Tag: centralized commuter offices

The economics of office presence

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The virtualization and decentralization of knowledge work has greatly reduced the need for office attendance. But it nevertheless holds value for many knowledge organizations as shown by return to office policies mandating attendance for all or some of the work week.

That value is being assigned and weighed by both knowledge organizations and workers in terms of compensation and talent attraction and turnover.  

The math of the office attendance value equation works roughly inversely. Some organizations offer premium pay for office attendance. It’s also being valued insofar as spiffing up offices to make them “worth the commute.”

Conversely, some knowledge workers are willing to accept lower compensation for roles that don’t require much if any office attendance. A paper issued earlier this year by the National Bureau of Economic Research found on average, tech workers are willing to accept a 25 percent pay reduction for roles that don’t require full time office attendance.

This explicitly recognizes the personal cost in terms of time and money incurred by the commute whereas traditionally it was externalized onto staff and seen as part of the job. Now it’s being factored into the employment relationship. Higher compensation for roles requiring regular office presence can offset employees’ cost of commuting.

On the other hand, companies that do not demand office attendance and thus remove the cost of commuting from the employment bargain are being flooded with job applications per this recent Business Insider article, reflecting their high desirability among knowledge workers.

“It’s not about where we work, but how,” Melanie Rosenwasser, chief people officer at Dropbox, told Business Insider. “Flexibility and agency are the new currencies of work.”

The length of the commute and housing costs also factor in. The math there is well established and similarly inverse. Housing tends to cost more nearer to downtown business districts or office parks and campuses or with reliable and fast public transit. Conversely, housing costs tend to be lower in outlying edges of metro areas but come with longer and more time-consuming commutes that take away from employees’ personal time.

As for talent attraction and retention, the most skilled and knowledgeable staff know they are marketable and factor that into their calculations. Knowledge organizations that require office attendance run the risk of losing talent not inclined to work in a mandated organizational office setting.

Buildings and bureaus: RTO isn’t only about trust and control

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Return to office (RTO) isn’t only about control or trust or workplaces. It’s more fundamental. It’s essentially about organizational identity.

For decades, public and large private sector organizations have defined themselves largely by how they functioned, structured in the industrial age management model as vertical bureaucracies exercising command and control management. The hierarchy is represented in the building with the building as totem. Leadership sits in the upper floors of the building and corner offices. Staff in cubicles in the center and on lower floors.

The building is at the core of organizational self concept and sense of purpose. The org may have started humbly in a garage like Apple but now a large multi building campus represents it nearly as much as its branding. In Apple’s case, for example, the modernistic circular spaceship headquarters building.

Apple founder Steve Jobs described the personal computer as the “bicycle for our minds.” That untethers the mind from time, place and distance. But the spaceship houses the bodies containing the minds of Apple employees. It’s the mothership, the corporate edifice.

Decentralized, virtual knowledge work first made possible by Apple computers and later information and communications technology (ICT) advances is at odds with that. Hence, we see resistance expressed as RTO. It really means return to the organization — get back in the building.

Or as some orgs have framed it to staff, you don’t have a future with this org if you don’t regularly appear at the building that represents it and should find another role outside of the org.

ICT has disrupted that. knowledge work no longer requires the industrial age buildings and bureaus of the 20th century or daily commuting to and from them. It’s done wherever knowledge workers are and thinking. Rapidly processed, communicated and recorded on ICT tools like personal computing and communication devices and the cloud.

The essential questions knowledge organizations face in the 21 century:

How are they defined in the post-industrial age (or “smokestack era” as Alvin Toffler termed it in his 1990 outlook on the 21st century, Powershift)? If buildings and bureaus no longer essentially define them, what does?

Since knowledge work has been traditionally defined by Dave Rolston’s four dead kings of work:

  1. One job title
  2. Performed under one manager
  3. At one time
  4. At one place

How will it be optimally defined and organized going forward?

No assembly required

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As information and communications technology tools decentralize and virtualize knowledge work, it challenges knowledge organizations to reconceptualize working. In the pre information economy industrial age, work and education involved assembling: in schools, factories and offices.

Now the office is optional.

Making this conceptual shift has proven difficult for many knowledge organizations. That’s because their leaders often believe assembly is essential for collaboration and teamwork. Hence, they demand staff attendance at least some of the workweek in a centralized, commute in office.

Assembly is no longer needed is when information of all forms is easily shared virtually.

Forced assembly hasn’t gone over well for staff who find themselves going though the motions of assembling, swiping their badges to create a record of attendance. Or sitting in a cube farm and having Zoom or Teams meetings with colleagues in other nearby cubicles – something they could just as easily done without making the commute trip there.

Future shock and past snapback

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Before advances in information and communications technologies over the past four decades, knowledge work required industrial scale centralized commuter offices (CCOs), often staffed by hundreds or thousands of knowledge workers.

