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The Rise And Fall Of WeWork

Marlen Gonzalez

South Texas College

ORGL-4341-KV4-Management Theory I-CBE

Romeo Benavidez

May 2nd, 2023

The Rise And Fall Of WeWork

WeWork is a company that provides flexible shared workspace solutions for individuals,

entrepreneurs, freelancers, startups, and large enterprises. Founded in 2010, the company offers

coworking spaces, private offices, conference rooms, and other amenities such as high-speed

internet, printing facilities, and kitchen areas. WeWork has locations in over 100 cities around

the world, including major cities such as New York, San Francisco, London, and Shanghai. The

company has grown rapidly in recent years, and at one point was valued at over $47 billion.

However, in 2019, the company faced financial difficulties and had to postpone its initial public

offering. Since then, WeWork has gone through significant changes, including the departure of

its co-founder and former CEO, Adam Neumann. The company has shifted its focus to cutting

costs and improving profitability. Despite the challenges it has faced, WeWork remains a

popular option for those seeking flexible workspace solutions. (Satish, D. 2001)

Organizational Structure

WeWork’s organizational structure is designed to support its mission of providing

flexible workspace solutions and fostering a community-driven culture. Some observations that

can be made from its organizational structure: Decentralized structure, WeWork operates in over

100 cities worldwide, with each location having its own team responsible for managing

operations and providing services to members. This decentralized structure allows WeWork to

be responsive to the needs of its members and to tailor its services to local market conditions.

Flat hierarchy, WeWork’s organizational structure is relatively flat, with a limited number of

layers between the top leadership and the front-line staff. This structure promotes

communication, collaboration, and decision-making at all levels of the organization. Emphasis

on community, WeWork’s organizational structure reflects its emphasis on building a

community-driven workspace. Community managers are present in each location to facilitate

connections between members, organize events, and provide support services. This structure

allows WeWork to create a sense of belonging among its members, which is a key differentiator

from traditional workspace providers. Focus on innovation, WeWorks’s organizational structure

is designed to encourage innovation and creativity. The company has a dedicated team of

researchers, engineers, and designers who work on developing new products and services to

meet the evolving needs of its members. This structure allows WeWork to stay ahead of the

curve and to continue to differentiate itself in a competitive market. WeWork’s organizational

structure is designed to support its mission of providing flexible workspace solutions and

fostering a sense of community among its members. The company’s decentralized, flat

hierarchy, emphasis on community, and focus on innovation have been key factors in its success

and popularity among businesses of all sizes. Some of the opinions I have of WeWork are that

they were young, an overspending company, who didn’t have an adult around to tell them NO.

(Brown & Farrell 2001). WeWork faced several challenges, including concerns about its

financial sustainability and corporate governance practices. The company’s rapid expansion and

high valuation have come under scrutiny, and there have been questions raised about the

leadership of its co-founder Adam Neumann. In 2019, WeWork postponed its highly anticipated

IPO, and Adam Neumann resigned as CEO. Following Neumann’s departure, WeWork has

undergone significant changes, including restructuring its leadership team and implementing

cost-cutting measures. Overall, opinions about WeWork and its leadership are mixed, some

people praise the company’s innovative approach to workspace solutions and others criticize its

business practices and leadership. However, it’s important to note that these opinions are

subjective and can vary widely depending on individual perspectives and experiences.
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Controls

The P-O-L-C framework stands for Planning, Organizing, Leading, and Controlling,

which are the four primary functions of management. WeWork’s planning process includes

assessing market demand, identifying suitable locations, and designing and building each

workspace to meet the needs of its members. The company also engages in strategic planning to

identify opportunities for growth and to stay ahead of emerging trends in the shared workspace

industry. WeWork has a decentralized organizational structure, with each location having its own

team responsible for managing operations and providing services to members. The company also

has a centralized team of researchers, engineers, and designers who work on developing new

products and services to meet the evolving needs of its members. WeWork places a strong

emphasis on leadership, with a focus on promoting a community-driven culture among its

members. The company’s community managers are responsible for building relationships with

members, organizing events, and providing support services. WeWork’s leadership team is also

responsible for setting the overall direction of the company and ensuring that it remains focused

on its mission. WeWork uses a variety of controls to ensure that its operations are running

smoothly and that it is meeting the needs of its members. For example, the company uses

financial controls to manage costs and to ensure that it is generating revenue from its members.

