Distance Learning

By Anne Field

Trends: Distributed Offices


Reconsidering the Centralized Office


Back in 1985, two ex-architects on the staff of Xerox's famed Palo Alto Research Center set up two large video screens—one in an open workspace at its lab in Silicon Valley, and the other in a similar location at a PARC facility in Portland, Ore. Then, they left the camera and microphone on. The goal: to study whether technology could mimic the intimacy of physical proximity between the far-flung offices of large corporations.

In the first few days of the experiment, workers on both sides of the digital divide felt self-conscious, concerned that the virtual windows might inhibit them from normal work. But in time, the video screens—placed near the coffee machines in open work areas at each location—began triggering random social encounters and the spread of office gossip between the two sites. "People could chat with their long-distance colleagues while getting a cup of coffee—a simple but pretty suggestive example of how technology can encourage random encounters that usually occur face-to-face," says Thomas Malone, professor of information systems at MIT's Sloan School of Management.

Some 17 years later, workplace experts still insist there's no substitute for the intimacy and communication that occurs between workers sharing the same office. E-mail helps. So can videoconferencing—as long as it's working and not simply creating more complexity and headaches for people not intimately familiar with the nuances of the technology. But virtual chatter is still no substitute for face-to-face interaction. "You travel for trust," says Malone, who is writing a book, tentatively titled After the Corporation, that will examine how the Net is making it easier and cheaper to disperse information and, therefore, decision-making.

But in the months following Sept. 11, as companies from Morgan Stanley to Empire BlueCross BlueShield move to create newly decentralized office locations as part of their beefed-up business-continuity strategies, managers are rethinking these distance gaps and the ways new technologies can be used to bridge them.

Consider Avon, a prime example of a company that realized after the attacks that its security plans were lacking. Avon had no idea how many of its 1,400 New York City-based workers had come to work on Sept. 11, or where they were in the agonizing hours of that afternoon. "We didn't know if we had anyone on those planes," says CIO and senior vice president Harriet Edelman.

Like everyone else, Avon required its workers to enter its midtown Manhattan headquarters with a digitized security card, and all travel reservations were supposed to be made through a central office. But many workers had been bypassing the travel reservation office for parts of their trips. Meanwhile, the company had no way of getting access to the entry-card data, which was stored on an off-site server. "We simply didn't know where our people were" says Edelman. "We never thought about having to use that data in an emergency to know if someone was in or out of the office." The experience, she says, "showed us that if we thought we were smart about security and HR before the attacks, we had a lot to learn." The result: Edelman is pushing ahead with the company's ongoing IT overhaul, which, in part, will make human resources a bigger part of the company's security and business strategies.

"Human capital needs to be handled more gingerly at companies across America," says William Halal, a management professor at George Washington University. "Lots of companies, even today, couldn't tell you who their workers are, really. Sept. 11 brings that reality to the fore at many businesses across the country."

Before the disaster, IT departments at such companies as Georgia-Pacific had already begun building super-HR systems aimed at expanding the focus from benefits administration and the like to broader issues like individualized directories of worker skill sets, employee goals and succession planning analysis. Now, say management experts, HR is poised to move up the priority list in strategy discussions of all kinds at all types of companies. "In the days after Sept. 11, corporate intranets that nobody read or cared about were suddenly being turned to by workers demanding more information, reassurance and information about salaries, insurance policies and clues as to how the world for them would be changing," says Michael Rudnick of Watson Wyatt Worldwide, an HR consultancy based in Washington, D.C. Adds Bob Schuetz, a human resource expert with Mercer Management Consulting: "During the disaster, HR had to refocus on the people side of the business. The disaster challenged the hierarchy of basic needs that HR assumed employees had wanted when they used a company Web site. Now, more than ever, employees need and want relevant information about more things." In other words, employees want their intranets to do more than simply offer a digitized version of the paperwork they receive through interoffice mail.

Procter & Gamble is also making changes. Since Sept. 11, HR at the $9.7 billion consumer products company has become much more involved in strategic discussions, working with heads of business units on how to redeploy employees in the event of disaster at a particular location, to pinpoint the identity and job descriptions of every worker, and determine which employees can be trained to perform the tasks of colleagues elsewhere. In the process, the company is investigating how that added knowledge can be used to improve management policies and customer service offerings. "Now you have to think about people, process and technology more comprehensively," says Ted DeZabala, a partner in enterprise risk services for Deloitte & Touche. "Before Sept. 11, companies saw the Web as a way to get closer to customers. After Sept. 11, they're also realizing that IT has to be used to get closer to workers."

Decentralization is no picnic. Managers worry that remote employees can't be supervised as closely, while employees tend to feel invisible and out of the loop, according to Steve Harrison, a member of the research staff at Xerox PARC. Such workers may see themselves as second-class citizens, their roles less important than those of their more centrally located colleagues. Harrison views such problems as part of what he calls "technologically mediated work situations." But they are issues every company must be more willing to tackle, he says, given the urgency of the new post-Sept. 11 environment and the decentralized, networked management structures being forced on organizations by the widening use of the Internet, from the factory floor to corporate suites.

