies have to work harder to beat the competition due to remote hiring practices. Others believe that supporting remote working increases focus on promotion and reskilling (42%), shrinking the talent pool and jobs market.
The Winner: Remote and Hybrid
HR professionals have well and truly welcomed remote and hybrid ways of working. Due to geographic limitations, access to remote workers may open the door to new talent that wasn’t accessible before. Make sure that you are well-positioned to promote your company and its benefits.
Real Estate Costs
Whether businesses lease, own, or rent, real estate is a huge line item on the balance sheet. It’s a massive investment to keep employees in the office. For many businesses, this is an acceptable cost of doing business if — and it’s a big if — the rewards are worth it.
If keeping your team in-house means that they are more productive, happier, less stressed, and more likely to stick around, the extra office space is (probably) worth it.
But the issue is, as we’re discovering, the benefits of working remotely and/or in a hybrid manner appear to outweigh the benefits of working in-office.
This leaves business owners seriously questioning whether the costs are worth it. This is forcing businesses worldwide to reassess their real estate spending, but not in the way you might think…
PwC’s US Remote Work Survey found:
- 87% of businesses plan to change their real estate strategy over the next few years. This includes moving to premier locations or operating satellite offices.
- 56% of these companies, even though they plan to reduce office space, expect to invest in more real estate than before. This happens because companies rethink what the ideal office experience should look like.
While other research shows that:
- In 2020, the US shed 138.4 million square feet of office space due to reduced office requirements following the COVID-19 pandemic.
- As employees move to a hybrid or remote work environment, companies cut back on real estate needs, saving money they can re-invest in different features and amenities.
The stats show that for many businesses, remote or hybrid working is a prime opportunity to save on real estate costs. Downsizing and saving on operation costs allows companies to re-invest the money in other features and amenities.
But, interestingly, not all companies are getting rid of their office space; they are reducing and recalibrating to accommodate the new way of hybrid and remote working. With employees working from home rather than in-office, companies can cut back on real estate needs, reduce office spaces, or even sell or repurpose built buildings.
The Winner: Hybrid and Remote
Investing in decentralized hubs seems to be a smart idea. By doing so, you not only save on operation costs but can also re-invest the money you saved in extra features or additional amenities for your employees.
While a hybrid and remote work model pleases the execs and the employees, does it make financial sense? Of course, there are many different costs associated with remote, hybrid and in-office models, but first, let’s look at IT spending.
To be able to employ a remote or hybrid model, businesses need additional IT solutions. Subscriptions to collaboration and project management platforms and cloud-based video conferencing platforms all incur costs, but they are essential if you want your team to work from anywhere.
But how much do these costs affect businesses? And which business model spends the most on IT?
During the pandemic, companies were forced to adjust to a hybrid or remote work model for their employees, and as a result, IT spending increased 6.7% between 2020 and 2021.
Communication tools, project and order management software, security software, etc., make up the increased IT spending. In other words, a network of tools to keep your team connected from anywhere.
The tricky part here is determining the cost difference between a hybrid and remote workforce, as much of the new tech required to run a remote model is likely needed for hybrid too. The cost difference is likely minimal, but we can compare this cost to an exclusive in-office team.
The stats paint a clear picture of increased IT costs since employees were forced to work from home:
- Companies’ IT spending increased 6.7% between 2020 and 2021 as they adjusted to employees working remotely or on a hybrid basis.
- Worldwide IT spending will reach 4.45 trillion US dollars in 2022, an almost 5% increase in growth compared to 2021.
The costs have clearly increased, and many businesses struggled to implement an entirely new way of working. But, with the right strategies, they managed to aggregate their outdated systems, make the life of their employees easier, and, at the same time, boost their effectiveness.
The Winner: In-Office
If you’re concerned about IT costs only, you should stick to an in-office workforce model. It’s cheaper, and you won’t need the web of apps, tech stacks, tools, and SaaS just to be able to communicate with your employees. That said, there are many other cost savings associated with a remote and hybrid model, which may offset the increased IT spending depending on your use case.
Workplace Distractions Costs
One of the primary reasons offices are moving towards a hybrid model is because remote workers are more productive than fully on-site workers. Businesses collectively lose close to $600 billion per year in productivity due to distractions.
94% of employers found that company productivity has been largely the same (67%) or higher (27%) since employees have been working from home during the pandemic. The top reasons for the increase in performance are fewer interruptions (68%), more focused time (63%), a quieter work environment (68%), a more comfortable workplace (66%) and avoiding office politics (55%).
A survey by the Economist said that 36% of workers felt more focused working remotely while 28% felt the opposite. What is true for one employee isn’t true for another, which means that the employer should create options that suit different preferences.
