Strategy & Operations » Leadership & Management » Management – Time to keep your head down.

Financial institutions and associated businesses that saw their premises turned into smoking rubble are suffering the most after 11 September.

But it is clear that – long after the dust finally settles – there will be profound ramifications for the way many other companies work.

For now, opinion seems to be almost evenly split between those who believe that, in order to defy the terrorists, the lower end of Manhattan must be rebuilt essentially how it was before; and those who would like to disperse their operations into lower-key offices in order to reduce their vulnerability.

Property experts agree there is a general air of “wait and see” caused by the shock of the attacks and resulting economic concerns that have been heightened by military action. Nevertheless, there seems to be some support for the notion that 11 September will come to be seen as a pivotal moment in businesses’ attitudes to how they organise themselves.

Andrew Finney, managing director of relocation specialist HCR Countrywide Mobility, says that – in the same way that banking group NatWest never reoccupied the tower that bore its name after the 1993 Bishopsgate bomb – many businesses will question the need for all their people to be together in one place.

This goes against recent thinking. Consolidations have put great pressure on property space as businesses as varied as pharmaceutical groups, banks and professional services firms have sought to put as many of their employees as possible under one roof. The new towers being built at Canary Wharf in east London’s Docklands are the clearest testimony to that, but the practice can be seen all over London and other leading cities.

It has always been difficult for companies to estimate their future space needs when building this kind of landmark property. But now the compelling reason for having staff split between several sites has become reducing the risk of losing key personnel. As David Norburn, dean of the management school at Imperial College, London, points out, it has long been standard practice for organisations to avoid having too many senior people on the same aircraft. So, why not prevent too many of them sharing the same office space, too?

The usual answer is that businesses such as banking revolve around people and their interactions. One Harvard Business School academic was quoted recently as saying that investment banks “have to be clustered together to work effectively”.

However, the advent of ever more sophisticated technology takes away some of that argument – though even proponents of dispersal do not advocate a total breakdown of familiar organisational structures. Tellingly, they also do not predict a huge rise in top-end telecommuters or e-workers, for the simple reason that most people need a social dimension to their work. Similarly, videoconferencing may well become highly popular (particularly if the price falls), but is unlikely to replace face-to-face encounters for crucial meetings.

Instead, according to Paul Winter, managing director of property strategy consultancy Corpra, there will be a continuation of a trend that has developed in parallel with the drive for massive offices – and that is for businesses to have smart suites of offices in big cities. These offer meeting facilities but are otherwise barely occupied because staff are dispersed around and about.

As a result, prestigious office buildings will increasingly be shared rather than just housing one business as before. The suburban areas of New Jersey that house the back-up facilities that kept Wall Street banks going through the recent crisis are likely to see an influx of senior executives joining the techies.

If businesses are devolving responsibility as they break themselves into manageable units, this move will not cause too much disruption. Indeed, there are already many well-known organisations that pride themselves on the tiny scale of their London headquarters.

But there will still be landmark buildings. Some organisations will still decide that a single large building is the ideal way to house staff. Human nature being what it is, there will always be those with an appetite for premises that Winter describes as “aphrodisiacs for deal makers”. But it is perhaps worth bearing in mind Norburn’s warning that prestigious buildings tend to be symbols of historic rather than future success.

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Leadership & Management
Leadership & Management
Leadership & Management
Leadership & Management
Leadership & Management

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