The next twelve months could see some pivotal changes to how companies operate. Remarkably, 85.5 million square feet of office space will come due this year. So, major decisions need to be made on whether to renew the leases. 

It’s a window of opportunity to remodel a company’s working structure. But it’s also telling that in our recent survey of 1,000 UK employees, 42% feared that their employer valued their office lease over employee retention. In such an uncertain and stagnant economy, CFOs are under pressure to cut costs. And with companies asking employees to come back to the office more days a week, these mandates are also triggering layoffs. 

Specifically, organisations such as Amazon and JP Morgan have reintroduced a mandatory five day return-to-office (RTO) policy in recent months, prompting discussions on the balance between real estate costs and employee preferences. Do these companies mind that people may quit in favour of more flexible options? Have they in fact accounted for this? 

Property over people 

Many large employers aren’t currently open to flexibility. Many are also tied into long office leases or are planning to renew them this year. Therefore, in order to balance the books, something has to give – and often it’s employees’ jobs. Such decisions can be influenced by an old-school mentality which is being amplified by the media: it fuels the idea that large companies should be reverting back to full-time office work, instead of illustrating how most employees work best. 

Out of the 1,000 employees surveyed, 54% said they noticed a pro-office bias in the mainstream media. And two thirds felt coverage on flexible working didn’t reflect their current situation. Instead, the survey actually highlighted that for employees facing RTO mandates, workplace satisfaction dropped by 25%, with the majority (84%) saying it had either decreased or remained the same.

Recent coverage is now highlighting the practical challenges of implementing these RTO policies. Many offices, for example, are not equipped to handle a full-time return. It was revealed in February that JP Morgan, one of the most prominent companies supporting the mandates, lacked enough desk space at its Canary Wharf headquarters to facilitate the transition. Consequently, it is looking to lease new office space. More broadly, new research has shown full-time RTO mandates could disadvantage up to a million disabled workers, creating a significant inclusivity issue. 

So, why are some employers so determined to implement a five-day week RTO despite the limitations it can cause? 

‘Business’ over jobs 

When we conducted a study into how much different office and workspace options cost, we discovered that for leased offices this can reach up to £2,000 per month per employee. And when you factor in research by CBRE that shows leases could increase by 3-5% this year, it’s clear that pursuing full-time RTO mandates will either have to be financed by a jump in revenue or, more likely in the current climate, cuts. 

There is also a wider context to consider. Despite falling towards the end of last year, inflation has risen again to 3%. Crucially, due to the impending increases to National Insurance rates in April for employers, more than a third of 2,000 UK firms surveyed by CIPD have said they already plan to reduce their headcount as a result. 

With this outlook, it’s clear CFOs are facing a variety of pressures to trim costs, and RTO mandates can mean that redundancies and layoffs have to take place. Yet committing to expensive leases is also a way to ‘justify’ or facilitate layoffs. Despite JP Morgan’s full-time RTO mandate and hunt for new leases, the firm is also carrying out the start of its job layoffs for 2025 in the US – a guarded strategy that may include in the UK as well this year.

Flexibility over rigidity 

The debate doesn’t need to hinge on a binary approach over whether employees should come into the office or not. In fact, there doesn’t have to be a decision between keeping office space or people on the books – companies can reduce costs and maintain both. 

Employers can explore using a range of different spaces and locations at different prices to facilitate employees to ‘work from anywhere’ (WFA). And by adopting this approach, they can balance rent costs while also providing greater flexibility and choice over how employees work. 

But taking costs out of the equation, there is the simple fact that flexible working is better for employee satisfaction, has a positive  impact on productivity, and is more sustainable. It provides a way to offer choice and actually improves retention. 

Tellingly, 78% of the employees surveyed believe flexible or hybrid work options increase their productivity – a figure that stands at 85% amongst 18 to 30 year olds. And these feelings are backed up by evidence. In 2021, Harvard professor Raj Choudhury carried out a peer-reviewed study that showed, under the right conditions, how “WFA can lead to productivity gains”. 

If employers are struggling to manage real estate costs with employee preferences, the flexible workspace model means they can provide a range of workspace on various pricing models. And it removes the issue of being fully remote too – something many other employees struggle with. 

Power to the people (and property)

There is no set rule on how hybrid and flexible working should take place. Each sector and specific job will govern where employees prefer or need to work. But the issue doesn’t revolve around the number of employees who want to go into the office full-time or have a hybrid system – it’s about giving them the choice and flexibility to do so. If you take that away from workers, then their job satisfaction and productivity will naturally suffer. 

Most people you speak to will like a mixture of both office and remote working days – it gives them the best of both worlds. But there are more layers to explore within this setup, like using on-demand workspaces for people to work near where they live or in areas they are visiting. 

A flexible approach empowers businesses to cut costs while maintaining office space and giving employees the flexibility they need. In short, long-term leases don’t need to take precedence over people’s jobs.