Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 97

The simple ‘hot-desk’ equation

Hot-desking is a classic economic phenomenon. For all the hype and discussion it comes down to a very simple equation. A company can reduce its rental expense, but to do this it needs to get its employees to take a pay cut. The pay cut is not in money but rather a reduction in the quality of an employee’s working environment. Economists call this an ‘externality’. My research could discover no facts on the benefits of hot-desking other than rental cost savings.

Hot-desking is sold as a way to break down work cultural barriers, increase collaboration while creating the ‘Office of the Future – Today’. It is a cost saving exercise. Because a very senior executive endorsed the idea, employees are labelled as not having the right cultural values if they show even a hint of disapproval. A totalitarian propaganda machine is in full swing by the time the last photo of the family is removed from the old decommissioned ‘cold’ desk. Centre worker, Cori Girondoudas was docked $3,000 from her pay each year for two years because she repeatedly refused to remove a photograph from her work station. The photograph took her tally of personal items on the desk to four — one above the prescribed limit.

Companies have reported a reduction in rental costs of up to 30% from adopting hot-desking. These enticing savings have to sell it to the employees who suffer an increase in stress and insecurity. Few employees enjoy hot-desking and those who do are often the same people you regret having near you in a cinema, sports game, bus, plane, or marrying into the family.

Hot-desking conveniently ignores the human condition. Humans are territorial, we enjoy a sense of belonging and like a routine. We are also hierarchical. We work hard to get more pay but we also want the corner office. If some spotty graduate comes in early after his gym class and gets the corner desk, we older guys feel pissed off. We will have to seek revenge, in a team building way of course.

Some of you are thinking that I am just an old guy and I need to get with the times. It is true that I sleep better in the same bed each night and the same goes for my desk. It is hard to get 30 minutes sleep if you wake up in a different part of the office having no idea where you are.

But in Ross Gittins’s article on hot-desking, he quotes research that demonstrates that the most important contribution to work place productivity is not collaboration, but individual focus work. In fact, those who can focus on their work in a nesting environment are also better at collaborating.

One of the fundamentals of business is to drive down costs. Businesses are psychopaths and if they can transfer a cost (externality) to the staff then they will. Businesses also suffer from Aspergers. They don’t really understand the human condition, nor do they read body language.

I am now implementing hot-desking in my home office to improve collaboration, break old work habits and enhance productivity. My favourite hot desk is the queen sized one on the top floor. I go there for an hour after lunch to do my best thinking.

Some comments from Donald’s blog:

Geoff

Unfortunately no one is measuring the cost of the reduction in productivity that’s achieved via ‘discretionary effort’. Discretionary effort is that extra bang for the buck that an organisation gets from an employee because they feel good about their job and where they work, importantly employers don’t have to pay money for this, they just have to demonstrate they value their staff. I have spoken with friends, colleagues and customers on this subject and the common factor is that employers are great at measuring the cost savings from hot-desking but don’t attempt to measure at all the loss of discretionary productivity that goes along with it. I wonder if there is a higher turnover rate of staff where hot-desking has been deployed?

Jayne

I would like to add that during flu and cold epidemics, the wonderful world of hot-desking is also introducing us to plagues that seem to move inexorably around the office. If we were truly interested in efficiency we would return to single offices which allow focus, concentration and peace and quiet a la “Quiet: the power of introverts in a world that can’t stop talking”. Awesome read if you want to change your thinking on the value of noisy collaboration.

Christine

I’m a working mum who does school drop-offs in the mornings. By the time I get to the office it’s impossible to get a desk; not even a spot along the anti-social benches against the windows. When I do find a spot, often practically in the toilet, I spend good third of my day pacing up and down the corridor locating my team for face-to-face discussions. Cost cutting? For sure. Murderer of productivity? I’ll say.

 

Donald Hellyer is the former Global Head of Funds and Insurance at National Australia Bank and is Co-Founder of BigFuture.

 

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

Latest Updates

Investment strategies

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

Planning

Super, death and taxes – time to rethink your estate plans?

The $3 million super tax has many rethinking their super strategies, especially issues of wealth transfer on death. This reviews the taxes on super benefits and offers investment alternatives.

Taxation

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

Shares

The megatrend you simply cannot ignore

Markets are reassessing the impact of AI, with initial euphoria giving way to growing scepticism. This shift is evident in the performance of ASX-listed AI beneficiaries, creating potential opportunities.

Gold

Is this the real reason for gold's surge past $3,000?

Concerns over the US fiscal position seem to have overtaken geopolitics and interest rates as the biggest tailwind for gold prices. Even if a debt crisis doesn't seem likely, there could be more support on the way.

Exchange traded products

Is now the time to invest in small caps?

With further RBA rate cuts forecast this year, small caps may be key beneficiaries. There are quality small cap LICs and LITs trading at discounts to net assets, offering opportunities for astute investors.

Strategy

Welcome to the grey war

Forget speculation about a future US-China conflict - it's already happening. Through cyberwarfare and propaganda, China is waging a grey war designed to weaken democracies without firing a single shot.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.