I’m always amazed at how people covet and fight over offices, regardless of how much money they make.
Offices become a manifestation of the occupant’s self-worth and social status. Very seldom are office size, location, and furnishings tied to the critical path. Most C-Suites are hidden away in citadels far away from the critical path. No wonder that they don’t have their finger on the pulse of the business, and require outside activist investors to get them re-focused.
In a more ideal world, offices would be assigned based on the occupant’s function on the critical path. For example, if you are in a customer-facing job where you host them on site, perhaps you should have an office that impresses them and makes them feel important. On the other hand, if your customers are cost-conscious, like Walmart, then that same customer-facing office might be very barebones to demonstrate your company’s frugality. If your job sits between manufacturing and sales where you hold daily meetings between both departments to work out pricing strategies, then you should probably have an office big enough to hold such meetings. You get a big office not because you are a big shot, but because necessary daily meetings take place in your office.
In a similar vein, offices should be assigned as much as possible to mirror the critical path. If customer service must support and respond to production or delivery problems, then they should sit near them to facilitate communication and problem resolution.
I’d like to take this principle a step further and suggest that we think about office spaces as rewards in a different way than we do the other social and psychological rewards previously discussed. Rather than recognizing seniority or special contributions to the company, office assignments should focus on and “reward” critical-path importance.
It’s clear enough that critical path managers should sit near their critical path operations. As a manager, your job is to keep an eye on and continually support your part of the critical path. Placing yourself far away from the action will only make your job more difficult and force you to travel a lot.
Now these suggested office arrangements may not be possible for conglomerates that have operations across the entire world. Companies like Google and Exxon have offices on most continents. Obviously, the top management cannot sit everywhere. But, what they choose to sit near sends a message about what they value. So, you can use office space as a reflection of critical path importance, as well as a symbol of social status.
For example, Google’s CEO Sunder Pachai put his office near Google Brain, the company’s R&D group devoted to artificial intelligence (AI). By doing so, he signaled that their work is important to the future of the company, i.e., tomorrow’s critical path. It allows him to have casual conversations to see what they envision in the future and their role in it. The learning goes both ways—the researchers can hear what the CEO is thinking and cares about. As importantly, it shows that the CEO values their critical path contributions, even though they are not yet producing revenue.
Pachai is at the helm of a company, in Google, that has a smooth-running cash machine in its ad business. In such cases, the CEO will often assume—as Pachai evidently does—that current management has it under control. This allows the CEO to focus more on tomorrow's critical path, as Pachai is doing in situating himself close to Google Brain. This works fine—until the cash machine stumbles (think of SNAP, the parent of Snapchat, after its IPO, and JC Penney for several years). Then the market demands that the CEO pay attention to today's critical path, questions why she or he wasn't paying attention to it, and gives the ultimatum to get it humming again.
A version of this occurred at Facebook when the advertising folks there used to sit far away from CEO Mark Zuckerberg since he concentrated more on the tech side. Yet, when Facebook went public and had pressure to grow revenues, he moved many of the top ad people near the boss.
Office location as a reward can produce competition among the several new businesses or products competing to get top funding within the company and to become the firm’s next cash cow. Returning to Google, for example, AI is now in favor. But what happens when it falters, and the next shiny new object catches the CEO's attention (and funding), such as cloud computing, self-driving, Google pay systems, movie production, etc.?
For example, Facebook invested heavily into how to employ virtual reality (VR) across the huge social network and the VR team moved near CEO Zuckerberg. Yet when VR did not pan out as expected, they were moved to another location. Facebook said the move happened because the VR team had grown too large. But, it wasn’t lost on observers that VR had lost its buzz in Silicon Valley and that machine learning and AI were now in. Purely coincidentally, Zuckerberg moved the AI team near him and the other top brass.