Much of the staff worked processing repetitive tasks that shifted from paper to digital form that did not require centralized creation, processing and storage. Information then became portable and decentralized, moving along with knowledge workers on personal computer and communication devices and later internet-based telecommunications and the cloud.

That made CCOs obsolete as exclusive work and meeting places by making knowledge work far less dependent on time and place, allowing information to travel as text, data and video most anywhere and asynchronistically.

These ICT advances have sped up considerably in the current decade with widespread adoption of working from home accelerated by the pandemic and the emergence of generative and agentic artificial intelligence.

These changes have come so rapidly that they challenge knowledge organizations to constructively adapt to them. They are experiencing what futurist Alvin Toffler termed “future shock” in his 1970 book of that title. It happens when the pace of technological change is so rapid institutions and organizations feel overwhelmed by it and experience cognitive dissonance as past, present and future seem to merge.

Understandably so considering the as built environment of office buildings concentrated in central metro areas and connected by what were originally designed as “high speed” highways to bring knowledge workers to and from them from outlying bedroom communities.

That world of the 20th century when companies grew and staffed up and occupied offices at industrial age scale no longer easily jibes with the 21st. That scale no longer make sense when knowledge, innovation and strategic judgment are the most valuable resources, resources that no longer require large numbers of staff regularly concentrated in office buildings.

Future shock produces what could be described as past snapback. It’s resistance to the future and nostalgia for when knowledge workers regularly commuted to the office because that’s where the job was. It’s clearly seen with “return to office” expectations.

Which haven’t gone over well since knowledge workers and not their organizations have traditionally borne the costs of getting there. And once there, sitting in a cube farm doing the same activities they could do in their home offices. That produces cognitive dissonance for knowledge workers.

Knowledge organizations have been trying to reconcile the conflict between the 20th and 21st centuries with “hybrid” office attendance, having staff come in on a designated number and days of the work week. In other words, working in the CCO like in the 20th but with the current century recognition that knowledge work doesn’t necessarily require office attendance.

It eases future shock and cognitive dissonance. But going forward into the third decade of the 21 century, the shifts will require knowledge organizations make a big adjustment to a world that for many seems to have changed in less than a decade.

From workplace to gathering place

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The return to office debate reflects a transition period away from when the tools to process, document and communicate information were located in centralized commuter offices (CCO), making it the primary knowledge workplace. Over the past few decades thanks to advances in information and communications technologies that is no longer the case.

The CCO role as “workplace” is changing from a location where knowledge work is exclusively performed to an ad hoc meeting place where knowledge workers gather for collaboration, brainstorming, social bonding, and training. Offices or some suitable location are still needed. But not every business day. Floors filled with cubicles surrounded by closed door offices have become superfluous.

The conceptual shift underlying the transition is from conceiving of much knowledge or thought work as needing a defined workplace — like a physical factory floor assembly line in manufacturing — to a virtual, much less location dependent activity.

Related is a shift in the view of knowledge workers to the time and travel expense needed to gather. Coming together isn’t a mindless commute trip anymore. It’s now more like business travel and has to be meaningful and clearly of value.

The purpose of co-located work is now emerging as dominant determinant. When and where do knowledge workers gather and for what purpose?

This transition is a big one and coming with much gnashing of teeth and confusion and disorientation that is to be expected in a shift of this scope given how deeply entrenched the office has been as the exclusive knowledge workplace. That organizational discomfort can result in resistance that makes adaption more difficult.

An emerging — and dubious — tradeoff: Making CCOs destinations worth the drive.

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In his 1976 book, The Telecommunications-Transportation Tradeoff, Jack Nilles posited that telecommunications had evolved to the point it could substitute or “trade off” against transportation demand associated with getting workers to centralized commuter offices.

For Nilles, the idea occurred to him while crawling along congested Los Angeles freeways to commute to his job as an aerospace engineer along with thousands of his fellow Angelenos. This was at a time when advanced telecommunications technology was T-1 lines that could simultaneously transmit data and voice telephone calls, allowing downtown offices to link to satellite offices in the sprawling L.A. basin located where their employees reside rather than having them travel to the downtown office buildings.

Two decades later, the Internet did the same thing but brought the connection straight into peoples’ homes. That greatly enhanced the mathematics of Nilles’ tradeoff. Much if not most knowledge work could as the Internet and personal communications devices evolved could be done in home offices — no transportation or even satellite offices required.

A new tradeoff is now in the offing. This one proposes to make commuting worth the personal time and expense cost incurred by knowledge workers by making commute in offices more luxe, comfy spaces instead of stuffy, florescent lit cube farms.

