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Smart Working
Changing 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.

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Bryce Byungchul_Jeon_Smart Working_Report_v1.2_posting

  • 1. Smart Working Changing the perception of workplace MBA 2014 Byungchul Jeon
  • 2. 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.
  • 3. 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
  • 4. 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:
  • 5. 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
  • 6. 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.
  • 7. 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
  • 8. 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
  • 9. 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
  • 10. 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
  • 11. 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
  • 12. 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
  • 13. 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
  • 14. 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.
  • 15. 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
  • 16. 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.
  • 17. * 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.