New global research from International Workplace Group (IWG) and global engineering consultancy Arup shows that businesses empowering employees to use local workspaces and offices as part of their hybrid working approach could boost productivity by 11% over the next five years.
This latest figure combines research from the National Bureau of Economic Research, which looks at how much of time saved from commuting is reallocated to work, and from the Economist Impact’s study on time lost to distractions when working from a company HQ in the U.S. These findings build up on previous academic research from Professor Nicholas Broom at Stanford University, which highlighted that hybrid work boosted productivity by 3% to 4%.
The study shows that hybrid working could generate $219 billion in GVA annually by 2030 to the U.S. and $566 billion by 2045—the equivalent to the GVA of Austin, Texas—through increased productivity, reduced turnover, replacement costs and portfolio costs.
This 11% productivity boost is driven by lower commutes, with employees benefiting from increased focus time and fewer distractions, ultimately spending up to 40% of time saved from traveling on additional work. In fact, the rate of employees reporting their productivity levels as ‘excellent’ in flexible workspaces is 67% higher than those working from home.
This more productive use of time has the potential to have a significant impact on businesses and the economy. If workers spend half their time in local flexible workspaces or offices – gaining improved focus and saving time on commutes, it could unlock 170 extra productive hours per worker, each year. That’s the equivalent to $42 billion in annual GVA within five years, rising to $109 billion by 2045. Just by using a flexible workspace “occasionally,” remote companies could reduce costs by $5 billion a year by 2030.
Hybrid working is also proving to be essential to employee retention. Flexible arrangements can reduce voluntary turnover rates by up to 20%; in the U.S, this could translate to annual savings of $22 billion by 2030 and $45 billion by 2045. These predicted savings stem from lower recruitment and training costs, with employees three times more likely to stay in roles where they can choose flexible working options.
Workers are reaping the rewards of being able to work closer to home, too, and access workspaces locally. Removing the need to commute brings significant cost-savings to employees – U.S workers can save up to $30,332 per year if they switch from a daily commute to a city center to working locally four days a week.
By adopting hybrid working and flexible office spaces, businesses can also significantly cut their real estate costs and reduce overheads, while also providing access to higher-quality workspaces at a fraction of the cost of traditional long-term leases.
According to the study, companies transferring all their portfolios in neighborhood hubs or providing coworking memberships to their employees as opposed to space in central offices are expected to reduce real estate costs by 55% in the US. On a broader scale, US companies could collectively save up to $58 billion annually by 2030 and $122 billion annually by 2045 by shifting to less centralized locations or leveraging flexible workspace memberships.
“When businesses give employees the freedom to work closer to home in well-equipped spaces without the need for longer daily commutes the results are clear: better focus, fewer distractions and improved work-life balance, all of which translate into meaningful productivity gains. These benefits, when scaled, have the potential to deliver billions in value to economies around the world,” says Mark Dixon, CEO and founder of IWG. “Put simply, it’s a win-win for both companies and their teams. Employees are more engaged with an improved work/life balance, while businesses benefit from higher productivity, lower real estate and recruitment costs and ultimately, a happier workforce.”
