Archive for the ‘Corporate Services’ Category
|Workplace Strategy: What is the true driver and expectation? Part II
Wednesday, May 11th, 2011
By Jack Burns, Managing Principal
In part one of the blog on this topic, I focused on how companies are addressing the changing nature of the new workforce and planning new workplace solutions designed to increase productivity and reduce real estate expenses. The first steps include reviewing what employees like and don’t like about their environment, measuring utilization, and compiling your findings.
In part two of this blog, I will outline the next steps in this process: the plan, the buy-in, implementation, and improvements. Overall, the challenge is how to best utilize your space and manage change, and key factors are securing the support of management and setting realistic expectations.
Preparing the Plan
Once you have established the current utilization of your space and the corresponding implications, you are ready for the next bold steps, starting with a new workplace strategy. Unfortunately, establishing a new plan is not an exact science. You can research what other companies have done, but you ultimately need to customize a program to meet your company’s specific needs.
If you are working on field office locations that are predominately “sales and service,” then you can really push hard on seat-sharing. Staff in these situations should certainly be spending more time selling and delivering services in the field rather than sitting in the office. In fact, you should be able to achieve a 3:1 ratio of employees to seats through hoteling and virtual offices. This kind of arrangement, with mobile employees who have no fixed seats, could involve 70% – 90% of the workforce, and it could reduce total seat needs by 40% – 70%.
If you are dealing with a back office or HQ-level operation, the challenge is more difficult. Still, a company can pursue a “Home Office” or an accelerated work-week program, and you may be able to identify 10% – 30% of staff who could be mobile. Home Office workers are those that primarily work from their homes and seldom visit the office except for occasional meetings. These workers utilize laptops, wireless air-cards, localized printer, and mobile phones. If 10% of your employees worked from home full time, you could reduce your total seat requirement by 15% to 30%.
In any event, reducing fixed seats is the main goal to cutting costs. But change can produce anxiety, and you need to address concerns in advance by providing the best in mobile and office technology, more meeting and collaborative space, provisions for remote communications (including video conferencing), and personal storage solutions for mobile employees.
Selling the Plan
Once your plan is written, you need to sell it at the top and also to rank-and-file employees.
It should be easy to secure buy-in at the CFO level when you run the numbers of seats that can be reduced. If your plan involves reducing the SF per employee from 250 SF to 80 SF, for instance, the numbers can be compelling.
However, even with significant savings and employee concessions, cultural changes and entitlement issues can present a real challenge. If employees aren’t willing to change their work dynamics, a program like this won’t succeed.
So, if you have a field office set-up, you should identify a few facilities where you can achieve the greatest ROI from a new workplace solution. First, seek a C-Suite sponsor other than the CFO. Then seek a regional level VP to join forces to sell the idea. Depending on your operation, pick three to four facilities that you can implement in a 12-month period. Usually, a leased site with an approaching lease expiration will offer the best opportunities.
Working with the regional manager, create a communication package with the help of HR and IT to clearly explain what will be happening. Then run a “town meeting” led by local office management to show support for the new venture. It is important to run communications at the impacted site level and through the management level at the same time. Seeing is believing with new workplaces, so pilot, pilot, pilot.
Implementing the Plan
Make sure your team has a good architect with a successful track record in implementing new workplaces. And make sure the design considers all the nuances that you discovered through your surveying and interviews. With such impactful changes planned for the workplace, developing a strong communication program is a must. Your Project Manager needs to be a good listener and communicator. HR can also play a major role in running internal training sessions on change management; how to work on the road or from home; how to manage mobile workers; how to use the new workplace effectively, etc.
Make sure you deliver on the things you promised. Celebrate the project with testimonials from happy workers and their managers. Identify those individuals early on through your surveys and interviews. Keep track of these folks as they will likely be your biggest supporters, and you can use their experience to sell the program downstream.
You may want to over-engineer the first new worksite rollouts to overcompensate for the big change. For example, as mentioned above, enhance the coolness of your worksite with creative touches like collaboration zones, social areas, quiet areas, interesting and fun graphics, different lighting schemes, etc.
