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The economics of office presence

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The virtualization and decentralization of knowledge work has greatly reduced the need for office attendance. But it nevertheless holds value for many knowledge organizations as shown by return to office policies mandating attendance for all or some of the work week.

That value is being assigned and weighed by both knowledge organizations and workers in terms of compensation and talent attraction and turnover.  

The math of the office attendance value equation works roughly inversely. Some organizations offer premium pay for office attendance. It’s also being valued insofar as spiffing up offices to make them “worth the commute.”

Conversely, some knowledge workers are willing to accept lower compensation for roles that don’t require much if any office attendance. A paper issued earlier this year by the National Bureau of Economic Research found on average, tech workers are willing to accept a 25 percent pay reduction for roles that don’t require full time office attendance.

This explicitly recognizes the personal cost in terms of time and money incurred by the commute whereas traditionally it was externalized onto staff and seen as part of the job. Now it’s being factored into the employment relationship. Higher compensation for roles requiring regular office presence can offset employees’ cost of commuting.

On the other hand, companies that do not demand office attendance and thus remove the cost of commuting from the employment bargain are being flooded with job applications per this recent Business Insider article, reflecting their high desirability among knowledge workers.

“It’s not about where we work, but how,” Melanie Rosenwasser, chief people officer at Dropbox, told Business Insider. “Flexibility and agency are the new currencies of work.”

The length of the commute and housing costs also factor in. The math there is well established and similarly inverse. Housing tends to cost more nearer to downtown business districts or office parks and campuses or with reliable and fast public transit. Conversely, housing costs tend to be lower in outlying edges of metro areas but come with longer and more time-consuming commutes that take away from employees’ personal time.

As for talent attraction and retention, the most skilled and knowledgeable staff know they are marketable and factor that into their calculations. Knowledge organizations that require office attendance run the risk of losing talent not inclined to work in a mandated organizational office setting.

Buildings and bureaus: RTO isn’t only about trust and control

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Return to office (RTO) isn’t only about control or trust or workplaces. It’s more fundamental. It’s essentially about organizational identity.

For decades, public and large private sector organizations have defined themselves largely by how they functioned, structured in the industrial age management model as vertical bureaucracies exercising command and control management. The hierarchy is represented in the building with the building as totem. Leadership sits in the upper floors of the building and corner offices. Staff in cubicles in the center and on lower floors.

The building is at the core of organizational self concept and sense of purpose. The org may have started humbly in a garage like Apple but now a large multi building campus represents it nearly as much as its branding. In Apple’s case, for example, the modernistic circular spaceship headquarters building.

Apple founder Steve Jobs described the personal computer as the “bicycle for our minds.” That untethers the mind from time, place and distance. But the spaceship houses the bodies containing the minds of Apple employees. It’s the mothership, the corporate edifice.

Decentralized, virtual knowledge work first made possible by Apple computers and later information and communications technology (ICT) advances is at odds with that. Hence, we see resistance expressed as RTO. It really means return to the organization — get back in the building.

Or as some orgs have framed it to staff, you don’t have a future with this org if you don’t regularly appear at the building that represents it and should find another role outside of the org.

ICT has disrupted that. knowledge work no longer requires the industrial age buildings and bureaus of the 20th century or daily commuting to and from them. It’s done wherever knowledge workers are and thinking. Rapidly processed, communicated and recorded on ICT tools like personal computing and communication devices and the cloud.

The essential questions knowledge organizations face in the 21 century:

How are they defined in the post-industrial age (or “smokestack era” as Alvin Toffler termed it in his 1990 outlook on the 21st century, Powershift)? If buildings and bureaus no longer essentially define them, what does?

Since knowledge work has been traditionally defined by Dave Rolston’s four dead kings of work:

  1. One job title
  2. Performed under one manager
  3. At one time
  4. At one place

How will it be optimally defined and organized going forward?

Redefining office space use in the post CCO era

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Return to office (RTO) policies have created controversy, framed as a set to between executive leadership wanting staff to work in centralized, commute in offices (CCOs) and staff preferring to work in their home offices as they did during the public health restrictions during the pandemic years.

RTO mandates have been used to encourage resignations as a blunt personnel reduction strategy, sending the message if you don’t put in office attendance you don’t belong in the organization and should move on.

Another way to view RTO is future shock. As information and communications technology (ICT) and personal devices grew increasingly sophisticated and useful over the preceding four decades starting with the personal computer in the 1980s, it was becoming increasingly clear that they would disrupt the office as it had been known. No longer would daily office attendance with the often time and energy sucking commute be necessary.