“People and companies know that offices are changing and that offices need to start feeling maybe a little bit more like hotels, with great service, seamless technology, inspiring design, and workplaces that create a true sense of place,” says Annie Dean, chief strategy officer for the building operations and experience division at CBRE, a large commercial real-estate services firm.

Dean’s new role overseeing CBRExIndustrious Building Experience Lab juxtaposes with her former role with software company Atlassian, where she led Atlassian’s Team Anywhere that emphasized virtual, decentralized knowledge work. “We have 13,000 employees spread across the globe, and individuals can choose their working location every day,” Dean said then. “It’s about how we work, not where we work.” 

In her new role, it’s the where is paramount: making the centralized commuter (CCO) office a destination worth the drive.

The question is whether knowledge workers in highly congested metro areas like the L.A. Basin will find value in the tradeoff. Certainly office space can be overhauled to make collaboration, training and brainstorming sessions more comfortable and enjoyable instead of the usual layout of seas of cubicles surrounded by closed door offices that has been the standard setup since at least the 1970s.  

In these big metros, many knowledge workers aren’t likely to see the value when crushing commutes – like in the San Francisco Bay Area — are factored in. In such high cost metro areas, the predominant tradeoff is housing affordability versus commute time that tends to push knowledge workers to metro fringes were housing costs are lower. That typically means longer commutes. Spiffing up the CCO won’t alter the math for many of these knowledge workers. The time sucking trip it isn’t likely to be seen as worthwhile aside perhaps from an occasional trip each month more akin to business travel to professional gatherings involving overnight stays involving a true hotel.

It’s now longer about whether to CCO or not. New model of knowledge work needed.

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When knowledge workers worked in centralized offices, they commuted to them because that’s where the tools of their trade were. Typewriters, mimeograph machines, photocopiers, plug and PBX switchboards and desk telephones and later, facsimile machines.

When desktop microcomputers emerged in the 1980s and later laptops and cell phones known as “personal communication devices,” their portability enabled their use in home offices just as easily as centralized commuter offices (CCOs). That was the beginning of the end of the office as it was known for a century.

It was the next development in information and communications technology that obsoleted the commute to CCO routine: the mass market Internet in the 1990s. That allowed these portable devices to transmit and receive and later virtually process (in the cloud and with generative AI) all forms of information: documents, data, numbers and voice and video communications.

The CCO’s primary function then became a gathering place for group work. How much gathering is necessary is currently a topic of much discussion and debate among knowledge organizations and their staffs. Every workday? Just some days of the week? For those who live within 50 miles of the CCO?

The topic has cleaved into two camps: office centralists and virtualtists.

Jamie Dimon, CEO of JP Morgan, laments the Internet that disintermediated real time communication out of CCOs via “fucking Zoom” videoconferencing as it put it in a viral online rant. Dimon and other old school leaders like him believe co-located gathering is essential to knowledge work and career development. They’re willing to invest substantial amounts of money to create office space resembling first class hotel suites and associated amenities to facilitate assembling in person. There’s some practical rationale for this position relative to career development and training for younger workers.

For the other school of thought, gatherings requiring a commute to a CCO should be limited and purpose driven and not the everyday mode of working. Commuting to a CCO simply to do work that can be done in a home office isn’t worth the personal time and expense incurred. It’s a very strong utilitarian argument.

Resolving this split going forward will require the development of a new model of knowledge work disposes of quotidian office attendance and focuses on purposefully defining the need for gathering and the expected outcome, i.e. reaching a consensus or reaching a decision. That’s in line with the view of knowledge organizations as “decision factories” as Roger L. Martin described them in a 2013 Harvard Business Review article.

Toffler’s second and third waves colliding in U.S. federal government

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In his 1980 book The Third Wave, futurist Alvin Toffler depicted the long-term evolution of modern socio-economy as a series of three waves. The first was agrarian – the cultivation and sale of plant crops and animals. The second was the industrial era that began in the 18th century. According to Toffler, this wave reached its peak in the 1970s when services took on a more dominant role relative to manufacturing – the third wave.

The transitions between the waves play out over many decades and are fraught with tension between the receding and rising waves. Not surprisingly since in each, the scale of social and economic change is enormous with broad implications for how and where people work and live. The previous socio-economy and its industries and settlement patterns is remade into the next.

Toffler wrote of advances in information and communications technology and fiber optic telecommunications infrastructure that would fundamentally alter the second wave industrial era based on centralization of production in offices and factories in metro centers. The third wave, Toffler prognosticated, would instead bring about decentralization.

Second wave office work would migrate back to homes that Toffler termed “the electronic cottage.” Toffler’s prediction came just six years after fellow futurist Arthur C. Clarke issued a similar forecast, envisioning the end of commuting to urban downtown office buildings. “Men Will No Longer Commute, They Will Communicate.” And plenty of women too who have entered the workforce since Clarke’s 1964 prognostication.

