COLUMN ONE : The New Nomads of Corporate America : Some firms are abolishing offices and sending employees out. Although some fear isolation, replacing desks with laptops cuts costs and gives workers incentives.
Near this city’s bustling airport, within sniffing distance of a dairy farm or two, Mayra Molina is helping pioneer a radically new way to work. She and 13 others who sell advertising in Pacific Bell Yellow Pages directories have turned the local Marriott Residence Inn into a temporary office and living quarters.
The company saves the rent it normally would pay for commercial office space. And Molina and her colleagues have the option of stumbling downstairs in pajamas or sweats each morning to grab a cup of coffee and sit at the desks in their townhouse-style suites to make calls or browse electronic data.
Welcome to the “virtual” office, the freshest trend among companies seeking to carve away at real estate costs in the lean 1990s--and to keep nomadic employees closer to customers by arming them with mobile communications and computing devices.
“This is the future--fewer enclosed offices,” said Gun Shim, director of real estate management at the San Francisco headquarters of Pacific Bell Directory, the unit that sells Yellow Pages ads. “I wouldn’t want to be the landlord of a big office building.”
For a small but growing number of companies--including Andersen Consulting, AT & T and VeriFone, the premier maker of credit card authorization systems--the days of mahogany-paneled corner offices are passe for all but the highest muck-a-mucks. In their stead are satellite offices or shared work spaces that employees must reserve as they would a hotel room.
These mobile workers go one better than telecommuting, an alternative already embraced by thousands of employees and managers who work at home. Increasingly, bosses are handing cellular phones and laptop computers to front-line employees, liberating them to work from autos, clients’ offices or, if the need arises, fast-food joints, a few of which serve up modem receptacles along with burgers and fries.
Reducing overhead and making workers more productive are not companies’ only motives. Employees who need to drive children to soccer practice or elderly parents to the doctor benefit from the flexibility. Another plus is a reduction in peak-hour commuting, which helps businesses comply with new environmental regulations.
As with telecommuting, workplace experts warn of “remotitis”--one consultant’s term for the feeling of being isolated.
Indeed, in an era of teamwork and collaboration, the fear that efficiency gains and cost savings might come at the expense of the human element is slowing some businesses on the road to virtuality. “Companies are rethinking how far and fast they want to go with it,” said Joe Cook, a senior managing director with Cushman & Wakefield, a global commercial real estate firm.
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At most firms, inertia and tradition have a powerful lock on the way they do business; the notion of the virtual office is the sort of dramatic departure that frightens managers and their underlings.
It also requires a stiff investment in technology and training that many companies would find daunting. And, of course, virtuality simply does not make sense for many businesses--retail establishments, for instance, or big law firms that feel compelled to present a prestigious facade to clients.
One firm marching right along, though, is Andersen Consulting. In the 1980s, Andersen typified the fast-growing, image-conscious consulting business. “Our strategy was to have a downtown ‘trophy’ office, and every person at a certain level had an office,” said William T. Van Lieshout, whose New Age-esque title is managing partner of people, values and culture.
As office space grew scarcer and more costly, the company began to reassess. Meanwhile, advances in technology--such as facsimile machines, car phones, voice mail, laptops and networking software--were vastly improving workers’ ability to communicate.
“Everyone was clamoring for more offices and space, but I kept seeing existing offices with no one in them,” Van Lieshout said. “There was the realization that with our people being very mobile, offices were expensive, inconvenient storage places--with good views.”
Borrowing a phrase from its manufacturing clients, Andersen pioneered a “just-in-time,” or JIT, strategy that began a trial run in San Francisco in 1987. Instead of providing offices and phones for its 90 managers, Andersen offered 13 offices that employees had to book in advance--a concept known as “hoteling.”
Only a few top partners were assigned permanent offices--a change that was greeted with disappointment ranging from mild to severe among those who had been aspiring to such perks. Other rooms were reconfigured to be uniform and functional--with oblong tables (rather than desks with drawers), cupboards, shelves, laptop hookups and nondescript art on the walls.
