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KI In The News

Say Goodbye to the Office Cubicle

The Wall Street Journal | April 2, 2013

By Ben Kesling and James R. Hagerty

The same folks who brought you the bland office cubicle are turning a profit these days by trying to kill it off.

As the nationa's economy recovers, office-furniture makers, who were hit hard by the recession, are racking up sales by persuading companies that newer office layouts can encourage collaboration and, in some cases, shrink their space requirements and costs.

Herman Miller, Inc., which helped spawn the cubicle craze more than 40 years ago, is one of the suppliers leading the charge. Its revenue has risen by nearly a third in the past two years, thanks to customers such as Microsoft Corp.

The software giant hired Herman Miller's consultants to track how space was used at some of its locations. They found, among other things, that conference rooms designed for 20 were often being used by just two or three people. So, Microsoft created more "focus" rooms -- smaller spaces where two to four people could huddle.

"Work is really getting done in smaller teams," says Martha Clarkson, Microsoft's global workplace strategist.

Postcubicle offices began to crop up in earnest about a decade ago, inspired by changes in the way people worked. They feature lower walls between desks, or even no walls, and more areas designed for conversaton, to encourage impromptu problem-solving sessions.

Many companies were intrigued by the idea, but the recession stalled the trend, sending the U.S. office-furniture industry's revenue plunging 26% in 2009, according to market researcher IBISWorld. Lately, however, the surging stock market and growing optimism about the economy have rekindled "projects that were sleeping for several years," says Franco Bianchi, chief executive of Haworth, Inc., one of the nation's biggest office-furniture makers.

That's part of the reason IBISWorld expects 2013 to be the industry's strongest year of growth in nearly a decade. The firm predicts that office-furniture makers' revenue will hit $21.5 billion this year, up more than 4% from 2012 -- though still 26% below the peak in 2006.

Mr. Bianchi has sought to counter some customers' lingering caution about spending by improving service and providing more design advice. He says Haworth has added around 20 employees who work with clients to create effective work environments. Closely held Haworth, which is based in Holland, Mich., says its sales have climbed 18% since 2009 to $1.31 billion in 2012.

"Ten years ago we didnt' have the resources to engage people on how they work," Mr. Bianchi says. "We were selling furniture, and now we're selling interiors."

Herman Miller is widely credited with inventing the cubicle in the 1960s, when it introduced what it called the "Action Office," a line of panels and desks that could be configured in a variety of ways.

At the time, private offices were a symbol of rank and privilege. But the new partitions, some of them six feet tall, could be arranged to provide similar privacy for rank-and-file workers, who had largely labored in open areas called "bullpens," with their desks placed in rows. In the decades that followed, cubicles became ubiquitous.

In recent years, as electronic communications supplanted paper and flat-screen monitors and laptops replaced unwieldy desktops, businesses found that workers were left with unused space. Some of them also were feeling isolated.

Younger workers were accustomed to using wireless devices in settings like coffee shops, where they could move around and chat, rather than being tethered to workstations.

"There are incredible changes in demographics in the workspace," says Tracy Brower, a Herman Miller executive who advises clients on using space. Many of those clients demand hard data on the best ways to drive productivity and improve employee morale through interior design. "Customers are demanding more quantitative data in their decision making," Ms. Brower adds.

To get a better handle on worker behavior, Herman Miller has its own research arm, which relies on some high-tech tools. For example, it temporarily attaches electronic sensors to chairs in some clients' offices to determine how often they are occupied.

The research shows many cubicles are used for only a bit more than a third of the workday, and individual offices can sit empty 80% of the time.

Based in part on those findings, the company launched Avive, a line of thin, free-standing tables that can be used as personal desks or pushed together to form for group workspaces.

Last month Herman Miller reported its profit for the fiscal third quarter ended March 2 rose nearly 11% to $16.5 million as revenue increased 5.9% from a year earlier to $423.5 million. For the fiscal year ended in June 2012, the company's revenue rose 4.5% to $1.7 billion, after jumping 25% the year before.

The changing office landscape is most visible in the famously futuristic buildings of Silicon Valley, which are also known for their zany touches.

"Not everyplace looks like Google," says Jonathan Webb, head of business sales at Krueger International Inc., known as KI, a commercial-furniture maker in Green Bay, Wis. "Not everybody has a slide in the lobby." But some tech-company furnishings are filtering into the mainstream.

"The biggest trend we see from our clients in Silicon Valley is the trend for personal workspace flexibility -- the ability to adapt a workstation," Mr. Webb says.

Partly as a result, KI's sales of desks that can be electronically raised for standing work or lowered for sitting have more than doubled over the past three years. Mr. Webb says the desks allow employees more choice in how they work, without being considered too radical or costly a change.

Using furniture and advice from Herman Miller, Campbell Soup Co. has been remodeling its 55-year-old Camden, N.J. headquarters, providing more common spaces, including "huddle rooms" for meetings of two to four people.

"People are collaborating much more" now that they aren't "bound by walls or cubes," says Beth Jolly, a Campbell spokeswoman.

Many Campbell managers and executives still have offices, but they are being standardized at 120 square feet. That means smaller offices for some executvies, creating more open space that can be devoted to common areas. It also is easier to move people, since rank no longer dictates space allocation.

Does that apply to the CEO? "We're getting to that," Ms. Jolly says.

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