< Previous20 WORKFORCE 2024 Where did the movement to adopt a four-day work week begin? SPARKS: We have been talking about this since . John Maynard Keynes predicted this would happen. Richard Nixon as vice president in the s picked up on that thread too. It is often attributed to Henry Ford. Right now, it is kind of an old-fashioned notion. Productivity is top of mind for our clients. A four-day work week happens to be a benefi t for the workers. Around companies have already adopted it globally. Over companies experimented with this in the UK. Other companies hopped on the bandwagon and over fi rms participated. Can you share any examples of large employers in the U.S. who have adopted this shorter work week already, and what their experiences have been? SPARKS: Biggest adopters have been small and mid-cap fi rms. Many in tech. ey tend to be more experimental. ey are taking place at the team level. ey are based on the way that people are working today. Smaller mid-cap fi rms — about % of those fi rms that participated decided to continue, and decided to adopt it permanently. Out of that study, it has to do with morale and fewer absences. e data is so early. It also helps with recruitment. It is a pretty competitive market, so it helps recruitment strategies. It does not suit all industries. Some companies have A four-day work week happens to be a benefi t for the workers. Around 300 companies have already adopted it globally.” — Su-Zette Sparks , Senior Managing Director of Americas Consulting, CBRE WORKFORCE 2024 21 0 % 10 % 20 % 30 % 40 % 50 % Allowing employees to amend hours on offi ce days (e.g., 10-6 vs. 9-5) Asking employees to visit the offi ce on a rotating schedule to better spread attendance Allowing employees to work from anywhere a certain number of weeks a year Virtual-fi rst strategy - allowing employees to primarliy work remotely and access drop in space as required Four-day work week 17 % 3% 20% 16% 21% 16% 31% 12% 20% 27% Emerging Workplace Policies Exploring Implementing shift work that is drastically impacted. It aff ects overtime. It is very diff erent for some industries like healthcare and hospitality. Productivity did go up slightly. Revenue held fl at and was up % for some companies in the UK. Meetings can be a big time waster. e level of change management that you have to commit to is big. What is the impact on culture? at is a very important driver for some companies. How would a shift to a four-day work week aff ect both landlords and tenants in the offi ce sector? SPARKS: We are so early in the conversation that the data is still being collected. e potential could be in sustainability goals and operating costs. We could collect better data sets. ere are a lot of dependencies on both ends. Six states have put forth legislation around a four-day work week. Four more states are entertaining it. It is around incentivizing it or mandating it. Are there any pitfalls to avoid when contemplating moving to a four-day week? SPARKS: No. is meetings. Evaluate these and how people spend their time to make sure that a -hour work week works. You have to have a plan and get employees involved in this. It is the number one pitfall if you don’t have a plan to address it. What will you take off their plate so they can handle it? I don’t know of anyone who has already adopted this in large-cap. For larger companies, it may be a slower burn. Source: CBRE Research, April 202322 WORKFORCE 2024 F our years after the advent of the global pandemic, employers are still all over the map when it comes to deciding who gets to work remotely and who does not. In the third quarter of 2023, a LinkedIn survey showed that 54% of Americans were still working mostly onsite, while 25% worked remotely and 18% worked on a hybrid schedule. But that’s not necessarily what workers want. According to LinkedIn’s Workforce Confidence Index survey of more than 9,000 U.S. workers, most (58%) want REMOTE WORK Here’s how top employers are handling the return-to-office debate. by RON STARNER Dilemma Solving Remote Work the WORKFORCE 2024 23 more workplace fl exibility and would choose either a hybrid or remote workplace if they could. is is not stopping large companies from issuing stern return-to-offi ce edicts. In late October, Amazon empowered managers to fi re employees who did not return to the offi ce to work at least three days a week. Elon Musk, owner of Twitter (now X), sent a companywide email ordering all Twitter employees to return to work in the offi ce fi ve days a week. ose who don’t comply, he wrote, “should pretend to work somewhere else.” Are harsh directives like these a harbinger, or will companies and workers fi nd a happy middle ground where they can co-exist? I reached out to prominent corporate headquarters site selection consultant John Boyd Jr. for additional perspective on this topic, and he summarized what he’s seen and heard from some of his largest Fortune clients. “Our clients in Big Tech, the Big Banks and Wall Street are telling their employees to come back to the offi ce, and I believe their rationales and calls will largely shape the long-term workplace template as we unwind from the historic disruptions caused by the pandemic,” Boyd said. “Jamie Dimon, CEO of JPMorgan Chase, probably best encapsulates this view — a view shared by other corporate leaders like Tesla’s Elon Musk, Mark Zuckerberg of Meta, Rob Goldstein of BlackRock, Andy Jassy of Amazon and David Solomon of Goldman Sachs — when he says that his fi rm has seen ‘alienation’ among younger workers and that remote work ‘doesn’t really work for creativity and spontaneity.’ Upward of % of JPMorgan Chase’s workforce, including all managing directors, now work in the offi ce fi ve days a week.” e more the pandemic becomes a memory, says Boyd, the more the RTO point of view will take root among offi ce culture in general. Our clients in Big Tech, the Big Banks and Wall Street are telling their employees to come back to the offi ce, and I believe their rationales and calls will largely shape the long-term workplace template as we unwind from the historic disruptions caused by the pandemic.” — John Boyd Jr. , Principal, The Boyd Company Inc. Our clients in Big Tech, the Big Banks and Wall Street are telling Tangram Interiors designed this new amenity-rich cafe for Edwards Lifesciences in Orange County, California, to help facilitate a return- to-offi ce for Edwards employees. Photo courtesy of Tangram Interiors24 WORKFORCE 2024 “Hybrid work schedules won’t go away, due to their popularity among employees and their potential cost savings in real estate for companies,” notes Boyd. “However, I do expect them to become more limited in scope and availability, and localized in the sense that decisions will be made by regional or division managers, avoiding the kind of risky companywide rebellions that we have seen at Amazon, Apple and Twitter.” Whither the Fate of Office Properties? Economic conditions are impacting RTO policies. Remember the Great Resignation when people were quitting their jobs in droves? Well, that’s not happening anymore as inflation, record-high mortgage rates and mass layoffs dominate the American economy today. One industry where Boyd has seen a shift is the call center sector. “Remote working can help a company with its ESG and social impact metrics,” he notes. “This is especially true in the call center industry where we have been very active over the years. PepsiCo, TD Bank, Visa International, Progressive Insurance, Royal Caribbean, PNC Bank and Concentrix are all clients of ours. An enormous number of call center agents are working remotely today. Working from home facilitates the hiring of the disabled, single moms and other diverse and disadvantaged workers who don’t have the means to commute to a contact center or to an office. Also, a smaller contact center or office footprint due to offsite work-from- home operations scores well on the environmental front due to the use of less air-conditioning and heating and fewer CO2 emissions from employees driving to work.” The tradeoff is the impact that remote work is having on office buildings, and it’s not a good one. Boston, Massachusetts, is ranked as one of the top destinations in America for digital nomads — i.e., tech workers who can do their jobs remotely from anywhere. Photo: GettyImages WORKFORCE 2024 25 Nowhere is this problem more acute than in Washington, D.C., where a plethora of offi ce buildings await the return of workers in multiple federal agencies. A recent report in Bisnow revealed that the slow return to offi ce by many federal agencies is putting the health of many older D.C. buildings at great risk. is prompted the Biden Administration in August to issue a directive to all federal agencies in the nation’s capital to “aggressively execute” return-to- offi ce plans for their employees by the end of . So far, pushback from federal employee unions has largely stalled this eff ort. Bisnow quoted Cushman & Wakefi eld Executive Vice Chairman Bill Collins as saying, “I do believe it would be great to have the federal government back. I wouldn’t bet on that anytime soon. Unions are pretty powerful.” Catherine Timko, principal and CEO of e Riddle Company in Washington, D.C., says that some of the federal offi ce leases in D.C. have shrunk as a result of remote working. “If people do not require face-to- face meetings, people will not return to the offi ce,” she says. “ e impact of this is that the older offi ce buildings in D.C. are being vacated at the fastest rate. e class B and C buildings are being vacated the most.” Converting unused offi ce space into residential housing isn’t a magic solution either, she adds. “According to a Gensler study, only % of the offi ce buildings in D.C. can be converted to residential.” The 10 Best States for Digital Nomads In the meantime, many workers will continue to seek havens where they can do their job remotely and still be compensated handsomely for doing so. One recent study identifi ed the best markets for these so-called “digital nomads.” Global accommodations experts Bluepillow.com put together a Digital Nomad Index Score of the top optimal destinations for people who want to work remotely — using factors like quality of life, coworking spaces, state and national parks, low crime rates, air quality and other criteria. e index listed states as the best places for remote working (see chart left). Rounding out the top were, in order, California, Minnesota, Washington, Illinois and Nevada. e bottom fi ve states ( to ), according to Bluepillow.com, were West Virginia, New Mexico, Arkansas, Wyoming and Mississippi. TOP 10 STATES FOR DIGITAL NOMADS RANK STATE 1 Massachusetts 2 New Jersey 3 Connecticut 4 Maryland 5 New York 6 Colorado 7 Utah 8 Virginia 9 Rhode Island 10 Florida If people do not require face- to-face meetings, people will not return to the offi ce.” — Catherine Timko , Principal and CEO, The Riddle Company If people do not require face- to-face meetings, people will source: Bluepillow.com26 WORKFORCE 2024 “Tier Two” Locations Off er Potential Solution During Tight Labor Markets I n the past few years, we’ve experienced some of the most competitive labor markets in recent history. While wages seem to have fi nally plateaued, and unemployment rates are edging up, no one is predicting abundant labor in the near future. According to the U.S. Bureau of Labor Statistics, as of October , the U.S. unemployment rate was .%, compared with an average rate of .% from through . e St. Louis Fed projects the rate to climb to .