Small changes to an assembly or packaging line can mean big savings in terms of time and money. The same is true when it comes to office space. Companies that fall back on tried-and-true formulas to accommodate their client-facing or back-office workers - lease a space, fill it with employees, and give them each a standard-issue desk, phone, and computer - are systematically sending money out the door.
Research suggests that as much as 50 percent of corporate office space goes unused at any given time, yet companies continue to pay for 100 percent of it. Yesterday's "everyone in one place" approach to workspace has become outdated in a business world where some types of work can be more about what you do than where you go. While there will always be a need for fixed facilities, companies can increase the efficiency of their cost-intensive real estate footprint by creating more flexible systems that give office-based employees new options for when and where they work.
So Much Empty Space
When offices go unused, companies lose money. It's always been an inevitable cost of doing business, but technological and societal changes in recent years have made the issue more visible. With laptops, cell phones, mobile e-mail devices, and high-speed Internet available on every corner - and the 70 million-strong Millennial generation entering the work force - some workers have little need to spend time at a desk in a corporate office. In fact, research group IDC expects 75 percent of the U.S. work force to be mobile by 2011.
While the growing ranks of mobile workers have left more desks unfilled, it isn't the only cause of wasted office space. Even workers who still spend most of their time in the office building may spend hours every day away from their individual workstations. For example, a Microsoft survey of more than 38,000 people found that the average worker spends 5.6 hours per week in meetings. Furthermore, many companies routinely pay for raw square footage that sits unassigned to any workers. This happens when a company takes out a larger space than necessary with the expectation of growth, or when layoffs create a surplus of space.
Considering all the potential causes of unused space, nearly every company in any industry has room for improvement.
Cost of Office Space Waste
Looking at the factors that routinely cause desks to sit empty, the money spent on unused office space alone is enough to justify a dramatic change in workplace practices. But square footage is only part of the equation. The Total Cost of Occupancy (TCO) - the all-inclusive cost of accommodating one person at one workstation - can easily be three to four times the lease cost for the raw space.
TCO includes the lease cost, plus office furnishings, heating and air conditioning, power requirements, computers, phones, and even the human support (administrative, maintenance, and IT) required to operate a typical workspace. Every hour that space goes unoccupied, precious financial, human, and natural resources are misspent. And as the time that workers spend at their desks declines, some estimates put the nationwide toll of wasted office space in the range of $250 billion a year.
Obviously, no company can overcome the problem completely. Some space will always go unused as shifting business priorities make a moving target of workspace requirements. However, there are alternatives to the traditional relationship between workers and office space that make it easier to "rightsize" and bring more efficiency to the operating budget.
Creating a more flexible and adaptive workplace strategy begins with reducing permanence. Instead of a central office building where all employees have a space they can call their own, a more efficient approach is to create a fabric of workplace settings from which workers may choose. Several increasingly popular strategies lend themselves well to this concept.
Perhaps the most obvious response to unused office space is to take away the office altogether. Today's communications technologies make working from home a realistic option for more workers than ever before. And so-called "third places" like Internet-enabled public gathering spots, bookstores, and copy centers have become as important to the mobile professional as the office itself. With the right tools, the right type of workers can be every bit as productive as if they were in the main office, while the company can save nearly the entire cost of providing their workspace.
The idea of teleworking isn't new, but companies are beginning to approach it more proactively. Where teleworking was long viewed as an employee privilege for those with "special circumstances," it's now gaining acceptance as a cost-conscious business practice that benefits the company as much as the workers. As such, more companies are actively identifying the functions that are best suited for telework and making it a condition of the job. Moreover, they're equipping teleworkers with more than just a laptop and an Internet connection. Companies are finding ways to ensure their remote and mobile employees have the resources they need on days when the limitations of a home office come into play. Those tools may include access to drop-in business lounges, videoconferencing services, or third-party meeting rooms to host clients or connect with headquarters.
Pick a Desk, Any Desk
the upside to teleworking, the fact remains that a remote existence
doesn't suit all employees. But that still doesn't mean they all need
full-time desks at the corporate office. For example, it may be rare
that all sales employees are working at their desks at the same time.
Therefore, forward-thinking companies recognize that there's no need to
allocate separate office space for every worker. Space and resources,
when not in use by one worker, can be used by another.
the idea behind office hoteling. Just like travelers don't need a
full-time residence in the cities they visit, many workers don't need a
full-time workspace at their company's main office. So rather than
every employee having a cubicle or office "held" for them at all times,
a hoteling system assigns office space to employees on an as-needed
basis. Like travelers checking into a hotel, workers can make
reservations for a workstation when they know they'll be there. This
reduces the amount of physical space a business needs, lowering
overhead costs while ensuring that workers still have the space and
resources they need when they need it. A less formal version of
hoteling is hot-desking, a "sit anywhere" set-up where unassigned
seating is available without reservations.
scenario is likely to accommodate a company's entire corporate
workforce, temporary seating arrangements work best for targeted groups
of employees, such as sales teams, who are frequently out of the
In addition to realigning office resources at the corporate headquarters, companies also have much to gain by rethinking their approach to branch locations or satellite offices. Whether it's across town or in another city, opening a new location to be near a major client or attract new talent comes with inherent startup costs, as well as risks associated with signing a long-term lease. There's the possibility that business may not pan out in the market, forcing closure of the office before the lease is up. Or the new office could prove so successful that the branch must relocate to a larger space. In either case, the company risks paying for space it no longer needs, or incurring penalties for not completing the terms of the lease.
Companies can avoid this predicament through the use of fully furnished and equipped business centers in place of traditional real estate leases. These move-in-ready shared office centers can be found scattered throughout metropolitan and suburban areas, and allow companies to open strategically placed branch offices closer to employees' homes or adjacent to important customers, without the need to lease and outfit traditional office space. Since most business centers offer short-term contracts, companies can easily and inexpensively expand or reduce their office space without changing locations.
In all likelihood, no single new workplace program will be the silver bullet that vanquishes office space waste. To dramatically increase the efficient use of space and produce compelling bottom-line results, most companies will require a customized strategy that attacks the problem from many different angles. The common element in any such plan, however, will be accepting that the workplace must align to meet the new realities of business in a mobile world. The transition will take time, but there are ample rewards waiting to be claimed by companies who embrace the change.
Guillermo Rotman is CEO of The Regus Group Americas. The Regus Group, Plc. is the world's largest provider of workplace solutions, operating a global network of more than 950 business centers in 400 cities and 70 countries. Visit the company's website at www.regus.com.