Insight

Rethinking office location strategy in a post-COVID world

Words: Fabian Bodoky Murray Matheson

While the pandemic’s impact still reverberates, at the time of this writing (in the U.S., at least), it feels as if the brunt of COVID-19’s force is mostly behind us. 

At its onset, many businesses in the service industry quickly adjusted their location strategies to allow for the majority — if not all — of their office employees to work from home. For others, COVID-19 demanded an immediate work-from-home experiment, where businesses had to scramble to create employee guidelines and get supporting technologies in place.

Now, companies are evaluating their businesses and workplaces in a post-COVID purview — reflecting on lessons learned, as well as successes and missteps from the past 18 months. They are generally realizing that employees adapted and productivity remained stable, even with a physically separated workforce.

With companies almost universally rethinking what it means to be “at work” — working full- or part-time in the office or from a new or smaller location or even a new city — one of the topics getting widespread executive attention is location strategy.

What COVID-19 taught us

A key takeaway of the many lessons learned from COVID-19 about work is that companies can be more flexible than they previously imagined — and their employees can be productive and happy working remotely.

With a return to the office inevitable for most businesses, there’s no doubt employees will want some continued flexibility. According to a recent Randstad Workmonitor survey of 27,000 workers in 34 markets, 54% say their employer allows a hybrid work schedule of some days from home and some at the office — with the resulting changes opening up new options to their location approach.

This return to the office doesn’t mean it needs to be a direct return to the same ways of working – or even the same locations – but it offers a unique opportunity to strategically rethink the approach to the workplace.

What opportunities does this offer?

In talking with our clients, we’ve heard only a few declare that a 100% virtual model is their choice for the foreseeable future. Most want to apply a mixed approach, where employees will still come together at an office location, even if it’s not daily. They are, however, considering options the work-from-home experience gave them and how they can be strategic about growing their business in a location that offers more talent, a more attractive local market, and the ability to optimize labor costs.

To address this need, we’re guiding clients through a series of discussions and assessments, helping them explore the bottom-line and talent access benefits of revamping their location strategy and covering questions that include:

  • What was the experience during the pandemic, and what does that mean specifically for them?
  • How can they expand on the aspects that went well?
  • Can they reduce cost by driving headcount growth towards a lower-cost city?
  • Does a revamp also offer operational opportunities – such as, access to new talent pools?
  • What would a location change mean to employee retention and the organizational culture?
  • Should they adopt a blended approach to telework, with some time spent in the office and some spent working remotely?

If your company is at the beginning stages of re-evaluating its location strategy post-COVID, we recommend focusing on several critical areas that can help you decide if a new location is right for you, when to make the changes (now or later), and a strategic plan to moving forward.

Which companies benefit from this assessment?

Companies of any size can rethink their location strategy, of course, but it can be easier to start early in the trajectory — for example, when you have well below 1,000 employees. We see that these smaller companies have more flexible processes – i.e., developing a new base is therefore quicker and easier compared to more mature companies – especially if growth can be leveraged.

Other types of companies that may have the most success changing locations include those on a solid growth track, where the focus is on efficient expansion and not workforce reduction.

Depending on your market and workforce makeup, finding the types of employees you need can be a challenge. It requires more and more money to get the right people — or you risk a high rate of turnover. Considering a second location lets you tap into a wider talent pool and have more options.

Carefully selecting an additional city can have a strong impact on talent availability and overall salary cost. Choosing a smaller city or urban area can mean a 20–25% cost differential. Situating employees offshore can realize savings as high as 80%. These numbers are hard to ignore, and without fully exploring the benefits and any drawbacks, you’ll be left with unanswered questions.

Traditionally, smaller companies had restricted options; for example, they were limited to a Tier-2 location within their country. Recently, new delivery options with partners have emerged, where minimal size constraints for establishing an offshore presence no longer apply.

Next steps for evaluating your location strategy

Rethinking your approach to your business’s location can feel like a daunting task. The good news is, there are initial steps to take that can build momentum and achievable milestones that can make the process more manageable and rewarding along the way.

How Efficio can help

We’re here to help you start or strengthen the location strategy discussion at your organization. We’re running these types of reviews with multiple clients, assessing various delivery options through location data and insights, supply and talent market knowledge, employee benchmark data, and process design amongst other offerings. We know what’s involved in bringing the right people to the table from HR, Finance, key business stakeholders, and company leadership.

What drives us each day is a continuous focus on helping organizations like yours understand the options and business case around these types of decisions, as well as how to reduce costs, improve internal processes, and make sure savings are measurable and sustainable while delivering greater, long-term value for your business.

The pandemic is hopefully largely behind us. The opportunity to rethink your location strategy lies before you. How can we help?

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