The majority of knowledge organizations however didn’t adjust to this slowly emerging reality until the pandemic restrictions forced them to do so and in a space of just two years. The future of knowledge work had arrived but too quickly for organizations to adjust.

So many adopted RTO to lessen the shock. That’s not necessarily maladaptive, but a natural reversion to the known and familiar. That creates a pause to allow time to figure out how to go forward —  and not going backward per se.

What’s truly adaptive is recognizing the primary impact of ICT: that knowledge workers no longer must necessarily report to CCOs because that’s the only location where the tools they needed to work were situated. Now they are portable and can communicate easily. That requires rethinking the use of office space and determining its best and most logical use going forward.

One model that looks promising is that of Stamford, Connecticut–based Synchrony, a branded credit card issuer.

According to this item posted October 6, 2025 at Fast Company, the company’s 20,000 employees work in their home offices and at company offices “when in person gatherings occur for training, leadership meetings, innovation sessions, and culture-building events.”

That redefines the office from a regular workplace in their traditional sense to an event driven gathering venue. There, both the presence in the office and the transportation of staff to get there is defined by a specific business purpose and not just showing up. That provides a guiding vision for the post pandemic future, offering a useful template to knowledge organizations experiencing future shock.

No assembly required

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As information and communications technology tools decentralize and virtualize knowledge work, it challenges knowledge organizations to reconceptualize working. In the pre information economy industrial age, work and education involved assembling: in schools, factories and offices.

Now the office is optional.

Making this conceptual shift has proven difficult for many knowledge organizations. That’s because their leaders often believe assembly is essential for collaboration and teamwork. Hence, they demand staff attendance at least some of the workweek in a centralized, commute in office.

Assembly is no longer needed is when information of all forms is easily shared virtually.

Forced assembly hasn’t gone over well for staff who find themselves going though the motions of assembling, swiping their badges to create a record of attendance. Or sitting in a cube farm and having Zoom or Teams meetings with colleagues in other nearby cubicles – something they could just as easily done without making the commute trip there.

Future shock and past snapback

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Before advances in information and communications technologies over the past four decades, knowledge work required industrial scale centralized commuter offices (CCOs), often staffed by hundreds or thousands of knowledge workers.

Much of the staff worked processing repetitive tasks that shifted from paper to digital form that did not require centralized creation, processing and storage. Information then became portable and decentralized, moving along with knowledge workers on personal computer and communication devices and later internet-based telecommunications and the cloud.

That made CCOs obsolete as exclusive work and meeting places by making knowledge work far less dependent on time and place, allowing information to travel as text, data and video most anywhere and asynchronistically.

These ICT advances have sped up considerably in the current decade with widespread adoption of working from home accelerated by the pandemic and the emergence of generative and agentic artificial intelligence.

These changes have come so rapidly that they challenge knowledge organizations to constructively adapt to them. They are experiencing what futurist Alvin Toffler termed “future shock” in his 1970 book of that title. It happens when the pace of technological change is so rapid institutions and organizations feel overwhelmed by it and experience cognitive dissonance as past, present and future seem to merge.

Understandably so considering the as built environment of office buildings concentrated in central metro areas and connected by what were originally designed as “high speed” highways to bring knowledge workers to and from them from outlying bedroom communities.

That world of the 20th century when companies grew and staffed up and occupied offices at industrial age scale no longer easily jibes with the 21st. That scale no longer make sense when knowledge, innovation and strategic judgment are the most valuable resources, resources that no longer require large numbers of staff regularly concentrated in office buildings.

Future shock produces what could be described as past snapback. It’s resistance to the future and nostalgia for when knowledge workers regularly commuted to the office because that’s where the job was. It’s clearly seen with “return to office” expectations.

Which haven’t gone over well since knowledge workers and not their organizations have traditionally borne the costs of getting there. And once there, sitting in a cube farm doing the same activities they could do in their home offices. That produces cognitive dissonance for knowledge workers.

Knowledge organizations have been trying to reconcile the conflict between the 20th and 21st centuries with “hybrid” office attendance, having staff come in on a designated number and days of the work week. In other words, working in the CCO like in the 20th but with the current century recognition that knowledge work doesn’t necessarily require office attendance.

It eases future shock and cognitive dissonance. But going forward into the third decade of the 21 century, the shifts will require knowledge organizations make a big adjustment to a world that for many seems to have changed in less than a decade.

The terms “flex” “hybrid” and “remote” represent evolution of knowledge work

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These terms describe the evolution of knowledge work beyond the time and space confines of the 8-5 Monday through Friday centralized commuter office (CCO). Common to all of them is the preservation of the CCO serving as the primary “workplace” since these are all relative to the CCO.

