Workplace culture, office space and demand

COVID-19 continues to herald a plethora of change to our lives globally. The social, economic and environmental ramifications are yet to be fully realised, though many are speculating and positing theories. One theory is that work practices may change. Some organisations and employers are considering whether changes to work practices, such as increased home working may be viable in the longer term. If taken up on a larger scale, this would relieve stress on transport infrastructure and will impact demand for office space. However, which types of office-based organisation are likely to opt for this new work pattern, and which organisational cultures are best suited?

This article, based on a four-year Australian study of organisation culture, office and workplace needs, assesses the market to posit answers to these questions. You may not have heard of organisational culture theory, yet it is a powerful theory influencing our workspaces. If an organisation does not have an appropriate culture to support its business activities, there could be substantial impacts on that organisation’s day-to-day activities and, ultimately, its overall financial performance.

Within workplace theories, a key organisational culture theory is the competing value framework (CVF), which identifies different organisational culture types and their respective appropriate workplace settings. Four main cultural dimensions in the CVF are; adhocracy, bureaucratic, clan and market cultures. Various cultural aspects prevailing in organisations are examined here to gain a deeper understanding of the effects of changes in office layout on the corporate culture of organisations, with the potential COVID-19 impacts overlaid.

The characteristics, suitable office designs and organisational culture types discussed are summarised in Table 1.

Most office buildings are designed to cater to tenants’ vision and philosophy in terms of work pattern and office designs. Some organisations prefer a 9am to 5pm work pattern, which is used in traditional office layouts and work practices. Designs known as hive, cell, combi or den (Szarejko and Trocka-Leszczynska, 2007; Nanayakkara 2019, p17) are the most common office layout plans used in traditional work practices. Some organisations prefer more flexible office designs to support flexible working patterns. In the recent past, popular designs for flexible work patterns include; team spaces, meeting rooms, conference room, learning space, activity-based layouts, home offices, virtual offices, client sites and satellite offices.

Integrated workplace strategy, which addresses client requirements, determines the required office design for organisations to achieve their strategic goals. Minimising the cost of corporate real estate has become an important aspect of new office designs, with some organisations reducing their space allocations to 10m² per employee. During the 1990s in major Australian cities, it was around 20m² per employee This figure is very similar to other major cities globally at the time. With the adoption of flexible practices, such as activity-based working, agile working and support of the latest technologies, some organisations have reduced the cost of their corporate real estate by around 30% (Nanayakkara, 2019 p111-2). Firms implementing flexible work patterns and office designs were mostly target-oriented or service organisations such as insurance, telecommunication, banking and healthcare. Those organisations are mainly focused on profitability, customer base, achieving targets and results. All employees are involved in achieving their expectations and work as a team with close connection between members. Clan and market cultures are the main culture types in these organisations. Since team and collaborative working are strongly encouraged, team spaces, meeting rooms, conference rooms, and learning space are all needed to increase staff interaction and fast decision making.

Then came COVID-19. Its effects are immediate in Australia as in the rest of the global office market. While we see the immediate impact now, the medium- and long-term effects are yet to be known.

Initially, government imposed health restrictions and regulations, and employees were strongly encouraged to work from home. Regardless of employee preferences, working from home became the only option if it was feasible. Though early days, there has already been speculation that some employees will prefer to work from home for part of the week, and that others conversely, are desperate to return to their workplace. In the medium-term, surveys of employee opinion and satisfaction with regards to home working is needed. Some organisations may realise both short-term and the long-term financial benefits with employees working from home, as operating expenses have been significantly reduced during the lockdown period. Similarly, if some staff can work from home for part of the week, there may be the possibility of reducing the office space they occupy. This could save significant amounts of money in the long term, as corporate real estate is the second largest expenditure for most large organisations (van der Voordt, 2004). Some organisations are responding to the financial hardship created by COVID-19 by reducing staff numbers. Rather than reducing their most valuable asset, which is people, a better choice for organisations could be to lower the costs of their corporate real estate.

The purpose of collaborative spaces is to increase communication and interaction among team members. Opportunities created by these office designs include increased spontaneous interactions which have positive impacts on perceived productivity (Brill and Weideman in Alexander and Price, 2001). If social distancing and working from home continues in the longer-term, these dedicated workplaces would be less effective, or even ineffective. Collaboration, teamwork, high-involvement work patterns, and quick decision-making ability would be reduced too. The natural, fast, efficient sharing of knowledge, which enhances productivity, would be minimised.

If we look at those organisational culture types again, the diminishing characteristics above are the main characteristics of the clan and market culture types. In the longer term, these dominant clan and market culture types could be disproportionately negatively affected. Concurrently, governments are recommending employees work from home and minimise their social interactions. Where people are going to the office, employees are encouraged to work individually with minimum circulation. Staff are required to work at their allocated space and desk sharing is not allowed, as it creates unnecessary risk. If you examine this, these are the characteristics of the adhocracy culture.

Ultimately, if new restrictions and standards imposed due to COVID-19 exist in long term, the two most collaborative support cultures; clan and market would be less visible, and the adhocracy and bureaucracy cultures may be more viable. Does that mean traditional office layouts and design would reappear taking the corporate real estate sector back to the 1970s to 1990s era? Time will tell. 

Related competencies include: Property management, Strategic real estate consultancy