A glitzy head office is all well and good, but does it add to outside impressions, staff morale or productivity? Charlotte Hardie inspects some of the most and least glamorous to find out

Whether they feature lobster-clad facades, 28-metre glass atriums or just plain old concrete walls, retailers’ head offices are as eclectic as the sector itself.

Generally speaking, these buildings are not renowned for their glamorous touches. Tesco perhaps wins hands down when it comes to functionality - its very ordinary, modern block on an industrial estate in Cheshunt, Hertfordshire, could be described as little more than functional, and neither could DSGi’s similarly uninspiring headquarters in nearby Hemel Hempstead.

Does the look and feel of retailers’ headquarters matter? Emphatically no, says Dreams chairman and former DSGi chief executive John Clare. “The need to communicate the value of your brand through the head office is about as close to zero as you can get,” he says.

When DSGi’s head office was partly ruined by the nearby Buncefield oil explosion four years ago, 1,200 staff had to be temporarily relocated with a laptop either in various other nearby buildings or at the spare desks of some of its suppliers. “It wasn’t ideal, but did it make any difference to the performance of head office over the following three months? No,” says Clare.

One DSGi head office employee says: “It’s just a typical 1990s modern block that hasn’t had a lot of investment. There are certainly no frills, but I can honestly say it doesn’t bother me.” And this is a man who came from a retail business where he had his own office in a “fantastically glamorous” building, complete with its own cinema. “I’ve got a job I enjoy. Pay me my millions and I don’t care what the carpet’s like,” he jokes, adding: “The clear message we’re receiving is that we need to invest in customers and stores rather than our working environment.”

Poundland chief executive Jim McCarthy describes the value retailer’s head office, which adjoins its warehouse, as “exceptionally cheap at £5 per square foot” and entirely devoid of “corporate extravagance”. He adds: “We call it the retail support centre, and it’s exactly that. It’s absolutely, unequivocally there to support our shops. For us, the look and feel of the place just isn’t important. Investment has to go into the product and customers. I’d rather open more shops than spend it on head office.”

This is not by any means pouring scorn on those few retail businesses that are lucky enough to operate from higher-specification buildings, such as Marks & Spencer, Morrisons and Sainsbury’s. The latter was up against management consultant Accenture to acquire its 333,000 sq ft, Norman Foster-designed building in London’s Holborn in 2001. Added extras include a gym and a top-floor cafe with views over the city.

Luxurious though it is, there is no doubt that a touch of glamour can reflect well on a brand. External stakeholders talk about it and the workforce can feel proud of it. Former Sainsbury’s store manager Paul Gilligan spent several months working at head office as a project manager. He says: “There’s no doubt it’s impressive from the minute you walk in. It was bright, light, fresh, the facilities were great and the atmosphere among everyone who worked there was good.”

However, pride tends to wear off. Robert Myatt, of business psychologists Kaisen Consulting, says: “People do start to take it for granted.” And for all that he appreciated Sainsbury’s smart office environment, Gilligan agrees. “It’s always going to impress outsiders, but once you’ve been in there for a while you do tend to forget about the building, it’s more about the people,” he says.

Furthermore, research consistently shows that the number-one factor in determaining employee engagement is employees’ manager and how well they are managed. The second-most important aspect is the social environment and colleagues. The physical environment only comes into play as priority number three. But even then, it’s not about whether the building has floor to ceiling glass windows, state of the art lighting, plush carpets or Italian leather sofas. What is vital is comfort and cleanliness. Myatt says: “If it’s too hot or too cold or the lighting is inadequate, then it definitely has a negative impact, but as long as it’s not unsatisfactory the physical environment is not a major factor in work satisfaction.”

House of Fraser moved from its headquarters in Victoria to the vacated M&S head office on Baker Street last year. One HR employee says the former building certainly lacked comfort.

