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Is Co-Working the Innovation You Need?

Human Resource Executive
Craig Guillot
Craig Guillot is a freelance writer based in New Orleans. He can be reached at [email protected].

When Greg Fullerton took the position as vice president of human capital at Tectonic, he noticed the company’s prime office space in Chicago was often going unused.

While Tectonic’s 3,500-square-foot space in the Willis Tower may have originally been acquired for prestige, employees were often spending several days per week working from home or at client locations. And at a cost of nearly $35,000 per month, Fullerton questioned its value for the 10 employees who worked at that location.

“It was the best view we could ever have from an office, but we were really restricted on our flexibility and costs,” Fullerton says. “When you’re paying that much on real estate, that’s money you don’t have to spend on employees, bonuses, hiring the right people and treating them well.”

It might seem contradictory for a growing organization to downsize its office, but Fullerton did exactly that and moved the employees into a co-working space in the Financial District.

The transition to one small, private room and communal workplace may have initially been about reducing costs but, in the three years since the employees have been there, Tectonic has experienced many benefits, Fullerton says.

Employees now have less pressure to use the office and can work from home more. There’s a better social atmosphere, it’s closer to the train stations and employees have more options about where in the office they want to work. There are even amenities like a pool table and video-game console.

Co-working spaces are growing in popularity across the country, experts say, and they’re no longer just for solitary freelancers looking to get out of the house. Employers are now placing workers in co-working spaces to help meet evolving needs arising from the changing nature of work.

“It’s all about flexibility,” Fullerton says. “Employees can use it how they want.”

The New Workspace

Co-working spaces are quite diverse and can range from small, artsy locales in residential neighborhoods to upscale, multi-floor facilities in skyscrapers. While some cater to rigid and conservative clientele, most focus on creating open environments where workers can collaborate, innovate and work among a community of other like-minded professionals.

One of the greatest benefits of co-working is that it offers employers a flexible workplace with built-in infrastructure, amenities and a community feel, says Gretchen Spreitzer, professor of management and organizations at the Stephen M. Ross School of Business at the University of Michigan. Employers can instantly establish a presence in a city and offer home-based and remote workers new options, while reducing the cost and commitment of traditional office space, she adds.

In the past few years, large organizations such as Google, IBM, Verizon and Microsoft have been looking to foster collaboration and enable employees to work better from anywhere, Spreitzer says.

“There has been a big shift in recent years. Many big employers are turning to organizations like WeWork to create whole spaces for their workers. They’re trying to get [remote employees] to work more collaboratively and are looking for new options,” she says.

With more than 18,000 co-working spaces across the globe, the market is growing at an annual rate of 20%, according to Commercial Property Executive. WeWork, a national provider of co-working spaces with 674 locations in 117 cities across the world, has seen its enterprise-customer base grow by nearly 400% in the past year; one-third of global Fortune 500 companies are now WeWork members, the company said it its 2019 Global Impact Report.

International Workplace Group, which operates flexible co-working spaces under several brands in 1,000 cities across the globe, offers spaces “for every type of employer,” says Sharon Edmondson, vice president of HR Americas at Regus. The Regus brand focuses on creating productive, flexible workspace, while Spaces–another brand from IWG–offers a creative atmosphere that fosters connection with the community, and IWG’s No18, set to open soon in Chicago and Atlanta, features spaces that look more like living rooms than offices.

“Employers are looking to co-working to reduce costs, increase productivity, and recruit and retain talent,” Edmondson says. “We’re seeing all types of employers across industry and size, from Fortune 100s to mom-and-pop businesses and everything in between.”

A Day at the Office

While co-working may be an easy way to secure office space with a built-in community, it’s also a means to boost work-life balance and employee satisfaction.

At Fueled Collective, a co-working concept with six locations–in Cincinnati, Minneapolis, Chicago and St. Paul., Minn.–90% of members are employers, says Chief Social Officer Don Ball. One of the company’s most popular spaces is the former trading floor of the Minneapolis Grain Exchange, which has 50,000 square feet of space and 40-foot ceilings. Members run the gamut, from professional-services and financial firms to creative agencies and law firms, many with more than 20 employees each.

“There’s small businesses, start-ups and others trying to decide if they want to bring a full team here. They’re all looking for more innovative and collaborative places,” Ball says.

Many employers say there’s a vibe in co-working spaces that often enhances productivity and employee satisfaction. JMJ Phillip Executive Search has 30 employees in WeWork co-working spaces in Chicago and Denver.

While co-working has enabled the company to scale easier without long-term lease commitments, it also offers an environment employees can’t always get at home or in a traditional office, says Dennis Theodorou, managing director for JMJ Phillip Executive Search. “It’s professional but also laid back,” Theodorou says. “There’s a lot of activities and opportunity for them to socialize, not just with our own colleagues but with people from other companies.”

