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Do You Need to Pack In Your Employees?

Among the many challenges fast-growing companies face, how to accommodate new head count in the available space is a big one. Consider tossing out the cubicles, some CFOs say.
David McCann, CFO.com | US
December 13, 2011

Your company is growing. Actually, "growing" is a pretty tepid word for what's going on. You doubled your head count this year, and expect the same number of new folks on board next year. Where are you going to put them?

One answer: pack 'em in. Tear down the cubicles. Open space is "in."

Start-up enterprises today are increasingly putting employees out in the open, without walls to impede sight lines to their co-workers. The arrangement is not only space- and cost-effective but also promotes teamwork and energy, CFOs at such firms say.

Coyote Logistics is a five-year-old, third-party logistics company that has roughly doubled its workforce to 900 this year and expects to take on 400 to 500 new employees in 2012. Except, there were no cubicles to tear down. Coyote has never had them.

The company enthusiastically appreciates the benefits of a work environment where employees are arranged in rows, with colleagues to either side and across from them. Asked which provides greater value, the efficiency and cost savings or the environment itself, CFO Jonathan Sisler says, "Definitely the latter. We're a sales organization, and we make tens of thousands of calls to our customers every day. We have to have energy on the floor, and the high density creates that. It makes people enjoy coming to work."

Coyote, which finds freight that needs moving and matches it up with carriers to haul it, recently moved from Lake Forest, a Chicago suburb, to a building in the northern reach of the big city where it is negotiating access to enough space to expand to up to 2,000 employees at the site. A key to the deal was winning tax and investment incentives from the city. "If you know you're going to be expanding, look to your city and state governments, some of which are offering heavy incentives," Sisler advises.

Sisler has an office at the company's location in Atlanta, but when in Chicago he, like the rest of the executive team, works out in the open, like everyone else. "It's the ultimate open-door policy," he says. Noise is not an issue, he adds. You get used to it fast, and several meeting rooms allow managers to meet with their teams and provide quiet and people can go for sensitive or personal business calls.

Ron Kwiatkowski, CFO at ScrollMotion, another fast-rising company that develops interactive digital media content, extols the flexibility of the open work environment. It's easy to arrange people into teams using multiple configurations, he says. The only infrastructure alteration that may be needed as workstations move around is adding power and network drops.

ScrollMotion's developers need a lot of quiet time and prefer it dark, Kwiatkowski says. So they are put in an area "off to the side" where they can dim the lights without bothering anybody. The creative staff is clustered in brighter areas where they can have the interaction they need.

On the cost side, Kwiatkowski estimates that 220 square feet per person, including open space, would be needed when housing employees in cubicles. With a completely open-space setup, "you can really cut that in half in you need to jam people in. Now, we don't want to jam people in for long because it becomes counterproductive, but it does allow us interim flexibility to continue being productive while we search for incremental space opportunities."

From a 4,000 square foot space on W. 35th Street in New York City, it recently moved to a 15,000 square foot parcel near Penn Station. The company has more than tripled its workforce, to 130, in the past year, and envisions doubling or tripling again within 18 months.

ScrollMotion has established a relationship with a real estate consultant to monitor the company's expansion requirements, setting up right-of-first-refusal arrangements with its current landlord and actively looking at new space on an ongoing basis. "It's really about the strategic direction of our company, but the tactical piece is maintaining those kinds of relationships with real-estate professionals," Kwiatkowski says.

Meanwhile, the impact of expanding head count is relative. At Zorch International, a tech-enabled branded merchandise agency, the employee roll has grown at least 25% a year for a few years, but the total is still only about 40.

But if Zorch were to have cubicles instead of an open floor arrangement, it would need about 30% more space than it's presently using, says CFO Jackie Barry. The company is actually ready to increase its square footage in its building, but that's to prepare for future growth, not spread out the staff too much.

"As we've added 5 people and 10 people there, we've been able to say, 'OK, everybody's going to sit a little closer together.' When we take on additional space, maybe then we won't be sitting quite so close together. But when we're in a phase of filling that space up, we'll be sitting closer together again. The world doesn't end because there aren't a bunch of walls. And everybody gets that."




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