Accounting/ Hotelling: The Wave Of The Future term paper 17924

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Throughout the years technology has made huge impacts on the way business conducts itself. From the internet and cellular technology to laptops, communication has become accessible wherever one might be. Those who have benefited most from such technology are those who spend most of their time out of the office. However, the question is this: If technology enables employees to communicate and accomplish the tasks necessary to complete one’s work outside the workplace, then why aren’t corporations jumping at the idea? Corporations are always looking at ways to cut costs. Having an employee work from home reduces office overhead. Corporations need to attain a level of culture that can only be absorbed when working at the business place. So how can corporations cut office overhead costs while trying to maintain growth, information sharing and a level of culture? Is it possible to implement such system? Accountants, who are not known for their ingenious technological creations, have contributed to technology by implementing a system where information sharing is enhanced and space is utilized more efficiently. For the most part ‘hotelling’ is more of a cost saving technique than a technological advance. However, the technology used, ensures that information sharing is not reduced or lost due to space utilization. Hotelling may be the new wave of the future, however communicating this to employees may be more difficult than anticipated because of some of the social elements that will be disrupted by installing the new system. Hotelling does have its downfalls, but the benefits certainly exceed the costs for any organization willing to install such a system.

With the increase of communication devices such as intranets, cell phones, laptops, modems, emails, and voicemails, accountants have more mobility as to where they can do their work. This is extremely beneficial to those accountants who spend most of their time at the client’s workplace. Most of their larger clients populate the downtown core of major cities. Therefore, for most accounting practices, it is logical to have their main offices also situated in the downtown core. The big issue revolving the practice is the fact that being situated downtown gets extremely expensive, especially for a line of business where the employees occupy the office less than half of the time.

Hotelling systems can alleviate the costs of residing in the downtown area. Hotelling is a system whereby no employees have certain seating arrangements or desks. Each individual is responsible to log into the system each time they come into the office. The system then assigns them a desk that is available. Not occupying a desk everyday is wasted space that can otherwise contribute to reduce overhead. Since accountants do not spend most of their time in the office, it is logical to have a larger layout of cubicles rather than separate and much larger offices within the provided area. Through hotelling, the firm hopes to restrict the growth of its office space - particularly in its pricey downtown locations. Having an office layout only consisting of cubicles can reduce space and allow for more employees to be hired.

“…Coopers & Lybrand estimates that its ‘Right Space’ (hotelling) initiative has

saved the firm £2.5m on an investment of around £500,000 - with potential to

save more than £5m in the next three years…reducing space requirements in

London by 40% and in Birmingham by 20%.”

Before Pricewaterhouse merged with Coopers and Lybrand, Coopers and Lybrand LLP was a technological leader in the accounting industry. They moved to paperless accounting before any other firm. Everything was basically done on laptops thus, accountants everywhere they went could carry information. As a technological leader in its industry, Coopers and Lybrand decided to try this hotelling system. “By using the hotelling system, we were able to consolidate from 18 floors in two buildings (in Manhattan) to nine floors in one building,” says Mike Hamel, now a senior associate at PricewaterhouseCoopers. Office space is definitely one of the biggest overheads with accounting firms. It has been an issue over the years as to how it could be reduced. By measuring the amount of time consultants in various service lines spend outside the office, PricewaterhouseCoopers has been able to reduce the ratio of workspaces to employees to as little as one to four.

Having access to a laptop enables the employees to access the company's intranet. Within the company’s intranet is a listing of office sites owned by them. Each office has a diagram of the office layout and anything else that the employees should know in respect to the office like locations of photocopiers, fax machines and secretaries. Once the employee logs in for the day, the system automatically assigns the employee to a cubicle that is free. The employee’s direct telephone number is automatically transferred over to that same cubicle.

“All those affected by ‘Right Space’ have their own personal ID number,

which becomes their ‘virtual’ telephone number. Telephone calls are to

people, not telephone numbers or extensions. And a database automatically

routes calls to each individual, no matter where they are.”

