Transcript of Distinguished Lecture by Distinguished Professor Lee Parker
Held on 10 November 2020, Tuesday 10 November 2020, 11.30am-12.30pm
WELCOME – Distinguished Professor Xinghuo Yu
Hello welcome everyone, I'm Xinghuo Yu, the Chair of RMIT’s Professorial Academy and the host of today's event.
First, I would like to acknowledge the peoples of the Kulin nation on who's unceded lands we are meeting today. I respectively acknowledged their elder past and the present.
So today we shall hear from Distinguished Professor Lee Parker, who will deliver his lecture on Accountability and at the Office. This is actually the part of the activities of the Academy to fulfil its application to advance and advocate as a thought leader for RMIT.
Before we start, we’ll just to go through some housekeeping things. This is a Teams Live event, so you will not be able to ask any questions directly by microphone however, if you have any questions please post them to the Q&A so at the end of the lecture we'll pick up the popular ones to ask the presenter on your behalf until the session finishes.
So, without any delay, please join me to welcome Lee to deliver his lecture. Lee over to you.
LECTURE: Distinguished Professor Lee Parker
Hello everybody. I suppose you'd be forgiven for wondering why an accounting professor would be looking at things like the office. Generally, you would expect architecture and design specialists and human relations management, and organization behaviour people to be into this sort of space. But there are a range of issues about accountability and the office which do concern us from the point of view of management control, corporate governance, cost management, efficiency, and indeed OH&S. One of my several areas of research is in the corporate social responsibility and accountability space, which includes occupational health and safety.
And, I guess the office has been largely neglected in much of the management and accounting research literature, because I suppose, for many decades we've been preoccupied with the factory.
But if you think about just walking around, for example the Melbourne CBD, particularly at night, and you look up into the multistorey buildings, then you see floor after floor after floor of open plan offices. When you think about the proportion of our economic activity that's really engaged in the service industries, then you could be forgiven for thinking that maybe today's office is the new factory.
Now certainly it's an intrinsic feature of our working life and a large proportion of the population is regularly physically situated in offices, for significant working hours with a whole lot of routines and rituals that often get involved in that.
We can go back to probably the 1850s and onwards to look for early predecessors of the offices that we've become accustomed to. So when you examine particularly, for example, photographic evidence of early office design, you see a trend running from the late 1800s into the early 1900s, where there’s a move from offices that were often configured smaller sized, many in that sort of comfortable salon or club lounge look. Then we see them growing in size and turning into what physically appears to be a virtual production line. And that reflected the office workforce growth that particularly expanded from the beginning of the 20th century. In those first 30 years, we saw huge growth not just in number of offices and size of offices, but also of course number of clerks, administrators and bookkeepers that were employed.
In fact, in the US, for example, between 1904 and 1919 firm or corporate size in itself grew by 30% on average and between 1900 and 1920, in the US there was an addition of 3 million new clerical staff into those growing firms.
If we jump forward to today then in fact professional office and clerical workers constitute the largest occupational group in the workforce in Australia with around about four million people working in professional, clerical and administrative roles.
Now there's been some research done in terms of the way in which the buildings that house this growth in office workforce went in terms of what I've called ‘reaching for the sky’. And there’s really some quite interesting historical research on the genesis of the North American skyscraper, which of course spread into so many cities, and we're quite familiar with the tall multi-storey office building in the CBD today that initially was in practical terms a response to this huge growth in the administrative and office workforce. It was trying to produce mass office accommodation on small geographic space footprints, but it was also then turned into something that became a symbol of corporate success. It reflected very much large-scale office interiors now.
That of course spread out into, for instance, manufacturing sites and other areas. So it wasn't just that the office was high rise, it was spread out physically at floor level as well. When we get up to the last ten, twenty years, then we see signs of the office starting to relocate and starting to reconfigure. That includes some extent of teleworking from home and we will return to that issue in terms of COVID shortly. With of course, computer technology, came the ability to work remotely and also the spreading of office facilities into regional and suburban hubs.
To understand the situation we're in now and the developments that we're seeing moving forward, We really need to go back into history again. So, if we look back at the scientific management era which really commences around 1880 and has its zenith through to about 1920, that was an era when consultants and practitioners and writers tried to reconfigure management as a science. The big focus was on systematic top down management for efficiency and producing engineering solutions for making, manufacturing and mining work more cost efficiently.
