How COVID-19 could accelerate the rise of smart cities

The dramatic changes to the workforce brought about by organisational responses to COVID-19 will likely accelerate the shift to smart cities, according to UNSW Sydney

The coronavirus pandemic is permanently reshaping the nature of how work is done in a number of ways. Organisations have had to contend with large swathes of their employees working from home, and it looks like this seismic shift will be permanent in many ways. Many organisations have wrestled with flexible working, work-life balance and virtual teamwork for many years. But when push came to shove in 2020, employees appear to have adapted remarkably well to the process of working from home.

A survey conducted in April 2020 by Iva Durakovic, interior architect and Associate Lecturer at UNSW Built Environment together with architectural design firm Davenport Campbell, indicated that 83 per cent of employees are satisfied with remote working, 75 per cent feel the same (or more) productive, 87 per cent feel trusted by their organisation and 79 per cent feel a strong sense of ownership over their work.

The research also found there is a startling alignment between how employees feel and organisational challenges – the top ones being maintaining culture (37 per cent for employees and 39 per cent for organisations), workplace health and safety (31 per cent for employees and 39 per cent for organisations) as well as productivity (23 per cent for employees and 39 per cent for organisations).

It is important to note that the physical workplace does not exist in isolation. As the researchers above noted, its design is a complex web of people (culture), place and technology in a symbiotic relationship to ultimately foster behaviours that result in productive work outputs.

“We need to reimagine how workplaces can look like and how they best serve work and add value,” says Frederik Anseel, Associate Dean of Research and Professor of Management at UNSW Business School.

Prof Anseel believes the workplace of the future will probably be more flexible with people jointly arranging with their employers when to work from home and when going to the workplace. “Having people getting stuck in traffic for an hour to arrive at a workplace where they do exactly the same work as they could do at home but much more efficiently, needs to change,” he says. “This has been an eye-opener for a lot of companies, but also for managers who were suspicious that it couldn’t be done. It can and it should.”

Durakovic also points to the obvious benefit is the hours saved each day on commuting and a shift towards hubs in which people come together. “If we can at least reduce the number of times that we need to go into the office, if not completely, it will free up productive time that we could [use] working without having that stress of the commute, [or] that we can get back for ourselves so that we have more of a work-life balance,” she says.

What’s going to happen to office space?

With large numbers of employees sent home to work over the past eight months, this has had a domino effect on a number of industries. One of the hardest hit has been commercial real estate.

Property Council of Australia research, for example, found there was an increase in Sydney CBD office vacancy rates from 3.9 per cent to 5.6 per cent from January 2020 to July 2020. And as early as April this year, 42 per cent of office real estate requirements in Sydney were on hold.

Employees are working from home while businesses are cost-cutting and analysing their office space utilisation. Businesses, the property sector and architects are all putting their heads together to figure out potential solutions to these challenges.  One suggestion, for example, has been to convert office buildings in Australian CBDs into residential living spaces.

“Large corporations and companies – they’re never going to let go of an office or headquarters completely – but they may need less space, and commercial real estate will need to be more flexible with that,” says Durakovic.

“We have already seen seismic shifts towards Space as a Service (SPaaS) models as a result of the gig economy with increased demands for lease flexibility and better alignment between workspace and contemporary ways of working. They’re now going to have to get even more creative with how they can multi-purpose certain areas of buildings, be more flexible in the leasing terms and costs to make that work for them financially.” 

“Utilising technology and public-facing spaces to advantage and social good, building owners and organisations have an opportunity to amplify the experiences they can offer workers and the community more broadly, particularly outside of typical office hours,” says Durakovic. She observed that the pandemic has “roused our sense of collective purpose”, citing Herbert Smith Freehills research which has found that people are holding companies accountable to creating value for the communities that they serve and broader global context.

Other research into the employee experience has found that people want to be proud of the company they work for, and Durakovic points out that this requires an alignment of both core values and sense of purpose in their work.

The rise of smart cities

Governments around the world have championed the idea of smart cities. The Australian Government, for example, has committed $50 million to a smart cities and suburbs program that aims to improve the liveability, productivity and sustainability of cities and towns across Australia.

The dramatic changes to the workforce brought about by organisational responses to COVID-19 are only likely to accelerate the shift to smart cities, says Prof Anseel, who believes the workplace should become a place where people come to collaborate, share and exchange information, creatively solve problems, build a community and identity. “What I expect is that a new work philosophy will merge with ideas of smart cities. Companies will have smaller workspaces to meet all over the city, closer to peoples’ homes,” he says.

“This is the concept of the 15-minute city, where people do not need to commute for long times. This will be supported by small-scale workplaces where co-workers meet with each other as well as clients, suppliers and colleagues from other companies – all co-located in these work hubs.

“Work hubs will also be more embedded in community life, making it easier to flexibly switch from meeting someone, doing some concentrated work at home, go shopping and exercise and go out with friends or colleagues – all in the vicinity of one’s own house and workspace.”

Durakovic agrees: “I think we’re going to get to a place where we’ve got sort of distributed hubs in neighbourhoods or communities, and a central place to come to that means people won’t have to do the exhausting commute every day. We will definitely still need a home base, a connection point to come to and see our colleagues, connect to our professional communities [and] a workplace can provide [that], but it might be a lot smaller. It might be very different in terms of its technology and purpose,” she says.

Flexibility (where, when and how we work) and choice (when, how and what I come to work for) are two key learnings that employees will bring with them to the future workplace, and Durakovic’s recent research (currently under peer review) with SHE Labs and Davenport Campbell supports this. It found that 67 per cent of employees want to see an increase in flexible work arrangements offered, 70 per cent want to work from home 2-3 days a week, and 89 per cent of organisations were either developing a plan or already prepared for an increase in flexibility of their workforce moving forward.

Meaning and connection

While the survey conducted by Durakovic and Davenport Campbell found 83 per cent of employees are satisfied with remote working, there were a number of things they were willing to come into a workplace for. These included seeing their team in person (75 per cent), face-to-face meetings (73 per cent), human connection (72 per cent) and a need to have a separation between work and home (60 per cent).

“The biggest threat to working from home at the moment is not deadlines or productivity,” says Durakovic. “It’s the isolation and our mental health. Our recent findings indicate both mental and physical health decline as front-of-mind for employees with ‘isolation from colleagues’ and the quality of furniture ergonomics in their home working set up ranked as two of the top three challenges."

Prof Anseel also underscores the fact that humans are social animals. “We don’t thrive in isolation. Many people have struggled with maintaining good social relationships in quarantine and working from home. We quickly learned that a virtual social hour or virtual drinks are nothing like the real thing. A serendipitous encounter at the coffee corner can be start of a new business collaboration.”

Many people miss daily informal conversations with their team, the richness of real-life brainstorms and discussions is hard to replace, he observes. “So, the idea that we will never go back to the office is probably not warranted and we will need to find some compromise between these new ways of working. What works for one person, will not necessarily work for another person,” says Prof Anseel.

For more information please contact Frederik Anseel, Associate Dean of Research and Professor of Management at UNSW Business School, or Iva Durakovic, Associate Lecturer at UNSW Built Environment.