the price of productivity

Many business owners and managers are looking to save costs by choosing to go open plan and save on office space.

In other words this is cramming as many staff into the smallest space possible – known as over densifying.  This was particularly common around 2008, during the recession, when businesses went into survival mode and made as many cost savings as possible.

Whilst at first glance it seems to be an obvious cost saving solution – to pay as little as possible on rent for the company, research has found that it can have a long term negative affect on staff productivity.

Measuring productivity is not straightforward, nor always 100 percent reliable, however, it is highly critical for all businesses, SMEs and Blue chip companies alike.  A study on US nonfarm labour productivity found that the average annual increase of productivity before the recession was 2.8%.  After the recession, when more businesses looked at saving costs on space and went open plan, the average annual increase in productivity has fallen to 1.4 percent (U.S. Bureau of Labor Statistics, NGKF Research; February 2016).

So you may be thinking ‘well that’s just over 1 percent different, surely that doesn’t make any difference in the grand scheme of things?’  Well yes it does and here’s why.



A report by Knight Frank and Newmark Grubb also found that in some metropolitan areas, it only takes a ‘mere 1 percent decline in productivity to wipe out the cost savings achieved from over densifying office space’.  Although we couldn’t categorically say that this would apply to all businesses around the globe, we can see that potentially many businesses may have suffered by opting for the short term, survival approach of saving costs on space.



“TRYING TO FIT TOO MANY EMPLOYEES INTO TOO SMALL A SPACE WITH THE SINGULAR GOAL OF ACHIEVING COST SAVINGS CAN BE COUNTERPRODUCTIVE SINCE THE RESULTING LOSS OF PRODUCTIVITY MORE THAN OFFSETS ANY COST SAVINGS ACHIEVED. ” - Newmark Grubb, Knight Frank February 2016

So what does this mean for office design?



There have been many studies and reports conducted on office productivity in open plan offices and the most common and most important factor that conflicts with staff productivity is distraction.  See our advantages and disadvantages on open plan office design here.



The results above show that open plan offices may not be the perfect solution for every company, however the concept is by far from dead.  Open plan office design is an evolving theory, with innovative design concepts being implemented in order to tackle the drawbacks i.e. noise/distractions.  See this blog article on how designers are reducing noise levels within open plan offices.



These findings highlight that the fundamental challenge is to get the balance right between being efficient with your office space whilst also ensuring that productivity doesn’t suffer.  This is where it is important to engage with a professional office interior designer who will help you achieve the most from your office space, in terms of efficiency, productivity and return.