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January 17, 2023

The Fluid Office: Rise of the Hybrid Work Environment

Work from Home Computer

Every year, we conduct our annual Norwest Talent & People Practices Benchmark Survey. This gives our firm a glimpse into how our portfolio companies are fostering culture, retaining talent and tackling shared challenges.

Our 2022 report affirmed that remote work is a large component of return-to-office policies. About two-thirds of companies added some form of remote work opportunity, with 34 percent offering options for fully remote roles, and 25 percent for partially remote or hybrid roles.

However, despite the initial buzz about remote work, the percentage of workers permanently working from home is expected to dwindle in the coming years. The present and future for many millions of workers is some form of a hybrid work environment, in which most employees split their time between working in the office and working remotely.

Workforce sentiments and trends both indicate a complete shift from the traditional 9-to-5 work structure. At the same time, many organizations are hesitant to go fully remote. The hybrid work model allows both employers and employees to find that delicate balance and go forward together.


More Time at The Workplace

Remote job postings have eased and employers have slowly regained their bargaining power over employees who prefer to work remotely. Job listings on LinkedIn offering remote positions fell from 16 percent in January 2022 to 12 percent by December 2022. This development will likely continue through 2023 as 50 percent of businesses expect employees to be in the office at least five times a week.

In general, the workforce appears to favor hybrid environments over working in the office full-time. A recent study found that a vast majority of workers prefer a hybrid setup where they can work remotely for 25-75 percent of the time. The latest data shows that nearly a third of combined Gen X and Baby Boomers say they can be productive in both the home and office. Over a fifth of millennials and Gen Z share the same sentiment.


Evolving Office Models

A shift toward hybrid working models will massively impact the way founders build companies going forward. At Norwest, we wanted to delve deeper, and explore the future of the hybrid work environment to help our portfolio companies understand how to design a model that works for everyone in this new normal. We also thought it was important to analyze employee sentiments towards various workplace models after nearly a year of working from home.

Over half of employers support a hybrid work model where employees report to their workplace a few days per week. In contrast, only 5 percent of companies favor an entirely remote work scenario. In the near term, most of our companies will adopt a hybrid approach.

There is no denying that we are now in an era where hybrid work models are fast becoming the norm. How do employees feel about hybrid work? We dug in to some key research and found four key insights:


1. Most employees like the flexibility of a hybrid work environment.

An earlier study conducted during the pandemic showed that 90 percent of respondents believed a hybrid workplace model would become the standard post-pandemic. While it’s still too early to understand the long-term ramifications of remote work, many high-revenue growth companies have embraced hybrid work models. During the height of the pandemic, many workers didn’t expect to come back to the office. And in a post-pandemic world, a majority of employees prefer the flexibility that hybrid work offers.

Whether they’re interested in maintaining a healthy work/life balance, not wasting time in a long commute or feeling more productive at home, employees clearly crave the flexibility of a hybrid work environment. Wise organizations should adjust, or risk losing potential talent to other, more flexible companies.

90% of the respondents believe that post-pandemic, a hybrid workplace model will be standard for most businesses.


2. Office spaces still serve a great purpose, even in a hybrid working environment.

Although most employees enjoy the benefits of WFH, employees are less willing to forgo the office completely.

Our evidence suggests that employees want the freedom to choose when and how often they utilize their office space. They enjoy having a dedicated space for socializing and collaborating. As a result, organizations are working to transform conventional offices into hybrid-friendly spaces, conducive to collaboration, communication, and optimal performance.

The takeaway? In a hybrid workplace era, organizations might want to rethink their strategy on how they utilize their office spaces. They might not need a dedicated area for every single employee; but they can still leverage the square footage they have for meeting spaces, private phone booths, or creative uses.


3. Employees need connectivity and flexibility to become productive

As companies look ahead to adopting a hybrid work environment, they should bear its potential limitations in mind. Along with other issues with remote working, leaving the office behind risks a rise in loneliness. In a 2021 survey of our portfolio companies, 23 percent of employees cited feeling isolated or alone in their WFH environment, and 19 percent missed participating in company culture. Another 18 percent found it difficult to collaborate and brainstorm with their colleagues remotely.

Our data shows that employees need subtler forms of support that prevent them from feeling disconnected. Only a third of employees report that they have received training or education on work from home best practices.

Workers need to be flexible and their experiences personalized so they can thrive both at the workplace and home. A recent study by Gallup support this, indicating flexibility and connectivity will be crucial to the hybrid employee experience. Employers should set in place rules and processes that drive communication, encourage partnerships, and enhance teamwork.

89% of employees say they are satisfied with their current work from home experience.


4. In a hybrid work environment, collaboration requires extra effort

Transitioning to a hybrid workplace model appears to make collaboration more challenging than in a classic, in-person office setting. Over two-thirds of respondents believe collaboration within a hybrid work environment may prove more difficult compared to an all-remote environment.

Two of the top-cited pain points were difficulties in participating in meetings (both being heard and just understanding what is being discussed) and the feeling of being left out of the office culture.

How can companies empower employees to collaborate more effectively in a hybrid work environment? In our survey, respondents say they would value the following:

  • Making video (rather than solely voice) mandatory during collaborative sessions (cited by 58 percent of respondents)
  • Providing equipment with better camera and audio quality (cited by 36 percent of respondents)
  • Adopting smart cameras that identify the speakers’ faces (cited by 32 percent of respondents)

It is clear that any successful shift to a hybrid workplace requires a proactive approach that implements combined inputs from the management and employees. Both parties should communicate and collaborate in creating and executing a viable hybrid work model.


Going Hybrid: The Only Way Forward

The hybrid work environment is here to stay. To thrive in this new working landscape, companies need to be keenly aware of how arrangements are impacting employees, both positively and negatively. They need to take steps to address the issues with remote working while recognizing that there is much about a hybrid setting that employees truly value.

Happy and motivated employees make for successful companies. As we enter a new, hybrid world, savvy companies will want to optimize their operations so that their staff experiences the best possible hybrid workplace. Hopefully, our survey helps companies thrive, through 2023 and beyond!