For some managers, the toughest thing was not having a room to call their own, Van Lieshout said. “But we demonstrated that they’d be better supported and could communicate electronically with their secretaries,” he said. “They agreed as business people that (the old way) didn’t make sense.”
Doug Garfinkel, a senior manager with Andersen who transferred to the firm’s San Francisco office when the idea was young, adapted quickly.
“It made perfect sense,” he said. “I went through periods where I literally came to this office once in a year.”
Noting that “having my name on the outside of an office wasn’t key to my self-esteem,” Garfinkel added that if the firm were obliged to create a private space for everybody, he might be relegated to a cramped, dark nook.
One recent afternoon, shortly before heading to Rome to spend a month with a client, he reserved the office of another executive--a JIT vantage point with an enviable view of Coit Tower poking through the fog. Pointing to photos of the other executive’s children on the shelves, he quipped: “They’re mine for today. You pick up the family obligations for the day.” As for pictures of his own family, those trot the globe with him--in his wallet or briefcase.
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The just-in-time strategy has helped fast-growing Andersen halve the square footage needed per employee in San Francisco to less than 80 square feet. About half the firm’s 23 U.S. offices have gone to some sort of JIT arrangement; the money saved, Garfinkel noted, can be spent on technology and training. On the horizon are office redesigns such as at the firm’s Palo Alto office, which features an occasional armchair for anybody needing to plunk down just to read.
The virtues of being virtual may extend not only to management consultants, but to other professionals who tend to rove--such as auditors or field engineers--and to customer service personnel and salespeople whose function is to be in the customer’s face.
Franklin Becker, a Cornell University professor who studies workplace arrangements, figures that at many organizations, 70% of desks, offices or workstations go unoccupied at any given time on a typical workday. Factor in weekends, vacations and holidays, and overall occupancy can tumble to as low as 15%.
Yet companies pay the real estate bill 365 days a year.
This calls for a change in the old notion that an employee’s worth is measured by the size and location of his or her office, said Becker, director of Cornell’s International Facility Management Program in Ithaca, N.Y. At some companies, he said, the new attitude should be: “If I have an office, I’m a wasteful person.”
Molina, the Pacific Bell Directory sales representative, has bought into that philosophy after just two months of calling Ontario’s Marriott Residence Inn her “home, sweet office.”
The company’s representatives spend several months in a territory selling ad space before moving. Usually, Pac Bell Directory’s real estate team finds temporary space in an office building; representatives stay at a hotel or an apartment of their choice and get reimbursed for their expenses.
When the company decided to enter Ontario as a new market, it decided to take the concept of “hoteling” literally. In what seems to be the only experiment of its kind, Pac Bell Directory negotiated with the 200-room Residence Inn for a reduced rate, guaranteeing occupancy of 20 rooms for five months in exchange for certain accommodations.
The Residence Inn allowed the company to rewire rooms for computer hookups and to route calls around the hotel’s phone exchange. A makeshift office was set up in a downstairs corner of each representative’s townhouse suite, with a combination of hotel furniture plus an ergonomic chair and file cabinets provided by the company.
The hotel also let Pac Bell Directory take over a meeting room as a temporary main office, housing several support staffers and bulky equipment such as photocopiers.
Among the amenities prized by Molina are the hotel’s complimentary breakfast, in-room kitchens, daily maid service, washers and dryers, swimming pool, health club membership and grocery shopping service.
“I absolutely love it,” said Molina, a six-year veteran of the company. “There’s nothing like knowing that I don’t have to leave the quarters to have everything readily available. I think I’ve been more productive. And I like the fact that I don’t have the distraction of an office.”
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For Molina, who works on commission and drives as much as 100 miles a day to see customers, the chance to stay overnight in Ontario rather than commute saves about two hours of downtime each day. It comes at a personal cost, however: Her two young daughters spend most of their time with a live-in sitter at Molina’s home in Alhambra; she sees them mostly on weekends.
