What Corporations can Learn from Coworking
It’s time to ditch the rules
Our coworking space, Workspace Williamsburg, hosted a future-thinking consulting group for a tour and Q&A last week to learn about coworking culture. The members of the group who had come from corporate jobs with cubicles went through the entire session in disbelief. They kept looking at us as if implying that this was too good to be true. But that right there is the magic of coworking. It’s possible to have virtually no oversight and still be productive. Actually it’s likely you’ll be much more productive than your “supervised” counterparts. The reason? Added autonomy.
The following is an excerpt from “How to Run a Company with (almost) no rules,” a TED Talk by Ricardo Semler, CEO of Semco Partners:
“This is a complicated company with thousands of employees, hundreds of millions of dollars in business that makes rocket fuel propellant systems…so this is not a simple business. We looked it and we said, ‘Let’s devolve to these people. Let’s give these people a company where we take away all of the boarding school aspects.”
At Semco Partners, Semler asked questions that were so obvious on the surface, yet provided revolutionary answers.
“Why do we need to know when people get to work? Why can’t people set their own salaries? We don’t want to know how many holidays you’re taking. We don’t want to know where you work.”
The positive effects of added autonomy
Autonomy, which is a keystone of coworking culture, leads to higher productivity. People are fascinated by the cheerful, laid back, relaxed culture of coworking. The traditional corporate values that are placed on managing workers do not exist in coworking. Michigan’s Ross School of Business conducted a study interviewing the founders of coworking companies from across the U.S. and gathering feedback from the members of dozens of coworking spaces; they found that two of the greatest benefits of coworking are “flexibility and autonomy without dispensing with meaningful community.” These findings are aligned with a2011 Deskmag survey of coworking. Of the 1,500 coworkers surveyed, 75% reported an increase in productivity, 92% reported an increase in the size of their social circle, and 80% reported an increase in their business network. While the corporate world is slowly coming around, it still has much to learn from this style of work.
Drive by Daniel H Pink, an in-depth look at what motivates us, gives a great argument in favor of worker autonomy. Pink rejects the traditional corporate view that workers need to be micro-managed. According to Pink:
“[Autonomy is] not the rugged, go-it-alone, rely-on-nobody individualism of the American cowboy. It means acting with choice — which means we can be both autonomous and happily interdependent with others.”
On the next page, Pink states:
“Researchers at Cornell University studied 320 small businesses, half of which granted workers autonomy, the other half relying on top-down direction. The businesses that offered autonomy grew at four times the rate of the control-oriented firms and had one-third the turnover”
In coworking culture, everyone has this level of autonomy.
How can corporations increase worker autonomy?
Not everyone is sold on the idea that added autonomy leads to success in business. A recently published exposé on Inc.com warns of the dangers of empowering workers. This article makes three main points: it’s dangerous to give too much authority to the wrong people, it’s dangerous to give access to sensitive information to the wrong people, and that empowered employees will adopt an “I can do whatever I want” attitude. Therefore, Inc suggests that employers should have boundaries for the ways in which they empower employees.
This article is fundamentally wrong in its criticism of worker empowerment. The problems this article identifies are more due to poor hiring practices than the autonomy given to workers. It’s not that these problems don’t exist… they just have nothing to do with worker empowerment. Zappos is a perfect example. Think Like a Freak by Stephen Dubner and Steve Levitt features a chapter called, “Teaching your garden to weed itself,” which uses Zappos.com as an example of a company that weeds out the applicants that won’t end up being great employees. Zappos will pay customer-service employees $3,000 to quit after a four-week training program and one week of work. Even though this is an $11/hour job, 90 percent of employees still don’t take the offer. CEO Tony Hsieh uses this tactic to get rid of everyone who isn’t completely loyal to Zappos. The “dangers of empowering workers” don’t exist at Zappos because they use this offer as a way to build trust. As a result, Zappos is comfortable offering employees a larger amount of autonomy than traditional corporations. Their employees belong to voluntary groups called “circles” where they engage in peer review and everyone has an equal say within this flat hierarchy. Customer reps are encouraged to talk to customers for as long as they want, and they’re authorized to settle problems without calling in a supervisor.
In early 2012, Zappos led its own coworking experiment in Las Vegas, which was a big success. It grew to 200 stakeholders, including Zappos employees, area residents, start-ups, independent workers, and others. Zappos then applied the coworking model to its entire headquarters in a $350 million project to construct a collaborative, entrepreneurial community that organically attracts talent to the area. Amazon bought Zappos in 2009 for $1.2 billion, and later Amazon started offering its own employees up to $5000 to quit. Clearly, Zappos is onto something.
It’s time to embrace the “coworking model”
Coworking embodies worker autonomy, as Michigan’s Ross School of Business showed. In turn, worker autonomy leads to higher productivity. Granted, there are dangers to giving workers too much autonomy, but these are associated more closely with hiring the wrong people, not the concept of autonomy in-and-of-itself. Zappos.com, one of the most forward-thinking companies of our time, pays disloyal workers to quit and empowers the rest with the ultimate autonomy, making Zappos the corporate equivalent of coworking spaces.
Thus, corporations will have to adapt to coworking spaces and forward-thinking companies like Zappos if they want to have comparable levels of productivity. The closed off, cubicle culture leftover from the 60’s and 70’s is still very much a part of big corporations today. Eventually, companies holding onto this obsolete system will not be able to compete with the more productive businesses that are influenced by coworking and give their employees autonomy.