In a world in which employee engagement is steadily decreasing, it’s increasingly important for firm leaders to understand the psychology behind their office spaces.

Whether you’ve experienced it firsthand or heard about it on the news, you probably know that employee engagement is dropping in the United States.

According to research from Gallup, employee engagement saw its first annual decline in a decade, dropping from 36 percent engaged employees in 2020 to just 34 percent in 2021. In 2023, it’s estimated that only 31 percent of workers feel engaged at work. We need a rebound, and if you ask many experts, it starts with office psychology.

With organizations encouraging or even requiring employees to return to the physical office, it’s crucial that the workspace they’re returning to offers beauty, comfort, and function. Incorporating design elements that make them feel “at home” can go a long way in creating a better work environment.

But what exactly is the role of office spaces in fostering engagement, and how do they impact our psychology? Let’s talk about it:

The role of physical environment. An office’s design shapes employee behavior and mindset. It works in the background, influencing the manner in which individuals approach tasks, collaborate, engage with others, and feel about their jobs.
A carefully designed office space can boost productivity and engagement. Conversely, an outdated or poorly planned office can have the opposite effect.
As the Psychology Department at the University of Southern California puts it, we’re looking at building “new spaces for a new time.” Technological advances are changing the way employees work and do business, and physical work environments need to evolve with the times.
The next generation of workers wants to be happy, and that starts with workspaces that are healthy and functional. This brings us to our next few points: What office psychology elements are known to impact employee engagement and happiness?
Furniture matters. Furniture is more than a functional aspect of an office; it’s an integral component that directly affects the well-being and efficiency of employees.
A set of armchairs in a nook can facilitate private conversation. A well-designed breakout area encourages informal discussion and relaxation. A carefully chosen meeting table might improve team collaboration, for both in-person and remote participants.
In more and more circumstances, office spaces are opting for contract furniture that is dynamic and versatile. They don’t just want one setup – they want pieces that are flexible, multi-purposed, and designed to meet various mental and physical employee needs.
Furthermore, they want furniture that contributes to healthy productivity in the office. Modern ergonomic design focuses on creating workspaces (and furniture) that positively impact health, concentration, and comfort.
According to the Washington Department of Labor and Industries, implementing ergonomic solutions at work can increase productivity by 25 percent. In other words, when furniture supports and cares for employees, they tend to be more energetic and engaged.
Layout dynamics. The layout of an office space silently orchestrates meaningful interactions and shapes the dynamics of a team. An open floor plan facilitates collaboration and conversation while enclosed spaces provide opportunities for deep concentration.
The most productive offices tend to strategically employ multiple kinds of layouts to enable multiple kinds of productivity.
Currently, it’s estimated that seven out of 10 companies in the U.S. have some kind of open floor plan – but most fail to prioritize private spaces. This leaves many introverts without areas where they can recharge. It also discourages heads-down solo work or periods of uninterrupted concentration.
As Harvard Business Review stated in 2019, if you want to boost collaboration in a workspace, you need to increase the right kinds of interactions while decreasing ineffective ones.
An open floor plan might seem like the most beneficial option, but in reality, designers need to strike a blend between public and private spaces for employees. This will likely facilitate higher levels of productivity, but it will also ensure employees’ psychological needs and preferences are met by providing choice and control in how they decide to work
Lighting and mood. Most of us know that lighting is a powerful mood influencer. When used effectively, it can make people feel more creative, energetic, and happier. When used ineffectively, it can trigger feelings of repression, stagnation, and stress.
We all know the feeling of a buzzing fluorescent light hanging over our heads – and it’s not a good one. Too much artificial lighting can also throw off our internal clocks and leave us feeling lethargic.
That’s why the most productive workspaces place a huge emphasis on bringing in natural light.As Chicago environmental and design psychologist Sally Augustin said, “Natural light is like a magic medicine – it improves mood, mental performance, and the ability to get along with people.”
One of the biggest design challenges in corporate spaces is ensuring most workstations can benefit from some form of natural light. At the same time, designers need to account for things like glare and outside distractions to ensure that natural light sources are helpful, not counterproductive.
That’s why many modern offices are turning to adjustable solutions such as automated window shades, motion sensor lights, smart bulbs, and dimmable overhead lights. These design features make lighting more personal and productive for each individual.

Office space design isn’t just a study in furniture, layout, or lighting – it’s a study in human nature. The more we learn about how our physical environment impacts our mood and productivity, the better we can tailor corporate spaces to meet employee needs.

In a world in which employee engagement is steadily decreasing, it’s increasingly important for designers to understand the psychology behind office spaces. This is how we get things back on track and foster healthier, happier workplaces.

Jon Leach is a director of business development at Tangram Interiors for the Dallas-Fort Worth region. Connect with him on LinkedIn.

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