And you'll be familiar, even if it's not your area, with the whole notion of Frederick Taylor and his time and motion study work and Henri Fayol the French mining engineer in France, about standardized procedures and top down orders requiring staff to follow instructions. That became endemic through the manufacturing organisations, but in fact it was consciously transferred into the office. That happened with office redesign, office mechanization, and indeed, there are scientific management texts that are totally focused around that period on transferring what were thought to be the lessons of scientific efficiency in the factory to become scientific efficiency in the office.
Now this wasn't purely driven by private sector consultants, it was actually driven by government as well. So, if we look at the early 1900s both in the USA and the UK, governments became very concerned with public sector inefficiency. They started to look at scientific management as a way forward through that. In fact, in North America this became a badge of the progressive era where the whole notion of efficiency became the focus of both government and business attention. And in fact, it became such a focus that indeed, in some North American church pulpits, it was preached as a moral value: so it became quite endemic in social thinking.
Now, in recent decades, under what we call new public management, we've seen a resurgence of that sort of thinking. You don't have to be familiar with new public management to know that if you look at governments around the world, they have very vigorously engaged in downsizing direct service delivery by government outsourcing to non-profit and private sector organisations, commercializing and corporatizing their operations; very much moving towards government owned business entities and mimicking the whole private sector efficiency drive. Both the private sector and the public sector fed into each other in the early part of last century, and really, that's still persisting today.
So when we look at the history of office design and office efficiency, we actually see a real focus on space and furniture in communications and even staff physical movement within the office space, all largely focused (when you look behind the impression management) on time and cost saving. So, when we think back to the office as almost salon or club like design and we move forward to the mass production style of office design, we actually see a movement in the nature of how office work is conceived from being a professionalized administrative craft to becoming an industrial like task specialization exercise.
There is a real sense within the office, both in the past and today where the office is a centre of what we call ‘discipline through the record’. That's where whether the office can now be diversified and decentralized geographically, or whether it's still sitting in a CBD. It's all about recording, calculating. filing and reporting. Now if you're thinking this feels a little bit remote, believe me you can translate this right into your own university and its physical setup and its working set up. So these things carry far and wide. And indeed, I'm engaged in historical work on the office, contemporary research work, and projects that focus on universities as well. The name of the game in the office exercising discipline through the record is to render all staff’s actions to be calculable, and if you can calculate what they're doing and what they're producing then it becomes governable.
And so the office becomes a centre where you can attempt to control both the internal organizational world and the external organizational world where the record is an exercise in both social control an formal accountability, but I'll explain what that means a little more in a moment.
I'm going to jump forward now to what we call today's “innovative” office designs. One of the most commonly known now, that's been around for about 30 years, is the Activity Based Working office or the ABW. The ABW office has been heavily adopted in Australia. It was initiated by a Dutch consulting company in the 1990s. Essentially, it's like the open plan hot desking tradition, and there's a couple of photographs there. There are many, many ways which the office presents itself. Effectively, if I simplify it for you, if you're a staff member in an ABW office, you get a locker in which you can put your personal belongings and after that everything else is shared space. There are cafes, lounges , 1:1 meeting pods, stand up desks, small group meeting areas. It is entirely open plan, you pick where you're going to go and stand or sit, and with or without whom you're going to meet to do whatever you're going to do. Which means, as staff member, you might relocate several times in one day, but all of the space, all of the equipment, everything is shared.
Now, there's a rhetoric, and there's a reality about this. If I created a shopping list for you, what the consultants and the corporate doctors claim about innovative office designs is like this. They argue that it's trying to provide today's people with individual working freedom and flexibility. You can work how you want, where you want, with whom you want, in whatever situation. It is also claimed to enhance staff collaboration because people can move around, people and work with each other. We can people work individually. They can break into a meeting or break out of a meeting. Therefore its claimed that this provides a much more encouraging comfortable environment that improves staff satisfaction, that improves staff sense of wellbeing, and allows people to focus better on the task at hand. Whether it's a small group discussing something, or whether it's an individual working in a in a quiet area. It's also argued to appeal to the younger technology-oriented generation, where you walk around with your electronic tablet and your mobile phone, and that's it. It's the sort of fulfillment of the dream of the paperless office. The paperless office was something that was advocated and promoted 30 years ago. But in many organisations it has never really reached reality.
