Smart WorkingChanging the perception of workplace

MBA 2014

Byungchul Jeon

CONTENTS

Executive Summary

1. Introduction

2. Working Environment Change

3. Definition of smart working

4. Smart working Cases and Results

5. Conclusion

References

EXECUTIVE SUMMARY

Driven by the new technologies, our ways of working has been changed rapidly especially in

the recent 20 years. In order to maximize profits, companies try to find the optimum solutions

to raise productivity. During the change from paper based working to computer based,

organizations accelerated their working speed and also reduced extra working space that

would otherwise have been assigned as storages for the paper documents. It has not been long

since the term smart working was actively used. The smart devices such as smart phones,

tablet PCs helped this stream settle as a trend. This report will look into smart working from

inception to application and introduce some real examples in South Korea and The

Netherlands to see why companies pursue smart working and whether it ultimately gives

benefits to the organizations that adopt the measure.

Introduction

Since the Industrial Revolution, humans’ working efficiency has been improved dramatically.

Not just the labor forces in physical working sites, office workers also have found ways to

reduce time and expenses spent on the same results. Thanks to the development in IT, the

speed of change is getting more spurred. The internet ignited the transformation by changing

the way we communicate with one another. Connecting the world, the internet helped us

reach the information we need regardless of time and place while working. It can be referred

to the 21st century’s revolution compared to the 19th century’s Industrial Revolution in terms

of the degrees of the improvement in working efficiency. It is now propelled by the smart

devices such as smartphones and tablets. This development enabled us to get beyond the

physical boundaries through networks. The smart era helped create the concept of smart

working with which companies expect productivity maximization.

Working Environment Change

Traditionally in the 20th century, people worked fixed basis with 8 hours of working time

from 9:00 a.m. to 6:00 p.m. It fitted well in typical organizations at that time because workers

needed to converse with each other and the way to make the best out of it was to work

together at the same place and time for collaboration. As women’s participation in

workplaces was low, male-dominated workplaces during that period did not really have to

consider various aspects regarding working conditions.

The late 20th century’s technology development, i.e. laundry machines, dish washers,

refrigerators, vacuum cleaners, etc., freed women from being bound by home choirs. In

addition, as the social systems like day-care centers for children were organized, more

women have been able to join workplaces. This phenomenon also changed men’s role in

households and they started take part in upbringing of their children. This complexity

generated a need for companies to consider new ways of working in order to content their

employees amid this social transformation.

The Employment Act pertaining to the flexible working regulations in the UK that has passed

in April 2003 reflects this trend. The regulations were meant to provide employees looking

after young or disabled children with the right to ask their employers for flexibility in

working. From April 2007, the Act was extended to the workers that look after other

dependents, such as spouses, partners, relatives, or someone living at the same address as the

employee (The Times 100, 2014). The extended regulations also apply to hours of work,

times of work and place of work: home or office (ACAS, 2013).

Along with this social change that brought about flexible working time, the Information

Technology not only made working-from-home possible but also intrigued radical change

such as mobile office. Using cloud computing, people can work in the same environment at

home as they do at the office. They have access to the files and emails at home without any

hassle if they have an internet connection. Combined with cloud computing, smartphones and

tablets enabled working on the go. This mobile working totally disrupted the physical

boundary of workplace, expanding it to everywhere the internet signal reaches: in a car, on a

train, in a café or even on foot. People can now work anytime anywhere seamlessly so that

they don’t need to stay at the office all day long.

Definition of Smart Working

There is not a fixed definition of Smart Working since it came out naturally following

different types of new ways of working. Generally speaking, people would mention flexible

working hour, cloud computing, working from home or desk sharing as a part of smart

working when they were asked about it.

Capgemini defines smart working like this; ‘An approach to organizing work that aims to

drive greater efficiency and effectiveness in achieving job outcomes through a combination

of flexibility, autonomy and collaboration, in parallel with optimizing tools and working

environments for employees.’ (CIPD, 2005). The flexible working-focused research company

Flexibility said in a research paper that it uses the term ‘Smart Working’ to refer to the new

ways of working made possible by advances in technology and made essential by economic,

environmental and social pressures (Flexibility, 2011). Smart working does not seem to have

a strict boundary since it was not distinctively defined by a scholar. We can add more

features on the concept of smart working or customize it to make it fit in the organization in

order to optimize the action for the best performance.

