The Value of a Campus: Costs and Benefits of Collocation

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One of the most critical decisions large organizations face is whether, how, which and to what extent to collocate organizational units as the organization grows and evolves over time.

All things being equal, most companies prefer having the whole company “under one roof.” But things are not equal. There are cost, security, attraction and retention, business continuity, branding, market location, technology and other issues that need to be considered. When they are, the value of a campus, or collocation, may become less obvious, though perhaps for some firms no less compelling. Using the organizational ecology framework, the IWSP’s current research examines the value of collocating business units, whether in a single high-rise tower, a multi-building urban “campus”, or a suburban campus.

Value of a Campus: Efficiency, Identity, and Communication

Typically, organizations view collocation in a campus or office tower as serving three main purposes:

1) Efficiency and Control, driven by the value of economies of scale (the opportunity to reduce unnecessary redundancies), greater opportunity to expand as the organization grows, and the belief that it is easier to manage and control the organization if it is in one location.

2) Identity, revolving around employees’ sense of belonging to a significant enterprise and customers, suppliers and analysts awareness and confidence in a corporate brand.

3) Communication, motivated by the belief that being physically present on the same campus or in a single office tower enhances face-to-face contact and collaboration across business units.

The flip side of these collocation benefits is a series of potential drawbacks. These include higher costs from housing all functions in more expensive real estate; increased risk of loss of business continuity from disasters; more difficulty attracting and retaining qualified staff whose life and work styles vary enormously; unrealized communication and collaboration potential; greater difficulty responding to shifting markets and the downsizing as well as expansion of the firm.


Companies routinely invest enormous amounts of time, energy, and money debating, developing, and implementing workplace strategies around the issue of collocation. Collocation can have both positive and negative organizational consequences. We believe, however, that given factors such as the shifting demographic profile of workers and their associated expectations, the unmitigated improvement of information technologies, the globalization of the marketplace, mergers and acquisitions, emerging new business strategies, and endemic uncertainty about virtually everything affecting business today that this is the right time to test key assumptions about the value of a major campus or tower strategy. The key question is not whether a campus or collocation is right or wrong. Rather, it is under what conditions and at what costs do different kinds of collocation make sense; and are our working assumptions about collocation valid?

Selected Research Questions

Which groups and individuals in organizations actually exploit and benefit by close proximity?

How close does proximity have to be to be meaningful?

Is employees’ organizational commitment and identity with a corporation affected by whether the worker is located in a collocated vs. dispersed facility?

Are the operational and capital costs significantly different in a campus or single tower vs. a more distributed workplace strategy?

Is employees’ sense of security affected by collocation in a campus or tower vs. being located in a smaller, more distributed facility?

What is the time lost (and what might be gained) by employees commuting between buildings or sites by foot, car, train (subway), or airplane?

In what ways and to what extent is organizational learning affected by collocation vs. more distributed workplace strategies?

Research Design: Four Levels of Analysis

The potential variation on forms of collocation and distributed work, and their associated costs and benefits, is enormous. We cannot study everything. To gain insight into key factors influencing costs and benefits of different forms of collocation, the IWSP research program will explore the value of a campus at four quite different levels, employing distinctly different methodologies. For each of these, we will use sponsor’s own sites first, wherever appropriate and feasible; as well as drawing on non-sponsor firms.

Level 1: Corporate Best Practice Survey

Working with our IWSP sponsors, we will identify 10-20 firms in the United States and abroad who are known as having chosen and implemented successful collocation or distributed work patterns. We will visit these firms for 1-2 days each to meet with key informants. The desired outcome is to understand the nature of the workplace strategy, the underlying thought process for their decision, the factors they considered, data and information they used to support their decision, and the benefits expected or realized. The intent is to address all three potential values of collocation: efficiency, identity, and communication.

Level 2: Employee Survey

Using primarily employee surveys and some interviews, the focus at this level is on issues of identity and communication. The intent is to compare three forms of collocation: Central tower; urban campus (i.e., several buildings within 5-10 minute walking distance); and suburban campus (i.e., single property with several buildings owned and occupied by one firm). Within each of these collocation forms, we will compare the effects of collocation with distributed work for the same company. The research design, therefore, is intended to generate insights both on the effects of different forms of collocation, and on distributed work compared to collocation. Unlike Level 1, which relies on in-depth interviews and archival data (e.g., internal white papers, corporate analyses, memoranda), Level 2 relies on web-based surveys of employees working in both collocated and distributed fashion.

Level 3: Ethnographic Analysis

This level focuses on a much smaller sample of individuals and firms than Levels 1 and 2, but in much greater detail. The intent is to drill down on issues that surface in Levels 1 and 2 in order to understand in more depth underlying processes and dynamic relations. Methods are likely to involve techniques such as in-depth interviews; shadowing (following a few employees over the course of a day to understand their work patterns in detail); and distributing throwaway cameras which respondents use to take photos of where they work, and then using the photos as a stimulus for discussing key issues ranging from commitment and identity to communication and collaboration.

Level 4: Financial Modeling

While we expect to obtain some information on the relative costs of collocation and dispersion in the Level 1 analysis, the intent here is to specifically model key cost parameters in order to understand the range of financial implications associated with different forms of collocation and distributed work. This information provides the opportunity to assess organizational benefits around identity and communication in relation to efficiency or cost. For example, while collocation may increase sense of commitment to the firm, at what cost is this achieved?