Now what do we know from the research that we've done that sits behind these claims? Well, what we know, and we know it from even published declarations by corporates on their websites, that in general the adopters are targeting a 30% reduction in their floor space and associated cost reductions: reduced energy costs, cleaning costs, storage space costs, insurance costs and lease costs. But it's about a third that their hunting for. They're also looking to reduce their churn costs. Now, if you're not familiar with that term I could probably explain it in a university sense. If you had a department with a particular profile where you had, say, 5 professors and three associate professors and 15 lecturing staff, and if the five professors were allocated 20 square meters each, and the associate professor received 15, and the other staff received 10 square meters each, there’s your space profile. And if you were setting up divisions or spaces, you'd configure the internal structure of the office that way. But what happens if that profile changes and all of a sudden you have less professors, more associate professors, more lecturers? You then actually face a whole lot of restructuring costs if you're going to adhere to those sort of space rules for different levels of the hierarchy. Now in fact, this new type of office design eliminates that issue because there is no space structure that's connected to hierarchical levels, so that if you experience a change in the hierarchical profile of your office staff, it has no impact. There are no additional restructuring costs. So that that's what that's really about.
Also it is found both in stated objectives and in what actually gets achieved that with respect to floor space occupancy, densification occurs. So not only is floor space reduced for your existing number of staff, but then it is found that gradually furnishing and people are shifted more into the reduced space. It is argued that over time it's possible to increase the number of staff on a particular floor space by approximately 20%. To give you an example publicly, the Macquarie Bank in Sydney has declared that it is saved already in doing this, $10,000,000 per annum in least costs. That's just the lease costs, not some of the other costs that I've referred to.
So, there's a new focus. It's another form of social engineering in terms of trying to socially engineer staff attitudes and behaviours and outputs. The focus is very much on output. In some ways the staff are still very much under surveillance because you're very observable wherever you are in this sort of office design. But at the end of the day, there tends to be a greater emphasis on measuring what your output is regardless of where you were, how you shifted around the floors and whether your supervisors could see you or not.
Now ABW as a modern office (and it's really just it's another form of the open plan office) has a management control agenda: reducing both fixed overhead and operating costs. That's been the case both historically with the production line open floor office of the say 1930s – 1940s and onwards, and today's redesigned office. It is less overtly stated as a sort of a front stage performance agenda, but it is quite surprising how often organisations on their publicly available websites state the fixed overhead and operational cost reduction as a backstage agenda. In that respect I'm referring to a theorist called Goffman, who wrote in the 1950s on front stage and backstage performances. Also, it's looking for efficiency and productivity increases at the same time, so it's trying to achieve reduced costs, reduced floor space, denser occupation of the floor space by staff, but then extracting more output out of them. But there is one further agenda. The ‘new office’ is designed in a very observable, welcoming, comfortable, wellbeing emphasis style. It's also to do with managing client customer relations where there's an interface between the client and customer and the office itself.
There is evidence starting to show up in some organisations where they find that the functional work needs to retreat back into a more traditional backstage hidden functional design. We see that in relation for example in professional accounting firms to taxation work.
Are these design developments new? Well, to some degree it is, but very largely while it looks different, its agendas and what it's trying to achieve reflects those historical scientific management agendas. Cost and efficiency control are very, very serious agendas, despite the impression management that organisations often put forward both to their staff and to the customers. So, it's very much a marketing and customer relations strategy, but the scientifically planned notion behind it does remain.
I and a colleague are doing some research at the moment on the big four global accounting firms. Looking at what they have revealed about their office designs and agendas both in Australia and globally. They have publicly pronounced that they are designing to try and enhance collaboration (staff to staff collaboration and client to staff collaboration) and improve productivity. And when they talk about productivity they’re talking about speed of task completion, revenue generated and faster problem solving. And again, they’re using different workspaces for different tasks as I've explained before, and they're looking for networking and efficiency improvements. And again, that that's not just networking between the inside and the outside of the organization, it's talking about networking with staff groups between senior staff and junior staff, and of course between staff and clients. So, there is a real focusing on the this, particularly in the language that's used, and the promotional language that's emphasized where they're really focused on the client and appealing to the client. So, they actually talk about labels like the ‘client experience’, or they talk about labels like ‘client collaboration’. They're quite open in terms of the agenda being to get the client feeling like they’re involved: in the deliberations and in the decision making. But that is also occurring between how they get different groups within the firm to relate to each other.
