What is a virtual office?

Research from CBRE found that nearly 85% of employees would prefer to work remotely at least two to three days a week.¹ On top of that staggering conclusion, Chicago Booth economists found that nearly 34% of U.S. jobs can be performed at home.² What does this research mean for companies that have yet to adopt a hybrid or remote work model? Change is coming.

In 2022, Gallup conducted a massive work study of 140,000 employees. Their research revealed that 91% of surveyed employees reported plans to work in a fully virtual or hybrid office environment.³ While the pandemic forced many offices to make the switch to a fully or partially remote environment, many companies are still weighing the pros and cons of creating a hard-wired virtual office for their employees. To help business owners and entrepreneurs alike, we’ll explain the advantages and disadvantages of working in a virtual office space.

The virtual office: advantages and disadvantages

So, what is a virtual office?

A virtual office is the accumulation of people, software, and information in a digital space where a company and its employees can operate and communicate without existing in a traditional office.

For a hybrid company, a virtual office space would include the communication systems, email platforms, HRIS, and other technology that connects its remote employees to the physical office space.

However, for the 16% of fully remote companies,⁴ the virtual office is a different place entirely. Instead of creating a system designed to connect remote employees to a fixed location, these virtual offices are entirely detached from the real estate of traditional offices: People working from cafés, kitchen tables, and co-working spaces all connect to make things happen.

Advantages of the virtual office

While the virtual office model is far from perfect, it does offer many advantages for employees, companies, and society as a whole. Let’s take a look at a few of those key advantages recognized by remote offices:

‍Happier employees. Several employees have come to enjoy the many benefits of working in a virtual office. The flexibility of getting to work from home often means more unstructured time to spend with family and pets or complete tasks around the home. In addition, fewer days in-office means little or no commute—which has a positive impact on employees’ well-being and motivation.⁵ The autonomy from working in a virtual office directly translates to better mental health and performance from employees.⁶

^‍Lower operating costs and better growth. If a mid-sized company in Chicago wanted to lease 250 ft² of office space per employee at $35 per ft², they’d need to budget a lease for nearly $220,000.⁷ As a company acquires talent and outgrows its physical space, the overhead cost grows with it. However, a virtual office doesn’t need to budget for large office buildings. Instead, they may choose to place that money into an employee travel benefits program or other internal investment. As a virtual office grows, it won’t encounter the same barriers that a traditional office would.

‍Higher productivity. Without the physical office, fewer time-consuming tasks take up an employee’s workday; commutes, team or all-hands meetings, and office events become things of the past. While it’s still important to conduct team-building activities in a virtual office, these don’t have to take away from an employee's focus for a long period. Prerecorded announcements, emails or chat messages, and smaller team meetings can allow employees to focus on big-ticket items without having to lose focus.

‍More available talent and better jobs. A major advantage of a virtual office is its access to talent from around the country or world. Instead of requiring job candidates and employees to travel to your new office in the Bay Area, you can source and recruit talent from the locations you want to target. Although a candidate from New York City will cost more than one from Memphis, you can pick and choose where and how you want to acquire talent. As more and more offices go virtual, more opportunities arise for highly qualified candidates around the United States. But, in a virtual office, they won’t need two weeks and a benefits package to relocate their entire livelihood.

Disadvantages of the virtual office

As we mentioned earlier, the virtual office model is not perfect; it creates challenges and administrative overhead that can be a nightmare for any size of business. We’ll address four key disadvantages of the virtual office:

‍Management challanges. When your teams are in-office at one location, it’s a straightforward task for you to manage and support the day-to-day activities of the office. In a virtual office, you’ll need to adapt to a digital environment. Using the same skills as a traditional office, you’ll need to regularly engage employees with video and collaboration software to mimic the traditional office space. Although you’ll be missing out on physical cues, virtual offices mean that all employees are only a couple of clicks away.

‍Fewer opportunities for collaboration and skill shares. A benefit of working in the office is the opportunity to share skills, knowledge, and expertise among peers. However, the virtual office limits how often and how well team members can communicate with one another. It’s difficult to decipher tone online,^8,9 so there may be communication hitches while your company adjusts to a virtual office.

Grace Baena, Director of Branded Content for Kaiyo, suggests that “These issues can be overcome, whether that's working with collaboration software like Slack or Trello, and remote after-hours team building via Zoom.” CBRE found the majority of collaborative work (24%) was completed virtually.¹⁰ This means that along with all of the challenges of a virtual office, most employees are at least somewhat comfortable with digital collaboration.

‍Workstation inequality and data security. With employees scattered across your city or country, it’s likely the case that workstations and setups vary greatly among employees. Similarly, not all employees are prepared to defend against cybersecurity attacks or social engineering. On the company’s end, this may require management or IT to intervene with private VPNs, workstations, or specialized training for your office—especially if you deal with medical information.¹¹‍

‍Legal challenges. One challenge of having employees across multiple states is navigating the legal requirements of employment. Items that may differ by the state include paydays, minimum wage rates, sick leave, marijuana usage, and more.¹² Consulting with your HR managers, legal department, or private attorney will be a must if you plan to hire outside of your current state.

Navigating the disadvantages of the virtual office

Although the virtual office comes with some intimidating challenges, it’s important to remember that 93% of employees say they would not go back to working a traditional office job with mandatory office attendance.¹⁰

^‍Instead, you can join the 33% of large companies investing actively in employee experience programs:¹⁰ desk booking software, event planning tools, and people tracking features that optimize the virtual office for maximized productivity, engagement, and autonomy.

‍Sources

1. https://www.cbre.com/Insights/Articles/workforce-sentiment-survey
2. https://news.uchicago.edu/story/much-us-staying-home-how-many-jobs-can-be-done-remotely
3. https://www.gallup.com/workplace/390632/future-hybrid-work-key-questions-answered-data.aspx
4. https://www.apollotechnical.com/statistics-on-remote-workers/
5. https://www.gallup.com/workplace/358346/gallup-workplace-insights-learned-2021.aspx
6. https://www.forbes.com/sites/briannawiest/2020/09/11/remote-work-shown-to-significantly-improve-mental-health-80-prefer-flex-options-post-pandemic/
7. https://www.zippia.com/advice/how-much-office-space-per-employee/
8. https://www.nytimes.com/2020/12/09/style/tone-indicators-online.html
9. https://www.wework.com/ideas/professional-development/creativity-culture/how-introverts-and-extroverts-can-find-harmony-in-the-workplace
10. https://www.cbre.com/insights/reports/the-next-normal-how-hybrid-work-will-transform-commercial-real-estate
11. https://www.cdc.gov/phlp/publications/topic/hipaa.html#:~:text=The%20Health%20Insurance%20Portability%20and,the%20patient's%20consent%20or%20knowledge
12. https://www.shrm.org/hr-today/news/hr-magazine/summer2019/pages/how-to-comply-with-new-state-and-local-laws.aspx

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