Another feature to this type of system is that it allows the employees to view where others are seated in the office. Being in an office building with hundreds of employees can be quite difficult to track someone down if seating arrangements are always changing. Walking up and down the aisles to locate employees is just a waste of time. With this system, all it takes it a simple click of a button and the intranet site can locate the exact cubicle anyone in the office. Employees can also book equipment or conference rooms through their intranet when visiting other offices in different parts of the world. “If I’m a resident consultant in Chicago and I’m going to New York for the day, I’ll have the opportunity to request a reservation in the New York office where I’m going that day, “ says Mike Hamel.

Such a system though, must be implemented from the top right down to the bottom. If those who are hotelling see that others like senior partners have their own desks and offices then they might view themselves as inferior. This can demoralize an employee considerably and affect ones work productivity. Management should be more inclined to accept such a system and reap the benefits it has to offer rather than the minimal negative impacts. Besides, senior partners spend the least amount of time in the office. A space utilization survey showed that senior staff spent less than 25 percent of their time in the office. With a top-down approach, employees are more likely to accept such a system because they would see that management is giving up more than they are. Having a permanent desk or office is a status symbol. Employees may see it as a step higher within the hierarchy as well as job security. Permanent desk seating suggests that an employee is permanent within the firm. A person who is shuffled from desk to desk may envision that their time with the company will only last as long as there is work. If work is slow then they may think that they are the ones to be let go. Management must communicate that such a system is not implemented to do such a thing.

Privacy is a big element that is lost when companies revert to a hotelling system. Many employees who were used to shutting the door if they did not want an employee to hear their conversation are unable to talk with someone privately without having anyone hear them. Management, for the most part are the ones who are subject to sacrifice such privileges when reverting to this new system. However, privacy can still be maintained by communicating through email or even through conversing via cell phone in a private area of the office building. Andersen Consulting in Vancouver has installed some private booths in their office for those more personal conversations. “When a call comes in that doesn’t require an audience, four phone booths stand ready. Think BC TEL box with chair and desk and plugs for a laptop. The idea is to squeeze in, shut the door and chat away.”

Human Resources should also be aware of the fact that overcrowding may affect the workplace too. If too many employees are hired, then employees will become frustrated because they will always have a hard time booking a desk in the office.

Employees in an office environment sometimes feel that they should create a setting around their desk that matches their personality or home. For example, employees like to decorate, put pictures on their desks, and have some of their necessities in their desk. Such things like this are said to improve an employee’s productivity because they are able to work in an environment that they feel is more comfortable to them. When employees are forced to share desks then some of these privileges are thrown away and they feel as though they are locked in a cubicle with nothing to look at besides their laptop. On top of it all they will have to carry all their necessities with them. People feel as though they are important by having their own desk. However, the higher the employee to desk ratio, the higher a chance an employee will be sent home for lack of a desk. For some it might be fine to go back to an environment that is rela and more personal, however those who traveled from a distance may become frustrated and outraged. This may give employees a sense of insecurity and hostility.

The firm has to find a way to combat these issues and reassure employees that hotelling will not threaten their jobs. Many firms have hired floor staff that manages the system. They book spaces, desks, and equipment and keep an eye out for resources that are not being used. By having a team manage the system, employees have to do their part in assuring that everything they need is given upon request. Therefore, employees are responsible to login to the company’s intranet every morning before they leave to work and book a desk if they need one. This avoids wasted travelling time if no desks are available. Coopers & Lybrand developed a hotelling system much similar to the one stated.

“From this a strategy emerged: to create a team of mobile professionals

able to spend more time with their clients, while retaining access to all the

facilities they would normally enjoy at a permanent office, irrespective of

their location. Right Space aims to do this by focusing on properly managing

a variety of available office spaces, shared desks and equipment, and relying

heavily on an integrated package of telecommunications equipment.”