Pac Bell Directory runs 55 sales campaigns each year like the one in Ontario. Shim, the firm’s real estate executive, projected that using virtual office plans for campaigns that lend themselves could save the company as much as $900,000 annually.
The Residence Inn is happy, too, because Pac Bell Directory’s extended visit has substantially boosted its average length of stay. And the enhanced wiring that Pac Bell Directory installed will remain.
“It’s perfect for us,” said Susan K. Schnell, the hotel’s director of sales. “I hope it all works out and we can do it again and get more and more companies.” Schnell has floated the idea past other firms, but so far none has decided to take the plunge.
Pac Bell Directory’s decision on whether to expand the idea to other locations will hinge on its effect on productivity and employees’ attitudes. Becker’s Cornell group and the Center for the New West, a Denver-based think tank, are surveying participating Pacific Bell Directory employees. So far, feedback is positive.
At AT & T, which offers employees a variety of alternative work options, the jury is in. About 10% of the company’s 123,000 managers in the United States work out of virtual offices.
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Three years T reconfigured its office space in Monterey Park. For account executives who sell international long-distance plans to businesses, the company limited the amount of office space available, urging them to set up home offices and spend more time with customers. Salespeople who continued to commute from home found that they had to be in by 7:15 a.m. to stake out a spot.
At first, account executive John Coughlin relished the freedom of working from home in Manhattan Beach. But there were always distractions--the “businessman’s special” at Dodger Stadium, the beach two blocks away, the ease of stepping out to pick up movie tickets.
Feeling that he was “slipping away,” Coughlin soon resumed his daily trek to the office. But the two hours of commuting time seemed an ordeal, convincing him that all he needed was a little self-discipline. Now his forays to Monterey Park are rare. An unexpected bonus: lower dry-cleaning bills, thanks to the days he stays home in sweat pants.
With laptop and portable phone, Coughlin routinely conducts business and checks electronic mail and voice mail from planes, customers’ offices, restaurants and his gold Mercedes-Benz sedan. One pitfall, he said, is that the technology makes it possible to work around the clock--a prescription for quick burnout that he learned to avoid. He also misses the traditional office camaraderie. “I felt really strange,” Coughlin recalled, when he realized there would be no Super Bowl office pool.
“It’s difficult to continue team morale,” he said. “You feel as though you’re so isolated at times. Some people want some type of cheerleading, some type of support. That’s difficult to achieve.”
At VeriFone, computer networking and video conferencing are keys to keeping far-flung employees feeling informed and connected.
Chief executive Hatim A. Tyabji keeps an office at the company’s headquarters in Redwood City, but he considers his real office to be his IBM-compatible laptop. Tyabji has been known to log 400,000 miles in a year--flitting from Hong Kong to Bangalore, India, to Marseilles, France--to oversee production and visit customers.
Along the way, he stays in touch via e-mail. Every stitch of financial data about the company is available on-line; every employee gets a laptop and is expected to master it. The technology is not fancy, but it is effective; chief information officer Will Pape travels with a computer that has a monochrome screen.
“I don’t need color,” he said.
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VeriFone is one of the most extreme proponents of “anywhere, anytime” work and routinely exploits differences in time zones. If a rush software program is needed, at closing time one VeriFone team will electronically ship an unfinished project to another group several hours away, and so on until the project’s whirlwind completion.
VeriFone’s rivals, primarily smaller regional operations, find the technique tough to top.
“The (technology-driven) culture has taken on a life of its own,” said Richard Foote, a globe-hopping VeriFone product marketing manager who spends so much time on the road that he and his fiancee had to plan their recent wedding on-line.
Should we pity the souls trying to manage these wide-ranging employees? Pape thinks not. “A whole lot of people look at virtual office and telecommuting and wonder, ‘How do I know my people are working?’ ” he said. “That’s never been my problem. (These techniques) encourage work. I’d find it difficult to work any other way.”
