Businesses that empower 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 is according to new global research from International Workplace Group (IWG) and Arup. This number 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 US. The findings build on previous academic research from the likes of Professor Nicholas Bloom of Stanford University which highlighted that hybrid work boosted productivity by 3% to 4% in a randomised pilot conducted for Trip.com.
The 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 travelling 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.
Hybrid working is also proving to be essential to employee retention. Flexible arrangements can reduce voluntary turnover rates by up to 20%. 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
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.
Companies transferring all their portfolios in neighbourhood hubs or providing coworking memberships to their employees as opposed to space in central offices are expected to reduce real estate costs by nearly 55%.
Mark Dixon, CEO and founder of International Workplace Group, comments: “Our latest study with Arup builds on the growing body of academic research showing the compelling productivity gains of hybrid working.
“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.
“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,” he adds.
Katie Randall, leader of city economics and strategy at Arup, adds: “As organisations rethink the role of the workplace, hybrid models can be a catalyst for both personal and economic growth. Empowering employees to choose flexible, local workspaces not only sharpens concentration and reduces commuting stress but also fuels a culture of satisfaction and loyalty.
“The ripple effects are profound: companies see stronger performance, communities thrive with new business hubs, and the global economy stands to gain significantly. With productivity growth a key priority for national governments, our research shows that hybrid working forms a helpful part of the solution.”