Companies seeking to drive employees back into the office after rise of work-from-home

Australian workplaces are set to force their employees back to the office in greater numbers this year, despite the recent rise of “hybrid” arrangements that have people frequently working from home.

“We have seen a number of organisations recently introduce new measures to drive people into the office,” Jo Masters, chief economist at Barrenjoey, has told The Financial Review.

“Which, combined with rising job insecurity as the economy slows, is likely to see office attendance rise a little from current levels.”

Another expert, SQM Research founder Louis Christopher, told the newspaper “most employers will be pushing for greater office attendance” in 2024.

“With a forecast rise in unemployment, businesses will have the upper hand in negotiations with their employees,” he said.

Australia’s unemployment rate currently remains below 4 per cent, an unusually low mark – meaning the only real direction it can move is up.

The number of Australians working from home rose sharply during the Covid-19 pandemic as state governments imposed lockdowns, and it has yet to return to pre-pandemic levels.

But the trend of greater flexibility appears to be reversing itself, with multiple major companies, including ANZ and Origin Energy, now warning workers their annual bonuses could be cut unless they spend at least half their days in the office.

One factor working against that push, however, is the cost of leasing office space – and the financial benefits for a business if it downsizes.

“Many companies will likely give up space when their leases expire, as they accept that balanced work-from-home is here to stay and they use it as a way to save rental costs,” Dr Shane Oliver, chief economist at AMP, said.

While the trend is heading back towards working in the office, with the commute that inevitably entails, Australia is unlikely to ever reach the same situation as before Covid struck in 2020.

Recently, The Australian’s 2024 CEO Survey found a considerable number of large companies had embraced a hybrid working model.

The survey found that more than a third of Australians, 37 per cent, were working from home regularly, though that was below the peak of 40 per cent, reached in August of 2021.

At the time, Commonwealth Bank CEO Matt Cornyn said a vast majority of his company’s staff had been spending at least half their time in the office.

He said that arrangement struck a balance between “committing to flexible working and ensuring staff deliver the best outcomes”.

The CEO survey canvassed 70 executives across various sectors, revealing a consensus that three days in the office was becoming the new standard.

Some companies enforced this as a prescriptive policy, while others provided it as guidance.

“We believe this strikes a balance,” Damien Nicks, the CEO of energy company AGL, said. “It sets staff up for a connection, collaboration, and opportunities to learn.”

Several companies have adopted hybrid models, combining in-office and remote work.

Law firm Ashurst emphasises a balance, with most staff spending at least 60 per cent of their working week in the office.

Paul Jenkins, Ashurst’s CEO, said the office will continue to play a crucial role in collaboration and career development.

BHP’s Mike Henry recognised the impact of flexible work, describing it as a “game changer” in attracting more women to the workforce.

However, the miner maintains a guide of three days in the office to generate new ideas.

Wesfarmers CEO Rob Scott said specific jobs, like retail and warehouse jobs, could not be done remotely.

He emphasised that Wesfarmers’ highest-performing teams prioritise in-person interaction.

CEOs from various industries echoed the sentiment that a hybrid approach is essential for balancing flexibility and the benefits of in-person collaboration.

Telstra’s Vicki Brady noted the shift from flexible working to ensuring excellence in hybrid work, stating: “We know our people are at their best when they have a choice.”

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