Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 97

The simple ‘hot-desk’ equation

Hot-desking is a classic economic phenomenon. For all the hype and discussion it comes down to a very simple equation. A company can reduce its rental expense, but to do this it needs to get its employees to take a pay cut. The pay cut is not in money but rather a reduction in the quality of an employee’s working environment. Economists call this an ‘externality’. My research could discover no facts on the benefits of hot-desking other than rental cost savings.

Hot-desking is sold as a way to break down work cultural barriers, increase collaboration while creating the ‘Office of the Future – Today’. It is a cost saving exercise. Because a very senior executive endorsed the idea, employees are labelled as not having the right cultural values if they show even a hint of disapproval. A totalitarian propaganda machine is in full swing by the time the last photo of the family is removed from the old decommissioned ‘cold’ desk. Centre worker, Cori Girondoudas was docked $3,000 from her pay each year for two years because she repeatedly refused to remove a photograph from her work station. The photograph took her tally of personal items on the desk to four — one above the prescribed limit.

Companies have reported a reduction in rental costs of up to 30% from adopting hot-desking. These enticing savings have to sell it to the employees who suffer an increase in stress and insecurity. Few employees enjoy hot-desking and those who do are often the same people you regret having near you in a cinema, sports game, bus, plane, or marrying into the family.

Hot-desking conveniently ignores the human condition. Humans are territorial, we enjoy a sense of belonging and like a routine. We are also hierarchical. We work hard to get more pay but we also want the corner office. If some spotty graduate comes in early after his gym class and gets the corner desk, we older guys feel pissed off. We will have to seek revenge, in a team building way of course.

Some of you are thinking that I am just an old guy and I need to get with the times. It is true that I sleep better in the same bed each night and the same goes for my desk. It is hard to get 30 minutes sleep if you wake up in a different part of the office having no idea where you are.

But in Ross Gittins’s article on hot-desking, he quotes research that demonstrates that the most important contribution to work place productivity is not collaboration, but individual focus work. In fact, those who can focus on their work in a nesting environment are also better at collaborating.

One of the fundamentals of business is to drive down costs. Businesses are psychopaths and if they can transfer a cost (externality) to the staff then they will. Businesses also suffer from Aspergers. They don’t really understand the human condition, nor do they read body language.

I am now implementing hot-desking in my home office to improve collaboration, break old work habits and enhance productivity. My favourite hot desk is the queen sized one on the top floor. I go there for an hour after lunch to do my best thinking.

Some comments from Donald’s blog:

Geoff

Unfortunately no one is measuring the cost of the reduction in productivity that’s achieved via ‘discretionary effort’. Discretionary effort is that extra bang for the buck that an organisation gets from an employee because they feel good about their job and where they work, importantly employers don’t have to pay money for this, they just have to demonstrate they value their staff. I have spoken with friends, colleagues and customers on this subject and the common factor is that employers are great at measuring the cost savings from hot-desking but don’t attempt to measure at all the loss of discretionary productivity that goes along with it. I wonder if there is a higher turnover rate of staff where hot-desking has been deployed?

Jayne

I would like to add that during flu and cold epidemics, the wonderful world of hot-desking is also introducing us to plagues that seem to move inexorably around the office. If we were truly interested in efficiency we would return to single offices which allow focus, concentration and peace and quiet a la “Quiet: the power of introverts in a world that can’t stop talking”. Awesome read if you want to change your thinking on the value of noisy collaboration.

Christine

I’m a working mum who does school drop-offs in the mornings. By the time I get to the office it’s impossible to get a desk; not even a spot along the anti-social benches against the windows. When I do find a spot, often practically in the toilet, I spend good third of my day pacing up and down the corridor locating my team for face-to-face discussions. Cost cutting? For sure. Murderer of productivity? I’ll say.

 

Donald Hellyer is the former Global Head of Funds and Insurance at National Australia Bank and is Co-Founder of BigFuture.

 

banner

Most viewed in recent weeks

Meg on SMSFs: Clearing up confusion on the $3 million super tax

There seems to be more confusion than clarity about the mechanics of how the new $3 million super tax is supposed to work. Here is an attempt to answer some of the questions from my previous work on the issue. 

The secrets of Australia’s Berkshire Hathaway

Washington H. Soul Pattinson is an ASX top 50 stock with one of the best investment track records this country has seen. Yet, most Australians haven’t heard of it, and the company seems to prefer it that way.

How long will you live?

We are often quoted life expectancy at birth but what matters most is how long we should live as we grow older. It is surprising how short this can be for people born last century, so make the most of it.

Australian housing is twice as expensive as the US

A new report suggests Australian housing is twice as expensive as that of the US and UK on a price-to-income basis. It also reveals that it’s cheaper to live in New York than most of our capital cities.

Welcome to Firstlinks Edition 566 with weekend update

Here are 10 rules for staying happy and sharp as we age, including socialise a lot, never retire, learn a demanding skill, practice gratitude, play video games (specific ones), and be sure to reminisce.

  • 27 June 2024

Overcoming the fear of running out of money in retirement

There’s an epidemic in Australia that has nothing to do with COVID-19, the flu, or the respiratory syncytial virus. This one is called FORO, or the fear of running out of money in retirement, and it's a growing problem.

Latest Updates

Investment strategies

My disinterest in investments as an investment specialist

Shani Jayamanne takes a deliberately uninterested approach to investing. She outlines the technical and circumstantial reasons for why she goes against the grain and focuses on the real drivers of investment success.

Infrastructure

US trip reveals inflection point for $6 billion global industry

Members of First Sentier Investors’ Global Listed Infrastructure team hit the road to see what’s happening in key industries across the United States. What they found has big implications for utilities.

SMSF strategies

The ATO has SMSF asset valuations in its crosshairs

SMSF trustees need to ensure they value their assets at least annually and that those valuations are fair and reasonable, based on objective and supportable data. The ATO is particularly concerned with unlisted assets such as real estate.

Investment strategies

Should investors follow super funds into private credit?

Led by superannuation funds, institutions are piling into private credit, attracting to the high yield and steady returns on offer. Should retail investors and SMSFs allocate more money to this burgeoning asset class?

Investment strategies

Learn from the last tech bubble and embrace GenAI mania

Using the internet bubble of the 1990s as a guide, we draw lessons for today’s investors in the Generative AI mania. Although bubbles eventually end in a bust, the mania generates capital investment that often yields long-term benefits.

Strategy

Have your say on Firstlinks and the topics we cover

We’d love to hear your thoughts on Firstlinks and how we can make it better for you. If you’d like to help us out in a just a couple of minutes, please take our short survey.

Most aged care homes are falling short of minimum care standards

A new report on Australia’s aged care sector reveals many aged care residents are not receiving the levels of care they need and are entitled to despite taxpayers having paid millions of dollars to care providers.

Sponsors

Alliances

© 2024 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.