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Hybrid Work Was Supposed to Create the Best of Two Worlds. It’s Turning Out to be a Challenge for Office Tenants.

“Hybrid is going to be a multi-year journey, and we just started the journey in 2022,” says JLL’s Peter Miscovich.

The need to retain talent has prompted many companies across the U.S. to implement a hybrid work model as they bring employees back to the office. But those executives are now facing a new set of challenges.

While the COVID-19 pandemic prompted many companies to have people work from home, employee expectations and even acceptance of returning to an office have dramatically changed. Meanwhile, the hybrid model has created challenges to calculate the amount of space that’s needed, how to schedule employees’ in-office days and where to station them in the office. Companies are addressing how to enable collaboration among employees on different schedules and how workers who come into the office more often are viewed for assignments and promotions compared to their colleagues who don’t. Building a culture along with mentoring younger employees who aren’t there every day is also an issue to overcome.

But the biggest challenge with the hybrid model is getting employees to accept it and what it should look like.

“There’s really an expectation gap between what leadership and management want in terms of hybrid and what employees want,” says Peter Miscovich, the leader of the strategy and innovation consulting practice with the commercial real estate services firm JLL and  co-author of “The Workplace You Need Now.” “Those organizations that are providing hybrid workplace flexibility and hybrid choice and taking a more empathic and understanding approach with their employees are winning the war for talent and seeing less attrition and impact of the great resignation.”

At the onset of the pandemic, executives thought a hybrid model was four days a week in the office and on Friday people would work from home, Miscovich says. Many executives who were raised with office-centric workplace policies and have been uncomfortable with employee choice and hybrid flexibility are starting to understand that even three days in the office may not work, he notes.

“Many employees only want one day a week in the office or three days a month, and this tension and expectation gap is a significant challenge for many organizations,” Miscovich says. “The talent today has the upper hand, and leadership and management have to recognize that talent wants flexibility and a more human-centric and individualistic approach. That’s the greatest challenge, and I don’t think it will be fully negotiated for another year or two. Remote work was inning one. Hybrid is going to be a multi-year journey, and we just started the journey in 2022.”

Some of the firms that were the most inflexible when it came to office schedules in 2020 and lost talent in 2021, are now pivoting to make changes with their hybrid models addressing concerns such as child care, elder care and the life/work balance, according to Miscovich.

“The pandemic, as horrendous as it was and still is, was a tremendous wake-up call of how to embrace new ways of working, rethink our talent and workforce strategies, and think of the office as more a culture and socialization hub and less of a work hub,” Miscovich said. “We are designing new office space in a much different way in 2022 than we designed it in 2018.”

Employers continue to face challenges in their hybrid models because office occupancy has only returned to 40 percent of pre-pandemic levels on average, according to Rachel Casanova, senior managing director of workplace innovation with commercial real estate services firm Cushman & Wakefield. That's made up of people who want to come into the office or feel compelled to do so, but there are a lot of employees saying they’re not ready and it’s creating angst about what to do, she says.

“There’s a little bit of mayhem, and it’s really a multidimensional chaotic moment for organizations,” Casanova notes. “The big challenge is how do we get people to come back and what do I have for them here that makes it worth it and improves upon people feeling like they have more flexibility and that their concerns of safety and getting sick are dealt with.”

Everyday problems

Employers are trying to do it with food and free lunches, alcohol and hosting happy hours, Casanova says. They’re working with landlords to improve access to outdoor spaces and creating meditation rooms, gyms and yoga and massage therapy rooms that people don’t have access to at home. With rising gas prices and transportation costs, some companies are even helping offset that expense to increase days in the office, she notes.

“Everybody is talking about how many days a week, but that’s the elementary way of thinking about it,” Casanova says. “It’s about what we want to happen and what is the right environment to do that. It’s going to be testing and pilots. It’s expensive to get it wrong, which is why people are reluctant.”

Going to a hybrid model has created problems because employees who have worked and collaborated together in the office pre-pandemic may not be there on the same days now or when someone comes to the office expecting a colleague to be there, and they’re not, it creates a problem, according to Casanova. That’s leading to some frustration because the employee is communicating with people on virtual calls all day and questions whether it’s better to work from home.
“We have to know who is coming in,” she says of the challenges of scheduling that need to be overcome. “Nobody wants to come in and find a person who is not there.”

