Introduction:

The argument for an alternative approach to office space use is compelling. Because business practices are undergoing a fundamental and continuous metamorphosis, the needs of space users and owners are changing as well. Space markets have become more diversified, offering a broad array of options for tenants.

The nature of building tenancy is changing as well. Space users want shorter lease terms, greater adaptability within the space, and more services. Additionally, ownership of properties is becoming less attractive to companies with large space needs. Many of these companies prefer not to have their capital tied up in the relatively illiquid asset of a building.

Landlords are finding that they have to operate much more as service providers in order to attract quality tenants. The services provided might range from dry cleaning to day care, as landlords respond to the efforts of companies to attract and retain talented people.

Space:

Through out this class we have explored different ways of thinking about and using workspace as part of an integrated workplace strategy geared toward reducing costs and maximizing productivity.

Tele-commuting is perhaps the most widely known means of alternative officing. At first glance it appears to offer cost savings and increased employee satisfaction. Looking closer reveals that it can be almost as expensive to duplicate an office space in someone's home as it is to maintain an office for the employee at the actual company location. I also agree with Wild in that the senior managers for whom telecommuting would seem to fit, may in fact be the least suited to telecommuting. The workers they supervise have unpredictable needs for their presence and guidance. Telecommuting seems to work best for those who are doing fairly solitary work such as routine data processing, and yet even such solitary workers can benefit from association with other workers by having other eyes and minds with which to discuss problems and ideas.

Hoteling/Hot Desking can make sense on a limited basis, but it is important to introduce the idea over a long enough time for workers to get used to the idea. Also any new technology required for the transition to this way of operating an office should be offered with ample training for the users.

Flexible Office Configurations: Raised floors for an adaptable cabling grid and HVAC is becoming standard in new and redeveloped buildings. Modular furniture that can be quickly reconfigured for new interaction needs is also becoming commonplace.

Such approaches are usually implemented to save money, though some forward looking companies realize that there can be advantages beyond cost savings from redesign. Strategic advantages realized from a properly implemented IWS can be quite a bit greater than the cost savings. If workers are happier and more productive, their innovation and productivity falls to the bottom line. As may service oriented companies are fond of saying, their workers are their greatest asset.

However, the homeruns will become fewer and far between. In other words, the huge gains in productivity anticipated by companies as they adopt IWS's will level off eventually as more and more companies adopt the same strategies. Soon, IWS's will become a matter of survival.

Quality of the workspace extends to the types of materials used and how they were manufactured. Developers and tenants pay much more attention to environmental issues such as indoor air quality and natural light available for workers. Two famous examples of environmentally driven IWS's are manifested in Herman Miller's main factory in Michigan, and in The Gap's corporate Head Quarters in the San Francisco Bay area.

Tailored IWS's will lead ironically to fairly uniform buildings. This gives maximum flexibility to tenants as they paint their vision on a blank canvas of reliable proportions. Ultimately, though the specific space itself and the workplace strategy employed to use the space will become secondary to the results delivered. Space will become continually more flexible. There will have to a corresponding evolution on the building owners' side, as those who can't adapt will be left behind.

Users:

Behavioral shifts are always difficult. Cost Savings will continue to be the gateway reason for companies to explore test models of integrated workplace strategies, but it will gradually be replaced by strategic considerations as a the driver for integrated workplace strategies.

Technology will change but it won't change the need for human interaction as well as need for community and feedback. It's a truism a cliché that people are the most important asset of a company. Information is very important but it is a distant second, simply because skillful people must be in place in order to manipulate the information, turning it into knowledge, and ultimately wisdom.

Providers:

Property managers are hardly the shuffling old-timers they are perceived to be. Property ownership becomes less of a pure financial investment and much more of an operational, service, and value-added approach to property ownership. In this sense, the role of property managers synthesizes the duties of hotel operators as they maximize available tenant services, and the duties of asset managers as they maximize returns to investors.

I think this trend will continue the point of management companies offering staffing for short term projects. One model for this is an "Office Hotel Company" in California that offers short-term office leases, as short as a week, as well as a comprehensive shopping list of services.