The Winner: Remote and Hybrid
Fewer distractions are one of the benefits of a remote or partially remote workforce. Not all employees enjoy being fully remote, and others prefer working from home full-time. The best way to keep distractions to a minimum is to let employees pick the environment that is least distracting to them - retaining an office for individuals who prefer to work on-site but giving workers the option of working from home when they need to.
We’ve looked at how hybrid and remote models can actually cost a business more in IT costs, but what about employees? Is there a saving associated with working at home, on a beach, or in a coffee shop? Or do the lattes eliminate any potential savings? Let’s find out.
According to a study from Flexjobs, an online job service specializing in flexible jobs, they do. The figures show remote working employees save on average almost $4,000 per year, with many people reporting far higher savings depending on their commute length, car use, and so on.
Hybrid and remote employees save on car insurance, maintenance, clothing, and eating out expenses. For instance, Flexjobs’ survey says that car owners expect to spend between $6,000 to $10,000 a year on maintenance. This variation is because employees drive different types of cars, from pickup trucks to city cars to electric sedans.
These estimates, though, assume workers drive 15,000 miles per year. As remote employees will probably drive far less than that, the wear and tear of their vehicles would be minimal, significantly reducing their car maintenance costs.
The same holds true for car insurance. The more people on the road, the more accidents there could be, which translates into a higher insurance rate because the odds of getting into an accident are higher.
It’s not surprising, therefore, that 75% of workers feel that cost savings are the second most important benefit of flexible work, second only to not having to commute (84%).
- Remote employees can save up to $10,000 per year on commuting, car maintenance, insurance, public transportation, eating out, and clothing costs.
- 75% of workers consider cost savings one of the top benefits of remote and hybrid work models. Commuting comes first (84%).
These figures are based on remote workers, so let’s make some estimates. First, let’s assume these costs are based on a 5-day work week, so we can extrapolate a saving of 1/5th for every day not in the office. For example, if workers estimate they save $4,000 per year when working remotely, they could save 3/5s of that amount if they work from home for three days per week.
Simply put, the more days you work from home, the higher your savings, while on the other hand, based on the above example, people working in-office full-time would see zero savings.
The Winner: Remote
Implementing remote work lets your employees cut costs and put more money in their pockets. This makes them happier and more productive, increasing your workforce’s efficiency. If you’re not ready to take the plunge to 100% remote, hybrid offers the same savings on a pro-rata basis.
Business Running Cost
Another important factor that needs to be considered is the total cost of running a business in-office, hybrid, or remotely.
By running their business remotely, business owners save on real estate and other expenses, which, in turn, delivers a significant cut to operational costs. According to a 2021 Capgemini Research Institute report, remote working can cut up to 43% of real estate costs.
Even labor-heavy industries, like telecom, manufacturing, and energy, save 20% from remote working. Of all the organizations surveyed, a whopping 98% expect to save on operational costs in the next three years, with the public sector seeing the biggest saving potential.
Running your business in-office, at least pre-pandemic, meant your workplace budget went primarily to the office rent. Though the cost might vary from business to business, since location and type of office affect the rent price, companies typically spend about $500 per employee to work from the office in New York City. If you split this across a five-day working week, the monthly workplace budget would be $100 per day for each employee working in-office.
But, what’s the overall cost for hybrid companies now? This depends on the number of days employees spend in-office and at home. This could range from $204 on HQ space, $204 with access to on-demand workplaces, and $102 on perks, like home office equipment and remote work support, per employee per month.
Keep in mind that since hybrid work changes our relationship with the office, the HQ budget covers more than just employees working at desks, such as WiFi, meeting rooms, cleaning services, and kitchen facilities, among others.
Potentially, hybrid working could become more expensive than remote work or office work. For example, you could end up paying for an office space that will never be used or commit to a plan that, in the end, is unsuitable for your employees.
Likewise, some businesses think that adopting a hybrid strategy will save lots of money since they’re paying less for every employee who uses the office. But that’s wrong. Even if employees work remotely, you should still prioritize their work setup as much as you would have if they were working in-office. Doing so makes them happier and more productive, which you want to achieve, after all.
The Winner: Hybrid and Remote
While hybrid working has hidden operational costs, if you’re careful and know what you’re looking for from your employees and business, it can help you save a substantial amount of money. Investing in high-quality hot desking and space management software is an excellent way to optimize your space.
Positive mental health in the workplace is crucial. Not only does it benefit the individual, but companies that encourage mental well-being are rewarded with higher productivity, greater staff retention, and lower turnover rates. It is the right thing to do, and it’s a win-win for everyone involved.
Unfortunately, after the pandemic, many workers found that working exclusively from home had a detrimental effect on their mental well-being. Feelings of depression, anxiety, loneliness, and need for human connection, to name a few.
According to an American Psychiatric Association (APA) online survey between March and April 2021, most workers working from home say they experience negative mental effects, like isolation and loneliness, and find it challenging to get away from work as their workday ends.
