The pandemic permanently shifted how and where we work. This has become clear as companies sell corporate office parks, reconfigure existing office space and opt not to renew office leases. Some are calling this trend The Great Repurposing.
While this shift initially appeared to be in response to employee demand, chief financial officers (CFOs) are now recognizing hybrid and remote work as a strategy to help cut overhead costs.
According to a global survey of 250 CFOs conducted by International Workplace Group (IWG), 82% of CFOs said hybrid work is a more affordable business model.
In this blog, we discuss how CFOs are embracing a hybrid work model to help them prepare for a potential recession, promote productivity and retain talent.
Reducing office space in preparation for a potential recession
Recent research shows that companies are not viewing hybrid and remote work as a passing fad spurred by the pandemic, but as a permanent shift to how we work.
According to a recent AvidXchange survey of finance professionals at middle market companies, 44% of respondents said their company has reduced or eliminated its office space in the last two years, and a third of respondents (34%) said their company has plans to reduce or eliminate its office space over the next 12-24 months.
This may be a direct response to recession predictions, as 30% of survey respondents (the majority answer) indicated they are preparing for the forecasted recession by reducing or eliminating office space.
These findings are consistent with the IWG study, which found 97% of respondents said they have started implementing or plan to implement cost-cutting measures.
What’s on the cost-cutting list?
Two-thirds (65%) of CFOs said they’re looking to reduce facility spending by 10% per year.
Half of respondents said they are accomplishing this by choosing short-term leases or shared workspaces.
CFOs are connecting the dots between office spaces sitting empty and the significant impact a reduction in rent or mortgage and utilities can have on profit margins.
According to Mark Dixon, founder and CEO of IWG, companies can cut 50% of their real estate costs by going hybrid.
Leveraging flexible working arrangements to lure and retain talent
How are companies leveraging these cost savings? It appears they’re looking to invest in their talent – and help boost their bottom line.
According to a CFO Survey from Duke University and the Richmond Federal Reserve Bank, about three-quarters of respondents said a talent shortage is impacting revenue.
Given the persistently tight labor market, finance and accounting departments are tackling turnover by increasing salaries or bonuses (61%) and allowing employees to work remotely (43%), according to Robert Half’s Staffing Critical Functions Benchmarking Report 2022.
These trends show that although The Great Resignation has slowed, employees still hold power, and they want to maintain the flexibility they’ve enjoyed over the last two years.
According to the American Opportunity Survey, when asked what factors are most important when choosing a new job, “a flexible working arrangement” ranked third in importance behind “pay and career opportunities.”
In addition to cost savings, hybrid work arrangements support team wellbeing, increase productivity and lower turnover.
Employers and employees finally seem to be on the same page when it comes to working from home, with nearly two thirds (63%) of employees favoring the hybrid work model, and 86% of CFOs expect their workplace model to be hybrid in 2023.
However, just offering remote work opportunities isn’t enough. Companies also need to arm employees with the right tools and technology to make remote work more manageable.
Investing in technology to help enable remote work
Technology adoption is playing a role in both hybrid work enablement and recession preparation.
According to our recent survey, 30% of finance professionals at middle market companies are preparing for the forecasted recession by investing in technology to increase business efficiencies. Nearly half (48%) said investing in technology was a high priority for their organization over the next 12 months.
For companies looking to activate hybrid workplace flexibility, investing in tools like AP automation can help their finance teams keep track of invoices and payments from home.
In fact, according to our AP Professional Career Satisfaction Survey conducted in partnership with the Institute of Finance & Management (IOFM), 88% of respondents with fully automated AP systems work in a hybrid or fully remote position.
Through a cloud-based system, AP professionals have 24/7, anytime, anywhere access to invoices and payments. And automated workflows help process them accurately and on time.
In order to ensure that productivity remains high, it’s crucial that C-suite management selects an AP solution that makes hybrid work seamless by enabling their team to do the same things remotely that they do in-office.