Open Plan Offices = Lower Productivity

One of the things that drive me crazy about my current work environment is the layout of the office. It’s open plan. I know this allows the company to put more people into the space, but it sometimes makes for a really unproductive work environment. Furthermore, thinking the money they save on space will amount to peanuts when you factor in the amount of money lost by lower employee output. Thus, cramming people in like sardines should be such a no-no – particularly for public companies that are always talking about increasing shareholder value. That’s not going to happen if people are constantly being distracted from working.

Companies squeeze more staff in same office space
By Jim Pickard, Property Correspondent
Financial Times, Published: July 18 2006 03:00 | Last updated: July 18 2006 03:00
Claustrophobic office workers beware. Companies are squeezing ever more staff into the same amount of space in an effort to cut costs, a report has revealed.
The trend could have profound consequences, not only for people’s personal space but also for the wider commercial property industry.
Typical allocations of 140 to 190 sq ft per person are being cut to 120 to 130sq ft as bosses try to pack more staff into buildings, according to a study by Knight Frank, the estate agent. If the trend continued, it could thwart landlords’ hopes of rising rents in the coming years, according to Catherine Penman, head of research at the agency.
“The implication of the research is that the property market can no longer rely solely on economic growth to soak up excess space,” she said. Accommodation typically accounts for about 10 per cent of a company’s costs.

Many occupiers are reconfiguring their offices to make room for more workers, helped in part by technological change. For example, flat screen technology means that computers do not take up as much space as they used to. Others are making more use of flexible working patterns and temporary workstations, according to Knight Frank and Ramidus Consulting, which studied more than 50 companies in the south-east office market including BAA, BP, Centrica, Microsoft and Vodafone.
The M4 and M25 regional markets were hugely popular with many high-technology companies in the late 1990s, which took up swathes of glossy glass-and-steel headquarters buildings in order to be near London and Heathrow.
But the area then become symbolic of the fall-out from the dotcom crash as former high-flying businesses cut staff and space in an effort to retrench.
Only gradually have occupiers returned to the market, with vacancy levels still at high levels of 8.2 per cent for the M25 and 9.8 per cent for the M4. Even now, most developers are reluctant to start any new schemes in the area.
The research suggests that the recovery may continue to be slow as companies try to hold down their property costs.
The report cites one company that employs 1,200 people in Thames Valley. Its new chairman, determined to cut costs, reduced the space used by each person at its headquarters through various methods, including stripping out “unnecessary” services such as catering, putting more desks in the same area, and giving staff more laptops so they could work outside the office.
Prudential’s new headquarters at Paddington in west London are another example of increasing space efficiency.
It introduced a “flexible work environment” so that space which would have once accommodated 325 people now supports 500.
The Knight Frank report says: “There is mounting evidence that the overall density at which buildings are occupied is rising.
The traditional causal relationship between output growth and headcount growth cannot necessarily be relied upon to fuel another major cycle of demand for space.”
Across the UK, the number of “teleworkers” has grown from 921,000 a decade ago to about 2.4m. In addition, there has been rapid growth in the number of sole director companies, suggesting “individuals can now operate more easily outside the bounds of larger companies”, the report argues.
Take-up of office space around the M25 was 1m sq ft in the second quarter, its highest for five years. But take-up along the M4 fell 47 per cent from the first quarter to 296,000 sq ft.
Copyright The Financial Times Limited 2006

1 Comment
  1. Open plan offices scare me to no end. Every place I’ve interviewed at in the UK has this type of setup and the one that nearly made me faint was the behemoth setup for IT at Egg. It made me long for my nice grey/green cubicle with the fake windows at the top.

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