Ceridian (2014) sees smart working initiatives include:

ㆍ Flexible working – both in terms of working hours and location

ㆍ A greater degree of autonomy

ㆍ Virtual teams

ㆍ Increased mobile communications technology

ㆍ Aligning personal objectives to business objectives

ㆍ Creating the cultural conditions for smart-working to work

Flexible working consists of these forms (CIPD, 2005):

ㆍ Part-time working

ㆍ Term-time working

ㆍ Job-sharing

ㆍ Flexitime

ㆍ Compressed hours

ㆍ Annual hours

ㆍ Working from home on a regular basis

ㆍ Mobile working/teleworking

ㆍ Career breaks

Desk sharing idea came out from the obvious fact that all the desk were not fully taken by the

employees because of business travels, meetings, vacations, sickness leave, sabbatical year,

and so forth. Raising the occupancy rate by sharing desks, as we do in library, companies will

be able to maximize utilization of the office space and, as a result, reduce the costs spent on

the properties.

NHS Lincolnshire (2010) sees desk sharing, or hot desking, provides:

Organizational benefits

ㆍ Ability of employees to work in areas that best suit the task in hand

ㆍ Ability of employees to be more productive

ㆍ Reduces space costs

ㆍ Improved communications

ㆍ Increased Employee Satisfaction

ㆍ Increase labor pool through the ability to recruit people who may not be able to work

in a traditional environment, such as single parent families and people with a physical

handicap

ㆍ Creating the cultural conditions for smart-working to work

ㆍ Improved work quality

ㆍ Improved people quality and retention

ㆍ Opportunity to undertake business re-engineering

Employee Benefits

ㆍ More flexibility and control provided to staff to choose when, how and where they

will work.

ㆍ Ability to organize working day around meetings and pre commitments.

ㆍ Traffic/commuting considerations - freedom from rigors associated with commuting,

reduced commuting time.

ㆍ Improved quality of work stations, comfort and environmental aspects.

ㆍ Relaxation of time parameters in which to work

ㆍ Ability of employees to better balance work and home life

ㆍ Increased job satisfaction

Virtual desktop has recently emerged as an enabler for mobile working in the ubiquitous

environment. With the remote connection using the mobile devices, people are now able to

work anywhere they want as long as the internet connection is accessible.

Besides those ways of application for smart working, companies pursue different styles of

working ways as per their current business situations. Therefore the notion of smart working

is also evolving as the new technologies are invented and business world is constantly

changing.

Smart Working Cases and Results

The main reasons for companies to start smart working are productivity increase, cost

reduction, cultural change, employee satisfaction, etc.

South Korea’s biggest telecommunication company KT, or Korea Telecom, started its new

ways of working project when it merged its subsidiary KTF, or Korea Telecom Freetel, that

was ranked the second in the mobile communication market in Korea, followed by LG U

plus. Although the combined KT overpassed the mobile giant SK Telecom in revenue

including the sales from fixed line products, it was still lagging behind in mobile market

which was envisaged as the future growth engine. Besides the several financial investments

in the different industries like credit card aggregator and media production and distribution, it

saw the corporate culture the key factor to be the leading company in the industry. Since it

had to integrate the IT systems, including customer data and business process, between the

two then-separate companies, KT and KTF, it set up a big picture to migrate to a whole new

system based on cloud computing. This IT integration project was named as ‘The Blue Print”.

For a holistic change, it needed a change in software, namely corporate culture, as well as in

hardware, IT infrastructure. KT bestowed the title ‘Smart Working’ on this total change,

pursuing an innovative company. Since its foundation as a public owned-company, it has

been into a bureaucratic and hierarchical pitfall, and it used to be called a dinosaur that can

hardly change directions. Its target was to disrupt the old culture that was deemed as the main

cause of the sluggish growth rate and to transit into an agile organization corresponding to the

rapidly changing mobile industry. KT gave the title ‘Smart Working’ to the new KT ways of

working. The smart working in KT was applied to the organization with the procedure from

the vision to the actions through communication. As many academia scholars claimed setting

up a clear vision be a start of the new cultural change in change management, KT established

a new vision and missions. In addition to them, it also created a management philosophy that

clearly defined the identity of the company. These messages were meant to work as a

compass showing the direction in the midst of the confusion posed by the change. It turned

out to be the best timing for change and innovation since the smartphone revolution was just

about to bloom.

