The Effect of Workplace Design to Employee Engagement, Collaborative Capability, and Perceived Work Performance in Coworking Spaces

ABSTRACT

Coworking spaces phenomenon is rapidly growing across the countries of North America, Europe, and Asia. Owing to its functional work environment, it offers coworkers a collaborative atmosphere that makes them more involved at work. The research study aims to describe the causal relationship of workplace design to perceived work performance and to employee engagement and collaborative capability as mediating variables through the use of Structural Equation Modeling (SEM). A total of 350 coworkers aged 18-60 years old, from 27 different coworking spaces in Metro Manila, Philippines participated in the study. The findings of this research revealed that workplace design has no direct effect on perceived work performance; hence, perceived work performance improves when coworkers are more engaged and have better collaborative capability. Nonetheless, the rest of the hypothesized premises were affirmed in the result of this study. This paper can help the HR managers and the business centers to create a more flexible and constructive workplace setting for their employees. Further, the results can be used as a basis for the fundamental shift of the traditional workspace into a new creative workplace.

Keywords: coworking spaces, workplace design, employee engagement, collaborative capability, perceived work performance

1.0 INTRODUCTION

With the arrival of millennial workers, the rise of startup businesses, and increasing number of freelancers, the work environment is indeed rapidly evolving. Changes in the labor market over the years yield a tremendous increase in contingent work. These changes paved the way to a so-called “creative class” of workers. These types of employees prefer to work independently and refuse to work in bureaucracies or traditional career paths (Russ & Orel, 2015; Cresa, 2017). This trend plays a vital role in redefining traditional offices, particularly in the physical office structure. Employees’ performances nowadays are not only driven by compensation, rewards, and recognition, but also by workplace design (Kohn, 2014; Waber, Magnolfi, and Lindsay, 2014). They tend to become less productive in their work since the setting of their workspace is immoderately formal and they are designated in a cramped cubicle at the little corner of their offices (Trees, 2017). Some workspaces focus on sustainability and impact of technology in their office. Some have forgotten that they should likewise give attention in designing a workspace for the employees that maximizes their potential, performance, and productivity. Coworking spaces provide workers the discretion as to where and when to work. This allows them to manage their own time in doing other responsibilities (Aranko, 2015). It offers a broadened learning and networking opportunities that are hardly found within an organization (Raffaele & Connel, 2016) and a way to lessen work isolation (Fuzi, 2015). Employees coming from different organizations and industries can bring different resources to the coworking community. Likewise, workers can gain different takeaways from the community and they also feel more motivated since their jobs become less routinary (Liimatainen, 2015). At present, only a handful of organizations have adapted a trendy and modernistic workplace design, namely Google, Facebook, Airbnb, and few others (Smith, 2016). There have been initiatives that explored artistic forms, aesthetics, and processes in the Philippine cultural office landscape for decades (Arago & Ferrer, 2017), and the materialization of these initiatives is the creative hubs or commonly known as coworking spaces (Arago & Ferrer, 2017).

These spaces are shifting towards a creative and collaborative work environment (Koevering, 2017) and generally known as an office-renting space where employees and independent professionals pay for a desk and Internet connection to get their work done (Gandini, 2015). Spinuzzi (2012) defined coworking spaces as an open-plan office environments and non-traditional work arrangement. Taylor in 2014 added the definition of coworking spaces by which employees work alongside other unaffiliated professionals. He further highlighted that those employees working in a more flexible environment perform better than when they do it alone. On the other hand, Moriset (2012) construed these spaces as “serendipity accelerators designed to host creative people and entrepreneurs who endeavor to break isolation and to find a convivial environment that favors meetings and collaboration”. To put it simply, coworking space is a constructive space designed to bolster connection, commitment, and the core of work among workers from different professions, whether as a freelancer or as a small startup firm, of the space who work alongside with each other, yet perform independent activities.

The aim of this paper is to explore the coworking spaces’ structure and the interaction of people within in order to find out the effects on productivity. Additionally, we aim to develop a model that describes the mediating effect of employee engagement and collaborative capability towards the relationship of workplace design and perceived work performance. Findings of this paper can expectedly help corporate offices to provide alternative workplace strategies and align its office with how their employees work. Moreover, the Human Resource Management can adopt this new office paradigm in order to see and find another way of forming better relationships and connections with the employees.

