The workplace IS strategic: take it from a CEO

May 5, 2014

Picture this: On the first day that a Chicago-based financial services company moved into a new – and dramatically redesigned – workplace, two employees bumped into each other in the hallway. One said to the other, “Who are you? Why are you walking around our office?” The other replied, “I work here – I’ve worked here for several years.”

They had never seen each other before, even though the company’s headquarters office is home to only about 115 employees.

Today that company – National Equity Fund (NEF), a nonprofit financial services organization that constructs deals to fund affordable housing projects across the United States – is an industry leader that enjoys low staff turnover, high productivity, and a reputation as a high-energy, compelling place to work. It’s characterized by open collaboration and a free-flowing, can-do culture.

That encounter between two “strangers” at NEF took place in 2001, right after the company moved from two floors of a dingy, cramped building to a new, open-office single-floor environment filled with Herman Miller Resolve® workstations, lots of conference rooms, and an employee “Back Yard” with bright colors on the walls, a miniature golf course along the window wall, and a pool table where spirited games enable staff to burn off stress, celebrate business victories, and enjoy each others’ company.

The move came about because Joe Hagan, NEF’s CEO, recognized almost immediately when he joined the company in May 2000 that the office design was completely out of sync with his values and with the culture he knew he needed to build if NEF was to survive.

In Hagan’s words:

The culture I found when I arrived at NEF was really depressing. People were holed up in small cubicles and hard-wall offices. The office was dark and dingy – not a place to show our customers, and not a place that our people wanted to be. They weren’t happy – I think they spent most of their time on their computers looking for other jobs.

Ed Simon, Senior Vice President of Information Technology, described his first encounter with Hagan this way:

I was working on a new core software system for the company. I think he had been with the company about two months and he didn’t know who I was – he didn’t even know I worked there. We were all in separate offices, so no one really walked around and saw each other. We were all living in our own little silos.

To launch the design of a new headquarters office Gaylene Domer, Vice President of Facilities, took a small team of senior executives (including Joe Hagan) to visit Herman Miller’s corporate headquarters in Zeeland, Michigan (about a two-hour drive from NEF’s headquarters in downtown Chicago).

Hagan admits today that the open nature and bright colors of Herman Miller’s Resolve® furniture at first turned him off. But Domer persisted, arguing that a new, open office would bring staff out of the “woodwork” and help to create the collaborative work environment that Joe Hagan was looking for.

And in 2001 NEF moved into a new open office environment where everyone, including Joe Hagan, had the same size workstation. But interestingly the design was developed rather autocratically. Hagan did not want endless debates about the design; he wanted results – quickly.

He commented:

Back in 2000 NEF ran by consensus. Everyone wanted to have a say in everything. I needed to completely change how we worked. Before the move we’d have fifteen people in the room for every decision. You can’t run a company like that.

I had to lead; I had to define where we were going. Yes, you need to listen, but ultimately the CEO has to lead. I had to have the staff see what I wanted – so we could build on that sense of direction and move towards a more reasonable collaborative culture.

Then he added:

At first I wasn’t sure about everyone having the same workstation. But then I realized that since I was accepting a smaller desk that was the same size as everyone else’s, no one could complain to me that they deserved or needed anything more than what I had.

One reason I was willing to be tough about these decisions is that at the time I was out spending a lot of time with our investors renegotiating loans so we could retain enough cash to survive. It was ‘do or die’ for NEF. If I couldn’t pull it off, I was out the door, do I didn’t have a lot to lose by endorsing this new office design.

But I also knew I couldn’t make the cultural changes NEF needed without getting us out of that old place. Designing the new office somewhat autocratically was a way of signaling ‘I’m in charge. This is the way we’re going to do things from now on.’

Hagan had come to NEF from a banking background, and he knew how important appearances are in the financial services industry. As others have often pointed out, success in the financial services industry often depends on creating a self-fulfilling prophecy. A big part of becoming successful is looking successful – even before that’s completely true.

The new design worked even better than Hagan had hoped. In his words once again:

It was completely transformational. I was standing in the lobby greeting people as they came in for the first time. And I could see how impressed and excited they were as they walked around the building. And within a couple of weeks they were bringing their families in to the see the new space.

That’s when I knew we were succeeding. They weren’t job hunting anymore. They felt good about the space, and that made them feel good about the company.

Don’t ever let anyone tell you that workplace design doesn’t matter.

Now fast-forward to 2014. NEF is getting ready to move once again. Why? The office still looks very much like it did in 2001, and the staff still likes working there. The company continues to be an industry leader; it’s not in need of a dramatic turnaround.

Why change this time? We’ll pick up the next chapter next week. Stay tuned.

In the meantime, here’s part of the 2001 story, in Joe Hagan’s own words

{ 2 comments… read them below or add one }

Gaylene May 5, 2014 at 3:49 pm

Wow…thanks Jim…this is really exciting for NEF….

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Deb Burkart June 2, 2014 at 11:07 am

The move to the open space was transformational for all of us. No more space wars, more collaboration – and the colors and large windows that everyone could enjoy (not a few executive offices) made it a welcoming place during the long gray winters.

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