Why the cost of living crisis means leaders may have to accept a second coming of working from home

Dr Andrew White, who directs the advanced management and leadership programme at Oxford University’s Saïd Business School, looks at why the cost of living crisis means business leaders may have to accept a second coming of working from home.

We are enduring an unprecedented cost of living crisis due to inflation. With that, are we already in the early stages of a cost of working crisis?

Two years on from the onset of the coronavirus pandemic, numerous companies are gradually returning to the office. Unfortunately, this has happened just as petrol prices have skyrocketed to an all-time high, while the highest rise in rail fares in nine years also came into effect last month. So, if you’re not in a position to walk or cycle, it has never been as expensive to travel to work – at the same time as our food, energy and National Insurance bills have dramatically increased.

Over the next few months, workers across the country are going to notice they have less and less disposable income. While chancellor Rishi Sunak has announced interventions – the £150 council tax rebate and the £200 repayable discount on energy bills from October – these will only go so far.

As a result, it won’t just be our political leaders who are under pressure. Company leaders will increasingly be expected by employees to introduce their own mitigations against this crisis. This could mean leaders will have to accept a second coming of working from home for those whose jobs can be done in this way. This will mean staff only being asked to come into the office when it’s necessary, in order to alleviate the travel and other associated costs people are facing.

The alternative is to give people pay rises, and to be blunt, working from home is a much cheaper solution because it won’t actually cost companies anything.

What the pandemic has shown is that a lot of organisations can continue to operate without being present in an office and that physically working together should be for a good reason. And granted, there are plenty of good reasons for going into the office.

Dr Andrew White, Oxford University’s Saïd Business School

Dr Andrew White

In my experience, certain activities work better face-to-face than they do online, for example, meetings that take more than an hour, and the completion of complicated tasks. There is also a basic human need for social and cultural interaction, especially for employees new to an organisation who need to be inducted into ways of working and organisational cultural norms.

Moreover, working in an office may be preferable for some. You may have young children, your living space may not be suited to work, or your broadband connection may not be up to speed. All things that people experienced during the lockdowns of 2020 and 2021.

However, when you factor in the cost of living crisis, and those soaring travel costs on top of soaring bills at home, it will increase the pressure on leaders to ask: “Do we really need our people to come into the office and spend their money doing so? And spend unproductive time and energy travelling?”

One analysis has found people commuting into London from Canterbury, Winchester, Oxford, Cambridge and Hastings are facing season ticket increases of more than £200 a year. For a lot of people, that is material when their bills are rising everywhere else.

It sharpens the case for encouraging working from home when working in the office isn’t a necessity – and not just for the benefit of employees, but firms themselves.

One of the pervading themes of the “Great Resignation” was people wanting greater working flexibility and a healthier balance between their personal and professional lives. If that balance is taken away, and people are forced to come into work at greater expense than ever, firms could face further exoduses of talent.

We are yet to fully see where the pendulum falls, post-pandemic, between 100% in the office (as it was before Covid) and 100% at home (as it was during lockdown). But leaders may want to ask themselves is working from home the easiest and cheapest way to mitigate the cost of living crisis?