2.1 THEORETICAL FRAMEWORK

Yerkes-Dodson fundamental theory (Yerkes & Dodson, 1908) and Herzberg’s Motivation-Hygiene Theory (Herzberg, 1959) serve as the fundamental basis of this research. The theory states that there is a relationship between the performance and arousal or excitement of a person (Yerkes-Dodson, 1908). This theory states that if a person is stimulated, he/she can perform better which results in a higher level of arousal. In interpreting Yerkes-Dodson Theory, for instance, extroverts who have an optimum state of arousal enjoy exciting and thrilling challenges. Whereas, introverts have the high level of stress arousal. In Herzberg’s Motivation-Hygiene theory it explains the factors that motivate an individual. According to John Ball (2003), this theory of motivation is known as a two-factor content theory namely; hygiene and motivation factors. In interpreting Herzberg’s theory, motivating factors refer to the need of growth and recognition, while hygiene factors refer to the work conditions, company policy, and relationship with peers.

In the context of this study, Yerkes-Dodson (1908) theory assumingly, to maximize the performance of coworkers they have to create a nature-like design such as ocean, trees, and mountains for the background. Oseland (2009) also explained that, “stimulating environments with vibrant colors, and a buzz of activities may enhance the performance of extroverts or those conducting simple or complex tasks”. Hence, the better the stimulated workplace design the higher the coworker’s performance and their arousal. On the other hand, Herzberg’s satisfiers like accomplishment and appreciation motivates coworkers to work more whereas, the “dissatisfiers" like workplace setting such as dull color designs, poor thermal comfort, and no access to flexible equipment may result to dissatisfaction and reduced performance (Oseland, 2009).

2.2 REVIEW OF RELATED LITERATURE

2.2.1 Workplace Design

According to Griff (2016), employee engagement is not only driven by an employee's involvement and enthusiasm about their work, but also their workplace. Briggs (2016) also said that organizations need to design or create a positive workplace culture that will support the physical, emotional, and mental well-being of their employees, thus will lead to satisfied and engaged employees.

Workplace design is a physical space and infrastructure (Bouncken Reusschl, & Claus, 2016) and a partly open environment wherein acoustics and visual contact like flooring, walls, and ceiling have their own features (Vasell, Nenonen, & Helander, 2017). Workplace design plays a vital role in driving employee engagement (Siller, 2016) and it can increase the proportion of individual workspaces, assigned workspaces, and quality of meeting spaces (Knoll Workplace Research, 2016). In addition, a great physical workplace helps deliver greater productivity, more efficient teamwork, quality interaction, and more cohesive culture (Attfield, 2017). Thus, it is hypothesized that:

H1: The better the workplace design, the more engaged the coworkers.

The concept of coworking spaces primarily revolves around collaboration, openness, and knowledge sharing, that can contribute innovation inside the space (Capdevila, 2013), and a source of diverse network and support (Muhrbeck, Waller, and Berglund, 2011).With these versatile characteristics, organizations use these spaces as part of their talent attraction, an approach in building community (Castilho & Quandt, 2017), and retention as strategic demands on employee performance and efficiency are urging organizations to aim attention at workplace strategies and coworking solutions. Thus, we hypothesized that:

H2: The better the workplace design, the better the collaborative capability of the coworkers.

According to Caramela (2017), workplace environment can make employees be more efficient and passionate in their work. In the coworking space environment, it helps employees not just to be more efficient but also effective and creative towards their work (Švirákováa, Soukalováa, Bednářb, and Danko, 2014). In a survey administered by Dale Office Interiors in 2017, one (1) out of five (5) people agreed that relaxation and breakout spaces improve their work productivity levels. When employees are given a space to relax away from their desks, it can help reduce well-being issues like eyestrain or backache, as well as relieving stress (Spinuzzi, 2012). An improved well-being, in effect, would decrease staff illness and sick leaves (Bouncken, Clauß, and Reuschl, 2016). A lack of flexible spaces can make it difficult for employees to collaborate with one another and to unwind for a while before moving on to their next tasks (Dale Office Interiors, 2017). Thus, it is hypothesized that:

H5: The better the workplace design, the better the work performance of the coworkers.

2.2.2 Employee Engagement

Individuals are highly productive at a coworking space rather than at a traditional office space (Knoll Workplace Research, 2016). In fact, most workers attest that they would rather work in a coworking space because they believe that they perform better there – far better when they are in a traditional office or even at home. Primarily, the reason is because of its built-in peer accountability, fast-paced environment, and flexible amenities that make them more productive (Knoll Workplace Research, 2016). A survey conducted in 2015 to 1,500 coworkers in 52 countries, found out that 84% of the respondents reported to have an increased engagement and motivation level, 68% designated improvements in their existing skill set, 83% noted a decreased sense of isolation, 82% cited an increase in the size of their business network and 67% stated improvements in their professional success (Knoll Workplace Research, 2016). The flexibility of the coworking space enables the workers to gain control on how, when and where they would like to work – meaning they can manage their need for privacy, concentrate more easily and collaborate with their teams without disruptions (Knoll Workplace Research, 2016). This is freedom within work, and the result of freedom is a higher level of employee engagement (Cresa, 2017), which is defined as “the emotional commitment employees feel towards their organization and the actions they take to ensure the organization’s success” (Allen, 2014). With respect to such claim, a fully engaged employee works productively and effectively and thus improves corporate performance or business impact (Carder, 2017).

