Virtual offices: Anybody out there?

Virtual offices save space, but can also create managerial headaches.

Harry Zarek has 300 employees at the Richmond Hill, Ont., head office of his IT services firm, Compugen — and no room for any more. “We’ve literally run out of space,” says Zarek of the company he founded 27 years ago. “Parking spaces are all gone, desk space isn’t available.” A new head office isn’t planned until the fall of 2009, leaving Zarek to grapple with what to do until then, as well as how his new building might not just be bigger, but different. The answer might lie in having virtual offices, a kind of distributed work system that grants employees nomadic status but still provides convenient on-demand access to work spaces, meeting rooms and technical services. Powered by new technologies — low-cost, mobile voice communications, improved video conferencing, easier sharing and collaboration on digital files — virtual offices provide flexibility for both employees and their companies. Employees enjoy the freedom to choose where they work and avoid commuting hassles, while companies get another tool for recruiting and retaining employees, and shrink their real estate footprint.

Compugen in June began a three-month pilot program with SuiteWorks, a company based in Barrie, Ont., that offers ad hoc professional office space and services. Zarek hopes 50 volunteers from Compugen’s head office will sign on for the pilot in order to work out both the technical and human challenges of unchaining employees from their desks. “We want to be careful we do this in a very methodical way,” says Zarek. “We want to make sure people don’t feel a loss of attachment to the company because they don’t have an assigned desk.”

A virtual office isn’t like traditional telecommuting where employees work full-time from home. Those initiatives tend to have only a 5%â??10% participation rate, because employees and managers view it as an all-or-nothing proposition. Most people don’t have a dedicated workspace at home, and they also need to occasionally get out for meetings and casual conversations between colleagues. In contrast, distributed work strategies, which get up to 47% employee buy-in at some companies, support a network of work locations — homes, company offices and also satellite drop-in centres, such as those operated by SuiteWorks, which has both isolated “heads-down” desks and private meeting areas for teams, as well as common areas for mingling with other companies’ nomads. “It’s not a binary choice between home and work,” says Peter Browne, who joined SuiteWorks as CEO in January.

It’s no coincidence Browne was previously vice-president of real estate at Nortel Networks, a company that quickly slashed its office space in the wake of massive layoffs and ballooning financial losses. Using company property better is a key bottom-line benefit of having virtual offices, in addition to helping achieve softer goals such as improving employee work-life balance, and reducing the company’s environmental impact (up to 10 tonnes of greenhouse gases per year for each participating employee). At IBM Canada, new individual workspaces are no longer being assigned, and six offices across the country have no assigned desk spaces whatsoever. “We’re trying to build a real estate model that has less space in it, but, just as importantly, redesigning it for how work in the 21st century gets done,” says Jim Brodie, who oversees the initiative for IBM Canada. “We’re moving away from the old cube farm, and creating more areas where employees can come together when they have to collaborate on client solutions.” Currently, 30% of IBM’s workforce in Canadaâ?? 40% globally — take advantage of this distributed model. IBM is also experimenting with using drop-in centres such as SuiteWorks’s location in Barrie. To make it all work, communication technologies such as web conferencing and instant messaging are essential. Ultimately, success depends on a company’s culture, and how well middle managers adjust to supervising direct reports who have become nomadic.

If Compugen’s pilot program is to succeed, Zarek will have to determine how frequently managers need to check in, and whether conference calls can replace face-to-face meetings. “We need to ensure that employees don’t feel they’ve lost anything by not having to be at the office,” he says. “How do managers keep these folks connected?” That’s a question that most companies will eventually have to answer.