Opening lectures both online and offline, KT encouraged its employees to take the courses

for the mindset change and expected soft landing in this radical movement. It was obvious

that the workers, at least, sense the indication that they would face a drastic change looming.

Each department was imposed to create its own mission statement and action plans including

Rules & Guides.

It was not just a mental change. KT decided to move to another office building to integrate

both organizations, KT and KTF, and to design it as a smart office. KT’s smart office

basically offered open space in which everyone could easily communicate not hindered by a

lot of obstacles that the previous cubicle style office had had. The new building had

artistically designed interiors with a lot of pictures and ornaments everywhere even in the

toilets and meeting rooms. It also provided amusing resting spaces such as meeting space on

a turf area with classical music and private phone booths with a cozy sofa/bed and a table

beyond their own function, phone calls. Interestingly, the employees found out a way to

utilize the phone booths. As we might have experienced eureka moments during taking a

shower, people started using them for meditation, keeping the lights off while they were

inside. Despite the employees’ anticipation in the early stage of the migration that no one

would use the phone booths because those were not placed right beside the desks and their

managers would not like their employees’ absence, those facilities became one of the most

popular places to spend time inside the building. The old style management in the

organization valued visibility. The managers had thought their employees were working only

when they were at their desk. However, Apple and Google’s success prompted KT to realize

that innovative ideas rather than long working hours had more impact on the company, and

they started indulging the employees to have their own time even at work. This also explains

the success of the phone booths.

KT abandoned its fixed desk policy. It encouraged employees to change their desk regularly

like once in a week or a month. It was not successful because the new policy was not

mandated and people took frequent moving as a hassle. Gradually leaving their belongings on

the desk, they regarded the stuffy seats occupied, making them hesitant to take others’ desks.

One of the studies (Flexibility, 2009) attributes the enemy of the sharing desk policy to the

culture of possession and stresses the importance of changing the concept of owning a

particular desk into having guaranteed access to the right kind of facility for getting the work

done. It would have been better if KT had considered and applied the principles for desk

sharing proposed by some research institutes.

The research institute Flexibility (2009) also suggested these principles below for the success

of desk sharing.

1. A clear desk policy

2. Well organized team storage

3. Have the same agreed compendium of essential information at each desk and/or

online.

4. Create a beautiful environment!

5. Ergonomic work positions.

6. Laptops are preferable to desktop PCs.

7. Provide ample touch-down space to cope with peak demand

8. Work in non-exclusive team areas with fuzzy boundaries.

9. Have a good telephony solution

10. Encourage flexible working in practice

KT has missed mainly the two criteria among 10 principles: the clear desk policy and the

agreed compendium parts. Regarding touch-down space, it built Smart Office section in its

main office buildings and opened them to anyone who wanted to work nearby home or other

places wherever they felt helped creative thinking through a new environment. The facilities

also improved the employee satisfaction level especially of women workers in charge of

upbringing of their children, workers commuting long distance every day.

In addition to the desk sharing, KT adopted flexible working hour and working-from-home

policy. Employees could choose the time when they come to and leave the office as long as it

complied with the 40 working hours per week by legal requirement. However, it was not a

complete form of flexibility since the employees had to choose their working time only

among presets like 8:00, 9:00 or 10:00 a.m. of starting time and 05:00, 06:00 or 07:00 p.m. of

finishing time. They also had to make a decision in advance at the time of the beginning of

the month for the full month plan, thus they were not able to adapt to the change of their

schedule. Working-from-home policy was applied differently depending on managers. The

recommended guide proposed telecommuting one day per week. Despite the worries about

this policy as managers in the organization believed their employees would not work when

they were home, it proved, at least, it did not deteriorate the productivity while increasing the

employee satisfaction level. The mobile business division even implemented one month of

working-from-home policy for the employees working at the head office, allowing only

limited number of office visits for necessary business meetings. The radical policy was

praised as a big success within the organization after a time being.