Looking Ahead:

After steeping in the ideas known collectively as Integrated Workplace Strategies, the temptation to look into the crystal ball becomes overwhelming:

Work itself will change as people begin to think of themselves as free agents. The most successful workers will be as adaptable as the companies they find themselves working for. The human toll of constant workplace flux will be significant, but it will be offset by the freedom of workers to determine their fate.

Workers may balk at what a company does, but given an adequate skill set they can easily migrate to a new company. This is happening right now in the high-tech industry. Those companies who want the lion's share of the talent must be willing to pay for it and there is always a better offer for the worker right around the corner. The average stay in a high tech company for a software writer or a technology manager is about 15 months.

Strategy will be the ruling coin and workers and companies will continue their ages old struggle for power. Companies who demand too much of their workers will come up short. Employees will demand and get shorter workweeks that acknowledge the workers not just as production units but as human beings. Instead of anytime, anywhere becoming all the time, everywhere, for productive workers with the right skills it will evolve into how I want, when I want.

The most likely trend for development is going to be uniformity of product in some ways. Just as offices now universally have central heat and air and electricity and indoor plumbing, In the near future, flexible floor plans, raised floors, natural materials and healthy buildings will become the norm.

The organic company: Finance companies tend to flock together. If one considers New York City, it is can be broken down into districts, the financial district, the theater district, the meat-packing district, the jewelry district, the fashion district, not to mention all of the various ethnic neighborhoods. At first glance this seems like an outdated model, but in truth, it developed out of the human desire to be near similar people and activities.

Despite the advantages of technology, like businesses will continue to congregate. In some instances it may be like Delaware which has no corporate tax (since there is little else to draw people into the state), in other words, driven by government policy, or it may be driven by synergies that only exist in physical proximity despite the flux of information. This will especially be true in Industry as eco-industrial parks develop in order to convert "waste" from one process into "food" from another process.

Planning and managing the Workplace

A CRITIQUE

Steve Smith

Organizational Ecology- A means of looking at organizations in terms of how work and workers are convened in space and time and how those kinds of decisions both affect and are affected by decisions about the nature of information technology, the design of work processes, human resource policies and practices, and ultimately the organization’s philosophy and values.

Becker/Steele-Workplace by Design

Throughout this course, as I have gained a greater familiarity with the aspects of "organizational ecology", I certainly can find no fault with any of the ideas, goals and suggested means of achieving those goals in order to help make the physical workplace as highly valued a business asset as possible. After all who wouldn’t want the physical workplace to be a high performance business asset which enables teamwork and collaboration which in turn will facilitate dynamic and creative solutions to a firms business problems? From a pure academic viewpoint the logic of the ideas and concepts in this discipline seems inescapable.

But when I have tried to integrate a lot of this information along with what I have experienced and learned in the last 18 years in the business world, I must admit to some practical faults I have observed. Although my observations and criticisms which I will put forth her will seem somewhat general and involve some conjecture on my part, I hope that they will at least be viewed in a constructive context in that they are being made by someone who has had to deal with some of the more practical issues involved with real estate and organizations.

Market Environment:

The first organizational issue that I see as one of the major impediments to successful implementation of Integrated Workplace Strategies deals with the current general marketplace environment for public corporations. Due in part to the globalization of capitalism, which has increased competition as well as created arbitrage factors allowing the free flow of capital to low cost countries, and in part to the huge cost savings technology is delivering to business, quick maximization of profits has become even more sought after by shareholders. "Maximizing shareowner value" has become not only the major reason (or rhetoric) for companies to do and not do strategic and tactical projects.

Institutional as well as individual shareowners also want values realized as soon as possible or a company’s stock will generally suffer the consequences in terms of either greatly reduced stock value or a forced sale/merger of the firm. Because of this pressure to maximize profits quickly, physical space and the employees that use that space are viewed more than ever as costs that can be "mined" for savings when profits are unacceptable to shareowners. The savings that managers see being generated by eliminating headcount and space reduction are to easy and attractive when compared to the longer-term vision required implementing an integrated workplace strategy, which may involve more risk and uncertainty.