The terms portray a tension between the past and the future. In one camp are the CCO preservationists who call for a “return to office” after the social distancing contagion prevention measures of the COVID-19 pandemic early in the decade. In the other are the “flex” and “hybrid” and “remote” advocates.

The RTOers pay homage to the dying kings of set time and place of knowledge work whose obituaries began to be written in 2012 by Dave Rolston in his eBook Four Dead Kings at Work: The Decentralization and Blending of Work in the 21st Century. For them, it’s long live the kings.

The flex/remote/hybrid camp feel no need to pay their respects, particularly since they must do so on their time and their dime. They see knowledge work as increasingly time and location independent, hastened by the adoption of information and communications tech over the past four decades. Namely, portable versus office based tools including computers, personal communication devices, the cloud, and various communication and collaboration platforms running in it.

That trend continues to advance with the build out of fiber optic telecommunications infrastructure and in recent years, the development of generative artificial intelligence. It puts time on the side of the flexers and works against the RTOers as technology continues to develop and facilitate knowledge work.

From workplace to gathering place

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The return to office debate reflects a transition period away from when the tools to process, document and communicate information were located in centralized commuter offices (CCO), making it the primary knowledge workplace. Over the past few decades thanks to advances in information and communications technologies that is no longer the case.

The CCO role as “workplace” is changing from a location where knowledge work is exclusively performed to an ad hoc meeting place where knowledge workers gather for collaboration, brainstorming, social bonding, and training. Offices or some suitable location are still needed. But not every business day. Floors filled with cubicles surrounded by closed door offices have become superfluous.

The conceptual shift underlying the transition is from conceiving of much knowledge or thought work as needing a defined workplace — like a physical factory floor assembly line in manufacturing — to a virtual, much less location dependent activity.

Related is a shift in the view of knowledge workers to the time and travel expense needed to gather. Coming together isn’t a mindless commute trip anymore. It’s now more like business travel and has to be meaningful and clearly of value.

The purpose of co-located work is now emerging as dominant determinant. When and where do knowledge workers gather and for what purpose?

This transition is a big one and coming with much gnashing of teeth and confusion and disorientation that is to be expected in a shift of this scope given how deeply entrenched the office has been as the exclusive knowledge workplace. That organizational discomfort can result in resistance that makes adaption more difficult.

An emerging — and dubious — tradeoff: Making CCOs destinations worth the drive.

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In his 1976 book, The Telecommunications-Transportation Tradeoff, Jack Nilles posited that telecommunications had evolved to the point it could substitute or “trade off” against transportation demand associated with getting workers to centralized commuter offices.

For Nilles, the idea occurred to him while crawling along congested Los Angeles freeways to commute to his job as an aerospace engineer along with thousands of his fellow Angelenos. This was at a time when advanced telecommunications technology was T-1 lines that could simultaneously transmit data and voice telephone calls, allowing downtown offices to link to satellite offices in the sprawling L.A. basin located where their employees reside rather than having them travel to the downtown office buildings.

Two decades later, the Internet did the same thing but brought the connection straight into peoples’ homes. That greatly enhanced the mathematics of Nilles’ tradeoff. Much if not most knowledge work could as the Internet and personal communications devices evolved could be done in home offices — no transportation or even satellite offices required.

A new tradeoff is now in the offing. This one proposes to make commuting worth the personal time and expense cost incurred by knowledge workers by making commute in offices more luxe, comfy spaces instead of stuffy, florescent lit cube farms.

“People and companies know that offices are changing and that offices need to start feeling maybe a little bit more like hotels, with great service, seamless technology, inspiring design, and workplaces that create a true sense of place,” says Annie Dean, chief strategy officer for the building operations and experience division at CBRE, a large commercial real-estate services firm.

Dean’s new role overseeing CBRExIndustrious Building Experience Lab juxtaposes with her former role with software company Atlassian, where she led Atlassian’s Team Anywhere that emphasized virtual, decentralized knowledge work. “We have 13,000 employees spread across the globe, and individuals can choose their working location every day,” Dean said then. “It’s about how we work, not where we work.” 

In her new role, it’s the where is paramount: making the centralized commuter (CCO) office a destination worth the drive.

The question is whether knowledge workers in highly congested metro areas like the L.A. Basin will find value in the tradeoff. Certainly office space can be overhauled to make collaboration, training and brainstorming sessions more comfortable and enjoyable instead of the usual layout of seas of cubicles surrounded by closed door offices that has been the standard setup since at least the 1970s.  