54% of employees reported their employer had become more accommodating and understanding about their mental health since the beginning of the pandemic, but the numbers are declining. Workers stressed that only 1 in 5 employers were offered extra mental health services in 2021, 35% less than in 2020.
- While working remotely has many benefits and advantages, 60% of employees that worked at home reported that they faced feelings of isolation and loneliness and difficulty finding personal time, despite working from their home office.
- Out of those, younger adults (73% of 18 to 29-year-old and 73% of 30 to 44-year-olds) were more likely to report feelings of isolation, loneliness, and depression working at home. In comparison, older workers (48% of 45 to 64-year-olds) didn’t seem to be affected so much.
The office environment has benefits for employees’ mental health. The inherent socialization from going to a real-life office and interacting in person is important for many people’s mental health.
But the perks don’t stop there. When you go into the office regularly, your peers are able to notice if you’re having a hard time and intervene where needed, which is far harder via a Zoom call.
In-office meetings with mental and physical well-being specialists are also easier to coordinate and attend, so it’s far easier to make it part of your schedule to take advantage of any schemes on offer.
Hybrid potentially offers the best of both worlds here. The option for workers to benefit from the autonomy of choosing their own schedule and way of working, and the benefits of in-office interaction and the safety net it offers.
The Winner: In-Office or Hybrid
While the remote model has lots of benefits, including cost savings, it seems to negatively affect employees’ mental health. On this occasion, the in-office work and hybrid models seem to have the edge for employee mental well-being.
Being environmentally conscious is important. For this reason, governments and regulatory bodies impose taxes and compliance requirements to combat the threat of global warming and climate change. Businesses don’t have a choice but to comply. Otherwise, they will face the consequences.
Contrary to in-office work, hybrid working improves your company’s carbon footprint. Here’s how:
- If 3.9 million employees work from home just 50% of their time, greenhouse gas emissions would be reduced to the equivalent of taking 600,000 cars off the road for an entire year.
- Working from home can reduce commuter miles by 70 to 140 billion per year by 2025.
The pandemic offered a once in a lifetime opportunity to test these theories — is it true that working from home reduces emissions?
As you’d expect, the answer was a resounding YES. Working from home during the pandemic allowed billions of employees to skip the daily commute. This led to a 13% reduction in carbon emissions in 2020.
But, the environment is a complex topic, and there might be hidden climate impacts when hybrid working is the main work model.
According to a 2021 study from the Carbon Trust and Vodafone Institute for Society and Communications, hybrid working could create a worst-case scenario, where there’s more energy consumption and emissions as both homes and offices are operating to enable in-office and remote workers to do their jobs.
The Winner: Remote
Remote working can reduce environmental waste and help sustainability efforts, improving a company’s carbon footprint. It also reduces the stress of the daily commute for employees, which might make them more productive than ever before.
Highlights and Vital Statistics
- 69% of companies with negative or zero growth reject the hybrid working model and prefer on-site or remote working.
- 87% of US employees that worked remotely during the pandemic prefer to continue working remotely post-pandemic.
- 68% of executives feel that employees should work in the office for at least three days a week to keep the company culture going.
- 84% of Gen Z employees prefer interacting with colleagues face-to-face than through a computer screen.
- 64% of hiring managers seem more willing to consider remote workers.
- 87% of businesses plan to change their real estate strategy in the next few years, including moving to premier locations or operating satellite offices.
- Companies’ IT spending increased 6.7% between 2020 and 2021 as they adjusted to employees working in a remote or hybrid environment.
- 94% of employers found that company productivity has been the same or higher since employees began working from home during the pandemic.
- Remote employees can save up to $10,000 per year with remote or hybrid working.
- Companies can save up to $500 per employee with a hybrid or remote working model.
- 60% of employees working from home reported feelings of isolation and loneliness.
- Working from home during the pandemic led to a 13% reduction in carbon emissions.
Drum Roll, Please. The Winner Is…
What’s the verdict? Who’s won the show-down?
Do we want to operate fully remotely or per a hybrid model? Here’s a quick summary of the winners and losers for each category:
While employees have embraced remote working, there is still a need for face-to-face, in-office interaction. This article clearly shows that without any social interaction, the mental well-being of team members is affected.
On the other hand, businesses can make significant cost savings by reducing the number of people in-office, increasing the money available to invest in growth and other business areas.
The massive benefit of hybrid is the option for employees to choose and feel in control of their work, while for employees, they can benefit from many of the savings of remote working, plus retain a happy workforce.
All three models require the right tools and skillsets to maintain healthy collaboration and productivity as companies and employees embrace the “new normal”, but for us, the clear winner is hybrid. It offers the best of all worlds and fantastic opportunities for all businesses and employees.
But, now, it’s over to you. What works in your business? What do you prefer? Have you been convinced to change your business model?
Contact us to see how we can help you get set up with the right workplace model for your company.