It is well established in various researches that engaged employees are more productive employees. It is derived from the content of the work itself and the passion that an individual has for the work, and from the stimulation that people get from other coworkers (Jones, 2016). However, too much stimulation or engagement can result to a fair number of distractions such as conversing too much with other coworkers and the noise that emanates from preparing a meal in the kitchen that can interfere the coworker’s performance. Since coworking spaces feel less structured than traditional offices, drawing the line between work and socialization may sometimes prove challenging for a coworker’s performance. The diverse set of businesses, job roles, and personalities may culminate an environment of uncertainty and sporadicity due to the lack of common courtesies found in a traditional office (Knoll Workplace Research, 2016). Thus, it is hypothesized that:

H3: The more engaged the coworkers, the better the work performance in a coworking space.

2.2.3 Collaborative Capability

Coworking spaces are favorable places for creativity and idea sharing that gives ‘emotional, professional and financial support to coworkers’ (Fuzi, 2015). It provides coworkers with opportunities to meet a wider array of workers coming from different backgrounds. These individuals usually have a diverse range of competencies and then come up with fresh ideas, identify talent, and make deals with potential customers, partners and collaborators (Knoll Workplace Research, 2016; Gandini, 2015; Huwart, Dichter, and Vanrie, 2012). In the study of Gerdenitsch, Scheel, Andorfer & Korunka in 2016, coworking spaces as social environment “can provide possibilities for social support with coworkers as a new source of social support”. In a survey conducted by Jones Lang La Salle IP, Inc. in 2014, 74% responded that thinking, talking, and brainstorming are the factors that are most valuable in an organization. Having the access to communicate and collaborate with coworkers who share similar ideas and concepts can make their performance better and create a better work output with greater collaborative innovation through greater communicative exchange (Williamson, Carroll, Puybaraud, and Sandstrom, 2016; Pearce-Neudorf, 2014). It can then enable businesses to gain a competitive advantage in their product or process development with the combination of diverse ideas (Williamson, Carroll, Puybaraud, and Sandstrom, 2016). Thus, it is hypothesized that:

H4: The better the collaborative capability of the coworkers, the better the work performance.

2.2.4 Perceived Work Performance

The flexibility and culture of coworking spaces provide organizations a pool of innovators and entrepreneurs, which in turn open the gateways of opportunities to associate with other talented individuals to broaden their novelty capacity (Knoll Workplace Research, 2016; Troisi, Carrubbo, Maione, and Torre, 2016). As a result, these factors increase a coworker’s perceived job performance. A coworker’s perceived work performance is defined as an assessment of whether a person performs a job well (i.e., the work related-activities expected of an employee and how well those activities were executed) (PE Konsult Ltd., 2016). It is also important to take note that the wide array of talented individuals with distinctive personalities and brilliance can create an inconsistent office culture in a coworking space, since it would be difficult to sustain a common team spirit. It can also generate a lack of connection among the actual co-workers of an organization as they might become much closer and synergistic with other employees from different organizations instead of thriving collaborative relationships with their own colleagues. They may likewise feel detached from the normal business operations, and thus be disregarded with opportunities for career development (Knoll Workplace Research, 2016). Notwithstanding the space generates a community of productive workers, the structure of the space itself does not explain the circumstances for collaboration in the community. Rather, what matters most is the level of diversity among the community to establish a dynamic set of skills and knowledge (Liimatainen, 2015). The current study would like to know the extent of workplace design, employee engagement, and collaborative capability of the coworkers that makes them perform better.

2.3 The Hypothesized Model

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3.0 METHOD

3.1 Design

The study utilized a descriptive causal design, which uses Structural Equation Modeling (SEM) for data analysis. According to MacCallum and Austin (2000), SEM is a statistical approach that tests hypothesized patterns of directional and non-directional relationships among a set of observed (measured) and unobserved (latent) variables. There are four latent variables and five hypotheses in the study. Among the latent variables, workplace design is considered an independent variable, perceived work performance as dependent variable and the remaining two, employee engagement and collaborative capability, as mediating variables.

3.2 Sample and Study Site

Twenty-seven (27) coworking spaces within Metro Manila were chosen as the locus of the study. A total of three hundred fifty respondents (n=350) were purposively chosen based on the following inclusion criteria: all coworkers that works as freelancers, consultants, independent professionals, remote employees, entrepreneurs, and employees in a small or large firms inside coworking spaces. Permission to conduct a survey was secured from the Community Manager with the assurance that the responses will be treated with utmost confidentiality and shall only be used for the purpose of this study. Data was gathered over a period of three weeks from October to November 2017. A total of four hundred (400) questionnaires were distributed and only three hundred fifty (350) were retrieved.

