[July 27, 2016]

New Study Shows Who Sits Where at Work Can Impact Employee Performance and Company Profits

To increase worker performance, employers invest in a number of tactics - from education and training and performance management, to rewards and incentives. But new data show that simply rearranging employee seating can be one of the fastest and lowest-cost ways of increasing the performance of an organization's workforce. Research performed as a collaboration between Cornerstone OnDemand (NASDAQ:CSOD) and researchers at Harvard Business School uncovers how the distance between two employees' desks affects various performance measures and how placing the right type of workers in close proximity to each other has been shown to generate up to a 15 percent increase in organizational performance.

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Research conducted by Cornerstone OnDemand and researchers at Harvard Business School examines how employee seating arrangements impact performance. Placing the right type of workers in close proximity to each other has been shown to generate up to a 15 percent increase in organizational performance. For an organization of 2,000 workers, strategic seating planning could add an estimated $1 million in per annum profit. (Graphic: Business Wire)

For organizations looking to increase returns on the human capital of their workforce, simply rearranging employee seating may be one of the most cost-effective resources at their disposal. For an organization of 2,000 workers, strategic seating planning could add up to an estimated $1 million per annum to profit.

Increasing Productivity in the Workplace by Optimizing Seating Plans

The first study of its kind, Cornerstone's "Planning Strategic Seating to Maximize Employee Performance" report analyzed data from more than 2,000 employees over a two-year period provided by a large technology company with several locations in the U.S. and Europe. The analysis concluded that who an employee sits next to can have a significant impact on his/her performance, for both positive and negative situations.

Research uncovered three types of workers: Productive, Generalists and Quality. Productive workers are very productive but lack in quality. In contrast, Quality workers produce superior quality but lack in productivity. All the while, Generalists are average on both dimensions.

The study found that performance Spillover effects are strongest for performance measures where the emplyee is weakest. Seating Productive and Quality workers together and seating Generalists separately in their own group shows a 13 percent gain in productivity and a 17 percent gain in effectiveness. In short, symbiotic relationships are created from pairing those with opposite strengths. It turns out that those strong in one dimension are not very affected by Spillover in that dimension; however, they are very sensitive to Spillover on their weak dimension.

Rooting Out Toxic Behavior

The research also reveals that Spillover effects can extend to negative performance through misconduct and unethical behavior Spillovers. In measuring the extent to which a toxic worker (i.e., a worker that harms an organization's people and/or property) influences others, the study finds that the negative performance of these workers spills over to fellow workers in a process similar to positive Spillover. This suggests that employee engagement surveys that capture how employees feel about their work environment and their managers can be an important first line of defense in rooting out toxicity by providing an early warning to intervene in such a team.

Comments on the News

"Until now, not much has been explored on how the physical location of an employee and proximity to others can impact their productivity and performance," said Dylan Minor, visiting assistant professor for Harvard Business School. "These results suggest that companies can develop a framework to maximize organizational performance simply through the physical placement of workers. Physical space is something organizations can manage relatively inexpensively, and it should be viewed as an important resource in increasing the returns to human capital."

"With modern organizations shifting to open floor plans and flexible workspaces, this study shows that there is actually a science behind employee seating charts," said Jason Corsello, senior vice president of strategy and corporate development for Cornerstone OnDemand. "This is a great example of the business value of people analytics and how an organization's data can help them to operate smarter and more efficient, even when it comes to deciding who sits where at work."

Additional Resources

• To access the "Planning Strategic Seating to Maximize Employee Performance" white paper and infographic, visit www.cornerstoneondemand.com/strategicseating.
• Read additional commentary about this research on Cornerstone's blog, ReWork, at www.cornerstoneondemand.com/rework/rearrange-desks-increase-revenue-study-finds-seating-charts-impact-performance.

About the Study

"Planning Strategic Seating to Maximize Employee Performance" was developed as a collaboration between Cornerstone OnDemand and researchers at Harvard Business School. The research included an analysis of data from more than 2,000 employees over a two-year period provided by a large technology company with locations in the U.S. and Europe. For every performance measure examined, a metric was defined for each employee called "Spillover," which provides an aggregate measure of the performance of the employee's surrounding peers. To measure Spillover, a weighting of workers was developed to measure the potential impact on a focal worker as a function of how close he/she is in terms of physical distance. This "distance weighting" was then used to obtain a measure for the overall Spillover that a focal worker receives on a given performance dimension. For each of the performance measures, an employee's "Spillover" was calculated as an aggregate value of all of the employee's neighbors, weighted by distance. The farther an employee from a focal worker, the less his/her performance contributes to the Spillover faced by that focal worker.

About Cornerstone OnDemand

Cornerstone OnDemand (NASDAQ:CSOD) is the global leader in cloud-based learning and talent management software. The company's solutions help organizations realize the potential of the modern workforce. From recruitment, onboarding, training and collaboration, to performance management, compensation, succession planning and analytics, Cornerstone is designed to enable a lifetime of learning and development that is fundamental to the growth of employees and organizations.

Based in Santa Monica, California, the company's solutions are used by nearly 2,700 clients worldwide, spanning 25 million users across 191 countries and 42 languages. To learn more about Cornerstone, visit us on Twitter, Facebook and our blog. www.cornerstoneondemand.com.

Cornerstone® and Cornerstone OnDemand® are registered trademarks of Cornerstone OnDemand, Inc.

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