CEOs in Hong Kong turn to hybrid work model to retain talent, boost efficiency

Company bosses are turning their attention towards hybrid work environments for their employees, convinced that this approach will help retain talent and boost efficiency.

However, as companies optimise their operations, the city’s office market is experiencing setbacks, with vacancy rates reaching record highs this year and continuing to climb.

Nine out of 10 CEOs in Hong Kong have adopted the hybrid work model, with close to three quarters indicating that having employees stay in the office full-time “was not a business priority”, according to a report published on Wednesday by the International Workplace Group (IWG), a hybrid workplace platform.

The survey, which polled over 500 CEOs in June, said hybrid work helps to improve company culture and creates a “happier and more loyal workforce”. The report also noted that 56 per cent of the employees in Hong Kong who work five days a week on-site are actively seeking a new position.

The findings correspond with the results of June research led by Stanford economics professor Nicholas Bloom, who found that employees who work from home two days a week are just as productive, likely to get promoted, and less likely to quit their jobs compared to their peers who work out of the office five times a week.

The Stanford survey also found that the hybrid work-from-home model could reduce resignation rates, which are the highest among female employees, non-managers, and employees with the longest commutes. This reduction could save firms around US$20,000 in resignation costs per employee.

Recognising the benefits of the new model, employers are beginning to increase their investments in hybrid working facilities. The IWG survey showed that 94 per cent of those surveyed had allocated funds towards technologies that could enhance the hybrid work experience, while another 43 per cent identified it as their top investment over the past 12 months.

As employees increasingly view hybrid work as “non-negotiable”, and companies shift their focus to the new model, Hong Kong’s office market is experiencing a setback. The vacancy rate for the city’s grade A offices rose by 0.1 percentage points to 13.6 per cent in June, while average monthly rents declined by 0.6 per cent month on month to HK$49.7 (US$6.37) per square foot, according to a July report by JLL.

The property market also recorded a negative net absorption of 53,700 sq ft in June as new projects became available.