From the moment in August 2019 that Heyward Donigan became CEO of Rite Aid Corp.—operator of nearly 2,500 drugstores nationwide, in a highly competitive sector—she was thinking of radically shaking up the workplace. High on her list of concerns was attracting top talent, and whether the firm’s location in an outdated headquarters in the central Pennsylvania suburb of Camp Hill was hindering that.
Little more than six months later, COVID-19 struck—and Rite Aid’s plans for change both accelerated and grew more radical. Company leaders found that the lockdown’s working-from-home arrangement was so popular with its roughly 2,800 office-based employees—preferred in a survey by 80%—that Rite Aid is now abandoning its longtime location outside of Harrisburg for a much smaller office footprint in trendier Philadelphia. There, most employees will only come in for meetings or team enterprises—maybe as rarely as once or twice a month, or even less.
“Initially, we thought that this is a talent play—that we want to hire the best people no matter where they live and that we had to give people flexibility to work remotely,” says Jessica Kazmaier, Rite Aid’s chief HR executive. But the rapid move to working from home necessitated by the pandemic, and the positive reaction from the workforce, also showed the firm that “this was better from an employee-wellness standpoint, that there was a real outcry to work from home.”
In 2022, Rite Aid will launch what it calls an “enterprise collaboration headquarters” on just one floor, with about 23,000 square feet, in an ultramodern, new office building at the Philadelphia Navy Yard, the redeveloped former military site on the Delaware River just a stone’s throw from the city’s airport and I-95. The new facility is still being finalized, but it won’t have cubicles or assigned desks. And eventually, Rite Aid hopes to launch “regional collaboration centers” for staff in other parts of the country.
Rite Aid may find itself on the cutting edge of envisioning what the white-collar workplace will look like in the post-COVID-19 era, but it’s hardly alone. As the two-year anniversary of the pandemic approaches, scores of companies are weighing how much employees can continue the popular work-from-home option, how often workers want to come into an office and for what tasks, and what these smaller offices, mainly designed to foster collaboration and teamwork, should look like.
‘Coming from the employees’
Experts say the rapid move to this model—a hybrid approach, but tilted heavily toward working from home and less frequent trips to the office—has been driven less by management than by employee preference, and the knowledge that, in this worker-driven post-pandemic job market, top talent will seek out the best situation.
“It’s coming from the employees,” says Adrienne Altman, a managing director for the Willis Towers Watson consultancy, adding that even fields such as the financial services sector—once considered a stickler for conducting business face-to-face—are now looking at hybrid models. “I worked with a client who said they were coming back to the office and they were really challenged [by the employees] on it, so they backtracked,” she says.
The list of companies that have announced in the midst of the pandemic that they’re ditching their headquarters has included big names like the outdoor retail icon REI. That firm stunned some observers by announcing plans to sell a brand-new, posh, 8-acre suburban Seattle campus—laden with amenities like outdoor staircases to promote more exercise—before its 1,400 headquarters employees had ever spent a day there. Instead, REI is exploring a network of small satellite officers for employees who’ll mostly work from home. The retailer Old Navy is also selling its San Francisco headquarters to consolidate with its nearby parent The Gap, as office footprints shrink. The working-from-home-inspired downsizing of the traditional office is sometimes depicted as a real-estate play—especially for companies seeking to recoup lost income from the early COVID-19 lockdown period.
But experts and HR executives for some of the companies with bolder plans for a hybrid workplace say the driving force behind these shifts is less about lowering the rent and more about upping the corporate culture—to create a flexible environment that will keep existing employees happier and help attract new ones, while sparking new ideas about how to best collaborate and innovate.
Heading in that direction requires collaboration across the enterprise, says Altman.
“I would convene a cross-functional group with all the major functions: technology, real estate, communications, obviously HR, and maybe legal, for employment issues,” she says. But the consultant and others agreed that human resource executives must play a critical—if not the lead—role in the transition to deal with people-management issues that range from making sure at-home workers can connect to in-office meetings to dealing with the new parking hassles for those who now commute just one or two days a week.
A new approach to design
One of the more surprising early adopters in the switch to hybrid work has been the New York City-based digital agency and consultancy R/GA. That’s because the firm’s newer, state-of-the-art Manhattan office had been featured in an award-winning documentary and places like Architectural Digest for its sleek design, with large display screens and daytime lighting. But months into the pandemic, R/GA’s employees were posting greater productivity working from home and expressed the desire, in companywide surveys, to return to the office no more than one or two days a week.