KT exerted its initiatives to change not only the form of workplace in the corporate level but

also the ways of working in the individual level. In order to make the employees work based

on projects that were planned and closely connected to the other ones, it needed to come up

with a new task management system that would support planning tasks and communicating

with managers for feedbacks. The new system was designed to suit the flexible working

culture and smart devices celebrated as office tools since the BlackBerry’s success. Because

the employees were supposed to put all the tasks they perform into the system, they started

thinking what should be in and out. This behavioral change naturally made them prioritize the

tasks based on importance and remove unnecessary chores that were succeeded over years

without any doubt while not providing any benefit to the company. The managers also started

giving the list of orders through the system. This helped the company work more organized,

basing on plans rather than spontaneous incidents. The company saw the possibility of

transition from doing urgent and not crucial to doing not urgent and crucial jobs.

KT introduced new IT platform using cloud computing technologies with which people were

able to work remotely on a virtual machine that is assigned to them from the common

machine in the data center. The new system consists of two pillars, virtual desktop and file

sharing system. KT intended to let its people get out of the office into the market and work

from anywhere they were present. It offered all the employees iPad® to support this new

mobile working environment. The virtual desktop accessed by client terminals provided them

with the same environment like the previous physical desktops or laptops. For the mobile and

seamless working in the building, it installed secured Wi-Fi network reaching everywhere in

the building. Ones with old hardware welcomed the new system since it ensured faster speed

without lags in using personal devices. However, not strongly convinced about the expected

effects that it would create values without any negative impact, KT applied the new policy

only to the minor workers in the headquarter, leaving the majority in the field staying with

the old system. This mismatch made a discrete sentiment fracture between the office workers

and field ones. As for the data sharing system, all the documents created after the file sharing

system was deployed were supposed to be stored in the database so that anyone searching for

certain information could have access to it as far as it was on the database. Although KT

expected shared information would stimulate collective intelligence by collaboration, the file

sharing system was not welcome and only a few people followed the guideline, not uploading

their files onto the shared system. They still had the notion that the files they had generated

were possessed by them, thereby hesitating to share those data with others. KT should have

reminded the employees of the company’s ownership of the data created at work and have

mandated uploading the files to a shared data area in the machine. One of the minor attributes

on this failure was the inconvenience of the system in uploading files. It happened when

people transferred data files between virtual desktop to another virtual database, the fact that

created a bothersome effort. Some of the employees asserted that those two independent

systems be integrated into a single one that automatically stores files, not requiring any

annoying hassles to move files just to share them with others.

During this time, matrix teams were actively running since the employees started working

task basis that had planned and defined as a part of projects. When a project was spanned

across the departments, a virtual team based on matrix organization was formed. This

measure helped KT respond to the market needs quicker than any other competitors in the

South Korean mobile communication market.

Having recognized the importance of the cultural transition, KT drove its cultural change by

communications. The HR department and the Change & Innovation Team led the campaigns.

For instance, they conducted an email campaign to improve the efficiency of email

communication. They asked the people to add a simple header on the subject and to make the

body concise as much as possible. They also campaigned for paperless policy, urging the

employees to use the tablet PC instead of printouts. While being an active twitter user to get

closer to the customers, the president of the mobile division also used enterprise version of

social media called Yammer® internally for the employees, emphasizing the essence of the

real-time communication in the mobile business that changed rapidly.

With all the innovation trials as a whole titled as ‘Smart Working – The Ways of Working in

KT’, the company gradually changed its image as a dull dinosaur and started being

recognized as one of the most innovative companies in Korea. Ridiculed about its size and

culture that were referred to the traits making it too heavy to adapt to the new mobile

environment, KT had sought a disruptive change rather than just an improvement. Ironically,

the harsh situation was viewed as the success factor behind its radical transformation to an

agile innovative company. Eventually, KT has won the President’s Award in the 9th

Corporate Innovation Award, KCCI (KT Service Innovation Group, 2012). There is no doubt

that the KT’s smart working played an important role for this award as the CEO frequently

advertised the story of the smart working in KT. The company has also won other awards on

various fields such as design and technology, the fact that was regarded as the fruition from

the new environment that prompted the employees to think differently.