The ultimate model for using technology to knit together the dispersed work force may be Sun Microsystems Inc., which launched a flexible office program five years ago after managers discovered that 30 percent of its workers were not in their offices on any given day. "We have a highly mobile work force, and we need to make sure we have a structure in place that allows them to work anywhere, anyplace, anytime, on any device," says Cathy Guilbeault, the company's workplace resources director based in Burlington, Mass. At 55 of Sun's 294 field offices, employees who need a desk can make a reservation at a kiosk in the lobby or by calling a reservation agent. Otherwise, they all have a mobile phone and a laptop that they take with them wherever they're working, plus a card with a password code that lets them log on to the company network from any computer to get e-mail and other documents. Sun also supports four traditional campuses, with offices for less mobile employees, such as engineers.

Strategies of Place

Strategies of Place

Sun's motivation: cutting costs. But the company has also made what Deloitte & Touche's DeZabala calls "a shift to resiliency"—building flexibility into its business processes as well as its technology. Instead of having three locations, for example—one in the East handling transactions, one in the Midwest handling customer calls and one in the West for marketing—a company might set up multifunctional sites able to pick up the slack if another location shut down. A company might even design its facilities according to the kind of geographic concerns used to safeguard against natural disasters, such as hurricanes. "If you know the path a hurricane might travel, you wouldn't have similar facilities along that path," says DeZabala. "In the same vein, certain cities might be in the same geographic plain in terms of a terrorist attack. So you'd be careful what you placed in, say, New York, London and San Francisco." To a certain extent, financial services companies in San Francisco already do that: Concerned about damage from earthquakes, they don't put all their people in one site, and they make sure all their facilities aren't all on the same fault line.

Some companies are finding that the newly dispersed arrangements are working just fine—disaster-planning or not. Consider Empire BlueCross BlueShield, a health maintenance organization with headquarters that once occupied 10 floors in the World Trade Center. Like many other companies once housed there, Empire initially wanted to reassemble workers under one roof, but has since settled on a less centralized setup. At first, many of its 1,900 employees from the Trade Center "platooned" in shifts to fill the desks available at six makeshift offices in Manhattan, Long Island and upstate New York. When seats in the office were not available, they worked from home. The situation has inspired a more permanent, less centralized approach to the workplace. Even as Empire moves into more permanent quarters over the next two years, the company plans to use two New York City locations—one in Manhattan, the other in Brooklyn—with a total of 10 percent less space than it had before, at some 20 percent in savings in overhead and real estate costs.

It's forced rethinking, and results have been positive in other ways, company executives say. "What's the saying, 'Necessity is the mother of invention?'" says Kenneth Klepper, Empire's senior vice president for systems, technology and infrastructure. "We're finding we can do things we were skeptical of in the past. Hundreds of people have dialed in from home, and we continue to have high levels of productivity from people working remotely. I think we'll take what we're learning and turn it into improving the quality of work life and business life at Empire."

Says Charles Grantham, chief scientist of the Sonoma Valley, Calif.-based Institute for the Study of Distributed Work: "Corporate America is developing a different strategy of place, thanks to recent advances in information technology. Sure, you're better positioned for business continuity if you're distributed. But Sept. 11 also crystallized for a lot of people that decentralization—thanks to advances in technology—doesn't have to mean drop-offs in productivity and the death of social interaction between workers." Indeed, Gratham says, it can mean lower costs and newly structured work forces that, "reconstituted in several locations, can lead to more flexibility, greater communication between managers and workers and, ultimately, a better ear on the marketplace."

Anne Field is a Pelham, N.Y.-based writer who covers management and business trends. Besides contributing to CIO Insight, her work also appears in a variety of business magazines and Web publications, including Fast Company, fsb.com and iSource. Researcher Brian Watson contributed to this report. Comments on this story can be sent to editors@CIOinsight.com.

Distance Learning

Distance Learning
How companies are rethinking their strategies of work and place.

Avon Products
Avon could not account for all of its New York workers on Sept. 11. It is now pushing ahead with new IT-driven HR reforms, which put human resources on the strategy table and will improve what Avon already knows about worker skills, knowledge, lifestyles and attitudes.

Federal Express
On Sept. 11 and the days afterwards, the company's planes were grounded. FedEx has since beefed up its ground-travel network—along with its HR intranet, to improve the timeliness and relevance of data that can be found there, including worker stats and security information.

Procter & Gamble
P&G plans to continue using some post-Sept. 11 alternative workplace arrangements, for savings of $300 million annually in reduced real estate costs and overhead. It is expanding pilot projects in Cincinnati, Brussels and Singapore that promote desk-sharing by people not always in the office.

Morgan Stanley Dean Witter
After the Sept. 11 attacks, it scotched plans to move its trading operation and other activities to a nearby building, opting instead to disperse its workers so they don't all share the same transportation, telecommunications and power grids.

This article was originally published on 01-01-2002