Related to this expedient attitude that has been generated by upper management in response to shareowner demands, is the changing nature and attitude that has become ever more prevalent among the general employee population. Permanent lifetime employment at one company or firm is now extremely rare if not unheard-of. Consequently, it’s becoming standard procedure for today’s employee to always be in somewhat of a constant job/opportunity search mode while working at their current position.

In my opinion, the growing reason for this is out of a sense of self-protection (corporate "restructurings" and layoffs that happen ever more frequently) and not just seeking out a better "opportunity". One prime example of this changing attitude in public companies and the attitude it has helped to generate in employees is Eastman Kodak Company.

For years Kodak had been known as a paternalistic place of "lifetime employment". The workforce was known for its loyalty and above average productivity. But due to overseas competition (Fuji) and the need for technological changes, earning came under growing and continuous pressure. In response, Kodak tried new products based on old technology, diversification into unrelated businesses (Sterling Pharm.) but to no avail. Eventually in response to shareowners demands for maximizing value, a series of approximately 6 restructurings over 8 years has resulted in local employment being cut from over 60,000 to around 35,000 today. A large part of this reduction as taken place due to early retirements in which the firm saw many highly talented managers leave; a kind of brain drain that made the work environment suffer (lower morale). The stock price has begun a gradual if sporadic recovery, which has placated shareowners. But low morale continues under anxiety about the future.

It would be difficult to implement an Integrated Workplace Strategy as part of a long term strategic plan in this environment that has become so short term earnings sensitive in it’s orientation and outlook. As long as this short-term attitude to employment and the short term needs for space continue to become more prevalent, cost management and control of space will continue to take precedence over the very valid issues and ideas of organizational ecology. For it to work and be implemented effectively, shareowners will have to be somehow forced to view profitability from more of a long-term perspective in order to allow more long-term strategic plans to gain in value.

Tenant Adaptation:

A second organizational issue deals with the ability to apply IWS to a situation in which a firm, usually a small business (less than 250 employees) needs to finance either a newly constructed facility or rehabilitation of an existing structure. The concern that I have in this type of scenario deals with how "tenant specific" a particular Integrated Workplace Solution that has been developed. Some of the designs I have read and seen have made an office structurally and design wise quite user specific.

A major potential problem that I see occurring in this type of situation is when either the particular company or building owner submits the particulars of the project to a mortgage lender as part of the required loan submission package. Over the years commercial lending has started to become more secondary market oriented in that lenders are looking for more standardization in the physical characteristics of the properties they choose to lend on.

This has become attractive to lenders for several reasons. Firstly, from a financial/cashflow risk standpoint, the more unique or tenant specific a particular office structure becomes the greater risk occurs to the lender in the event of a foreclosure. If a building would require too extensive conversion and rehab to make it reusable or resalable to a new tenant/owner after a foreclosure, then many lenders in today’s marketplace will refuse to lend on the property. This risk can also apply in a non-foreclosure situation as well in that should the particular firm at some point need to relocate for whatever reason they may be stuck with a property that in effect may be unmarketable without cost prohibitive rehabilitation.

The Union Carbide headquarters is an unfortunate example that comes to mind that depicts this type of risk. This property seemed to be designed as a single user type facility, which would make it very difficult to find a subsequent user now that the company no longer uses it. It’s design and layout would make it somewhat difficult to subdivide for a multitenant use and its uniqueness probably makes it difficult for any possible single user to adapt for their own uses.

Secondarily from a general portfolio risk standpoint, a lender who would make a loan on a project that is very tenant specific in its design may lose the ability to reduce it’s risk exposure in the secondary market should it wish to sell off all or part of it’s exposure in the form of a participation. Standardization and uniformity of collateral assets is a market requirement that has allowed the secondary market to develop for commercial properties. Because more and more lenders want access to this market as a risk reduction tool, they are insisting that assets they lend on have more standardization to make them acceptable in the marketplace.

In conclusion I would like to mention again that I certainly can see the potential long-term benefits that organizations can derive from the concepts of organizational ecology. Integrated Workplace Solutions in the form of various alternative officing concepts such as Team Offices, Universal Plan, Office Hoteling can provide environments which can facilitate creative teamwork and collaboration which can add real long-term benefits to a firm’s bottom line. But in order for these concepts to gain greater acceptance and use there have to be some marketplace changes.