John Hampton, Senior Vice President, Solutions Development, Jones Lang LaSalle (Summer 2012)
In simpler times, site selection began with the type of facility needed: manufacturing, distribution, or office? Headquarters, sales force, call center, or back-office processing? But now, workplace strategists are becoming involved earlier in the process, not just after the location is chosen.
With the advent of the Internet and mobile technologies such as laptops, smart phones, and iPads, corporate site selection is becoming a more complex undertaking than it once was. These technologies manifest the profound change in the nature of work from task-based to creative problem-solving. Therefore, the question is not only where work is being performed, but also how is it being performed.and by whom.
Reducing Occupancy Costs
More senior executives now recognize that the choice of location and facility can have a significant impact on operational performance. For some, work force mobility technologies are affecting the types and locations of facilities chosen. While alternative workplace strategies and the drive toward collaboration are not new, the economic recession has accelerated these trends. In a happy coincidence, corporate location strategies aimed at boosting employee productivity, recruitment, and retention increasingly coincide with approaches that also reduce overall occupancy costs.
Facing economic uncertainty and pressure on the bottom line, many companies have been taking hard looks at their corporate real estate portfolios. The more forward-looking companies are not only seeking to unload excess space arising from layoffs and mergers, but also to maximize their space utilization and worker productivity beyond simply rearranging the cubicles.
Technological advances and the desire to reduce occupancy costs have contributed to new thinking in location strategies and site selection. In some companies, the conventional office layout with fixed offices, large "status" offices, and cubicle arrays has led to underutilization of space that ultimately is a drag on the bottom line. On the heels of a major recession, it's not surprising that square footage per worker has decreased from 400 square feet per worker in 1985 to less than 150 - and is predicted by Jones Lang LaSalle to fall to well under 100 - but that ever-watched metric has been greatly influenced by new approaches.
"Workplace of the Future"
Today's space utilization strategies are not about squeezing more workers into ever-smaller spaces. Rather, they are about solving the "Swiss cheese" problems of office space - adopting alternative workplace strategies to accommodate an increasingly mobile work force that isn't necessarily working in the office all the time, and to attract and retain a new generation of workers who prefer flexible work environments. For companies, the challenge lies in right-sizing the amount, location, and design of space needed to create the best environment for productivity and to support business goals.
Work force mobility technologies, of course, are contributing to these changes. Smart phones, iPads, tablets, and laptops have become commonplace in many companies, and videoconferencing, cloud computing, and other mobile technologies are coming to the fore. In the "Workplace of the Future" survey, administered to approximately 30 leading U.S. companies and design firms by international office furniture designer and manufacturer Teknion and shared by Jones Lang LaSalle at the 2011 CoreNet Global Summit, 89 percent of the companies surveyed reported that they plan to increase their investment in productivity-enabling technologies such as voice-activation technologies and sophisticated video conferencing beyond current spending levels by 2015.
For instance, salespeople tend to spend relatively little time in the office. Customer support call centers these days are often moved offshore. Why not transform a vacated call center floor into a drop-in office space for the sales force? If only 175 employees are in the office more than two days per week, why maintain office space for 250 all the time? With the advent of worker mobility technologies and more flexible work policies (at least in some firms), companies are analyzing not just how many employees will be based in a particular location - but how many of those employees will be physically in the office at any given time. These considerations affect the size and type of facilities needed.
Generations X and Y
As the Workplace of the Future survey noted, companies also are looking at the expectations of the contemporary work force, and how best to motivate and retain generations X and Y. Even while waiting for the pace of job growth to accelerate, many companies are focused on retaining those who have helped their organizations thrive during this difficult economic period, while anticipating future workers. According to the "Workplace of the Future" survey, companies attuned to the needs of the new generation of knowledge workers will be best positioned to attract and retain them. Flexible workplace options are most critical, said 41 percent of respondents, and leading-edge technology is also important, according to 39 percent.
If recruitment and retention of knowledge workers is the goal, a company might choose an urban location and a nontraditional office layout that can be equipped for both collaborative and solo work. Similarly, some types of work require frequent communication. Knowledge workers -particularly younger workers - prefer flexible work space that allows for freedom of movement enabled by mobility technologies.
In particular, generations X and Y are considerably less interested in hierarchy and status than previous generations, and more interested in flexibility, connectedness, and collaboration. Spending all day in a cubicle or enclosed office space doesn't necessarily appeal to workers accustomed to interacting with the world from wherever they may be at the moment. To these young workers, a high-status corner office is irrelevant - the free flow of ideas matters more than an important-sounding title, impressive office, or even compensation.
A Collaborative Environment
Face-to-face interaction - whether in the office or via video-conferencing - is generally more effective than endless e-mail threads. Why not design the office to encourage collaboration, with few formal offices, but numerous informal seating areas where employees can meet one-on-one or in small groups? Fewer square feet per worker becomes a beneficial side effect, rather than the primary driver, of how the workspace is designed, and is made possible with mobile technologies that enable workers to be productive wherever they sit.
How do these trends translate into office space use? Companies are tending to reduce space per individual worker, while increasing square footage for collaborative activity. The overall effect is a disconnect between company growth and corporate real estate usage, as companies adopt more sophisticated space utilization and workplace strategies that result in less demand for office space.
A major software company, for example, experienced 50 percent growth in revenues and a corresponding 40 percent growth in headcount. On the other hand, there was zero growth in office space. The company adopted work force mobility technologies and management strategies to support productivity, while allocating capital to other purposes. While this may be an extreme example, it points to the potential for companies to grow dramatically without an accompanying growth in office space occupancy -and work force mobility technology helps achieve this.
With the dual goals of boosting productivity and reducing occupancy expenses in mind, many companies are adopting open or quasi-open offices. It's a strategy that makes good business sense for some companies, especially those with a high number of knowledge workers who are highly mobile and more productive when not tied to a personal workspace. Smart companies are creating office environments that support these activities.
Accommodating Work Styles
Some companies are incorporating different kinds of workspaces into an open office environment to accommodate worker preferences, types of work activities, and varieties of interaction - from small teams to larger groups. Such spaces are likely to include ad-hoc collaborative settings, such as divider-less workbenches, meeting tables, and small nooks, such as diner booths. The office might also include glass-walled meeting rooms for larger groups, complete with whiteboards and collaboration technologies that underscore the concept of transparency and open communication, while allowing more natural light to flow through the work environment.
These offices may include work lounges and coffee bars that are not simply for "hanging out," but are intended to encourage informal contacts. Centrally located printers and other office equipment create natural hubs for interaction. Small "wormhole" offices allow for online videoconferencing or private phone calls. Such offices might also include individual "touchdown" spots that can accommodate visitors and mobile workers who simply need a place to plug in temporarily.
Of course, employees sometimes need a quiet room in which to focus on a particular project, to attend a conference call, or to review confidential material. Forward-looking companies don't ignore this requirement, but accommodate it in different ways. One is to create "phone booth" spaces in which an employee can make a private call. Another is to provide some closed office spaces and small conference rooms that can be reserved by those who need "heads-down" silent time.
Most important, the recession, the rise of mobility technologies, and sophisticated new approaches to boosting employee productivity are motivating companies to rethink how they choose their locations. For many office uses, large corner offices and room rows of cubicles are no longer the answer because the questions have changed. Today's companies want to know how best to accommodate the work and the needs of the workers, rather than asking how many desks will be needed, and they want to ensure that their facility can support the latest mobility work force technologies. For today's site selection executive, combining a smart location strategy with workspace strategies leads to an overall decision that is greater than the sum of its parts.