Is A Traditional Bank Pointing The Way To A Flexible Future?

Published on January 18, 2021 - By Jonathan Price

• Standard Chartered recently announced an agreement with IWG to allow the bank’s 95,000 staff the freedom to work from any of IWG’s 3,500 worldwide locations.
• Large corporations have signed significant agreements with serviced office companies before, but this deal appears to be different — and not only because of its scale.
• Jonathan Price explores the magnitude of this deal for IWG, and whether it could be a harbinger of great things to come for the flexible space industry.

Lots of ink has been spilled in the past six months on speculation about the future of the office, with many commentators suggesting that office workers’ dislike of commuting will prompt many to work from home, even after the menace of Covid-19 has passed.

Others have countered by pointing out that working from home is only practical for a minority of office staff and that many do not have the space and quiet that professional work requires.

Needing an office to work from does not mean that workers want to commute long distances into city centres. Ideally they want all the facilities and comforts of a city centre office in a building close to where they live, and their employers have been willing to accommodate this desire.

As noted in Instant’s UK Flex Market Review of 2020: “Big enterprises are adopting flexible working policies; moving away from relying on a single, central HQ and increasingly basing employees outside of the major metropolitan hubs in flex spaces.”

This change has been a contributing factor in the out performance of suburban offices over those in city centres in 2020, but it has occurred on an ad hoc basis rather than as a planned strategic move.

All that may change if other large enterprises follow the lead of Standard Chartered Bank, which signed a major deal with a flex space provider in early January.

95,000 staff gain access to IWG’s entire portfolio

Standard Chartered Bank traces its origins back to 1853 when Queen Victoria granted a royal charter to Scotsman, James Wilson. Five years later the Chartered Bank opened its first branches in Asia, in Mumbai, Kolkata and Shanghai. In 1969, it merged with Standard Bank, a South African bank, also founded by a Scot, becoming today’s Standard Chartered.

Known over the years for its financial innovations and its expertise in Asia, as well as its frequent brushes with regulatory authorities, Standard Chartered recently announced another innovation, an agreement with IWG to allow the bank’s 95,000 staff the freedom to work from any of IWG’s 3,500 worldwide locations.

The explicit aim is to give the employees the convenience of working from closer to home while benefiting from proper office facilities.

Large corporations have signed significant agreements with serviced office companies before, so that in itself is not that noteworthy.

But this deal appears to be different, and not only because of its scale.

Previous corporate deals have tended to be for single buildings or for project teams, or to cover regional needs of the client company. No other published deal has been global in scale, covering potentially so many employees and yet so unstructured.

Accounting challenge

The intriguing question is, will this arrangement work? On the one hand, companies seem to be managing with their staff working from home, which is equally unstructured, with staff randomly located where they happen to live.

But employees’ home use is not being billed to the company. The accounting task in handling tens of thousands of staff working in potentially hundreds of different IWG centres would be a challenge for any business, and indeed for IWG.

The world’s largest flexible space operator claims in its research paper, The Flex Economy, that having staff work locally has a large number of spin-off benefits, including boosting local economies and creating jobs, while reducing greenhouse gas emissions and saving huge amounts of valuable time and money.

The attraction of a proper office just a short walk, cycle or drive away from home is of course a big advantage for an employee nervous of taking public transport with a nasty virus around. I do wonder, however, whether 3,500 locations, impressive though that number is, is enough to offer that advantage to a significant number of the bank’s workers to make a difference.

On the other hand, one of the problems of staff working from home is that they do not meet and interact with colleagues, and this absence can lead to loneliness, and can, over the medium term, weaken the corporate culture of the organisation, as well as losing the cross fertilisation of ideas that classically happens around the coffee machine.

The same would presumably apply to staff working alone in an IWG office.

There is another issue. At home, staff do not mix with employees of other businesses, perhaps even competitors, which may happen in an IWG space. The potential for problems arising if staff do fraternise with people they should not, could be an issue for any business, let alone a highly regulated business like a bank, and an accident prone one at that.

A harbinger of great things to come?

The IWG agreement with Standard Chartered is reported to be for a trial period of a year, and it is undoubtedly a measure of the maturity of the serviced office industry that a prominent global corporation should enter into such an arrangement.

It may be a harbinger of great things to come and, if other corporations follow suit, we may yet see big businesses come to understand that 20%-25% of their space usage can be met by contracted flexible space, as predicted by researchers two decades ago.

There will be issues to resolve in making a success of arrangements like these, as indicated above, both for the corporations and their employees and probably also for the business centre operator. What happens to the space occupied by the bank if it decides not to renew at the end of 12 months? Will IWG be able to replace such a big client?

There would seem to be a fair chunk of risk for the latter, as well as an enormous opportunity. After its recent fundraising, IWG is well placed to handle it.