Many corporations have seen the beneficial effects this system has to offer. For example, at Fuji Graphics Systems Canada Inc., ‘hotelling’ has replaced personal offices for about 80 sales and technical support staff who spend most of their time on the road. However the main concern to companies who installed the ‘hotelling’ system was the affect it would have on customer service. Corporations did not want their customers to spend a lot of time being transferred form one person to another to try and reach an employee. Voicemail tag can take days before anything is solved, thus creating anxiety and hostility on the part of the customer. Rogers Cantel solved Fuji’s problem. A Wireless Office Service was installed. The system integrated the Cantel AT&T PCS wireless network with a new in-building infrastructure. “The system provides four-digit dialing access to a local extension from anywhere within Cantel AT&T’s network in Canada or the AT&T Wireless Network in the U.S. It eliminates juggling between cellular, pager and office voicemail systems.” Companies dictate that callers should be able to speak to a company representative wherever they are. This avoids customers being locked

This type of system accomplishes two main goals. The first being space utilization and the second being communication enhancement. Many predict that in the future all work can be done simply from the home. The electronic revolution might send people home some of the time, however this is not enough to eliminate corporate culture. Synergy cannot be built if one stays at home to do their work all the time. Hotelling or space-stingy offices are the ideal. They help create an environment where costs can be saved, information can be shared, growth is not restricted and equality is accepted.

“Space-stingy offices that are wired for the future and are engineered to

absolutely, positively boost team building. The principles are simple: big

hallways, shared desks, cozy lounges and teeny, weenie private cubicles.

No spatial hierarchy and few, if any, permanently assigned spaces.”

With technology such as this, why doesn’t every company allow their employees to operate from their own home? The answer is simple. It’s all about building synergy between the people who work at these corporations. By knowing individuals personally, these people are more willing to help others in answering any questions and overcoming any obstacles. With technology being the main line of communication and the only way to or find out what the person ed is capable of, one limits themselves to what is said and may not know what that person is truly capable of doing. Having that one-to-one conversation in person can say a lot more about a person than a quick question to a stranger that you have never seen before over email. “There’s a social element here that we don’t want to lose. Whether it’s talking about the weekend or discussing cases over lunch, we need to bounce ideas off each other. And if you’re at home, that doesn’t exist.”

There are many benefits that can be said about the hotelling system. The first issue revolves around reduced costs. With employees who are in the office less than fifty percent of the time, having permanent seating arrangements is a high overhead cost to firms. Hotelling reduces these costs by having the system assign random desks to individuals who have decided to do their work at the office. Since seating arrangements are not assigned, firms can hire more employees who can contribute to reduce overhead by bringing in more revenue. Other advantages include a feeling of equality and a more sociable environment. Such a system can improve the synergy within the office. Everyone is treated equally by having a cubicle and limiting those with offices. Whether it be a manger or a junior staff account, everyone should be given a cubicle rather than an office that minimizes floor space. Instead of having a private office, employees are now able to use open-concept workstations. These areas are not surrounded by walls and

allow for unobstructed views to the outside. But because of the reduction in private space, firms are creating "oases" or quiet areas where employees can take the opportunity to reflect away from the turmoil of the office. There are also meeting rooms and breakout areas for noisy teamwork. This type of innovative office arrangement, designed specifically for the firm's activities, is a trend that is changing commercial real estate. Because everyone is within close proximity with no boundaries or walls restricting them, allows for people to meet with their neighbour and build relationships. This system also encourages employees to go out and build close relationships with their clients to assure future business transactions. Installing the system does not experience lost information. In fact, more information is conveyed to the individual. Information such as where employees are seated, whether or not they are in or out of the office and even floor plans can be accessed. The ability to request certain equipment as well as a desk space for incoming travelers from other branches of the firms can be accessed through the intranet system. Finally, the system assures communication to either the representative the client wishes to speak with or a qualified individual who can assist with such inquiries, leaving voicemail as the last resort.

As long as there is a person monitoring and managing the system to prevent incidents of overcrowding, not much can be said about this system negatively. Besides concerns of privacy and the status of having a permanent desk area, such concerns can be overcome with a little communication and acceptance of the system from the top echelon of management right down to the bottom. Hotelling is a system where firms can reap the positive benefits it has to offer and will be seen amongst many firms in the future.

Word Count: 2755

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