“Some of that is going to be driven by personal preference, but now we’ve figured out how to do that efficiently and productively, why do I need everybody coming in?
“Why do I need you commuting and adding to the carbon footprint each day instead of maybe one day a week to see your team? Maybe we can enable people to improve their quality of life and be closer to their family, and we can have more [employee] diversity.”
Gelsinger says VMWare’s campuses will be redesigned with a new way of working in mind, based on the idea that people will be coming in for specific reasons, related to collaboration, rather than just because they were assigned to work in that location.
In the US, like in Australia where companies as large as Westpac have spoken about a permanently changed approach to presence in the office, the plans of huge companies like VMWare have huge significance more broadly.
The demographics of society can change significantly if workers do not need to live within a stone’s throw of a major city, and the commercial property sector will need to face up to different demands from their tenants.
I want to keep acquiring companies because some of them just became a half or a third as expensive as they were six months ago.
— Pat Gelsinger, VMWare CEO
“If we look at the average financial burden per employee for our company, we are probably spending about 15 per cent of each one on real estate, so that’s a fairly big number,” Gelsinger says.
“So maybe I say to an employee ‘hey, here’s your stipend, make your home office really good, get the 35-inch curved monitor, and we’ll run both a cable and DSL connection to your house, so you’ve got high bandwidth with redundancy and you can be really productive at home.'”
Gelsinger says he is not advocating a new world where nobody ever leaves their house, rather a world where unnecessary travel, is removed.
He says he has now been at home, without getting on a plane for over 10 weeks straight, for the first time in over 30 years, and has realised that plenty of his previous travel could have been avoided.
With a global workforce he says he has realised that by “Zoom bombing” meetings around the world, he is actually involved as a leader in a more natural way than the statesman-style visits that can occur overseas, when the boss comes to town.
After he speaks with the Financial Review, Gelsinger is due to drop in on an all-hands virtual meeting of his London-based team, before attending an evening Zoom celebration with staff in Brazil.
“If I flew to Brazil and joined a celebration event, I might do that once every two years in the past, but now that we’ve figured this stuff works, I’ll probably do three or four this year,” he says.
The following week he intends to adjust his schedule to work on European time, to attend client meetings with staff there, before shifting on to Asian time a little while later. For while staff may be spending more time at home, the wheels of commerce are still turning.
Gelsinger says important meetings with potential clients have become much less formal and more time efficient in the lockdown period.
“I had a call with the CIO of the Health and Human Services, in the US, he was at home and I was at home, and he had a baseball cap on,” he says.
“He has his full team on the meeting; we had a very productive hour. Before all this I would have taken a day, flown to the East Coast to meet with him in his D.C. office, with my suit and tie on, but really this was a more productive hour.”
The COVID-19 period has not been all smiles at VMWare however, Gelsinger made the tough call to freeze all salaries and temporarily halt 401K retirement plan payments to counter-balance a fall in revenue.
He says he made sure to take the same hit to his own pay, and that employees knew it was necessary to avoid furloughing staff or making redundancies.
The CEO of the year award in 2019 had come from employment website Glassdoor, where bosses are ranked by employees. He says the runs on the board he had earned with employees through guiding VMWare through a tricky acquisition by EMC and then through majority shareholder Dell’s IPO, meant most staff accepted his tough call.
“I’m favouring having more people on the payroll and asking everybody to tighten their belts a bit … because I want I want to emerge from this terrible period of time as a stronger more capable company,” Gelsinger says.
“Clearly these would be harder things to announce if I was a new CEO, who had just been in the chair for six months, but they trust that I have lead well in the past and say … ‘Hey, maybe this month I didn’t make quite as much money, but that’s okay, because I’m not here for a month, I’m here for a career.”
While he declines to discuss potential targets he says the COVID-19 downturn offers VMWare chance to grow notably through acquisition, and he is actively looking at potential buys.
“I want to keep acquiring companies because some of them just became a half or a third as expensive as they were six months ago,” he says.
“If we can tighten our belts a bit and invest well, we become a stronger company for the long-term.”
While VMWare shares on the New York Stock Exchange has dropped as much as $US68 during the pandemic, it is now back trading near its February high at $US156.27 and Gelsinger is confident that it sits in the sweet spot of the economy.
Companies need VMWare’s products to keep running during the slowdown and then to scale up again when the breaks come off.
“Hey, if the economy is down by 20 per cent, nobody is unaffected by that … Right? Wow,” he says.
“I believe that tech sits above the economy, and then software and cloud sits above tech overall. That doesn’t mean we’re not going to be impacted, but it’s going to stay comfortably above GDP.”