3.3 Instrumentation

Survey questionnaires were adapted from similar literatures, articles, and other online survey materials. The survey was conducted to measure the importance of workplace design to employee engagement, collaborative capability, and perceived work performance in coworking spaces. All four variables were measured through a 6-point Likert Scale ranging from 6 (extremely important) to 1 (not at all important) and 6 (strongly agree) to 1 (strongly disagree).

Pilot testing was made prior to the distribution of the survey questionnaires. The first part includes demographic information such as age, gender, highest educational attainment, work status, business industry they are currently working at, occupation, and the hours they render a day.

Different survey instruments were adapted for the study wherein the corresponding results after the pilot test was conducted to the three hundred fifty (350) respondents. There were eighteen (18) statements for workplace design adapted and modified to measure its importance to coworker’s perspective. Statements were derived from Hellmuth, Obata + Kassabaum (HOK, 2017), The Modern Office: A Workspace Design Survey (Zero21, 2017), and Survey Monkey. It includes “have access to fresh air” and similar statements which yielded a reliability coefficient of 0.86. For employee engagement, to measure the commitment level of a coworker, were gathered from HR Survey, LLC (2017) wherein some of the items were modified and one statement was removed after the pilot test was conducted with the reliability coefficient of 0.84. Collaborative Capability had twelve (12) statements and an example statement was “I meet and discuss with coworkers” to measure how a coworker connects with others and it was from the 1st Global Coworking Survey written by Carsten Foertsch in DeskMag, 2011 resulted to 0.94 reliability coefficient.

Perceived work performance had six (6) statements that were gathered, and modified to measure a coworker’s performance level from the survey PERforM: The Missouri State Employee Online Performance Approval System Resource and Informational Portal, Writing Performance Objectives for Job Components: A Brief Tutorial and had reliability coefficient of 0.91. Example statements were “I manage my time effectively” and “I complete my work in a timely manner. In addition, some items were adapted and modified from A Correlational Analysis of the Survey Questionnaire (Abe & Uda, 2016), and Beyond the Core: The Role of Co-working Spaces in Local Economic Development (Chuah, 2016) for all the variables aforementioned.

3.4 Data Gathering Procedure and Ethical Consideration

Considering the ethical aspect of this study, letters seeking permission to use survey tools were sent to the rightful owners of the survey items that we have adapted, assuring them that it will be acknowledged with appropriate reference. Letters of permission to conduct surveys were also sent to owners and community managers of coworking spaces before gathering the data. Upon approval, the questionnaires were given out to different coworkers available during the survey dissemination.

3.5 Data Analysis

Descriptive statistics were used to summarize the respondents’ demographic profile. Using SPSS ver. 22, exploratory factor analysis was employed to derive the underlying dimensions of the constructs. Likewise, AMOS ver. 24 was used to test the hypothesis in the conceptual model of the study using Structural Equation Modeling (SEM).

RESULTS

Table 1. Demographic Characteristics of Respondents (n=350)

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A sample of three hundred fifty (350) coworkers from twenty-seven different coworking spaces in Metro Manila took part in the conduct of this study to increase the research’s validity. Among the 350 respondents, 42.6% were male and 57.4% were female, and majority were aged between 18 and 29 years old (66.3%) whom were chiefly college graduates (78.0%). 77.7% were full-time employees, working between 1 and 8 hours on the daily average (68.9%), who were mostly Associates (12.6%) and Managers (12.6%) from the IT (23.7%) and the Media & Marketing (12.9%) Industry. 24.2% responded that they chose to work at their respective coworking spaces because of the familiarity with the area, and 73.1% reported that they work at the coworking space on a daily basis. When it comes their preferred price breakdown of working at a coworking space, 39.7% attested that a rate between 50 pesos and 70 pesos per hour is more favorable. Coworkers attest that the most essential items they need for better productivity in a coworking space are coffee, tea, and water (x̅ = 5.529) and wireless Internet (x̅ = 5.729) as these are.

Exploratory Factor Analysis of the Study Construct

All items in the questionnaire were factor analyzed using principal component method and varimax rotation with Kaiser Normalization rotation. The results of 350 respondents were sufficient enough for factor analysis to be carried out. A reliability coefficient (Cronbach Alpha) of .80 and above for each dimension were considered acceptable in this study. As part of the decision rules, all items under the dimension with factor loadings of less than 0.40 were discarded along with factor dimensions with eigenvalues less than 1.00. Exploratory Factor Analysis (EFA) of the workplace design variable is shown in table 2.

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