© 2009 MIT Sloan CISR, van Heck. CISR Research Briefings are published monthly to update MIT CISR patrons, sponsors & other supporters on current research projects.

THE NEXT GENERATION WORKPLACE Eric van Heck, Visiting Scholar, MIT Sloan Center for Information Systems Research and Professor, Rotterdam School of Management, Erasmus University

In 2009, for the second consecutive year, the Great Place to Work Institute awarded Microsoft the Best Workplace in Europe Award in the Best Large Workplaces category. This award honors companies that invest in people by providing exceptional work environments, practices, benefits, and recognition. Competing with 1,350 companies, local Microsoft offices across Europe won awards in all 16 coun-tries, with first-place awards in six countries. The new Microsoft building in the Netherlands is seen as a flagship example of how Microsoft is creating the next generation workplace for its employees.

What did Microsoft do to win? What are the charac-teristics of best workplaces? What are the lessons learned from Microsoft’s experiences? We address those questions in this briefing.

There were three main reasons Microsoft initiated a new way of working. First, Microsoft recognized that an increasing part of current knowledge work is no longer traditional office work—it is about gener-ating new ideas, convincing other people, combining different perspectives, and producing new knowl-edge. Next generation knowledge workers are seek-ing inspiration, flexibility, and the use of the newest collaboration tools to create knowledge that has value and provides sustainable results. It’s useful to think about their new workplace requirements. Second, Microsoft recognized that their operating model was changing from traditional software sales to a more service and customer oriented model. This operating model requires new forms of collaboration, teamwork, and customer relationship management. Third, Microsoft recognized that business growth depends on the personal growth of employees who are empowered with the tools and technologies that drive the business forward.1

1 For more details see the Microsoft Whitepapers: Digital Work Style: The New World of Work (May, 2005) and

Microsoft’s New Workplace Located at Amsterdam Schiphol Airport, Microsoft’s new building illustrates some key characteristics of the next generation workplace.2 Microsoft employ-ees arrive for work at all times of the day. De-pending on their activities, they choose an area of the building in which to work. Some will meet customers in the video conference rooms or the trendy café to discuss new products and services, while others are preparing presentations in closed cubicles. One can have brainstorming sessions with colleagues in the open-air terrace garden, while the auditorium provides space to present work to larger audiences in an interactive way. No employee—not even the general manager of Microsoft Netherlands—has a dedicated office.

Microsoft’s new building, with its abundance of windows, reflects the transparency that the em-ployees want to radiate to their colleagues and visitors. The new building also features technology that ranges from the latest collaboration tools to a cooling system that provides lower CO2 emissions. Collaboration technologies include Microsoft Office Live Meeting—an online meeting space where par-ticipants can deliver a presentation, work together on a document, or collaborate on whiteboards; Microsoft Office Communicator—a communication platform using instant messaging (IM), voice over IP, desktop sharing, and video; Microsoft RoundTable—a tool for 360-degree video conferencing; and Microsoft SharePoint—an integrated platform of server capa-bilities such as search, web site design, and business intelligence.

Our research examined the impacts of this new workplace design on employee working styles and performance. We surveyed Microsoft employees in 2007, before they moved to the new building, and People Ready: Inside Your Company is a Powerful Force (February, 2006). 2 Microsoft The Netherlands (NL) is a medium sized subsidiary of Microsoft Corporation and part of the Microsoft European, Middle East, and African (EMEA) region. Microsoft NL was Microsoft’s “Subsidiary of the Year” in 2007.

Volume IX Number 9B September 2009

Center for Information Systems Research Sloan School of Management Massachusetts Institute of Technology

RESEARCH BRIEFING

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again in 2008, after they had been in the building for six months. We found that the move to the new workplace resulted in more mobile working styles, higher reported flexibility, and a small increase in worker productivity. We also measured changes in job satisfaction but this measure was very high in 2007, so the change from 2007–2008 was negligible.

Different Digital Working Styles Every knowledge worker has a different working style depending on his or her individual approach to work, the type of job, and the availability of collaboration tools. In this research we considered one aspect of working style: mobility. We charac-terized a person’s mobility on a scale of 1 (desk bound) to 7 (very mobile). Figure 1 shows how employees described their mobility in 2007 and 2008. They have become less office bound; they work in more locations and at different times; and they use more mobile technologies.

Improved Individual Performance Although worker performance is crucial for overall company performance, improving individual perfor-mance is not an easy task.3 Our research examined four dimensions of knowledge worker performance: (i) flexibility; (ii) productivity; (iii) satisfaction; and (iv) innovativeness.

Flexibility refers to the work one has to do, where and when the work is done, and how easy it is for members of a team to fill in for one another. Survey analysis indicated that Microsoft’s adoption of the next generation workplace has had a dramatic impact on flexibility. Specifically, the new workplace facilitates team work because it is easier to integrate work process modules that are executed by other (virtual) team members. However, this flexibility is restricted by traditional income and promotion structures that evaluate individual performance, rather than team performance. Specific contractual provisions can also inhibit flexibility. Interestingly, women at Microsoft NL reported greater increases in flexibility than men.