Surveying, Testing, and Improving the Plan
Through reviews, surveys, and interviews, you can improve on the original model. This need not mean more space needs or money. Rather, it might be simple things like more IT connections and different placement for certain types of spaces, improved graphics, etc.
Complete a survey right after the move to determine how well you did during the relocation and the transition to the new workplace. Then, at minimal intervals of 90, 180, and 365 days, you should issue surveys to the employees at the facility. Compare surveys and make improvements or changes as necessary to address concerns. Also, send a team to the site four to five months post move, stay a few days to observe how the space is used, and offer follow-up training. If it is running smoothly, create a model case study that you can sell to others. Remember to learn from your mistakes and look to constantly improve on the model. Listen to your staff and try to get them what they need to succeed.
In the final analysis, this process is worth your patience and persistence. Because the bottom line should be greater savings, increased productivity, and even improved morale.
Tags: corporate real estate, flexibility, mobility, office space, office utilization, real estate expenses, tenant, workplace
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Workplace Strategy: What is the true driver and expectation? Part I
Wednesday, October 13th, 2010
By Jack Burns
Most workplace strategy programs will brag about how the company is addressing the new Gen X workforce by focusing on collaboration, mobility, and flexibility—all in the name of productivity. But is it really just about saving money?
Many companies and consultants refer to these programs as Alternative Workplace Strategies. The dictionary tells us that “alternative” means (1) offering or expressing a choice or (2) different from the usual or conventional – existing or functioning outside the established culture. Nice warm and fuzzy definition, but the word often has a negative connotation to it. I suggest that the word “alternative” be dropped from all descriptions of workplaces going forward, or at least not as delivered to the users of the space. If we simply call it a “workplace solution” or even “new workplace,” it sounds more positive.
So the goal of workplace strategy programs is to increase productivity and reduce real estate expenses at the same time. This goal can be met by following some simple steps (below). In this entry I will suggest some early steps in the process. Remember that paramount to any plan is (1) support and enforcement from the highest level in the C-suite and (2) pilot, test and improve…too quick of a roll out can lead to disaster. Be realistic about setting the right expectations.
1. Discover what you have today. What do employees like about their current environment, and what do they not like? Monitor how the workplace is used on a daily basis, looking at activity during different days of the week, times of the day, and days of the month. This is not an easy task.
a. Start with a general survey to ask the right questions. If you receive a 10-15% survey result you are doing well. Next take a percentage of those surveys and set up one-on-one interviews in person or by phone. Make sure to interview individuals from all disciplines, business units, and grades.
b. Next figure out how to measure utilization. The old fashion method still works best: deploy an army of folks to walk the floors, confirm head counts and seating plans, determine occupancy, and verify use of conference rooms and other meeting and collaboration areas. Many times an office or workstation has an occupant that day, but they might be in an all day or multi-hour meeting. Is the seat being sat in, are they meeting with others in their office, or are they completing tasks, on the phone, or on the computer? Create a checklist by seat of these important questions and have the surveyors confirm what is really happening during multiple hours of the day and days of the week.
c. Badge readers can be helpful as well, but with problems such as tailgating or piggybacking, this information can be misleading. New technologies are out there that make these systems more reliable if you can afford the investment.
2. Compile your Findings. Executive Management will be surprised at what you discover. Summarize, chart, and graph to show what space may be needed versus what you currently have. Most companies today find that employees will give up personal space in exchange for better technology, mobility, and/or more meeting and collaboration space. Entitlement does become a problem. Seat assignments by title—executives in the corner offices, for example— need to be eliminated in order for any new workplace program to succeed. Many managers are threatened by a more mobile workforce and worry about how they can manage folks they cannot see or find. It’s important they overcome their fears because technology and work styles now allow remote work both locally and globally. It’s time to adopt it.