% in and then fall back to % by . Neither demographic trends nor immigration numbers are easing the situation. Forbes in November even warned, “hiring and retaining workers will be a dog-eat-dog, employer-eat-employer eff ort.” ere are a lot of actions companies can take to recruit and retain labor more eff ectively, including fostering a positive and energetic work environment, enhanced benefi ts packages, on- site medical care, and day care support. Companies exploring location options for new or expanding operations can take the additional step of seeking areas where there may be less competition for labor, frequently synonymous with “Tier Two cities.” Some consider Tier Two cities as defi ned by a certain level of air connectivity, population or overall cost structure; others would point to the largest cities without an NFL team. Whatever the by TRACEY HYATT BOSMAN, MANAGING DIRECTOR, BIGGINS LACY SHAPIRO & CO. LABOR SHORTAGES Per the author, Raleigh, North Carolina, is a very attractive Tier Two city right now for labor. Photo: Getty Images WORKFORCE 2024 27 definition, it’s the concept that choosing a Tier Two city means going a little off the beaten path in search of less competitive — and potentially less costly — labor market conditions. Corporate location decisions are not so frequent that one can add everything up and definitively conclude that more or fewer companies are choosing Tier Two locations, particularly after controlling for industry mix and size of project. It’s safe to say, however, that tight labor markets, the emergence of a remote workforce, and a staggering number of “mega project” announcements that will be gobbling up thousands of workers in single locations demand that companies at least consider Tier Two options when planning for a new operation. Stepping Outside the ‘Tier One’ Norm This is a frequent conversation with our life sciences clients. The life sciences industry is dominated by locations like Boston, San Francisco and Raleigh, North Carolina (Research Triangle). With such fierce competition for talent in these markets, life sciences companies must weigh the benefits of being in the center of the activity against the benefits of tapping into a potentially deeper, broader or even just more stable workforce environment. The life sciences industry gives us an opportunity to also illustrate how the definition of “Tier Two” will vary by industry. If viewed through the lens of air connectivity or population size, Raleigh would be a Tier Two city. It is, however, undeniably a Tier One location in the life sciences industry. Eli Lilly recently made the strategic decision to expand operations to Concord, North Carolina, in the suburbs of Charlotte, a city that is among the 25 largest MSAs in the country but not historically known as a life sciences hub. Still within North Carolina’s world class life sciences training infrastructure, it sits just outside the frenetic competitive pace of the Research Triangle. Examples of other Tier Two life sciences locations our clients have been considering include Denver/ Boulder, Colorado; Indianapolis, Indiana; Houston, Texas; and Atlanta, Georgia. Intel’s recent selection of Columbus for a mega- sized chip manufacturing location is an example of a tech company choosing a location outside the more traditional tech manufacturing markets of California, Austin or Phoenix. The company surely anticipates being able to absolutely own the market for chip manufacturing workers in Columbus. The counterpoint is that there aren’t any chip manufacturing workers in Columbus, at least not yet. The area will need to cultivate this workforce. Both Eli Lilly and Intel have the luxury of being “employers of choice,” with strong brands that will create a gravitational pull and spur regional growth in the skillsets they require. Furthermore, given the magnitude of their projects and the time required to construct the facilities, there is time to establish and grow a talent pipeline. Other examples of projects going a bit off the beaten path include aerospace in smaller metros like Huntsville, Alabama; Palm Bay, Florida; Dayton, Ohio; and Colorado Springs, Colorado; and electric vehicle/battery investments in Stanton, Tennessee; Syracuse/Rochester, New York; and Big Rapids (Grand Rapids), Michigan. Finding the Right Fit Looking beyond the 25 most populous U. S. metropolitan areas, we find metros like Kansas City, Missouri.; Austin and San Antonio, Texas; Jacksonville, Florida; Charleston, Greenville and Columbia, South Carolina; Winston-Salem and Greensboro, North Carolina; Las Vegas, Nevada; Oklahoma City, Oklahoma; Des Moines, Iowa; Nashville, Knoxville, and Chattanooga, Tennessee; and Omaha, Nebraska, all of which are seeing investment activity. University towns are especially interesting given the continuous stream of new talent into the marketplace. In short, there are a variety of dynamic smaller cities that warrant consideration. Beyond availability, Tier Two markets potentially also represent material payroll savings, as much as 10-15% (or even more) versus Tier One markets, depending on the type of position and the markets compared. (Other costs are frequently lower, too, including real estate, utilities, and taxes.) We’re not saying that smaller markets are inherently better, less expensive or have unlimited workforces. A smaller labor pool can be just as competitive, even more so, if there aren’t enough workers to satisfy the demand of local businesses. Further, sometimes the potential upside isn’t worth the risk that comes with being a pioneer, especially if the operation is leading- edge and benefited by being close to R&D hubs. At the same time, the most obvious markets are not necessarily the best markets for a given project. Today’s takeaway is not that companies are abandoning Tier One markets. There are still plenty of investments going into Phoenix, Dallas, Houston, Atlanta, Seattle and the other “NFL cities.” But “Tier Two” doesn’t mean second rate. Companies may find the perfect fit for a new operation outside the traditional alternatives. Next >