“Everything spoke to people needing to have this type of [hybrid] environment,” says Angie Hannam, R/GA’s global chief talent officer. She notes that the digital firm’s advanced tech capabilities made it easy to switch to Zoom-style meetings; and, in terms of new clients and industry awards, the pandemic year of 2020 proved to be one of its best. Within months of the coronavirus lockdown, the firm was deep into plans to both shrink its footprint in Manhattan—losing a floor, and thus the dramatic center staircase that had been a focus of its open office—and redesign the remaining space for meetings and team projects, without assigned workspaces. Similar moves were afoot at other global locations for the 2,000-employee firm, including ending the lease for its San Francisco office in favor of a smaller, less expensive space.
Of course, bold plans for these new hybrid workplaces have been slowed somewhat by the persistence of the coronavirus and its variants that caused several new spikes in infections over the course of 2021. Hannan said that R/GA finally opened its smaller Manhattan office and its redesigned look—with an open-desk floor plan on one side and more communal collaboration centers on the other—in September. One of the new challenges has been getting a handle on how and when employees want to come in. Hannam said that 61% of the workforce has come to the office in the first three months, with Wednesday and Thursday being the most popular days.
Understanding the new hybrid-office needs and habits of the workforce is critical to determining what is arguably the biggest challenge of these new offices: their design. New York University management and technology professor Anne-Laure Fayard has already written extensively about the looming hybrid-office revolution, arguing that designers must put the interplay between these three issues first and foremost: space, technology and organizational processes.
“What we’ve found is that you need some balance between some traffic and privacy,” Fayard says. In other words, a vital part of returning to the office in the hybrid system is having the ability to spark spontaneous interactions with co-workers—“informal learning, or bumping into people,” she calls it—yet, the new office also needs areas where employees can work or attend a Zoom conference with outsiders without noisy interruptions.
Like other firms taking the hybrid plunge, Rite Aid has hired design consultants as it readies its new Philadelphia workspace. “This is our opportunity to get it right for the future,” says CHRO Kazmaier, noting that a non-traditional office without cubicles is a “blank canvas” with few existing models to copy from. She agrees with experts that finding and using the right technology is critical—especially for meetings in which some participants are in an office meeting room and others are calling in from home—in making sure that employees don’t feel disadvantaged if they are not in the physical room.
But even advocates for the hybrid workforce acknowledge there will be other issues to work out. One is onboarding new employees for whom in-person encounters with co-workers will be sporadic and rare, although Rite Aid’s Kazmaier insisted that orientation for new employees has worked well during the fully work-from-home era. More broadly, they note that making the hybrid office succeed means understanding and accommodating the needs of individual employees—those who live near the new headquarters and those in more remote settings, or those who are working from home with small children.
In other words, hybrid office design is ultimately not as much a matter of architecture but people management, which is why a central role for human resource executives is so critical—as is the need for constant surveys and feedback to best understand how the workforce is adapting.
“We coined the term when COVID kicked in that ‘you do you’—so that each individual is empowered,” says R/GA’s Hannam. She also frequently used the phrase “We’re pivoting” to describe how the hybrid plan is constantly tweaked, both because of the frustrating length of the pandemic but also as HR learns more about who’s most likely to come into the office (so far, mid-career execs over veterans or newcomers) or how to best integrate and mentor new hires. Hannam says one of the more ambitious ideas—the development of a new, small satellite office in Brooklyn close to where so many employees live—remains on hold while R/GA focuses on reopening its Manhattan headquarters.
So far, though, the pioneers of the hybrid office are pushing forward. Kazmaier says Rite Aid chain is already seeing a positive impact on recruiting, both around the United States and near the soon-to-open Philadelphia headquarters, in a city where the young creative class is growing and where the Navy Yard location—sustainable, surrounded by green space—offers added appeal.
“Talent is our No. 1 priority, and we can’t afford to box ourselves in based on imaginary boundaries,” Kazmaier says. But the project also means working closely with talent—both new and existing—in constantly adjusting to a work environment that was barely imaginable just two years ago. “It’s a more bottoms-up process, where you’re talking to associates about what they need and what their challenges are along the way. I think you need to do it as a whole organization.”