Global top 5th, in production quantity, steel manufacturer POSCO (World Steel Association,

2013) was founded as a public-owned company like KT. It also suffered bureaucracy and

hierarchical organizational character. Since the steel industry started sluggish in terms of

growth after the global economic crisis initiated by the United States, it began to consider a

change in its identity as a blue chip company. It needed new ideas to break through the

stagnation with. Under the static organization formed by a very strict hierarchy, it was

difficult for the employees to speak out with their opinions in meetings, suppressed by their

authoritarian managers. This was the start of POSCO’s smart working, namely ‘Smart

Working Place (SWP)’.

The company designated a pilot floor for smart working and named it ‘Smart Office’

enabling creative thinking with lowered barriers. The desks were taken out the partition

panels for open communication. Desk sharing policy was imposed to destruct hierarchies and

to inspire them with new ideas by making them mingle with others from different

departments. Not like KT that just recommended the desk sharing, POSCO mandated people

to change their seats every day, thereby preventing desk possession. It successfully permeated

into the organization and firmly settled as a norm on the pilot floor.

The new office was equipped a common library in which all the books from personal desk

could be gathered and displayed together at the shelf so that everyone had the access to any

books whenever they wanted. Having this space for books also helped the clean desk policy

for desk sharing.

Some spaces were assigned as concentration place. One who wanted to work without any

interruption could get into the place to focus on the individual tasks in there which was

separated from the normal office space.

POSCO implemented an interesting trial by making a non-office looking spaces as well.

Targeting to inspire the employees with refreshing environment, it opened a floor with full of

joy and named it ‘POREKA’ after the combination of POSCO and eureka. The place was full

of amusement equipment, such as foosball table, pool table and meeting rooms without desks

and chairs with only mattress and cotton cushions on the floor.

In order to change the working culture, it harshly pushed paperless policy. It was rather cruel

to people that did not reduce paper consumption to nearly zero. There happened a lot of

outrage on the policy because everyone had his or her own reason to print. The innovation

group did not allow any exception until it thought the new culture was set in the organization.

Enabling self-checking in performance of reducing paper consumption by displaying the

number of printouts on person on the intranet, it persuaded and, in case, forced the policy.

Since people misperceived the reason as a cost saving, the group tried to emphasize on the

real reason, change in ways of working in terms of efficiency in both-way communication

and corporate document security.

As for an IT support for the cultural change in working, POSCO also developed a new

system with mainly Task Management System (TMS), Idea Management System (IMS) and

Knowledge Management System (KMS). TMS was designed to manage tasks and share the

task contents and working schedule with others. IMS was for idea suggestion. Its

improvement was a new function to connect small pieces of ideas and to enable people to add

their ideas on others in order to make bigger ideas by sharing. KMS, as well, targeted to

maximize the collective intelligence by offering common modification functions like

Wikipedia®. The company also provided easy-to-use video conference call for better

communication.

POSCO’s Smart Working Place (SWP) implementation also made a great success, reportedly

reducing costs and increasing new knowledge and ideas. According to the Hankook-i (2014)

media production of South Korea, POSCO figured out the impact of SWP that it shortened

time consumed on decision making by 60 % on average, cut expenses spent on business trips

by 30 %, and reduced the number of printouts by 77 %. In addition, about 14,000 knowledge

and ideas per month were registered and shared in the system. Despite all the success,

POSCO decided to halt the additional investment on office space renovation more than the

pilot floor due to the budgetary issue.

T-Mobile Netherlands, Deutsche Telekom’s subsidiary mobile business unit, decided to adopt

smart working concept mainly for cost reduction. Like most of the mobile communication

companies in developed countries, it suffered market saturation. In order to overcome the

revenue stagnation and increase profits in the harsh market competition, cost reduction was a

way to go. The German headquarter made a decision to close down two buildings out of

seven in the main office complex in The Hague, The Netherlands, so that it could rent those

two to other tenants. The initial plan was only to reduce space by adopting desk sharing

policy. It set the new desk ratio as ten people fitting in six desks (10:6), instead of the

previous 1:1. The figure was based on many statistics.

One of the researches (Flexibility, 2009) on desk sharing shows the office occupancy as this:

ㆍ A traditional office used 8:00 a.m. to 6:00 p.m. Monday to Friday is used only 30 %

of the year

ㆍ Holidays account for 8% of an employee’s time

ㆍ Typical occupancy is around 45%

ㆍ Average office costs per head are around £6k.

