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OM in the News: Citigroup’s New Office Plan–No Offices

January 2, 2016
Citigroup CEO Michael Corbat at the bank’s HQ, under renovation. Corbat says the open floor plan will encourage communication.

Citigroup CEO Michael Corbat at the bank’s HQ, under renovation. Corbat says the open floor plan will encourage communication.

In renovating its Manhattan tower, Citigroup is planning to offer all the amenities of the modern skyscraper, including a rooftop deck, state-of-the-art gym, upgraded coffee and faster elevators. But when the bank’s executives move this month into their new digs at the 39-story office building, they will find one big thing missing: actual offices. The nation’s 3rd-largest bank is making the shift to an open-plan layout—a vibe more identified with tech startups than global banking conglomerates—where no one, not even its CEO will have a door. Most employees won’t even get their own desks.

Citigroup says the setup will connect people face-to-face, raise energy levels and save money, by fitting more people into one space. The new layout is minimalist and egalitarian. Because most desks aren’t assigned, employees must lock up their family photos and personal stuff each night. Everyone gets a window view—but no one gets complete privacy.

“Researchers disagree about whether open offices foster communication or encourage distraction,” writes The Wall Street Journal (Dec. 26, 2015). The wall-less workspace is meant to flatten hierarchies, something banks have traditionally been built on. The Citicorp CEO’s new 360 sq. ft. workspace won’t have walls or a door. Instead it features tall glass dividers to provide what the bank calls “seated privacy.” Lesser executives get semiprivate spaces of 180 sq. ft.

The bank says it carefully considered its employees’ concerns. The design—from white-noise generators to walls and ceilings that absorb sound—is meant to minimize the distraction of nearby conversations. Each floor will have multiple conference rooms and small phone rooms for private conversations. But other banks that have incorporated some open spaces have kept private offices for almost all of their senior executives.

Classroom discussion questions:

1.Why is office layout an important OM decision?

2. What are the 3 physical and social aspects that workspace layout must balance (see Chapter 9)?

One Comment leave one →
  1. Andrew Cochrane permalink
    January 2, 2016 2:28 pm

    Interesting. As the blog states, just taking the trend a few steps further.
    However, I bet that the advisers to companies advocating for these open-space plans and no separate offices have their own large and well- provided offices in their consulting firms !!!

    In my own observations, one of the important considerations is the employee’s sense of belonging and of some importance to the organization, which in turn engenders a commitment to the organization. The employee who has a desk or some permanent space values the area that they can call their own, and others know where to find them in the organization. In the system described, where every day the employee might have to find a new place to work, the employee has less sense that they belong to the organization, less impression that they matter to the company, and if their site of work changes every day then who would notice if they weren’t even there in a large company. Having a space for a few private items, photos, etc, is important, I believe, for emotional health and happiness.

    I work as a doctor in a large hospital, and having a desk (which I share with another surgeon) is very important to me. There are always patient files to read, letters to be done, and having some reference books at hand is very useful.

    In addition, privacy is important for certain conversations (managers discussing poor performance with an employee where that should be one on one and private or perhaps with an independent observer, important meetings related to deals in progress, takeovers, etc). Even if the conversation is not audible, the glass barriers described still allow others to see who is meeting, and is just as likely to generate rumour and gossip.

    Communication might in some cases be enhanced, but if the members of a project team or department are not able to work in the same area it may simply mean more emails and less face to face talk, and that is probably even less productive / efficient.

    In addition, many professionals (the analysts, legal staff, etc) are going to have papers, reports, documents, drafts of business plans, etc. Not everything is electronic. Do these have to be tidied up and carried around every night when they go home ?

    Personally, I think that personal office space is important, and the best way to break down barriers is by having different teams / departments in close proximity, and by having common meal / lunch rooms / canteens.

    Andrew Cochrane
    Melbourne, Australia

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