In terms of floor space reduction and densification in the big four global firms, we do have publicly declared data. For instance, Ernst and Young in some of their offices have decreased floor space by 25% and they've increased staff numbers on that floor space by 50%. Or, if we look at the Big 4 firm KPMG, there are examples they've given where they've decreased floor space by 35% and that they've removed what they call ‘dead zones’: so they've gone looking for areas that have low occupancy and they've removed those completely from their formal usage.
How does this compare to the present and past? And you might find I know it's only small for you looking at it on the screen, but that photo is round about the 1920s and of course I have a larger, sharper version of it and you really cannot count the number of rows all the way to the back of the picture. It just goes on and on and on. Notice it's a gender mix. Often the office of the 1920s and 1930s is portrayed as growing through the typing pool and that was an element, but there was actually quite a gender mix in the growth of the office. Those people are actually working on comptometers or adding machines, but it's a large group of people.
Certainly, there was some similarity between today's efforts at client impression management and the efforts of yesteryear. Where an office was visible to clients, there was a concern to make the client feel valued and esteemed, trying to reduce the barriers between the client and the firm and building client goodwill. So there were similarities. In terms of staff mobility visibility and surveillance, as I've said. In terms of surveillance it is really more on the staffs output because the staff within the ABW office are highly mobile. Nonetheless there has been a great focus on trying to govern where staff moved and how they moved in the past and today. Now today might look more flexible, but of course with COVID and COVID induced redesign protocols that may represent a return to a stricter control over how and where and when people physically move through office spaces that was certainly evident in the past. The retention of functional staff areas for which we see some evidence in some floors of organisations today, represents a reversal more towards the traditions of the early to mid 1900s. But, certainly space costs minimization and usage efficiency maximisation was a major agenda in the past, and it remains a major agenda today. Nothing's really changed despite any change in discourse or impression management discourse. Essentially, the game is one of implanting a commercial logic and a client focus into staff attitudes.
Now, what about the pandemic era that we're sitting in now? Of course, we need to remind ourselves that our current pandemic has quite a histgorical trajectory and you can see that on the slide in front of you. Some of them may have been more global than others, but it's not new and as we're told by public health officials, what we're going through now will happen again in some other form.
Now, what I can tell you is that when you look at the latest property research, central business district office space demand in the Australian capital cities is falling and it is actually projected by independent researchers to fall through to 2021 and 2022. Now, one has to be careful about this because property councils and some organisations are currently putting a very brave face on this. But the independent research shows that vacant space is increasing dramatically and will continue to go that way in 2021-2022 and that we are staring down the barrel of permanent longer term changes. There are some figures for central business districts as high as anticipated 60% vacant floor space across the CBD. We know from a lot of publicity about this that it comes from the lockdown period, the home working periods, and then the discovery by both individuals and organisations that quite a healthy degree of productivity and efficiency can be retained, even though staff have diversified out of the physical office through the transitions to teleworking. But also we're facing transitions to office redesign and office protocol reengineering.
These are significant issues and I can give you examples right from in the Melbourne CBD where there are some corporates with say a multi storey tower block that have run exercises evaluating how long would it take to get staff into the office in a COVID-safe way given that they've got to come in through main entrance doors and going up through the lifts and how long to get them out again. Some of the estimates for some of them are as high as three hours to safely get them in, and three hours to safely get them out, which is clearly not workable. So that increasingly firms are allowing for staff making longer term arrangements for hybrid operations where staff work at home totally, or part of the week or moving to hubs in regional areas. All of this has major social responsibility and occupational health and safety impacts. It's really an example where in terms of reporting on this, it's not just a matter of reporting what an organization has spent on office redesign or re designing protocols (because for example what you spent may not turn out to be effective), but it's going to become highly evident through a concept of accountability through action where you can actually see the visible corporate responses. It becomes physically evident to staff, it becomes physically evident to customers and clients both in terms of where the staff are, who's in the building, what the building looks like, how the furnishings have been repositioned, and so on. The problem we have right now, is that the open plan office and the activity based working office is incompatible in terms of infection control because it largely involves completely shared spaces, hot desking, shared spaces, shared furnishings, and shared equipment: all being major virus spreaders.
