Monday Mornings with Madison

Is Less More When It Comes to Office Space?

Part 1 – Work Space and Productivity

Office design has been evolving over the last few years.  Once upon a time, all managers and executives had offices with walls, doors, desks and furniture.  Space was abundant and a deluxe office was a standard perk of working at most any successful company.  Clerical, secretarial and support staff also had individual work areas such as cubicles or were separated from other desks by partitions, cabinets and space.

However, with the advent of technology coupled with the increase in population density and the skyrocketing cost of office space, business owners have been increasingly forced to make more of every bit of space.  Architects are tasked with being ever more creative in the use of space.  According to Corenet Global, a commercial real estate association, the average amount of space per office worker in North America dropped to 176 square feet in 2012, from 225 in 2010; a decrease of over 20%.   Employees are being packed into increasingly smaller work areas.  The question is how these smaller office environments are impacting productivity.  Does this trend in design work?

Like Sardines in a Can

With escalating rent prices in big cities, business owners are looking for ways to cut costs.  Outsourcing.  Telecommuting staff.  Conversion of industrial space into offices.  Freelancers.  There are a myriad of ways to cut down on the cost of office space.  But ultimately thriving businesses eventually end up squeezed for space.  The need to control costs has pushed business owners to find ways to fit more people in a finite amount of space.  Since no one has figured out how to stack employee work stations the way you stack Tupperware in cabinets or children in bunk beds, the only way to save space is to cut back on the space allocated per person.

Massive conference rooms, cluttered law libraries, giant file rooms and expansive lobbies are increasingly becoming a thing of the past.  Fewer and fewer managers are being given offices, and those offices are getting smaller.  Managers are even being asked to share offices.  Cubicles are getting tinier.  Design is getting more creative.  Today, companies are spending substantial money to redesign office space to eliminate waste.  Storage is being built into work spaces above and below desks.  Employees sit much closer together in ‘shared space’.  So how is all this closeness affecting productivity?  Are smaller work spaces effective?

Consider that decisions about work space are made the same way that decisions about employee’s salary and benefits are made:  from the top down. Senior management assesses the quality of the work environment against the cost. It is generally assumed that every employee wants more space, more natural light and better views. The nicest spaces typically go to the most senior staff and the balance gets distributed based on some process that relates to collaboration and hierarchy.  Even at companies where the work space is designed to be egalitarian and where senior managers occupy cubicles or work in shared space, the decision about the office layout still tends to be made at the top with little input from the employees.  Few managers ever bother to ask employees what they need or want for their work space.

Inherent in this top-down decision-making system for work space is the assumption that employees will be equally productive regardless of what type of work space they have. Even when the idea arises of a relationship between the quality of work space and employee productivity, it is immediately dismissed as something that is impossible to measure.  But, as it turns out, it is not impossible to measure.  The impact of work space design on employee productivity has been measured!

Smaller Work Space and Productivity

Tom DeMarco and Timothy Lister, principals of The Atlantic Systems Guild, a consulting firm specializing in the complex processes of system building with particular emphasis on the human dimension, tackled this issue.  In pondering the deep complexities they were encountering in systems projects of their own as well as ones related to them by their clients, DeMarco and Lister considered whether the major problems of programming systems work was not so much technological as sociological.  To explore this idea, they carried out a very telling experiment in which 600 software developers at 92 different companies were asked to complete a series of benchmark coding and testing tasks in an endeavor they dubbed the Coding War Games. Each programmer worked on his or her own and kept a log of the amount of time he or she spent working. This experiment was designed to help companies see how their programmers compared with programmers at other companies.  In other words, the focus of the experiment was to determine what factor most impacted productivity.

The performance of the programmers was evaluated using a number of criteria, including employee experience, salary, work quality, work space, etc. Here is what they found.  The best programmers outperformed the worst programmers by a ratio of 10 to 1 and also outperformed average programmers by 2.1 times.  Indeed, programmers in the top quartile were significantly more productive than those in the bottom quartile.  DeMarco and Lister looked at what factors best explained the superior performance of some over others.  There was almost no correlation between salary and performance, and almost no correlation between years of experience and superior performance. Those with two years experience performed as well as those with 10 years experience.  They also found little correlation between the quality of the work and time spent on it.  In fact, zero-defect workers took slightly less time, on average, to complete the exercise than those who had one or more defects.

Greater Productivity Tied to Work Space

However, DeMarco and Lister did discover one area in which there was a high correlation to productivity.  People from the same organization tended to perform at similar levels. The organization with the best average performance of its programmers worked more than ten times faster than the worst organization. Not only were they faster, but they passed all the major acceptance tests for quality.  As they examined the data further, here is what they found:

Office Environment Factors Top Quartile Programmers Bottom Quartile Programmers
Is your dedicated work space acceptably quiet? 57% 29%
Is your dedicated work space acceptably private? 62% 19%
Can you silence your phone? 52% 10%
Can you divert your calls? 76% 19%
Do people often interrupt you needlessly? 38% 76%

Productivity was directly impacted by work space factors.  Those who worked in areas that they deemed noisy, crowded and busy were far, far less productive than those who worked in areas they perceived as quiet, private and with limited interruptions.  All of those variables are deeply connected to worker density.

If people in spacious, quiet offices are more productive, up to 10 times more productive, than those in crowded, noisy, busy work areas, one could deduce then that one simple way for a business to be 10 times as productive as his competitors is to ensure that employee work space is private, quiet, and calm…. Or in other words spacious.  Another way for the bean counters to look at it is from the angle of cost.  Most companies pay office employees about 20 times more in salary and benefits than what they pay in rent. If a 10% savings in office rent results in a 10% loss in productivity, then for every ten cents of savings the company loses two dollars of productivity.  It is hard to argue with that math.

Next week, we will consider how tighter work spaces are impacting creativity and innovation.  Stay tuned.

Quote of the Week

“Productivity is driven at the enterprise level. Better performance is driven at the workplace level.” Bill Shorten


© 2015, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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