By placing the right type of workers in close proximity to each other, employers can generate up to a 15 percent increase in organizational performance, a new study reveals.
Executive SummaryTo increase worker performance, employers invest in a number of tactics—from education and training and performance management to rewards and incentives. But new data developed as a collaboration between Cornerstone OnDemand and researchers at Harvard Business School shows that simply rearranging employee seating can be one of the fastest and lowest-cost ways of increasing the performance of an organization’s workforce.
For a workforce of 2,000 employees, that translates into adding $1 million per year to the bottom line, according to research into “strategic seating” performed by Cornerstone OnDemand and researchers at Harvard Business School, which uncovers how the distance between two employees’ desks affects various performance measures and company profit.
The authors suggest that while money and time spent on hiring practices, employee education and performance incentives are all effective ways to boost productivity, simply rearranging employee seating is a faster, low-cost means to the same end.
“Physical space is something organizations can manage relatively inexpensively, and it should be viewed as an important resource in increasing the returns to human capital,” said Dylan Minor, visiting assistant professor for Harvard Business School and one of the study’s authors, in a statement.
Specifically, the research report titled “Planning Strategic Seating to Maximize Employee Performance” reveals the most beneficial seating patterns for three types of workers: productive workers, generalists and quality workers.
- Productive workers are very productive but lack in quality.
- Quality workers produce superior quality but lack in productivity.
- Generalists are average on both dimensions.
The study is based on data from more than 2,000 employees over a two-year period provided by a single large technology company with several locations in the U.S. and Europe. It focuses on an analysis of a distance-weighted metric for each employee called “spillover,” which provides an aggregate measure of the performance of the employee’s surrounding peers, concluding that “spillover” is minimal for workers with common strengths. But workers are greatly affected by “spillover” effects on their weak dimension.
In the study group, productive workers were 38 percent faster than average (generalist) workers, but their work quality was 14 percent lower. Quality workers were 33 percent slower than average workers but turned in work that was 7 percent higher quality. (Quality was measured by how satisfied the recipient was with the completed task.)
In addition to speed and quality, researchers also used “effectiveness” as another measure of positive performance, defining “effectiveness” in terms of how many times the workers needed to escalate a problem to a coworker to solve.
They found that the optimal spatial management pairs productive and quality workers together while seating generalists separately in their own group. This particular seating arrangement results in a 13 percent gain in productivity and a 17 percent boost in effectiveness.
“In short, symbiotic relationships are created from pairing those with opposite strengths. It turns out that those strong in one dimension are not very affected by spillover in that dimension; however, they are very sensitive to spillover on their weak dimension,” Cornerstone OnDemand said in a statement about the report.
Effective and ‘Toxic’ Density
Throughout the report, the researchers use the phrase “density of exposure” to mean the level of spillover a focal worker faces. Increasing the “density of exposure” of effectiveness by one standard deviation increases the effectiveness of the focal worker by some 16 percent, the report says, for example.
This concept extends to negative performance spillover impacts of “toxic workers” as well, the study notes, defining toxic workers as those that harm a firm’s people or property. In technical terms, the report notes that “one standard deviation in toxic density increases the probability of the focal worker being terminated for toxicity by over 150 percent.
This result, the researchers say, provides evidence of the value of employee engagement surveys that capture how employees feel about their work environment and their managers. Such surveys can be an important first line of defense in rooting out toxicity by providing an early warning to intervene.
“With modern organizations shifting to open floor plans and flexible workspaces, this study shows that there is actually a science behind employee seating charts,” said Jason Corsello, senior vice president of strategy and corporate development for Cornerstone OnDemand, in a statement. Corsello also noted that the study is an example of the business value of “people analytics”and how an organization’s data can help it to operate smarter “even when it comes to deciding who sits where at work.”
Cornerstone OnDemand is a provider of cloud-based learning and talent management software.
About the Study
The research included an analysis of data from more than 2,000 employees over a two-year period provided by a large technology company with locations in the U.S. and Europe. For every performance measure examined, a metric was defined for each employee called “spillover,” which provides an aggregate measure of the performance of the employee’s surrounding peers.
To measure spillover, a weighting of workers was developed to measure the potential impact on a focal worker as a function of how close he/she is in terms of physical distance. This “distance weighting” was then used to obtain a measure for the overall spillover that a focal worker receives on a given performance dimension.
For each of the performance measures, an employee’s “spillover” was calculated as an aggregate value of all of the employee’s neighbors, weighted by distance. The farther an employee from a focal worker, the less his/her performance contributes to the spillover faced by that focal worker.