An office can be a stimulating hub of activity… or a place that saps everyone’s energy. A workspace can support forward-looking decisions… or raise stress levels to the point that people merely exist in a reactive state. Employees can thrive in an environment that encourages cross-functional interaction and innovation…or be victims of the latest office-planning fad.
We know that surroundings affect productivity. Factors such as privacy and the ability to concentrate, as well as appropriate places to discuss the latest workplace dilemma — all have an impact on performance.
While HR professionals should have responsibilities involving productivity, rarely do HR surveys ask a key question that can uncover staggering costs: “If your physical environment changed to reflect your true needs, what difference would it make to your job performance?”
When asked about the combined impact of noise, distractions, crowded conditions, air quality, lighting, and inadequate meeting space, managers estimated those factors reduced effectiveness between 25 and 50 per cent. Translated into salary costs, this annual waste of $10,000 to $50,000 or more per employee deserves our attention.
Has HR been absorbing unnecessary costs?
Traditional cost-cutting exercises often overlook workspace deficiencies.
Standard silo-based accounting methods view each business unit’s costs independently. Well-intended facilities managers, for example, are rewarded when cost savings are gained through office space reductions. But this manoeuvre simply shifts any resulting productivity losses or employee turnover costs to HR.
The true bottom-line impact of inappropriate workplace facilities can be exposed by using diagnostic tools — such as the survey question mentioned above, a balanced scorecard, or gap analysis (see box next page) — which identify physical factors that prevent people from doing their best work.
What is the purpose of today’s office?
Why do traditional organizations overlook the financial impact of workspace deficiencies? It’s usually a case of lingering industrial-era priorities. Most managers are still in the early stages of understanding what it means to shift from administrative work to knowledge-based work.
Meanwhile, the primary purpose of the office is rapidly changing from a focus on keeping track of things to a forum for exchanging, evaluating, expanding and exploiting knowledge as a means to create and retain customers. The challenge for 21st century managers, according to business sage Peter Drucker, is to increase the productivity of the knowledge worker.
“Work on the productivity of the knowledge worker has barely begun,” says Drucker. “(We are today) roughly where we were in the year 1900 in terms of productivity of the manual worker.”
Most office space still reflects industrial-era priorities such as entitlement, rigid meeting rooms and an absence of places to think.
How will we motivate people to face the New Reality?
Another reason why organizations have been blind to workspace deficiency costs is linked to the bubble economy. Until recently, companies could remain competitive despite an appalling under-use of human potential and over-use of office design fads. Examples of non-strategic workplace planning range from indiscriminate removal of office partitions to insufficient meeting space. In the post-bubble new reality economy, every company must move beyond empty “people first” slogans in order to improve financial performance. Companies are facing new business opportunities and threats that require organizations to engage the eyes, ears, hearts and minds of every knowledge worker.
What exactly is a knowledge worker?
To understand why workspace will play a vital role in the new reality ahead, it’s important to examine what knowledge workers actually do each day. Conventional wisdom equates the term knowledge worker with information technology, yet much knowledge-based work involves thinking and talking. More than 70 per cent of the knowledge people require to do their job is gained informally, through interactions with co-workers and customers. Such day-to-day informal learning requires different kinds of spaces than the office of yesteryear.
During the industrial era, most tasks were repetitious; people didn’t need to make a lot of risky daily decisions that required both concentration and intense discussion. As work grows more unpredictable and ambiguous, human networks (sometimes called social capital) are becoming more valuable than digital networks. Work today involves making thousands of big and small decisions by interpreting situations, making sense of market forces, and weighing tradeoffs. This means that knowledge workers need places to think without distraction. They also need places to discuss their ideas and dilemmas with co-workers and customers. The cost of not supporting these activities will be poor quality decisions and reduced capacity to innovate.
Why do organizations have no choice but to nurture people?
When smart people are hindered by a noisy, uninspiring, isolating environment, the organization’s potential to innovate is jeopardized. Best-selling author and Fortune columnist Gary Hamel says there is one simple reason why every organization must get serious about nurturing brainpower: there is no real choice. In Hamel’s view, “most companies long ago reached the point of diminishing returns in their incremental improvement programs.” This means that “more of the same” thinking can no longer satisfy today’s demand for competitive advantage. Instead, future prosperity depends on the fresh thinking of motivated people who work in a supportive physical environment.
What does a knowledge-based environment look like?
DraftWorldwide Canada, the seventh largest communication company in Canada, is a leading example of how knowledge-based enterprises work. DWW depends on its creative brainpower as well as a free flow of ideas between co-workers and with clients. For their renovated Toronto location, they faced the added challenge of a recent merger. DWW wanted space that would encourage a variety of formal and informal gatherings, energize people and accelerate the integration of two cultures.
DWW used the following five principles to create a knowledge-friendly space:
1. Create flexible meeting zones: Centrally located meeting and break-out spaces promote free flowing conversation. Rather than rely only on pre-booked meeting rooms, this space encourages the informal exchange of knowledge beyond departmental boundaries.
2. Select movable furniture: DWW realized that large, formal table settings are not always conducive to intimate, open conversations about complex issues. Tablet armchairs on casters allow two people or a small group to draw close for informal discussion.
3. Re-apportion individual and common space: Although certain individuals required private offices to do their best work, many open workspaces were created. People accepted more compact individual workspaces in exchange for well-designed common areas, including shared retreat and enclave (thinking) rooms.
4. Design space that will attract clients: Companies must stay close to their customers in the new reality economy. Break-out and meeting space was designed to promote a lively exchange of knowledge and encourage clients to spend quality time with DWW.
5. Provide places to think: Small retreat rooms, or private enclaves, designed for one to three people to concentrate or think through an issue.
Worth pondering: How many unwise business decisions have been made in noisy, stressful offices during the past few years? How many “thinking rooms” could companies construct with the money they save as a result of better decisions?
How can HR prevent “daily brain drain?”
Much of the brainpower needed to meet today’s tough business challenges already exists within organizations. But crowded, noisy spaces reflect the industrial-era belief that real estate (less than 10 per cent of operating costs) have little or no impact on human resources (80 per cent of operating costs).
This gap suggests HR needs to view the physical environment as a strategic issue. The payoff will be higher performance, smarter decision-making, increased informal learning, and ultimately, stronger customer relationships.
Sharon VanderKaay is VP strategy at X-Design Inc., a corporate interior design firm that helps companies analyze their workspace from a knowledge management and financial performance perspective. She may be contacted at (416) 462-3084, SharonV@xdesigninc.com or visit www.xdesigninc.com.