The purpose of an office is to bring together people so that they can work collaboratively towards their organization’s goals. The quality of the work environment can have a significant impact on employee productivity and innovative thinking – getting it right is critical. But, how do we know if we got it right? Metrics for productivity are notoriously elusive and determining the incremental value of one workplace design over another is even more difficult.
The workplace design process always struggles to balance two goals in conflict with one another: delivering cost savings (making the most of the space) and generating value (making the most of the people). Companies need places that energize employees, encourage social interaction and collaboration, enhance personal control, and provide services and events to improve people’s quality of life at work. But at the same time, corporate real estate teams are always challenged as they are expected to keep spending to a minimum.
Workplace factors affect workplace productivity and many elements that enable high-performance workplaces are connected to employee health and well-being. Given that up to 90% of operational expenditure is on employees, even a small improvement in wellness and well-being can have a huge impact on productivity – repaying the incremental occupancy cost many times over.
Fostering workplace well-being involves not only physical wellness, but also employee engagement, which executives consider a top factor influencing an organization’s success. Employee engagement is influenced by many factors, but the ability of an office to engender a sense of belonging and control should not be overlooked. In fact, the physical workplace is identified as one of the top three factors used to attract desirable employees.
C-suite executives are increasingly recognizing that they can use their office space to attract talent and encourage productivity – and with the help of their CRE departments, they know the ingredients of a high- performance workplace. Although we can measure the cost of occupancy strategies, measuring the value created remains an elusive challenge.
Measuring Enterprise Value
Traditional performance metrics are focused on the efficiency of the space, such as occupancy cost per employee or cost measured against revenue. These are metrics of interest to real estate directors, but fail to capture the attention of business leaders. A focus on space-oriented metrics can compromise the larger goal of value creation, talent attraction, and productivity by negatively compromising the employee experience.
It’s essential that metrics focus on effectiveness and engagement; exploring the impact of physical space attributes, technology enablement, and HR policies as well as understanding the corporate culture and values that impact the employee experience at work. As we move to these higher-value priorities, the stakeholders also change. The impact of an effective and engaging workplace is of foremost importance, not only to the head of CRE but also to the COO, CFO, CIO, and CEO.
In order to demonstrate value, it is essential to also understand that the stakeholder priorities and timelines are diverse and often conflicting, which is why we need to identify the relevant data points, clear metrics, and benchmarks to address them and articulate the potential return that an investment in the workplace can make to the business.
Aided by technology trends such as the Internet of Things and the convergence of corporate functions, CRE is becoming a service industry focused on people’s experience rather than on assets. Design and management of buildings will be less about the “hardware” of work – desks, partitions, technology, or specifications – and more about the “software” of work – the cultural, social, and value systems of the organization.
We will see a focus on the value of the experience of work itself and user choice over when, where, and how work happens. Work will be staged in environments which are dynamic rather than static and adaptable to change as often as work itself changes by the hour, day, and week. Increasingly, the workspace will be an event-driven, curated experience in which space, tools, and technologies are provided to support the ever-changing daily needs of groups and individuals to create the successful conditions of their own work.
For larger organizations, this shift may affect only part of their real estate portfolio and some of their workforce; nevertheless, it represents a new dynamic in the real estate market and a big shift in expectations about the value of space and real estate. As with the best public spaces, these new workplaces can stitch together private institutions to provide a sense of place and inspiration, which is greater than the sum of its parts.
You might also be interested in “Creative thanks to coworking?” by Ursula-Beate Neisser.
By Despina Katsikakis, International Partner, Head of Occupier Business Performance
For more than 30 years Katsikakis has led innovation, research and implementation of transformative business environments and exemplary real estate developments worldwide. As Cushman & Wakefield’s Head of Occupier Business Performance, she provides input across the firm’s global business on the rapidly-changing context of work and its impact on employee engagement, productivity and wellbeing.