Now I'm not covering all the human relations organization behaviour aspects. But, if we look at these developments from, for instance a capital investment perspectvie, if one is going to reconfigure large scale offices to become safe from an occupational health and safety point of view, then for infection control one needs to reduce floor occupancy levels, build safe assembly areas and corridor and lift area control systems. You need redesigned and spaced out furnishings. Yet there are now arguments that over the last 30 years the amount of space per individual has been slowly coming down and down and down, and now it's going to have to go back up to, for instance 1980s, 1990s average levels. There are also a whole range of technology infection controls that are available, and I've listed some of them there. The protocols, as you can see, can involve split shifts, staggered start times, staggered break times, more frequent cleaning routines, protocols for sanitizing, training and communication programs for staff. So there are a whole lot of capital investments that are necessary to render the offices that we see today to be effectively COVID safe and yet that's being required in an era where we have economic downturn, we have organisations struggling for financial viability and yet they need to make these upfront investments.
If we look at a pre COVID and during COVID now, there is a suggestion that organisations may attempt to cling to their previous office cost control agendas with their low cost, high density, and flexible layout. Furthermore there is a sense in which when employees are allowed to spread out to for instance, suburban or regional hubs, work from home either wholly or partly that then there's a transfer of organisational costs to the teleworking or hybrid working employees, and that's an issue that's going to raise a whole lot of questions in terms of who bears that cost. Certainly even in, for instance, London in the UK we're seeing the spread of organisations getting out of CBD buildings and beginning to set up hubs even in regions up in the Midlands and allowing staff to work anywhere, for instance in England or Scotland and then just visiting the hubs periodically when they need to. So, the whole question becomes, are we looking at a question of public health versus financial self-interest? We certainly seem to be.
So, we face a changing office world where there's a growing tension potentially between corporate costs and staff occupational health and safety, and staff welfare and this reflects if you like a continuity of the historical agendas we've seen in the organisational so-called ‘scientific management’ of officers and their staff for efficiency and cost control. Regardless of how it physically looks, it is the new factory in a different guise. There are some really interesting research questions that are growing, for example to what extent does the open plan office reflect the open plan restaurant kitchen, where the chefs cook amongst the diners and the diners pay a premium to sit near the chefs to watch them at work? To what extent are we looking at something akin to pre-industrial revolution where the office starts remerging as a cottage industry that spread right through regional small group areas down to the individual home? I would suggest from the research we have to date that when we are looking at office design, office management and the role of the office in organisations today, it's a classic competitive playing field. It's money versus people. Thank you very much.
Q&A – Distinguished Professor Xinghuo Yu
Thank you very much really for a very interesting talk.
I have a question, the thing you are talking about, perhaps these has assumption there, which is sort of it hasn't been explored Is the culture right? In different culture than certainly how people interact are different for example, in Asia, this is kind of hierarchy social upper ranks is sometimes it appears to be more value than in other countries. So, is there any study show that how culture impacts on the office, the way how people see the office and how they should be arranged?
RESPONSE: Distinguished Professor Lee Parker
Thanks, that's a really important question, and certainly in my research I've not gone there yet and I think it's a really good point because even when we look at, for instance, the work that accountants do, the diversification of the work the accounting profession does in for instance, North America, Australasia, UK, Europe, it is reflected at least in attitudes: for instance the Asian region where there are much more traditional views about that the role of who does what and how it gets done. It's a much more compliance and financially oriented sort of role, so I think you make a strong point there. Of course, this is where in terms of the office we really need multidisciplinary research teams to look at this because there it's a small group really internationally, but we really need HR and organization behaviour people to take a closer look at this. Of course, my focus has been very much on accountability, efficiency, productivity.
But even from the HR perspective I see some evidence where, for example, even in a Western setting where, for instance, junior staff may find themselves interacting more closely in sitting for periods next to senior colleagues in the hierarchy, they don't always feel comfortable about it. So I mean, I think there's several layers of culture we need to look at in this. There is the sort of ethnic culture, there's the national culture but there's also the organizational culture and some organisations, as we know, have a much more hierarchical culture even if they're sitting, say, in a in a western setting.