The results at Microsoft NL show that adopting the next generation workplace also had a significant im-pact on knowledge workers’ sense of their individual productivity. Figure 2 provides an overview of significant changes in working dimensions related to the productivity of Microsoft’s knowledge workers.

3 See, for example, research at the Institute for Innovation & Information Productivity (www.iii-p.org).

The workplace changes led to changes in three working dimensions that contributed significantly to worker productivity: (1) Job competence, the sense that employees felt better equipped to do their jobs after moving to the new workplace. Microsoft motivated and trained their employees in such a way that they felt better equipped to do their job after moving into the new workplace. (2) Extrinsic job motivation, which reflects forces external to the individual that affected the employees’ level of effort; and (3) interaction outside the organization, which suggests that the building as a meeting place (instead of an office space) led to more frequent and better interactions with customers, partners, and suppliers.

The level of innovativeness very slightly improved. Microsoft would like to see more of an impact on innovativeness and is working to increase it.

Trust and Empowerment Are Critical Our broader study (see the Appendix describing the study) indicated that a crucial factor for adopting a more digital working style and creating higher levels of individual performance is the way top managers themselves use the next generation workplace: “Practice what you preach.” If top managers advo-cate this new concept but stay in their traditional offices (usually on the top floors of a building), the next generation workplace will not be easily adopted by the rest of the company. Another factor that resonates in all our empirical results is the empower-ment of employees.4 Managers need to trust their employees and empower them by giving them first, clear objectives and decision making tools, and then allowing them the freedom, flexibility, and discre-tionary power to make their own decisions and execute operations.

Appendix This research briefing is based on extensive research on workplace changes performed from 2007 to 2009 in the Netherlands. The research was sponsored by De Unie, Microsoft, Rabobank, and Sogeti and was performed by researchers and master students of Rotterdam School of Management, Erasmus Univer-sity. The research team collected data via interviews and online surveys. They also analyzed secondary material such as white papers, web sites, and internal

4 Lodewiek Jansen, Trust and empowerment: affecting employee satisfaction and productivity of the IT related knowledge worker, MSc Thesis, Rotterdam School of Management, Erasmus University, February 2009.

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company documentation. Four online surveys were conducted to measure the perceptions of knowledge workers and their work dimensions. The first online survey was conducted at the workers union De Unie after they moved into a new building (N=128). The second online survey was conducted at Microsoft. Employees submitted a survey before (N=268) and after (N=293) moving to the new building with 117 respondents participating in both surveys. The third survey was conducted at Rabobank, a global triple “A” bank headquartered in the Netherlands, where two departments moved into new work spaces

(N=191). The fourth online survey was done at Sogeti where the relationship between trust, empow-erment, work, employee satisfaction and produc-tivity was investigated (N=1294).5

5 More details and research results: Van Baalen et al. (2008), Worlds of Work: Results from the New Worlds of Work Research Report 2007, May 2008; and Van Baalen et al. (2009), Worlds of Work: Results from the New Worlds of Work Research Report 2008, September 2009.

Figure 1: Percentage of Microsoft NL employees that adopted a specific digital working style (1=deskbound; 4=mobile within building; 7=highly mobile) before (2007) and after (2008) moving into the new building.

Figure 2: Work dimensions that significantly impacted productivity (N=117).

Work Dimension Level of Productivity 2007 (M = 3.99)

Level of Productivity 2008 (M = 4.08)

Job Competence 4.27 4.31

Extrinsic Job Motivation 3.57 3.61

Interaction Outside Organization 4.25 4.36

About the Center for Information Systems Research

CISR MISSION CISR was founded in 1974 and has a strong track record of practice based research on the management of infor-mation technology. As we enter the twenty-first century, CISR’s mission is to perform practical empirical re-search on how firms generate business value from IT. CISR disseminates this research via electronic research briefings, working papers, research workshops and exec-utive education. Our research portfolio includes:

Achieving Superior Business Value from IT— A Single Framework of What Matters

Communicating Effectively about IT Value Maturing and Globalizing IT Governance Managing Business Experiments: Web-based Innovations in Collaboration

Learning from IT Projects: Effective Post-Implementation Reviews

Benchmarks for IT Decision Making Leading the Transition to the Digitized Platform Designing and Managing Shared Services Managing the Information Explosion Making Sense of “the Cloud”

In July of 2008, Jeanne W. Ross succeeded Peter Weill as the new director of CISR. Peter Weill became chair-man of CISR, with a focus on globalizing CISR re-search and delivery. Drs. George Westerman, Stephanie L. Woerner, and Anne Quaadgras are full time CISR research scientists. CISR is co-located with MIT Sloan’s Center for Digital Business and Center for Collective Intelligence to facilitate collaboration between faculty and researchers.

CISR is funded in part by Research Patrons and Spon-sors and we gratefully acknowledge the support and con-tributions of its current Research Patrons and Sponsors.

CONTACT INFORMATION Center for Information Systems Research MIT Sloan School of Management 5 Cambridge Center, NE25, 7th Floor Cambridge, MA 02142 Telephone: 617-253-2348 Facsimile: 617-253-4424 http://mitsloan.mit.edu/cisr/

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