Though the new desk ratio accounting 10:6 was to make T-Mobile Netherlands reach its goal,

emptying two building, thereby reducing costs, it took one further step to enable mobile

working through cloud computing and named the whole change program ‘Fit-In Advanced

. Similar as KT, a counterpart in South Korea, it built virtual desktop and offered laptop or

tablet PC to the majority of the employees when they migrated to the new virtual desktop

environment, which was named ‘NGDS (Next Generation Desktop System)’. As the cost

cutting project turned into the smart working concept, it also wanted to change its culture that

was represented as resistance to change. It also tried a smart office with new array of desks

and atypically designed interior, expecting workers’ behavioral change. In spite of the

visibility issue that some of the managers missed over their employees, most of the people

seemed to be satisfied according to the surveys conducted among who had experienced the

smart office.

T-Mobile Netherlands’ smart working has a fundamental constraint, the budget. Since the

motivation was cost reduction, the budgets that could be allocated in cultural program and

physical improvement of the office environment was scarce. The company’s frugal

innovation in ways of working is ongoing for the moment, even though it took a negative

stance on placing budgets in cultural program and office reformation. It has recently loosened

the desk ratio from 10:6 to 10:8 for many departments, reflecting the descending number of

employees.

Meanwhile, as T-Mobile Netherlands has already applied flexible working, the employees

work from home, come to and leave the office at their disposal as long as they can manage

their job to be done. It is expected to meet the aim, closing down two buildings, by the end of

February, thanks to the smart working including desk sharing and mobile working brought by

the virtual system and smart devices.

Summarizing the examples, KT and POSCO decided to adopt smart working to upgrade the

organization to an innovative company with creative ideas, whereas T-Mobile Netherlands

initiated the change mainly for reducing the costs. The smart working was applied to the

companies through flexible working, matrix organization, virtual desktop system, cultural

change campaigns, smart office with lowered obstacles and fun factors stimulating

imagination, and so on. It was more successful when the company was not lenient to applying

the policies to the organization.

No matter the motivation, cultural transformation or financial reform, it is shown that smart

working in those cases helped companies take benefits from it by promoting performance in

financial status and/or productivity level by changing the ways of working.

Conclusion

One of the research organizations specialized on smart working addresses the reason why

smart working as this (Flexibility, 2011);

Underlying Smart Working is a commitment to modernize working practices, by moving

away from the ‘command and control’ assumptions of traditional factory-style working about

where, when and how work should be done. It’s about doing more with less, working

wherever, whenever and however is most appropriate to get the work done.

This reason to proceed with the new innovation in working culture and environment is

realized by various aspects depending on the companies’ current situation. As seen in the real

cases that the companies have been through, we conclude that smart working help elevate

productivity with the same or less resources, therefore, reducing overall costs of running an

organization.

* References

ㆍ The Times 100 (2014), Changing working patterns - A Lloyds TSB case study

http://businesscasestudies.co.uk/lloyds-tsb/changing-working-patterns/the-changing-

work-environment.html#axzz2sIVix9i6, Last accessed 3 February 2014.

ㆍ ACAS (2013), The right to apply for flexible working, p16.

ㆍ CIPD (2005), Flexible working: The implementation challenge, p 64.

ㆍ Flexibility (2011), The smart working handbook, p 39.

ㆍ Ceridian (2014), The connection guide to smart working,

http://www.ceridian.co.uk/connection/articles/smart-working, Last accessed 3

February 2014.

ㆍ NHS Lincolnshire (2010), Hot Desk/Shared Desk Policy, p 7.

ㆍ Andy Lake, Editor Flexibility.co.uk (June 2011),

http://www.ceridian.co.uk/connection/articles/smart-working/, Last accessed 3

February 2014.

ㆍ Flexibility (2009), Sharing space - and learning to love it - Changing office space and

working practices for flexible work,

http://www.flexibility.co.uk/flexwork/offices/space-sharing.htm, Last accessed 3

February 2014.

ㆍ KT Service Innovation Group (2012), KT’s Innovative Management Story, p 24.

ㆍ World Steel Association (2013), World steel in figures 2013, p 30.

ㆍ Hankook-i (2014), 스마트한 환경 구축하고 끊임없이 소통해라 (Realize smart

environment and communicate endlessly),

http://weekly.hankooki.com/lpage/sisa/201309/wk20130905140145121210.htm, Last

accessed 3 February 2014.