Harnessing the 'Spillover' Effect

New research suggests that improving employee performance may not always require new incentives, training programs, or technology investments. Instead, simply rethinking where employees sit can deliver measurable gains to the bottom line.

A research team from Harvard Business School, hiQ Labs, and Cornerstone OnDemand examined how physical proximity between workers influences performance through what is known as the peer spillover effect—the tendency for employees’ behavior and output to be shaped by those around them.

Led by Dylan Minor, Michael Housman, and Yitzi Greenbaum, the study analyzed two years of performance and seating data from approximately 2,000 employees at a large technology company operating four call centers across the U.S. and Europe.

Employees were grouped into three categories: productive workers, who completed tasks quickly but with lower quality; quality workers, who produced higher-quality work more slowly; and generalists, who performed at average levels on both dimensions.

The researchers found that pairing workers with complementary strengths produced the strongest results. Seating productive workers next to quality workers—while grouping generalists together—generated an average 15% improvement in organizational performance, driven by a 13% increase in productivity and a 17% gain in effectiveness.

When translated into financial terms, these gains amounted to an estimated $1 million in additional productivity per 2,000 employees. Notably, these improvements appeared almost immediately after employees were seated together, but faded within two months once the seating arrangement changed.

According to Housman, this pattern suggests that the spillover effect is driven less by long-term learning and more by peer pressure and inspiration. Employees tend to elevate their performance when seated next to strong performers—but revert once that influence is removed.

The study also highlights the risks of negative spillover. Employees exposed to toxic coworkers—defined as individuals terminated for misconduct or unethical behavior—were found to be 27% more likely to engage in toxic behavior themselves. Encouragingly, the research showed that once a toxic employee was removed, the negative effects on surrounding coworkers largely disappeared within a month.

Experts note that employee engagement surveys can serve as an early warning system, helping organizations detect toxic dynamics before they spread. As Seymour Adler of Aon Hewitt explains, these findings reinforce the importance of social influence, peer evaluation, and cultural signals in shaping workplace behavior.

Taken together, the research underscores that spatial management—the deliberate placement of employees within physical space—is a powerful, low-cost lever for improving performance. When applied thoughtfully, seating strategy can amplify positive behaviors, limit toxic spillover, and deliver tangible financial returns.