Yahoo Finance Global businesses rethink plans to ditch the office post-COVID
Businesses across the globe are reassessing plans to downsize their company’s physical footprint, with just 17% of executives looking to reduce office space as a result of the pandemic.
This compares to 69% of CEOs who said in August last year that they planned to reduce their office space over three years, highlighting a shift in strategy from survival to revival.
According to a new study by KPMG, company bosses believe that remote working poses fresh data security risks. They named cyber security as the top concerns impacting company growth and operations over a three-year period.
The research, which was conducted in February and March of this year, also showed that almost half (45%) of chief executives, from the world’s most influential companies, said they do not expect to see a return to “normal” course of business until 2022.
This is opposed to nearly 31% who believe it will happen later this year.
KPMG surveyed a total of 500 global bosses from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, UK and US) about their response to the pandemic, and their outlook over a three-year horizon.
All respondents had annual revenues greater than $500m (£360m) and a third of the companies surveyed have more than $10bn in annual revenue.
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The changes prompted by COVID-19 resulted in a quarter of respondents admitting that their business model has been changed forever by the crisis.
Some 55% of CEOs said they were concerned about employees’ access to a COVID-19 vaccine, while 90% said they considered asking staff members to report when they have been vaccinated. This was in order to help them think about necessary measures to protect their workforce.
A third (34%) of global executives were worried about misinformation about COVID-19 vaccine safety and the potential this may have on employees choosing not to have it administered.
Bill Thomas, global chairman and CEO of KPMG, said: “Before any major decisions are made, CEOs want to be confident that their workforce is protected against this virus. The COVID-19 vaccine rollout is providing leaders with a dose of optimism as they prepare for a new normal.
“CEOs are scenario planning for difference across certain key markets that could impact their operations, supply chains and people, leading to uneven economic recovery.”
He added: “The pandemic has also been a catalyst for CEOs to evaluate the role their companies play in society. Many have given voice to issues they may not have previously commented on publicly – from tackling climate change to supporting the diverse communities they operate in – and we need to keep hearing those voices. There is much more to be done.”
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It comes after HSBC (HSBA.L) and Lloyds (LLOY.L) announced plans in February to slash office space post-COVID.
HSBC said it hoped to reduce its office space globally by 40% "over the long term" as it moves to an "agile" way of working.
The plans do not apply to the bank's branch network, chief executive Noel Quinn said. He added that Europe’s largest lender was committed to staying at its Canary Wharf headquarters, which houses 10,000 staff. However, smaller offices around London would likely be closed, he said.
Meanwhile, Lloyds is looking to reduce its office space by a fifth by 2023 as part of a push towards flexible working.
The move has been prompted by COVID-19, which the bank thinks will permanently change the way staff work.
The majority of Lloyds' 60,000 staff moved to working from home last year as the pandemic struck. Chief financial officer William Chalmers said a recent survey of employees found 77% wanted to work from home at least three days a week even after the pandemic subsides.
The finding has prompted Lloyds to consider cutting back office space and rethink the space that remains. Chalmers said the bank would "ensure that the workspace is fit for purpose in an environment in which colleagues want to come to work to collaborate rather than necessarily sit at their desks on their own".
“We will create a purposeful and future-ready workspace for all," he said.
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