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.

 

  •   18 February 2015
  • 2
  •      
  •   
banner

Most viewed in recent weeks

The growing debt burden of retiring Australians

More Australians are retiring with larger mortgages and less super. This paper explores how unlocking housing wealth can help ease the nation’s growing retirement cashflow crunch.

Four best-ever charts for every adviser and investor

In any year since 1875, if you'd invested in the ASX, turned away and come back eight years later, your average return would be 120% with no negative periods. It's just one of the must-have stats that all investors should know.

LICs vs ETFs – which perform best?

With investor sentiment shifting and ETFs surging ahead, we pit Australia’s biggest LICs against their ETF rivals to see which delivers better returns over the short and long term. The results are revealing.

Family trusts: Are they still worth it?

Family trusts remain a core structure for wealth management, but rising ATO scrutiny and complex compliance raise questions about their ongoing value. Are the benefits still worth the administrative burden?

Warren Buffett's final lesson

I’ve long seen Buffett as a flawed genius: a great investor though a man with shortcomings. With his final letter to Berkshire shareholders, I reflect on how my views of Buffett have changed and the legacy he leaves.

13 ways to save money on your tax - legally

Thoughtful tax planning is a cornerstone of successful investing. This highlights 13 legal ways that you can reduce tax, preserve capital, and enhance long-term wealth across super, property, and shares.

Latest Updates

Financial planning

How much does it really cost to raise a child?

With fertility rates at a record low, many say young people aren’t having kids because they’re too expensive. Turns out, it’s not that simple and there are likely other factors at play.

Exchange traded products

Passive ETF investors may be in for a rude shock

Passive ETFs have become wildly popular just as markets, especially the US, reach extreme valuations. For long-term investors, these ETFs make sense, though if you're investing in them to chase performance, look out below.

Shares

Bank reporting season scorecard November 2025

The Big Four banks shrugged off doomsayers with their recent results, posting low loan losses, solid margins, and rising dividends. It underscores their resilience, but lofty valuations mean it’s time to be selective. 

Investment strategies

The real winners from the AI rush

AI is booming, but like the 19th-century gold rush, the real profits may go to those supplying the tools and energy, not the companies at the centre of the rush.

Economy

Why economic forecasts are rarely right (but we still need them)

Economic experts, including the RBA, get plenty of forecasts wrong, but that doesn't make such forecasts worthless. The key isn't to predict perfectly – it's to understand the range of possibilities and plan accordingly.

Strategy

13 reflections on wealth and philanthropy

Wealth keeps growing, yet few ask “how much is enough?” or what their kids truly need. After 23 years in philanthropy, I’ve seen how unexamined wealth can limit impact, and why Australia needs a stronger giving culture.

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.