Who Needs an Expensive Office?

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CIO Magazine had an excellent article in December 2008 titled "Go Home" by Meridith Levinson.The article describes how Chorus, a successful software company focusing on health care providers, has no headquarters or leased office space. The driver for dumping their office space was that maintaining office space is expensive and that telecommuting can save money and enhance productivity.  Not new ideas, but one that will likely become more popular in the next few years (beware, perhaps, of investing in office park REITs).

I have been dealing with the issue of multiple office spaces at a number of my companies in recent months.  Sometimes the companies want separate R&D professionals in their own world--a popular concept in the early 2000's--perhaps nearer sources of high quality employees.  Other times, mergers and acquisitions have to confront multiple office locations as part of the rationalization process.  Finally, cash flow problems may force companies to move into cheaper quarters.

It got me thinking about why companies need offices in the first place.  Accenture, for example, went to shared offices years ago as a way of cutting real estate costs. Many software companies now prefer that sales and support staff live where they choose and work from home, since they have to travel to client sites most every week. But the question of no offices at all had not really crossed my mind. It may make a lot of sense in the emerging world of "less is more" in terms of resource allocation.  Why spend it on offices when it is better spend on, for example, R&D?

Start ups looking to keep cash burn low should consider having all or some of their office needs virtual. The article had a number of good suggestions of how Chorus keeps telecommuters tuned into what's going on in the virtual company:

1. Daily morning executive team meetings--a conference call first thing in the morning to discuss top priorities, getting the team to buy into what needs to be accomplished immediately and in the coming weeks.
2. Daily morning reports--a report each day to all managers detailing the projects each team is working on, where they need assistance and where they have resources available to help other teams.
3. Daily infrastructure calls--IT support, database administrators, etc. get together in the afternoon to discuss issues that came up in the morning meetings and who will take responsibility for resolving them.

Of course, telecommuting can create as many issues as it can resolve.  Finding people who are self managing is key as the home has numerous distractions to reduce productivity (no fishing off the houseboat during working hours!).  On the other hand, allowing telecommuters to better organize their lives, instead of showing up 9 to 5, is a great way to keep professionals happy.

Entrepreneurs should consider the pluses and minuses of having a telecommuting organization in developing their business plans.  Likewise, small companies should ask themselves if office lease costs could be better spent on serving customers better.  Either way, finding creative processes for keeping office costs at a minimum should be part of the annual budgeting game.

Comments

[frontierblog]

I cannot agree more, actually I wrote a similar post weeks ago

Edward

Frontier Blog - No one ahead, no one behind
http://www.hwswworld.com/wp

[Dave]

Thanks Edward

As they say, great minds....

Dave

[Englewood Colorado Office Space]

Great article and I completely agree. Without an actual office, some positions can be outsourced also. For example, my company works with Execucenter, which is a company that provides a receptionist during office hours and many other office services. This service is much cheaper than hiring another employee, and gives customers and clients someone that they can contact to point them to the person they need to talk to in your organization.