When the Walls Come Tumbling Down

A look at some of the benefits and pitfalls of replacing the traditional office with an open space linked by technology.

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Replacing the traditional office with an open environment linked by computers can cut real estate costs and increase productivity. But if it's not designed right, it can create chaos as well

Pink Floyd's latest CD will hit the stores in a normal enough cardboard casing, except for the red light along its side that flickers at irregular intervals. That psychedelic effect is becoming a bad trip for Fran Griffin, administrative head of special packaging for AGI Inc., a $74-million package manufacturer that is producing the case.

Griffin is discussing the Pink Floyd job with a pressman on the plant floor when she is paged. Retrieving the message, she learns that the film for the Floyd job is going to be a week late. Griffin signs onto one of the 32 unassigned terminals in the facility and E-mails the gluers, die cutters, and production scheduler, sending a ripple of information across the plant.

At AGI's Melrose Park, Ill., headquarters, there are no traditional private offices. Instead, workers operate in an open environment with few walls and doors. No matter where they are -- at a co-worker's desk or on the plant floor -- they have access to their computer files from any terminal or PC on the premises. Those who use laptops can plug into the company's network at any of 250 data ports. Many employees carry pagers because, like Griffin, they spend 80% or more of their time away from their desks, solving problems on the fly.

That's just what CEO Richard Block had hoped for when he invested nearly $1 million in a "nonterritorial" work environment. By tearing down the physical barriers between workers and providing them with the information technology to work wherever necessary, AGI sought to eliminate hierarchies and to foster collaboration.

Several big companies have experimented with nonterritorial workplaces. In 1991 AT&T began a massive initiative to equip market representatives with laptops and cellular phones. Now when reps need an office, they call ahead and reserve one for the day.

At the Manhattan and Venice, Calif., offices of Chiat/Day, the $893-million advertising firm, no one, not even founder and CEO Jay Chiat himself, has a private office; instead, there are open, unassigned cubicles and meeting rooms. The only personal space provided is a set of lockers for belongings. Laptop data ports are located about every 30 feet, even in the cafeteria. Employees carry small Rolm phones that clip onto their belts or shirts.

One motivation is real estate savings. The average area per U.S. worker is 200 square feet; alternative work environments have allowed some companies to halve that. In cities like New York and Los Angeles, where office space can run as high as $70 a square foot, the savings can be substantial. AT&T reported facility savings of $80 million in 1994, 20% of which came from reductions in real estate costs.

There's also the promise of higher productivity from a more dynamic, mobile workforce. Research shows that workers are most productive in open work spaces, as long as they are provided with small private areas where they can escape from the group. Many tasks, such as accounting or letter writing, still require privacy and solitude.

At AGI, Block hoped that by redesigning his company's work space, he could encourage more participative problem solving. And the strategy seems to be working, though some executives complained at first that they didn't have enough privacy. For example, when Jim Oppenheimer, vice-president of sales and marketing, had to analyze the breakdown of a price quoted to a client, he'd sometimes want a door to shut. But now nearly everyone at AGI has embraced the open environment.

Block joined AGI as vice-president of sales in 1970, a year after the company was founded, and took control of the then $30-million company through a leveraged buyout in 1987. The old labyrinth of hallways and closed offices didn't suit Block's freewheeling management style. He ordered up an open environment where workers could see one another and respond together to problems.

The new offices are in a square with an oval track in the middle. Outside the oval is open space filled with modular office furniture; there are no walls, and the area is flooded with sunlight from skylights. Inside the oval's perimeter are executive offices with glass walls and no doors. And in its very center are conference rooms.

Block recognized early on that if he wanted his employees to work anywhere and everywhere, he had to make information accessible from all points in the facility. So he installed data ports everywhere, from individual workstations to conference rooms to executive offices. He also considered a $15,000 cellular-phone network that would have allowed his roaming employees to carry small phones with them at all times, but he balked at the expense. For now, workers rely on pagers, voice mail, and a VAX computer network to keep them in touch at all times and from anyplace in the building.

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