Open Office vs. Private Office: Which Type of Office Layout Is Right for Your SMB?

What to consider when deciding on your office layout

When deciding on your office design, it’s crucial to consider more than cost or personal preferences. Private offices and open-office floor plans have pros and cons that can affect employee productivity, job satisfaction and work-life balance.

Depending on your industry, employee preferences and job functions, one workplace design might be a better fit for your office than the other. For example, Dan Zakai, CEO and co-founder of Mindspace, suggested that while a more collaborative team might perform well in an open layout, many employees benefit from some sort of privacy, like the addition of separate offices and other privacy solutions, such as phone booths and one-on-one rooms.

Bill Himmelstein, CEO of commercial real estate brokerage Tenant Advisory Group, said the goal for improving your company’s productivity is to give employees a working environment where they can accomplish as much as possible.

“Sometimes, it’s more collaborative in nature and, other times, it is [finding] some quiet space and [staying] heads down for a while,” Himmelstein said. “Either way, an office space should be adaptable, support the company’s culture and … serve as a place where employees and partners alike want to spend time.”

A combination of open and closed floor plans is also an option — and a highly desirable one to consider. According to the Gensler U.S. Workplace Survey 2022, most people prefer work environments that incorporate features from both open and closed office plans. The survey’s 2,000 respondents sought coffee shop and clubhouse work environment characteristics slightly more than corporate and conference room characteristics.

Types of office layouts

Many entrepreneurs and small business owners make the mistake of assuming a specific office type will work best for their business. However, this may cause issues in some organizations. Instead of selecting the office layout most convenient for you — or what seems most popular —  weigh the pros and cons of each while considering your team’s needs. 

Here’s an overview of three common office layout types to help you compare and contrast.

1. Open office plans

For the most part, open offices eschew cubicles and private offices. Colleagues typically sit close to each other in a shared office space. This workplace design allows office workers to communicate freely, which can be both good and bad for the company.

According to Zakai and Himmelstein, the pros of open offices include the following:

• Opportunity for collaboration and innovation
• More effective employee communication
• Better chance for healthy, informal communication
• Improved company culture
• Increased manager accessibility and sense of transparency
• More room for new employees
• More affordable option (less square footage per employee)

The cons of open offices include the following:

• Noise and distractions hinder productivity and disrupt the work-life balance
• Lack of privacy for phone calls and one-on-one meetings
• Potential security issues
• Potential negative impact on collaboration

Open office layouts shouldn’t be off the table, but there must be a balance for them to succeed. Otherwise, throwing everyone together in one room, with phone calls, meetings and conversations between colleagues, is a recipe for disaster. 

“While the open layout is feasible for some industries, workers need zones dedicated to minimizing distractions,” advised Himmelstein. “Oftentimes, this style of office layout amplifies the negative effects of overcrowding as finding a quiet moment to compose emails [and] reports or make phone calls can be a challenge.”

Additionally, the lack of privacy can cause operational disruptions. “Businesses have quickly discovered that when privacy leaves the workplace, so does productivity,” noted Himmelstein. “Few private spaces leads to a lack of places to deal with personal issues that will inevitably distract an entire team if someone is stressed or upset. Additionally, employees may be less likely to take risks if their peers are watching them fail in the open.”

2. Private office designs

Private offices and independent workspaces allow employees to focus on their work without distractions. However, collaboration is limited and company culture is often lacking.

According to Zakai and Himmelstein, the pros of private offices include the following:

• Fewer workplace distractions, resulting in increased efficiency and focus
• Prestige status that can be used as an incentive for promotions
• Private space for personal and professional matters
• Higher level of security
• Enhanced collaboration if a small team shares a private office

The cons of private offices include the following:

• Lower levels of engagement, team building and, sometimes, office morale
• Less chance for serendipitous collaboration and innovation
• Perceived lack of transparency
• Potential subcultures in the organization that misalign with the corporate culture
• Higher cost (more space needed to accommodate cubicles and private offices)

While some jobs require more privacy than others, a certain level of privacy is necessary for every business.

3. Combination of office layouts

Consider the nature of your business. What environment will suit your team and the tasks they must complete? A combination of office layouts may be the option that works best. 

“It starts with understanding your culture and how your people work, and then carefully planning the office space selection, design and construction,” said Himmelstein.

Himmelstein advised speaking with a designer and broker about the best layout for your team. Discuss how much privacy your workers need and what type of environment you prefer. Employees should have a say in the matter and their situations and job functions should be considered in the decision. 

Himmelstein suggested a hybrid situation where you limit private offices to top executives and add conference rooms as needed to give people places to meet in private. You could also have offices for sales teams and more open spaces for collaborative departments like marketing. 

“Consider the work and your team’s needs,” he added. “Does the nature of the work require frequent phone calls with clients or tasks that require strong focus? Or are your employees often engaged in group projects, necessitating regular communication?”

Build the office that’s best for your team

While open offices may be popular, many companies find out the hard way that they need boundaries. You can have the best of both worlds by finding a balance and creating a custom layout for your organization. 

If you decide on a more open layout, provide private booths for phone calls and conference rooms for meetings. If you go with a more private office space, ensure you’re still collaborating and maintaining positive company culture through team outings or check-ins. You’ll know your layout is working well for your team if everyone is happy, engaged, motivated and productive. 

If not, there’s always room to make a change.

Max Freedman and Sammi Caramela contributed to the reporting and writing of this article. Some source interviews were conducted for a previous version of this article.