TWBA/Chiat Day Inc. received nationwide attention by being one of the first companies to switch to the “virtual office” concept three years ago.

When the ad agency’s employees walked into their Venice office on the morning of Jan. 4, 1994, they were greeted by a concierge who loaned each of them a laptop computer and forwarded their phone calls to wherever the employee decided to sit.

The contents of everyone’s file cabinets were placed on a computer server and were physically transferred to an off-site records center, to which a courier made runs twice a day.

There was only one problem: The system didn’t work.

The advertising shop has quietly ended the undesignated-desk/laptop-checkout system, and employees now work on computer terminals that are once again surrounded by family photos and Dilbert cartoons.

Office hoteling whereby no desk, file cabinet or other office equipment is permanently assigned to a particular employee is a concept that’s existed for almost a decade. It remains a work in progress.

Some companies have pushed hoteling beyond its original conception, eliminating the idea of “office” altogether, while others such as TWBA/Chiat Day rejected portions of it as impractical.

“It took so much time to find a place to sit and forward the phone calls it got to be inefficient,” said Velda Ruddick, director of intelligence for the advertising agency.

A few employees left the company because of the system; others subverted it, pasting pictures of their families on the Powerbooks and claiming chairs with signs.

Etiquette questions emerged, as employees who either carried mobile phones or beepers during work hours debated if it was proper to answer their mobile phone while in the rest room or interrupt meetings to answer a page.

Part of the problem, Ruddick said, was that the virtual office system didn’t have enough structure. It operated by a rule of thirds: that employees would spend an estimated one-third of their work weeks in the office, one-third in meetings and one-third traveling to meet clients.

“We guessed at it,” she said. “Let’s face it: No one else was doing (virtual offices) at the time, and we had to make up a lot of the rules ourselves.”

At TWBA/Chiat Day, some of the virtual office elements remain. All computer files are on a server linked to the agency’s nationwide offices, employees still carry pagers or mobile phones, incoming faxes go through a receptionist who transfers them to the recipient’s e-mail account, and employees are still encouraged to work off-site.

“Many of the (virtual office) tools have become invisible to the employees as they’ve adjusted,” said Ruddick, who was interviewed while working off-site at her home.

In general, office hoteling gained popularity among companies during the recession as a way to save on real estate costs, the second-highest expense of a business after labor.

A company could potentially cut its per-worker office space requirements from 200 square feet to 64 square feet by reducing the number of desks, said Steve Dubin, vice president at interior design firm Cole Martinez Curtis and Associates.

But companies that hastily implemented office hoteling found that the loss of worker productivity and morale often offset those savings on rent.

“There is a psychological price attached to (office hoteling),” Dubin said. “If there’s no perceived benefit to the individual other than the cost savings to their employer, it just didn’t work.”

Some of the companies that experimented with office hoteling have since mutated it into a new system that is arguably more expensive and more productive, they say than traditional office spaces.

Andersen Consulting instituted the hoteling concept five years ago. Now Andersen employees no longer use the word “offices” the closest equivalent is an “acoustically private area,” a place where an employee can have a phone conversation.

The management consulting company initially started office hoteling to save on real estate costs. At any given time, about 80 percent of the work force is out of the office visiting clients, said Doug Cunningham, office manager for Andersen’s Southern California division.

But when the company introduced its new concept, it “went overboard in providing extra service to the employees” to make the transition as painless as possible. Among those extra services: Offering to hang an employee’s pictures above his or her assigned desk every day, having the concierge staff bring files to employees, making photocopies and arranging catered lunch, Cunningham said.

Andersen’s current system is more expensive than the traditional office environment it was trying to avoid, but the staff is now more productive, he said.