Will the Gig Economy Make the Office Obsolete?
by Diane Mulcahy
The gig economy, where independent consultants, contractors, and freelancers create portfolios of work in lieu of one full-time job, is transforming the way we work by disconnecting work from an office. In the traditional jobs economy, employers often require employee attendance in the office five days a week, eight hours a day. Gig economy employers, in contrast, focus entirely on performance, not attendance in the office. It doesn’t matter if the idea for how to solve a problem or the insight to craft a new strategy is generated in the middle of the night, or while showering, or in yoga class. The gig economy employer values the quality of worker results, not the process by which they are created.
The most impactful lesson that traditional companies can learn from the gig economy is to judge all workers, including employees, on their results, not on when and where they do their work.
Not one study suggests that working in an office eight hours a day, five days a week maximizes employee productivity, satisfaction, or performance. In fact, any data that exists on work in an office reveals that most employees aren’t engaged, waste a lot of time in the office not working, and that employee underperformance persists despite the omnipresence of management. Even worse, the direct costs of maintaining the traditional office-based workplace are high. CBRE estimates that the typical company in the U.S. spends upward of $12,000 per employee per year for office space. It’s hard to find a return-on-investment case for office space, and much harder still to find any company that makes a compelling one.
Focusing on employee time and location made sense when most jobs were time and place dependent. Factory workers, manual laborers, and workers in retail stores, restaurants, or hospitals have to be at their place of work at specific times to be productive. Knowledge workers do not. Sitting in an office cube or in a conference room attending endless, poorly-run meetings is unlikely to be how your company’s strategic or product issues are best solved. Nor is it likely to be the most effective way to create your marketing message, manage your back office, or maintain secure information systems. Our greatest insights and most productive work are often generated outside the constraints of the corporate workweek and the cube.
Study after study after study demonstrate that independent, remote workers are more productive, satisfied, and engaged than their office-bound colleagues. Recent surveys of 8,000 workers by McKinsey’s Global Institute and nearly 900 independent workers by Future Workplace and Field Nation find that those workers, freed from the constraints of office life, report higher levels of satisfaction and greater productivity. These results aren’t surprising since remote work eliminates the wasted time of commuting, the stress of constant exposure to office politics, and the death of the workday by a thousand paper cuts of interruptions and meetings. Yet somehow, despite evidence of the many benefits of independent flexible work, our office-based, five-days-a-week, time-in-the-cube approach to work still persists at many companies.
Why is that? Managers and human resource executives at traditional office-based firms respond to this question with narratives and anecdotes about trust, collaboration, and team-building, but offer nothing in the way of evidence – even from their own companies – to support their stories. The evidence that does exist suggests that trust and effective teams are built primarily through interpersonal behavior and communication, not constant proximity from working in the same office space.
At least one reason to maintain an office and require employees to work in it is that most managers enjoy working at a company in which employees are managed by time and place. After all, it’s pretty easy to see who is at their desk between 9 and 5. It’s much harder to develop, measure, and evaluate the specific value and results that each employee produces. Managers will have to work a lot harder under a system that focuses on tracking performance, instead of time in an office chair.
There is also a middle ground emerging between office-based and remote work. New studies show that workers who seek the structure of an office-based environment and the camaraderie of colleagues are much happier in co-working spaces than either a traditional office or working at home. Co-working options offer workers the best of both worlds – the control, autonomy, and scheduling flexibility of remote work combined with optional access to the structure and community of an office, if and when the worker wants it. For companies, co-working spaces turn commercial real estate into a variable expense item available at a lower cost.
The rewards are great for companies that prioritize performance over attendance in the office: more productive, efficient, and satisfied workers, management focused on results and deliverables instead of face time, a healthier corporate culture based more explicitly on merit, and lower, more variable real estate and facility costs.
Labor is the most expensive and valuable resource at most firms. Managing this resource by time and place is a crude, empirically unproven, inefficient, and costly approach. The biggest lessons that companies can learn from the gig economy are to separate work from the office, and to measure employees based on what they produce, deliver and solve, not the hours they spend in the office. Put simply, companies need to stop measuring what doesn’t matter, and start measuring what does.