WeWork also uses quality controls to ensure that its spaces are clean, comfortable, and well-

maintained, and that its members have access to the amenities they need. The company’s focus

on community-driven culture and innovation has been a key factor in its success, and its controls

have played an important role in supporting this mission. (Langevoort, 2001).

Some of the controls that were lacking or missing that raised concerns for the company

were: financial controls and accounting practices. The company’s high valuation and large debt
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burden have raised questions about its financial sustainability, and there have been concerns

about its use of non-standard financial metrics to present its financial performance. Corporate

governance controls, the company’s governance was criticized for being too closely tied to its

co-founder Adam Neumann, who led significant voting power and had the ability to make major

decisions without board approval. Risk management control, its rapid expansion and high growth

rate have also raised questions about its risk management controls. The company faced

challenges in maintaining consistent quality across its locations, and there have been concerns

about its ability to manage risks associated with its long-term leases and debt obligations. Crisis

management control, handling of the COVID-19 pandemic has also been criticized, with some

members and employees raising concerns about the company’s response to the crisis. There have

been reports of delays in implementing safety measures and providing support to affected

employees, which have raised questions about the company’s crisis management controls. There

have been some gaps and deficiencies in its control framework that have contributed to its

challenges. Controls that might be recommendable for the company to consider implementing in

the future are improved financial controls, stronger financial controls, and accounting practices

to ensure greater transparency and accuracy in its financial reporting. The company could also

consider using more standard financial metrics to provide a clearer picture of its financial

performance. Enhanced corporate governance controls, to ensure that decision-making is more

transparent and aligned with the interests of all stakeholders. This could include reducing the

concentration of voting power in the hands of a single individual or group and increasing the role

of independent directors on its board. Robust risk management controls, to mitigate risks

associated with its long-term leases and debt obligations. This could include conducting more

thorough due diligence on potential expansion locations, diversifying its real estate portfolio, and
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exploring alternative financing models. Effective crisis management controls, to ensure that it is

well-prepared to respond to emergencies such as the COVID-19 pandemic. This could include

developing contingency plans, implementing safety protocols, and providing timely and

transparent communication to members and employees. These controls could help WeWork

improve its overall performance, enhance transparency, and better manage risks associated with

its business model. (Satish, 2001).

Leadership Styles

The leadership style of WeWork’s former CEO and co-founder Adam Neumann has been

described as charismatic and visionary, with a strong focus on innovation and community

building. Neumann was known for his unconventional leadership style, which involved blending

work and personal life and creating a strong sense of community among the company’s

members. However, there have been criticisms that Neumann’s leadership style was too focused

on growth at all costs, which contributed to some of the company’s challenges. In addition to

Neumann, WeWork’s other leaders also exhibited a similar leadership style, with a focus on

fostering a community-driven culture and promoting innovation. However, there were also

concerns about a lack of accountability and transparency among the company’s leadership team,

which contributed to some of the governance issues that the company faced. Based on these

observations, it may have been beneficial for WeWork’s leaders to adopt a more balanced

leadership style, which includes a focus on innovation and community building, but also places a

strong emphasis on accountability, transparency, and risk management. This could include a

more collaborative approach to decision making, greater involvement of independent directors

on the company’s board, and a more disciplined approach to financial management and risk

mitigation. In addition, given the fast-paced and high-growth nature of WeWork’s business, it
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may have been beneficial for the company’s leaders to adopt a more adaptive leadership style,

which involves being flexible and agile in response to changing circumstances and market

conditions. This could have helped the company to better manage risks and seize opportunities in

a rapidly evolving industry. (Langevoort, 2001).

