New Zealand’s enterprising future: Seven reasons why co-working and flexible workspaces are booming
Top image: BizDojo in Wellington. Photo credit: Ben Mack
In some respects, New Zealanders are early adopters – perhaps no country in the world was quicker to abandon chequebooks and embrace EFTPOS terminals – but when it comes to rethinking the standard commute to a central office building to work a 40-hour week (plus always being connected to work after-hours), we’ve been well behind the curve.
A combination of corporate forward-thinking and necessity is changing that, and there are rising indicators that the future of work in New Zealand will be very different from even the recent past. The trend is towards flexible working arrangements, which can take many forms – up to and including an innovative experiment by Perpetual Guardian, which recently ran an eight-week trial where all 240 staff were given a day off each week at full pay, to test whether engagement and productivity would be positively affected by people having more time for their non-work lives.
Here I’m going to look closely at a core part of this new approach to work, the use of coworking and flexible workspaces – which will number 18,900 globally by the end of 2018, with around 50,000 square metres of that in New Zealand.
For argument’s sake, I’ll address the needs of and opportunities for two cohorts: workers (who might be employees of corporates or SMEs, or self-employed, desk-based professionals) and CEOs/owner-operators of office-centric companies who are willing to consider doing things differently for the sake of improved employee engagement and bottom-line benefits.
If you’re a worker with the contacts, talent and skills to negotiate, or a corporate leader looking to jump on a global trend, you’re likely to find something of value in the following lessons:
1. Flexible workspaces reduce cost and commitment. Traditional office spaces, often based on a long term six to 10-year lease with right of renewal, are remarkably costly when calculated on a usage basis. These spaces are only used 52% of the time – standard working hours with a little buffer at each end – and meeting room utilisation is a mere 12%. What if companies started paying only for the space they used when they used it, and didn’t lock themselves into long-term lease agreements that create additional balance sheet liabilities? Those exploring this area now are among the early adopters, and the number of followers is rising rapidly: workspace as a service segment is projected to rise to 30% of all commercial office space by 2030 from 1% currently.
2. Having a workforce operating flexibly encourages new and better measurements of performance. If workplaces are going to change, HR policies need to change with them. Many New Zealand companies, particularly those outside the newer start-up model, don’t go for outputs-based management; that is, most managers measure the performance and commitment of employees by time spent in the office, not on their actual output of work. If you change that, and have the management tools to measure employees on output, you can gauge what they are delivering for the company regardless of where they’re working.
3. Flexibility increases the productive time available… The statistics are positively agonising: a 2017 study by the New Zealand Institute for Economic Research found that congestion was strangling Auckland’s economy to the extent that the city’s productivity could be boosted by at least $1.3 billion per annum if traffic could move consistently at or near the speed limit. Traffic problems are compounded by bad weather, accidents on major arterial routes, and public transport strikes and shutdowns. Think of the time – and stress, which affects work performance – which could be saved if people were “at work” rather than battling to get to a particular location to do that work. For those who just need a computer, a phone and an internet connection, coworking close to home (for some people, working from home itself can be counterproductive) is a no-brainer, and new data suggests companies, driven by tech advantages like cloud-based computing, are starting to make that practical and philosophical shift: Spark Lab has found that over 70% of SMEs are giving their employees access to business systems and tools to work remotely. (And for companies and individuals conscious of their carbon footprint, spending less time behind the wheel is about the kindest thing you can do for the planet.)
4. …And this can lead to better remuneration models. Let’s say you’re a corporate whose employees each spend an average of $5,000 a year each on their commute, and you exchange your CBD office space for four coworking spaces in different parts of the city, with each employee able to work in the space closest to where they live. Their time and money spent commuting would be slashed (putting more of their earnings back in their pocket); their quality of life would skyrocket and so would their output; and they’d be more engaged and loyal than ever before. By moving to coworking and adopting the pay-as-you-go model for workspace usage, companies can reward staff in a way that actually reduces expenditure.
5. Coworking is possible for companies of every size. At present, 30 percent of global coworking space is occupied by corporates, such as the global tech firm that is a client of my company, Regus. That type of business wants one provider to handle their every flexible office space requirement in every city or country they are operating in, so they want access to a network. Other businesses, such as some banks and insurance providers we are in discussions with in New Zealand, want to exit their long-term lease and move into a pay-as-you-go workspace model, giving every employee funds for space and letting them decide how they want to spend it. The company saves money while getting the output they want from the employee, facilitates flexibility, collaboration and networking opportunities, and gets lease liabilities off the balance sheet; and the employee has decision-making power over where they work. Win-win.
6. Flexible workspaces let companies take advantage of globalisation. Ten years from now, New Zealand companies will be able to source and harness talent from anywhere in the world, without jumping through immigration hoops or committing to massive relocation costs. For a country as relatively inaccessible as ours, the opportunities afforded by coworking and technology cannot be overstated; companies can retain the services of the best and brightest from New York to London to Shanghai, cover their flexible workspace costs, and reap all the benefits of globalisation with none of the hassles (other than conflicting time zones). A corollary is that even very large companies can be nimble and experiment in new markets without committing to expensive office establishment costs. If it works out, great, and if it doesn’t, they have failed fast and at no great expense. Also relevant is the concept of “transfer of contract” throughout a workspace network: if a company has multiple locations with us, it can redistribute its spend in each location with a month’s notice to adapt spend to headcount. This eliminates surplus, so the company is paying only for what it is using in any given place each month.
7. Coworking = collaboration. It’s often said that the best ideas come from unexpected places, and a major advantage of the coworking model is the networking opportunities it provides. Say a corporate moves its 40 Wellington staff from one floor of a leased office building, where they interact professionally only with each other, and moves them into three coworking sites in different parts of the city. Suddenly they are interacting daily with professionals in other fields and industries – sharing ideas, solving problems, finding new contacts and business leads – in ways that only benefit their employer. For example, Bizdojo is supporting Wellington City Council on the Collider initiative of shared workspace and a networking-focused series of events, activation and coaching programmes, all designed to help employers attract and retain top talent. The cost-benefit analysis is clear: employers do not need to spend on external training companies or external team building activities because employees can access everything within the co-working environment.