Another challenge companies are facing with a hybrid model is their need to change their office setups from the past. Headquarters traditionally had offices on the perimeter, 10 percent were conference rooms and the work space was in the interior, Miscovich notes. While that has evolved over the years, companies are learning with the hybrid model that they need more technology-enabled rooms to handle group virtual meetings and change layouts for staff to share desks since they aren’t there every day.

“What we are finding with clients is that it takes good management, communication and design to make hoteling and hot desks work effectively,” Miscovich says.

According to Miscovich, 20 client case studies have shown hot desking works, while 50 others said it’s been challenging, and the reason for that is that it has not been well-orchestrated. That usually means a lack of good technology and poor scheduling and communication. When people come into the office, the hot desk or hoteling must be available to them, he notes.

“We believe in having on-site ambassadors or people who can be concierges and help you like when you go into a hotel lobby. Some of it can be automated, but you need a certain amount of human services to help with that. It’s about making people feel welcome.”

One of the challenges tenants are trying to overcome in luring employees back on even a hybrid schedule is the quality of the building, according to Tom van Betten, vice president of Matter Real Estate Group, whose sister companies own office buildings in San Diego, Long Beach, Calif., Phoenix, Dallas and Las Vegas. It’s going to take a relocation for some companies, he says.

“Class-B and class-C offices are going to struggle getting people back in the office,” van Betten notes. “Your office can’t suck. It’s that simple. There has to be something there to draw you back, whether it is basic amenities or proximity to amenities like a coffee shop. Those B and C mechanical systems are difficult to retrofit and if you have another COVID wave, everyone is sharing the same air.”

Leasing decisions

Some companies are choosing class-A space, but taking less square footage in a better location to provide that higher level of experience for employees, according to Miscovich.

While the conventional wisdom is that a hybrid model will allow companies to reduce their space needs, there are plenty of cases where it’s gone in the opposite direction, according to Nick Barber, a senior vice president with JLL. There are many workers who still want their own desks and work spaces when they’re in the office, he notes.

“Nationally, we’re seeing a lot of companies taking more space for breakout rooms specific for teleconferences rather than participate in their cubicle,” Barber notes. “They’re doing huddle rooms off the main work floor and transition rooms to take a breather that they can reserve and focus on their well- being.”

In the hybrid era, the challenge for companies is that office leases are typically signed for five or 10 years, but many executives don’t know how much space they will require in five to 10 months, let alone a decade, Van Betten says.

“We are right now in this evolution of hybrid work, and it’s not getting sorted out yet. Tenants need to commit to long-term leases, and that is one of the challenges. It’s one of the reasons I think co-working will come back like a lion because companies are coming to grips that flexibility comes at a cost.”

Many companies are guessing how many people will be back in the office, how much space they will need and how to design that space. There’s not a lot of experience to draw from to make decisions, van Betten notes.

“When you make an investment in building out space, you want to get it right, and that confidence isn’t there right now.”

One concern that’s arisen already with a hybrid schedule is a bias that develops among managers when they see a particular employee on their team in the office more than someone else, notes Kasey Garcia, a senior director at CBRE/Workplace Solutions.

“They don’t see a person working hard (remotely), but there’s a person who is in front of me showing up every day,” Garcia says. “Who do you think is going to get the assignments and next promotion? This is a huge concern. This is causing a lot of angst, and people are worried about unintended consequences that a hybrid will have on a career.”

In this new world of companies operating on hybrid schedules, managers are being sent to flex office training to ensure one challenge is addressed – that productivity doesn’t lag among employees in this new model, Barber notes. The managers also learn how to gauge and reward workers based on performance and goals instead of judging them by time in the office.

Companies acknowledge that going to a hybrid model in which employees work in the office two or three days a week has also created a problem with a connection among employees that’s vital to the bottom line, Barber adds. They recognize that and are creating out-of-office experiences to make up for it, he notes.

“They host happy hours, paintball or Top Golf outings that in the past were rewards for specific goals that the company would hit. Now it’s being used to create comradery in the office because people who are home two to three days a week may not be linked on the same schedule. This allows them to physically connect. It may seem philosophical, but there needs to be a harmonious connection with one another. You lose that when people aren't in the office interfacing every day.”

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