So I think you raise a very important point, and I think that's just further addition to the research agenda on this. I mean, I would emphasize that when we look at the world of the office, it's a relatively small cohort of research that we really have, even across the disciplines.
QUESTION– Distinguished Professor Xinghuo Yu
How do you see the future, you touch on a field or the potential future trend, what do you see, probably after the COVID-19 we won't go back to where we used to be, so what are the scenarios that you think that this is going to be very, very interesting because I thought I was touching on your point about this civilian, this kind of a monitoring performance because you see all the time that your performance is basically by measured by the time they bought from you, paid for you, rather than actually the productivity. But I guess in the future the predicted outcome will be become more important than the actual time
RESPONSE: Distinguished Professor Lee Parker
Yeah, that's it's a good point Xing because we can look back to the early period of scientific management in the 1882 to 1920 period. Of course, that's when the scientific management consultants really pioneered the whole notion of the piece rate of payment on production, and so in the future world (and of course, I'm no better at predicting it than anybody else) the working community have become so much more accustomed to communicating and presenting in the way we're doing right now and meeting in the way we're doing it right now. It means that people are much more flexible in terms of where they go and how they do things and how they meet. So there's very strong evidence that both in the design of work and the design of workplaces and the way in which people are managed, scientific management never went away. It's always been there. Now, it can resurface in various ways. So for example, if it's possible to measure what people produce as output, then in the post COVID world, we might see a reversion to more people being paid by output, and of course we've seen that in pre-COVID times. I mean, if we look at the public sector in Australia and we look at government owned business entities, a good example would be Telstra, where Telstra over many years has had its workforce pruned down and down, and down. So, the technicians working on the lines got sent out of the organization, but then they were taught how to create themselves as a small business and were then rehired back in as contractors.
So, we see loads of examples in Australia where organisations have shed staff and then staff have been put into small businesses and then recontracted back in and then paid not on time but on what they produced. Now there’s another interesting question about all this is. To what extent will we see change? I mean that's a very uncertain thing. You know, we hear stories this morning about this vaccine that looks promising with a 90% protection rate, maybe. If a vaccine seems to solve our problem in the next 12 months then one might argue that many organisations and people in society will relax, and they may try to move more quickly back to the good old days, possibly learning and preparing less for preventing the next crisis. If the period of having to be COVID careful lasts longer, then we may see some of these trends we're seeing at the moment in terms of social distancing, hybrid working, redesigning offices, becoming a more permanent feature. I mean, it's a very difficult thing to predict, but it certainly appears to be that organisations have been discovering even in the last six months that sometimes the productivity of their staff has actually increased with them being off-site and that it is potentially that we're going to see managers previously not in favour of teleworking now seeing that as an organizational advantage regardless of whether there's a COVID threat or not. So it's a very difficult thing to predict. Certainly in terms of, for example, office design at the moment in terms of COVID prevention, what's being envisaged is reduced densification of, for instance desk areas, going backwards to assigning a particular working space to a particular person and then not being there all week.
CLOSING: Distinguished Professor Xinghuo Yu
OK, thank you very much, I'm just trying to look at, it seems to be there is no further any questions posted, so for that I think we can stop here, so thank you very much Lee for very interesting talk and all the best.
CLOSING: Distinguished Professor Lee Parker
Thank you bye.
10 November 2020, presented by Distinguished Professor Lee Parker
From the emergence of the Industrial Revolution factory to today's multi-storey office building, the office has permeated organisational, economic and social activity for over 200 years. For profit, non-profit and public sector organisations, it has become a major site of clerical and professional labour, and a centre of strategic management, management control, service delivery and accountability discharge. Its location, configuration, functions and processes vitally impact organisational activity and outcomes. This presentation reveals the historical and persistent influence of scientific management on the office and its role as a site of internal and external surveillance, control and governance. Behind frontstage facades of innovative design, backstage agendas of cost efficiencies and client impression management will be unveiled. In today's covid-19 environment, the implications for occupational health and safety of corporate investments in open plan, hot desk and Activity Based Working designs and the pressures for their re-engineering and relocation, will be evaluated.