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“LONELINESS is a crowded room,” as Bryan Ferry of the band Roxy Music once warbled, adding that everyone was “all together, all alone”. The open-plan office might have been designed to make his point. That is not the rationale for the layout, of course. The supposed aim of open-plan offices is to ensure that workers will have more contact with their colleagues, and that the resulting collaboration will lead to greater productivity.

Ethan Bernstein and Stephen Turban, two Harvard Business School academics, set out to test this proposition*. The authors surveyed interactions between colleagues in two unnamed multinational companies which had switched to open-plan offices. They did so by recruiting workers to wear “sociometric” badges. These used infra-red sensors to detect when people were interacting, microphones to determine when they were speaking or listening to each other, another device to monitor their body movement and posture and a Bluetooth sensor to capture their location.

At the first company, the authors found that face-to-face interactions were more than three times higher in the old, cubicle-based office than in an open-plan space where employees have clear lines of sight to each other. In contrast, the number of e-mails people sent to each other increased by 56% when they switched to open-plan. In the second company, face-to-face interactions decreased by a third after the switch to open-plan, whereas e-mail traffic increased by between 22% and 50%.

Why did this shift occur? The authors suggest that employees value their privacy and find new ways to preserve it in an open-plan office. They shut themselves off by wearing large headphones to keep out the distractions caused by nearby colleagues. Indeed, those who champion open-plan offices seem to have forgotten the importance of being able to concentrate on your work.

Employees also find other ways of communicating with their fellow workers. Rather than have a chat in front of a large audience, employees simply send an e-mail; the result (as measured at one of the two companies surveyed) was that productivity declined.

Cubicles do not offer a great work environment either; they are still noisy and cut off employees from natural light. But at least workers have more of a chance to give their work area a personal touch. Allowing plenty of room for pictures of children, office plants, novelty coffee mugs—these are ways of making people feel more relaxed and happy in their jobs.

Such comforts are completely denied when companies shift to “hot-desking”, as 45% of multinationals plan by 2020, according to CBRE, a property firm, up from 30% of such companies now. Workers roam the building in search of a desk, like commuters hunting the last rush-hour seat or tourists looking for a poolside lounger. If you planned to spend a morning quietly reading a research paper or a management tome, tough luck; the last desk was nabbed by Jenkins in accounts.

Hot-desking is a clear message to low-level office workers that they are seen as disposable cogs in a machine. Combine this with the lack of privacy and the office becomes a depressing place to work. Workers could stay at home but that negates the intended benefits of collaboration that open-plan offices bring.

The drive for such offices is reminiscent of the British enthusiasm for residential tower blocks after the second world war. One British wartime survey found that 49% wanted to live in a small house with a garden; only 5% wanted a flat. But flats they got. Architects, who fancied themselves as visionaries like Howard Roark, the “hero” of Ayn Rand’s “The Fountainhead”, competed to create concrete temples for the masses to occupy. As David Kynaston, in his book “Austerity Britain” recounts, the desires of the actual residents were dismissed.

The real reason post-war architects built flats rather than homes is that it was a lot cheaper. And the same reason, not the supposed benefits of mingling with colleagues, is why open-plan offices are all the rage. More workers can be crammed into any given space.

Some people like them, of course, just as some like living in tower blocks. The only option for everyone else is to kick up a stink until executives change their minds and provide some personal space. In other words: workers of the world, unite. So you can separate again.

* “The impact of the ‘open’ workspace on human collaboration”, Philosophical Transactions, The Royal Society

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Business

Japan still has great influence on global financial markets

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IT IS the summer of 1979 and Harry “Rabbit” Angstrom, the everyman-hero of John Updike’s series of novels, is running a car showroom in Brewer, Pennsylvania. There is a pervasive mood of decline. Local textile mills have closed. Gas prices are soaring. No one wants the traded-in, Detroit-made cars clogging the lot. Yet Rabbit is serene. His is a Toyota franchise. So his cars have the best mileage and lowest servicing costs. When you buy one, he tells his customers, you are turning your dollars into yen.

“Rabbit is Rich” evokes the time when America was first unnerved by the rise of a rival economic power. Japan had taken leadership from America in a succession of industries, including textiles, consumer electronics and steel. It was threatening to topple the car industry, too. Today Japan’s economic position is much reduced. It has lost its place as the world’s second-largest economy (and primary target of American trade hawks) to China. Yet in one regard, its sway still holds.

This week the board of the Bank of Japan (BoJ) voted to leave its monetary policy broadly unchanged. But leading up to its policy meeting, rumours that it might make a substantial change caused a few jitters in global bond markets. The anxiety was justified. A sudden change of tack by the BoJ would be felt far beyond Japan’s shores.

One reason is that Japan’s influence on global asset markets has kept growing as decades of the country’s surplus savings have piled up. Japan’s net foreign assets—what its residents own abroad minus what they owe to foreigners—have risen to around $3trn, or 60% of the country’s annual GDP (see top chart).

But it is also a consequence of very loose monetary policy. The BoJ has deployed an arsenal of special measures to battle Japan’s persistently low inflation. Its benchmark interest rate is negative (-0.1%). It is committed to purchasing ¥80trn ($715bn) of government bonds each year with the aim of keeping Japan’s ten-year bond yield around zero. And it is buying baskets of Japan’s leading stocks to the tune of ¥6trn a year.

Tokyo storm warning

These measures, once unorthodox but now familiar, have pushed Japan’s banks, insurance firms and ordinary savers into buying foreign stocks and bonds that offer better returns than they can get at home. Indeed, Japanese investors have loaded up on short-term foreign debt to enable them to buy even more. Holdings of foreign assets in Japan rose from 111% of GDP in 2010 to 185% in 2017 (see bottom chart). The impact of capital outflows is evident in currency markets. The yen is cheap. On The Economist’s Big Mac index, a gauge based on burger prices, it is the most undervalued of any major currency.

Investors from Japan have also kept a lid on bond yields in the rich world. They own almost a tenth of the sovereign bonds issued by France, for instance, and more than 15% of those issued by Australia and Sweden, according to analysts at J.P. Morgan. Japanese insurance companies own lots of corporate bonds in America, although this year the rising cost of hedging dollars has caused a switch into European corporate bonds. The value of Japan’s holdings of foreign equities has tripled since 2012. They now make up almost a fifth of its overseas assets.

What happens in Japan thus matters a great deal to an array of global asset prices. A meaningful shift in monetary policy would probably have a dramatic effect. It is not natural for Japan to be the cheapest place to buy a Big Mac, a latté or an iPad, says Kit Juckes of Société Générale. The yen would surge. A retreat from special measures by the BoJ would be a signal that the era of quantitative easing was truly ending. Broader market turbulence would be likely. Yet a corollary is that as long as the BoJ maintains its current policies—and it seems minded to do so for a while—it will continue to be a prop to global asset prices.

Rabbit’s sales patter seemed to have a similar foundation. Anyone sceptical of his mileage figures would be referred to the April issue of Consumer Reports. Yet one part of his spiel proved suspect. The dollar, which he thought was decaying in 1979, was actually about to revive. This recovery owed a lot to a big increase in interest rates by the Federal Reserve. It was also, in part, made in Japan. In 1980 Japan liberalised its capital account. Its investors began selling yen to buy dollars. The shopping spree for foreign assets that started then has yet to cease.

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