Office space giant IWG swung to a £650m loss last year due to the impact of coronavirus on working habits, it announced earlier this year.
However, founder and CEO Mark Dixon has full confidence in the future of London’s offices, as he sits down with City A.M. for an exclusive interview.
Dixon said his company is aiming to capitalise on the shift to flexible and remote working, with increased demand for “hybrid working solutions” and suburban locations, as employees seek to cut their commute.
The Government said recently they will not make it compulsory to return to the office, was that a big disappointment for you?
The government has changed its advice to say that people can now return to the office, but that doesn’t change the fact that with the right infrastructure and technology people can be productive no matter where they are.
We’ve been promoting the concept of the hybrid office for many years, where employees spend part of their time working from home, then in a local office and occasionally from a central HQ.
Now, as a result of the pandemic, we’re seeing businesses of all sizes recognise the benefit of this model and demand for hybrid work solutions is growing incredibly fast. Firms are reconfiguring their office footprint, bringing centres closer to where their employees live and empowering them to work flexibly, reflecting the changing needs and demands of their people.
It is increasingly evident that a growing number of businesses across the UK are opting for a flexible approach, with three days in the office and two from home. How will this affect your business?
The shift to hybrid working is directly in line with our business model, because our services allow people everywhere to choose where, when and how they work. We’ve been witnessing the decline of full-time office work, right across the world, since long before the Covid-19 pandemic began.
2020 really hit the accelerator, as a digitally enabled workforce proved they could operate efficiently from home.
As a result, we’ve seen record demand for full network deals, where clients’ employees have access to any of our locations globally. This has already driven an increase of more than a million people using our network over the last year, with another million committed to do so in the months ahead. Importantly, this growth includes rapidly increasing demand for workspaces in the heart of communities close to where employees live.
Many people I spoke to say the office needs to change: more facilities, more inviting, a different purpose. Do you agree?
Yes, it’s important to design spaces that are inviting and flexible, where people can work together and be creative. Hybrid working means that when colleagues do come together it is for collaboration, so they need more spaces for meeting and working with one another.
In short, fewer and fewer companies need office space that is just a sea of desks.
Just as important, research clearly shows that people want an office close to home so they can live and work more flexibly without a long and expensive commute. Working in tandem, these trends mean that high-quality local workspaces will spring up in communities across the world and our footprint will focus not only on the city centre, but also in the suburbs and rural areas too.
Businesses want to provide a better work-life balance for their employees, what do you make of that?
This should not be a surprise, as it’s a question of enlightened self-interest. That’s because a better work balance makes for happier, more engaged and productive employees who will stay with a company for longer.
Around half of all employees would look for another job if asked to return to the office for five days a week. That’s a massive risk that employers cannot afford to take.
So the hybrid work model is not only better for the business bottom line, it also helps tailor the working week for everybody’s benefit. For employees, the time saved commuting to and from work every day is better spent seeing friends and family, exercising, or covering childcare. As a result, workforces have the potential to be healthier and happier. Hybrid working is also empowering employers to recruit and retain the best talent regardless of geographic location, making them more competitive and successful for the long term.
In a post-pandemic office environment, where do you see opportunities for growth?
We’re already seeing record growth this year – I’ve previously mentioned the two million plus new network users we’ve gained or are shortly to gain. That’s partly down to the fact that IWG has completed some of its biggest enterprise deals in 30 years, with clients such as Standard Chartered, Nippon Telegraph and Telephone Corporation (NTT) and the Civil Service. And more are on the way.
Of course, some companies are currently locked into leases. But when these expire, these clients are increasingly set to make the shift into more flexible hybrid space, which we provide. As a result, I can see demand accelerating throughout the rest of this year and for the foreseeable future.
How can businesses scale back the size of their HQ whilst finding and retaining the best talent?
Companies are rapidly realising the benefits of the ‘hub and spoke’ model for office space. Instead of one large and expensive city-centre space, we are seeing more clients looking for a smaller central HQ that’s supported by other offices located closer to where employees live.
In fact, IWG’s latest research found that 77 per cent of employees say a place to work closer to home is a must-have. A work base closer to home is a long-term priority for workers, who want to continue with the reduced commute and increased family time they have experienced in 2020 and into 2021.
Some argue that it is better for the environment if workers commute less. What is your take on that?
It’s an obvious fact. Commuting is the single biggest contributor to carbon emissions globally, so cutting long commutes by car or train is better for the environment.
This doesn’t mean that people should be restricted to working from home.
For one thing, it’s not what they want. For another, it’s bad for productivity and innovation, as it restricts people’s ability to collaborate and solve challenges by working together.
So having a mix of environments – such as home, a local office and an HQ – is ideal for both employees and employers?
The key is to reduce the commute by ensuring people have everything they need closer to home and hybrid working can help to deliver this concept, commonly known as ‘the 15-Minute City’. This involves having offices, retail and other facilities closer to home in small, interlocking and self-sustaining neighbourhoods, enabling people to access whatever they need on foot or by bicycle in a quarter of an hour or less.
It’s the future – and it’s coming to life around us right now.