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Different Companies Require Different Work Structures

  • By Bryan Lapidus, FP&A
  • Published: 7/13/2017

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Enterprises everywhere are shaking up how their employees work, but the trends are contradictory.

At one end of the spectrum, some companies aggressively pursue workplace flexibility and point out that employees, especially millennials, value the opportunity to work from home. PwC reported that 38 percent of us can work from home at least one day per week, and those that do are 48 percent more likely to rate their job a “10” on the happiness scale than those who do not have the option. In the battle for talent, this can become a key asset that management is likely to utilize—67 percent of global CEOs predict that in five years, employees will place more emphasis on culture, including autonomy and telework, than on financial compensation.

At the other end of the spectrum are major corporations that are insisting that remote employees attach themselves to corporate offices. The most significant example is IBM, which once had 40 percent of its employees outside traditional offices, but recently insisted that everyone report to an office or leave the company.

Then you have companies relocating from leafy suburban campuses to downtown locations. GE is moving from Fairfield, Conn. to downtown Boston to be near graduating college students and young professionals, and the startup ecosystem around the city.

The contradiction here can be thought of in different ways. Perhaps this is a great social experiment that we can run to see what form a company should take. More likely, however, this reflects how, in our diversified economy, one size or structure does not fit all.

Breaking down the costs

Some elements of a workplace arrangement are quantifiable and can be analyzed in a cost-benefit analysis, such as the total cost of owning/renting a building, including rent, utilities, tax breaks and economic incentives. We can also look at this cost on a per employee basis, and the utilization rate of the building. Deciding to invest in flexible workstyles will require some infrastructure as well—upgraded conferencing and collaborative tools, telecommunication costs, and even some training on how to conduct business with remote employees. Inevitably, some employees will leave when the new arrangement does not suit them, so there are severance costs and reduced headcount savings.

Cost savings provide motivation only when businesses encourage remote work, not the other way around. In all cases, however, business state that they are making their moves to encourage employee recruiting and retention, and these are the metrics that should be watched carefully. Are positions being filled faster? Is turnover rate decreasing? Is engagement improving? If there are productivity metrics, are they improving?

How a company structures its workforce is an extension of its corporate culture, and thus will be unique to each company. If “form follows function,” the form should relate to the type of business it is in, the type of people it wants to attract, and how work gets done. It also depends on which part of the business is being changed. For example, GE can move its headquarters more easily than it can move a wind turbine manufacturing facility, and currently, manufacturing employees need to be onsite.

With concerted effort, cultures can change and moving a corporate headquarters, centralizing employees, or encouraging remote work can signal that change to employees and shareholders. That change may be more innovative, more entrepreneurial, more international, etc. It can even just be a change in outlook that comes from a new environment.

Changing trends

A remote or flexible location policy is one aspect of a workplace that benefits and helps employees achieve a work-life balance. It is more applicable for specific job types—sales, phone-heavy positions such as recruiting and screening or customer service, or solo-type positions such as coding or user acceptance testing. This list is likely to grow as employees are more comfortable socializing through screens.

These work structures also follow societal trends. Three decades of declining crime rates have reinvigorated America’s cities and made them desirable for a new generation of talent. The desire and ability of employees to be connected from anywhere will push companies to allow them to work remotely at least part of the time. Since only change is permanent, companies can always decide to shake things up and change their structure at a later time.

Bryan Lapidus, FP&A, is a contributing consultant and author to the Association for Financial Professionals. Reach him at BLapidus@AllegianceAG.com.

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