In Part II I will take you through the next steps:
3. The plan – impact and results
4. Selling it at the top and then selling it in the office
5. Implementing
6. Surveying, testing, and improving
Tags: corporate real estate, flexibility, mobility, office space, office utilization, real estate expenses, workplace
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Seven Real Estate Cost Reduction Strategies
Wednesday, August 18th, 2010
By Jack Burns
There are many ways to consider cost savings, but there are seven in particular that you might want to focus on today. You can implement the following cost saving strategies yourself, but you will see quicker results if you utilize your service providers or other consultants.
1) Eliminate Surplus Space – Shadow & Swing Space
Even with reported vacancies through CoStar and other tracking services in the mid teens to low twenties in many areas, the true vacancy rates are often much higher. Typically a company will track a 5% – 10% vacancy to allow for churn. But today, many corporations may have 15% to 30% vacancy in their portfolio. This shadow space tends to be spread throughout a building or portfolio and is not easily assembled to dispose of through a restructure, sale, or lease/sublet. Through a planning exercise, study what it would take to unlock these spaces and dispose of them quickly. It may require spending capital to rework existing spaces to accommodate a consolidation, but many times the payoff will be outstanding.
2) Appeal Property Taxes
Most properties reached record values 4 years ago, and the real market values have now plummeted in many areas. If you own property today you must evaluate the real tax value. Make an effort to seek a reduced value to reduce the tax basis and even seek abatements on current tax bills.
3) Own Instead of Leasing (new FASB Regulations)
When making real estate decisions today you must consider the impacts of impending Financial Accounting Standards Board (FASB) changes. These changes may make the impact of renting the same as owning relative to how the property is placed on a company’s balance sheet. If ownership is a possibility, the payback will be beneficial with both a longer depreciation period and the ability to segregate cost for construction and investments.
4) Renegotiate Leases Early to Take Advantage of Low Rates (Blend & Extend)
This is old news and I am afraid that in many markets the window for this opportunity is closing quickly as vacancies are reduced and landlords become more confident in the market’s ability to recover. However, your advisor needs to test the options by completing a Rent Gap Analysis which will quickly assess if the trade off for additional length in term is worth the potential reduction in rent that could be achieved.
5) Implement Workspace Strategy for Increased Cost and Space Efficiency
Let’s face it: The best way to reduce costs is by owning or leasing lower cost real estate solutions. This is a great strategy, but many times may result in a need to locate in an area that may not be conducive to your business operations. However, using less real estate is the #1 opportunity to reduce costs. Workspaces can only get so small before they serve no functional purpose. However, a mobile worker strategy or a work from home policy will allow most companies to reduce space significantly. Typical work groups that can adapt mobile or work from home solutions include: sales, professional services, consulting, call centers, shared services, accounting, procurement, support HR functions, and other support functions. Development, R&D, engineering, management, and other similar functions many times do not work well in a mobile or work from home basis.
6) Real Estate Cost Allocation through Chargebacks
Within many corporations the true chargeback for use of space is not properly captured. This results in many business units not recognizing the cost of their use of facilities. If true costs are recognized and allocated to business units, P&L statements may allow these units to be more realistic about how they use space when they are hit with the chargeback for the space. This will require the implementation of a good CAFM system and utilization of internal or external resources to properly record who is occupying specific spaces and tracking those consistently.
7) Internal and External Benchmarking
How do you know you are doing well? Benchmark against outside firms and internally between business operations or divisions. Competitive advantages always drive good behavior. Good measures for benchmarking include total cost of facilities as a percentage of revenue or as a percentage of SG&A, total cost per employee (include contractors), total cost per seat, or cost per cubic foot in storage. Get involved with smaller focused groups to compare metrics, or look to larger organizations like CoreNet Global, IFMA, or REEB to compare your cost and space metrics against others. Make sure to compare yourself to more progressive industries and not just those in your area of business practice.
Do you agree with this list of seven cost reduction strategies? What other strategies would you add to the list?
Tags: corporate real estate, cost savings, real estate portfolio
Posted in Corporate Services | 1 Comment »