Decision-Making Styles

WeWork’s decision-making styles were heavily influenced by the company’s founder

and former CEO Adam Neumann, who was known for his unconventional approach to decision-

making. Neumann was known for making bold, visionary decisions that were often based on his

instincts and personal vision for the company, rather than on rigorous analysis or a systematic

decision-making process. His decision-making style was also influenced by the company’s

culture, which placed a strong emphasis on community, collaboration, and innovation. This

culture was reflected in the company’s decision-making processes, which were often highly

decentralized and collaborative, with input from a wide range of stakeholders including

employees, members, and partners. There was criticism that the company’s decision-making

processes lacked transparency and accountability, and that key decisions were often made by a

small group of insiders without sufficient input or scrutiny from other stakeholders. While this

approach may have worked well in the early stages of the company’s growth, it may have

contributed to some of the governance and financial challenges that the company faced as it

expanded rapidly and encountered greater scrutiny from investors and regulators. It may be

beneficial for WeWork’s management and employees to adopt a more systematic and disciplined

approach to decision-making, which involves greater transparency and accountability, and a

more rigorous analysis of risks and opportunities. This could help the company to better manage

risks and make more informed decisions as it continues to evolve and grow. WeWork’s decision-
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making style can be classified as a combination of visionary, collaborative, unsystematic, and

reactive, which reflects the company’s unique culture and leadership style. The evidence to

support the classification of WeWork’s decision-making styles as a combination of visionary,

collaborative, unsystematic, and reactive can be drawn from various sources, including the video

and research on the company.

Strategic Human Resource Management

Some questions that human resource management can have could be, what is the

organization’s strategic direction? WeWork’s strategic direction is to create a global community

of creators and entrepreneurs who can work, live, and connect with each other in innovative and

inspiring spaces. To achieve this vision, WeWork has expanded rapidly into new markets and

developed a range of products and services that support its members’ needs. To improve its

management of human assets, WeWork could align its HR practices and programs with its

strategic direction by prioritizing the recruitment and development of employees who are

passionate about entrepreneurship, innovation, and community building. What are the

organization’s core competencies and how can HR contribute to them? The company’s

competencies include its expertise in real estate development and management, its ability to

design and operate flexible and innovative workspaces, and its focus on creating a vibrant and

supportive community of members. To improve its management of human assets, WeWork

could develop HR practices and programs that support these competencies by investing in the

training and development of employees with expertise in real estate, architecture, design, and

community building. WeWork could also prioritize the recruitment of employees who share its

values of creativity, innovation, and community. What are the organization’s workforce

requirements? The requirements include a range of skills and competencies that are needed to
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support its core competencies, such as real estate development and management, design,

community building, and customer service. To improve its management of human assets,

WeWork could develop HR practices and programs that attract and retain employees with these

skills and competencies. This could involve offering competitive salaries and benefits packages,

providing opportunities for career growth and development, and fostering a culture of learning

and development. What are the organization’s cultural and structural requirements? It includes a

commitment to innovation, flexibility, collaboration, and community building. To improve its

management of human assets, WeWork could develop HR practices and programs that support

and reinforce these values. This could involve fostering a culture of innovation and

experimentation, promoting cross-functional collaboration and communication, and providing

opportunities for employees to connect with each other and with the broader WeWork

community. In summary, by answering these four questions and developing HR practices and

programs that align with its strategic direction, core competencies, workforce requirements, and

cultural and structural requirements, WeWork could improve its management of human assets

and support the growth and success of its business. (Satish, 2001).
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References

Brown, E. & Farrell, M. (2021). The Cult of We. WeWork, Adam Neumann, And The Great

Startup Delusion.

Langevoort, D. (2001). Corporate Adolescence: Why did “We” not work? South Texas College.

Satish, D. (2001). Financial Statement Analysis and Valuation Dilemma of WeWork (The We

company). South Texas College.

[Youtube]. The spectacular rise and fall of WeWork [Video].

https://www.youtube.com/watch?v=X2LwIiKhczo