Reverse telecommuting and Urban Centers

Some recent news stories bring up the prospects of reverse telecommuting. Almost 45 years ago I wrote a piece describing the dynamics of central office versus employee residence location. The point was that, as companies become established, the residence locations of their employees tend to form a circular normal distribution — a bell-shaped curve — centered on the headquarters
(HQ) office. I gave some examples of what happens when the HQ pulls up stakes and moves to a new location some distance away, usually because the CEO wanted to both have a short commute and live in the suburbs. The initial impact is that while the CEO and other employees living nearby have a shorter commute, the average employee has a longer commute to the HQ. The result often is turmoil, dropping morale, lowered productivity and attrition. The attrition comes from those employees who can easily find jobs near their existing residences and perceive little penalty in leaving; often those are the most productive employees.

This situation was one of the first things we studied in the early 1970s. Our approach was to institute telecommuting programs so that those newly-distant employees could conduct business as usual without all that stress and agitation. Subsequently many organizations adopted that strategy and, presumably, lived happily ever after.

But now comes an article in the Washington Post that says big companies are moving from the suburbs to the city centers! Apparently the CEOs are more concerned with easy access to airport hubs and offices downtown than they are with short commutes, at least around Chicago. They also think that since their new employees tend to be millennials,  and millennials like the activity and excitement of city centers, then the company’s hiring prospects are improved. So now we have the reverse situation of my first description.

Although reversed, the outcome may well be the same or worse. Current employees living in homes distributed around the suburban center may well be in the same turmoil, dropping morale, lowered productivity and attrition. The better employees, those who can easily get work near their current residences, may leave, with similar cost and productivity consequences for their company. Even worse, given the much higher living costs in the central city, many employees who otherwise would move their residences simply cannot afford to. That includes most of those sought-after millennials. Maybe reverse telecommuting should be investigated as a way to ease the situation.

Speaking of millennials, the July 24 Financial Times contains an article “House prices drive London exodus as buyers seek better value”  that describes the outflow of 93,000 from London last year, up 80% from 2011. Most of these were in the under 30s age category. Their reason for the move? House prices that are almost 75% higher than the average in the areas that attracted the leavers. Another incentive for reverse telecommuting.

The message: housing prices in central cities are too high for most workers. Therefore salary requirements for those hired to work in central cities are comparably inflated.

So as the CEOs of the world continue to pursue their downtown edifice complexes keep in mind that reverse telecommuting might work as well — or even better — than “traditional” telecommuting in saving everyone much cost and stress.

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