In these big metros, many knowledge workers aren’t likely to see the value when crushing commutes – like in the San Francisco Bay Area — are factored in. In such high cost metro areas, the predominant tradeoff is housing affordability versus commute time that tends to push knowledge workers to metro fringes were housing costs are lower. That typically means longer commutes. Spiffing up the CCO won’t alter the math for many of these knowledge workers. The time sucking trip it isn’t likely to be seen as worthwhile aside perhaps from an occasional trip each month more akin to business travel to professional gatherings involving overnight stays involving a true hotel.

It’s now longer about whether to CCO or not. New model of knowledge work needed.

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When knowledge workers worked in centralized offices, they commuted to them because that’s where the tools of their trade were. Typewriters, mimeograph machines, photocopiers, plug and PBX switchboards and desk telephones and later, facsimile machines.

When desktop microcomputers emerged in the 1980s and later laptops and cell phones known as “personal communication devices,” their portability enabled their use in home offices just as easily as centralized commuter offices (CCOs). That was the beginning of the end of the office as it was known for a century.

It was the next development in information and communications technology that obsoleted the commute to CCO routine: the mass market Internet in the 1990s. That allowed these portable devices to transmit and receive and later virtually process (in the cloud and with generative AI) all forms of information: documents, data, numbers and voice and video communications.

The CCO’s primary function then became a gathering place for group work. How much gathering is necessary is currently a topic of much discussion and debate among knowledge organizations and their staffs. Every workday? Just some days of the week? For those who live within 50 miles of the CCO?

The topic has cleaved into two camps: office centralists and virtualtists.

Jamie Dimon, CEO of JP Morgan, laments the Internet that disintermediated real time communication out of CCOs via “fucking Zoom” videoconferencing as it put it in a viral online rant. Dimon and other old school leaders like him believe co-located gathering is essential to knowledge work and career development. They’re willing to invest substantial amounts of money to create office space resembling first class hotel suites and associated amenities to facilitate assembling in person. There’s some practical rationale for this position relative to career development and training for younger workers.

For the other school of thought, gatherings requiring a commute to a CCO should be limited and purpose driven and not the everyday mode of working. Commuting to a CCO simply to do work that can be done in a home office isn’t worth the personal time and expense incurred. It’s a very strong utilitarian argument.

Resolving this split going forward will require the development of a new model of knowledge work disposes of quotidian office attendance and focuses on purposefully defining the need for gathering and the expected outcome, i.e. reaching a consensus or reaching a decision. That’s in line with the view of knowledge organizations as “decision factories” as Roger L. Martin described them in a 2013 Harvard Business Review article.

Distance isn’t quite dead. It’s being defined and justified. And it remains a burden.

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In her book The Death of Distance: How the Communications Revolution Is Changing our Lives, (Rev. 2001) Frances Cairncross posited the rapid and widespread adoption of information and telecommunications technologies (ICT) would render physical distance an “irrelevant” or “imperceptible” concept. She argued that the drastic reduction in the cost and time of transmitting information would become the most significant economic force to reshape society in the first half of the 21st century. In other words, it would be so easy to move bytes – digital information – there would be no need to move bodies to create and process it.

In order to slow disease and death arising from the 2020 COVID-19 pandemic, government health agencies issued social distancing recommendations. Knowledge organizations complied by leaving centralized commuter offices vacant and having staff work from home or other locations.

What they didn’t do deal a final death blow to distance that Cairncross predicted a decade earlier.

While the pandemic didn’t kill distance, it did lead to knowledge organizations defining it in their employment policies. Exhibit A is the return to office attendance mandates. They defined distance for the purpose of determining who would have to return to the centralized commuter office (CCO) and when.  

The metric: “reasonable” commute distance between a knowledge worker’s home and the CCO. Obtained from metro area or census data on commute distance. The definition varies but falls around 50 miles or one hour. Those who reside farther out are exempt from in office attendance requirements. As for when, that could be two to four days a week in the CCO.

The practical effect is organizations remain geographically centered as they have been historically for decades. The Puget Sound area for Microsoft. For Dell, Austin. Seattle and Amazon. In the public sector, Washington DC and state capitals. Knowledge workers are likely to meet colleagues and build professional networks and referrals to work opportunities by virtue of proximity.

Cairncross pointed to this agglomeration effect to revoke her death sentence on distance. But it’s not a binary matter of the life or death of distance. Agglomeration drives transportation demand that produces traffic congestion that make distance burdensome for knowledge workers by virtue of the time and expense it incurs to bridge it. It also drives housing demand and costs that increase distance as workers seek more affordable housing at the edges of metro areas and adjoining exurbs.

ICT eliminates the burden of distance by delinking knowledge work and transportation demand. The challenge for organizations is to determine how to best leverage it for that purpose while choosing co-located work wisely and with clear purpose.