Toffler’s and Clarke’s future has arrived – gradually since the mass market personal computer in the 1980s and Internet in the 1990s – and suddenly following the social distancing public health measures of the 2020 viral pandemic. Millions of office workers migrated to the electronic cottage, creating home offices and no longer regularly commuting.

The tension between the second industrial era and third information era waves is now starkly evident in the federal government and in two prominent figures of the current American administration: President Donald Trump and Elon Musk.

Trump is a product of the second wave and the 1980s in particular when he developed his identity as a real estate developer including office buildings. The younger Musk is more complex, a creature of both the second and third waves. He embraces technology but largely in the context of second wave transportation advances: automobiles (Tesla) and rocket ships (SpaceX).

Both men are essentially second wave industrialists. For them, Toffler’s postindustrial third wave electronic cottage doesn’t exist. It’s a dwelling, not a place to work. Working there instead of commuting to a distant office is even “immoral” as Musk put it. Consequently, the administration has ordered federal workers to report for duty at the office.

Knowledge organizations suffer “future shock”

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In 1970, futurist Alvin Toffler coined term “future shock.” It occurs when the future arrives too quickly for people and organizations to adapt to it. Consequently, they get out of sync with the onrushing change in their environments, leading to maladaptive behaviors such as:

 • Crisis-Driven Decision-Making – Reactive rather than proactive approaches to industry disruption (e.g., panic layoffs, rushed technology investments).

• Over-Centralization & Micromanagement – Leadership tightens control in response to perceived chaos, stifling innovation.

• Resistance to virtual work — A rigid preference for traditional centralized commuter office-based operations, despite clear benefits of decentralization.

• Internal Conflict & Cultural Breakdown – Generational clashes between leadership and younger, more digitally native employees.

Two related major forces of change are affecting knowledge organizations. Both have been building over the past five decades or so and have reached critical inflection points in the past few years, accelerated by public health measures taken in response to the 2020 pandemic.

The first is advances in information and communications technology (ICT) that has decentralized knowledge work out of commute-in offices in metro areas. Microcomputers and personal communication devices like smartphones allow knowledge work – researching, reviewing, analyzing and communicating information to arrive at decisions on how to use it – to be done most anywhere. Beforehand, that required dedicated office space and meeting rooms — and staff to commute to and from them.

The second is housing costs and transportation systems in metro areas. Housing tends to cost more nearer to their centers, increasing demand for more affordable, lower cost housing more distant from them. That in turn boosts demand on transportation systems that could in earlier decades enable knowledge workers to rapidly commute from homes located far from centralized commuter offices but no longer have adequate capacity to do so.

Knowledge organizations can overcome future shock, build resilience and adjust to change that shows no sign of slowing down. This requires them to assess and examine the evidence supporting how they conceptualize how their work is done, how their value proposition and strategic advantages are created and the best means to sustain them.

It takes courage to challenge long held assumptions and thinking. This isn’t an easy task for many knowledge organizations since for many, their foundations are built on a pre-digital era where ICT played a far less prominent role. But the benefits are many, allowing them reduce internal tensions and move forward more confidently and with greater capacity to adapt to the changing world of knowledge work. Help is available.

The customer service model and government offices

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The Trump administration’s offer this week to federal employees to either do their jobs in government offices or resign effective later this year reflects a conceptualization of public sector knowledge work similar to that expressed by some state governors who imposed similar personnel rules over the past few years. It likens it to customer facing services people receive in brick-and-mortar locations like retail stores. These locations must be necessarily be staffed during business hours.

Some government services – state motor vehicle departments and health clinics – fit that description. But much of what government does is plan and make decisions on how to allocate public resources and deliver them through government programs. They are what Roger L. Martin would describe as “decision factories” as he termed them in a 2013 Harvard Business Review article.

Prior to the 21st century, these activities were nearly always performed in vast cube farms, closed door offices and meeting rooms in government owned or leased buildings centralized in Washington DC and state capitols.  

Advances in information and communications technology since then have diminished the need for these locations to allow staff to share, analyze, discuss and plan while seated together in these offices. Personal computers and devices and the Internet generally work as well outside of these locations as within including residences, thus eliminating the need to travel to a centralized commute-in office for most forms of knowledge work.

But when they are used in a knowledge worker’s home, a cognitive dissonance occurs, particularly for those who are not digital veterans (early adopters) or younger generations of digital natives. Prior to these ICT advances, the home was clearly for personal time and relaxation – not working. Daily activities were defined by the space in which they occurred. Home is home and offices “workplaces.” That distinction is no longer so sharply defined.

Making the conceptual shift away from those sharp distinctions is difficult, requiring an adjustment in thinking that can be challenging for both public and private sector organizations.