Such socialization is especially important for Tectonic’s developers, consultants and IT architects, Fullerton says. While those employees work in the open spaces at Serendipity Labs in the Chicago Loop, the company also maintains a private office there for C-suite meetings, phone calls and conversations. That mix of options enables employees to use the workspace differently throughout the day as they need, Fullerton says.

As more employees work remotely or at home, loneliness and lack of engagement are growing problems, Spreitzer says. Co-working spaces can help fill this social void, many employers say. At Fueled Collective, workers from different companies often eat together in communal spaces and communicate during the day. Even home-based workers whose employers offer membership as a benefit often opt for the space over their home. “There’s a good number of them who show up on a regular basis,” Ball says. “For organizations that don’t have a company-owned office in the area, it offers some kind of accommodation for them. Many don’t want to go back to traditional office spaces or home.”

Fostering Engagement with Flexibility

Whether they work remotely or in traditional offices, employees are increasingly seeking flexibility that enables them to enhance work-life balance. As technology has changed the nature of work, many employers are seeking nontraditional work experiences with greater flexibility in how, when and where they work. Nearly half of employees say remote-work policies are an important factor in choosing a job, according to Indeed.

Most co-working spaces have a mix of suites, private offices, designated desks and open co-working spaces. The flexibility means that workers aren’t confined to one spot and can switch positions throughout the day, whether it’s a desk by a window or a large communal table with eight other workers. At Tectonic, the flexibility to use the space how they want has enabled workers to find what’s right for them and have more options than they did in a static environment. Amenities such as ping-pong tables and video-game consoles also offer new ways for employees to recharge during breaks.

“The flexibility you get is huge,” Fullerton says. “It’s going to enable companies to attract people from all different walks of life. If you narrow yourself down to people that just work in a cube, you are done in today’s business.”

IWG’s Global Workspace Survey found 85% of co-working-space users say productivity has increased in their business as a result of the greater flexibility.

But that flexibility can come with a price, as HR leaders have to “give up some control” when moving operations to a co-working space, Fullerton says. While they can find a co-working space that aligns with their company culture, they won’t have full control of events, holiday celebrations and occasional distractions. Many co-working spaces even allow dogs in the office and have after-hours events with alcohol. As a result, organizations that need a rigid, static environment may not do well with co-working, Fullerton says.

Co-working spaces also offer flexibility in real estate itself. It’s an especially attractive strategy for new, growing businesses that are building their cultures and want their people in the same space, Ball says. Employers can also avoid the overhead or management of a traditional office space and scale into new markets without long-term leases. The average price of a dedicated desk in a co-working space is $387 per month, according a survey by Deskmag.com.

Many organizations are also looking to co-working spaces because they offer built-in infrastructure, Spreitzer says. Employers don’t have to worry about acquiring much equipment, setting up the office or maintaining it. The fact that so many co-working spaces have a striking contemporary look also means employers can instantly create a “cool” work environment, Spreitzer says.

“They don’t have to worry about things like the Wi-Fi going down or whether it’s going to be suitable for millennials,” she adds. “It gives employers more flexibility and creates a certain image for them as being a cool place to work, at least in terms of the kind of space they provide.”

The flexibility of co-working spaces enables employers to keep their workforce mobile, agile and ready to respond to client needs, says Joseph Maltobano, principal at international architecture firm HLW. When the firm landed two big projects in Stamford, Conn., it was able to quickly move three employees into a Serendipity Labs office space and brand the concept StudioGo.

“We needed to be up and ready quickly in the market,” Maltobano says. “The flexible space offered a place where teams could go and spend the day rather than commuting back and forth to New York.”

Finding the Space

Because co-working spaces can vary, employers need to consider their options. It’s best to first identify what the company is trying to achieve with the space and what role it will serve relative to geography, operations and workforce, Edmondson says. This includes a full assessment of the organizational culture, identifying what fosters connections and ideas between employees, then leveraging that to find a workspace that fits its needs.

“It’s really about understanding how your employees communicate and how they work. Partner with the business and financial leaders initially to get a short list of what those expected ROIs are from that change, then find a solution that meets those things,” Edmondson says.

Those needs and desires will often vary across the organization. While front-line managers may seek reduced commuting times, a more collaborative environment and increased work-life balance, high-level managers may be looking to attract better talent, increase productivity and improve employee retention. C-suite leaders are often attracted to co-working because of decreased real-estate costs and improved productivity, Edmondson says.

“It’s the geography, the financial side of it and the environment that’s meeting the needs of employees,” Edmondson says.