She recalls: “It was fairly grim in the main. The desks were cramped and the buying office was a nightmare in the summer because there was no air conditioning. It was unbelievably hot.” She laughs about the contrast with the executives’ floor, which even had a dedicated long-serving butler. “Their floor was a hangover from the Al Fayed days,” she says. “It was all 1980s glass, cream leather sofas and thick carpets. We used to interview prospective staff up there and then have to stress it was nothing like the floor they would be working on.”

In many cases, upgrading an office is not a luxury, it’s a necessity. Today, Morrisons’ head office staff work in a building that has been likened to Frank Gehry’s Guggenheim museum in Bilbao, Spain. Three years earlier, many staff sat at desks that harked back to the 1960s, some worked in offices attached to retail distribution centres, some were in offices above stores, some were in rented accommodation in Bradford, and some even worked in portacabins.

Sir Ken Morrison might not have been a man who bought into aesthetic trappings, but even he realised an upgrade was long overdue. Its pristine dwellings now include an auditorium with conference and presentation facilities, a bistro-style canteen and an auditorium. The executive suite also has views over the Yorkshire countryside.
The investment has brought about significant improvements in the way the business is now able to operate. Aside from being able to wave goodbye to portacabins, it has also improved staff communication. With its previous disjointed array of office buildings, there was little opportunity to collaborate and any sense of workforce cohesion would have been difficult to achieve.

Interestingly, although the DSGi employee used to enjoy the trappings of his own plush office in his previous job, he says it wasn’t necessarily more conducive to better working. “At DSGi, it’s a typical open-plan office where we all sit in blocks. All the different departments work much better together.”

This is an important point: a head office does not need to be glamorous for it to be professional. Given the global success of a business such as Tesco, it’s a fairly safe bet that what its headquarters lacks in aesthetic appeal it more than makes up for in practicality and organisation. As Myatt says: “If an organisation is trying to project professionalism but the environment is chaotic, the equipment doesn’t work and there are boxes everywhere, there’s a mismatch and they’re not going to be able to project that image.”

The look of a head office also depends to a certain extent on the sector in which the company operates. Wayne Clarke, managing partner of the Best Companies Partnership, the advisory arm of the Best Companies Guide, says: “A fashion retailer will have different minimum requirements in terms of the style and location of their head office to, say, a DIY retailer.”

McCarthy would be the first to agree you would hardly expect a value player such as Poundland to run its business from an all-singing, all-dancing site oozing splendour in the middle of Mayfair. Equally, you wouldn’t expect to see a high-end luxury fashion house such as LVMH holed up in an industrial estate on the outskirts of Paris.

Carl McPhail, chief executive of New Look - which is relocating its head office to London next month - says: “You’ve got to have an environment that’s appropriate for your
people. We’re a creative business and our head office needs to reflect that. Sometimes head offices can be too functional.” He says the new building is designed to maximise creativity and enable designers, buyers and merchandisers to work together to deliver the best products for consumers.

Ted Baker is a good example of the interior of a head office suiting the brand. Named the Ugly Brown Building, the only indication of its presence on an obscure road between Camden and King’s Cross is a lobster on the door. First-time visitors are baffled by having to announce their arrival not to a receptionist but to a video screen. The idiosyncratic office environment befits the quirky fashion retailer perfectly.

Modernity and glamour might be a bonus, but retailers should not think it is the easy answer to achieving strong workforce morale. Clarke says: “I’ve seen many businesses fool themselves into thinking that simply upgrading the head office will lead to an engaged workforce. It’s rubbish,” he says. “There are some important essentials such as decent desks and chairs, but in the main it has little effect.”

And even the smartest of environments isn’t always enough to persuade its occupants to stay. In 2011, Sainsbury’s will vacate its prime central London location for a cheaper option down the road in the newly regenerated King’s Cross. As McCarthy - who used to work at Sainsbury’s as managing director of convenience before moving to Poundland - says: “It’s a great brand that’s doing very well, but even they are very aware that paying the top end of dizzy for office costs doesn’t make sense.”

Asked if he enjoyed the glamorous environs in his previous job, he laughs: “It’s only nice if your figures are good. It’s like a lead weight if they’re not.”