Debra Moritz, International Director, Strategic Consulting, Jones Lang LaSalle (2011 Directory)
In today's business climate, only the agile survive. Adaptability to change remains a significant concern to CEOs, and many of their companies are ill equipped to respond quickly to business needs. In a 24/7 world, the C-suite is looking for new ways to compete, innovate, improve productivity, and reduce cycle time. Adding to the complexity, the global business climate has withstood a series of rapid changes that have undermined the very structure of traditional business. Some organizations thrive, while others suffer. What makes the difference between success and failure?
Successful companies have a lean profile, providing flexibility to meet changing business conditions. By contrast, companies with traditional management models that include fixed locations, costs, and employee work practices create significant inefficiencies and obstacles to achieving corporate agility. These companies will need to rethink many aspects of their management models before implementing progressive plans to achieve true corporate agility.
Demographic shifts, a change in strategic direction, and a volatile economy are all unpredictable factors that can suddenly cause a need for contraction or expansion, but real estate occupancy tends to be a long-term decision. Corporate real estate departments strive to maintain flexibility in their portfolios through shorter lease terms, expansion/contraction options, and staggered lease expirations, as well as space layouts that can be changed easily to accommodate more people. A portfolio strategy well matched to the various demand and risk profiles of a company's space requirements can introduce the desired flexibility - and at the right cost.
Five Steps to Achieving Agility
Too often companies focus on workplace solutions solely as a real estate initiative to cut costs and often lose the ability to support the rapid change required from the business. Numerous Fortune 1000 companies have proven that agility-building processes can be used in a variety of scenarios when integrated support programs are in place. Examples of integrated support programs include onboarding (i.e., employee orientation and mainstreaming), labor-based location solutions, workplace repositioning, or data center site and building selection. These programs require open collaboration across human resources, real estate, and information technology. By integrating these functions, a company will increase its agility.
1. Create shared need.
• Assemble a high-level executive task force of information technology, real estate, and human resources executives.
• Develop an integrated value
• Identify strategic outcomes.
• Align strategy among functions.
Driving collaboration is no easy task. Ambiguous goals and misaligned agendas can undermine productive teamwork. Instead, teamwork relies on an open leadership approach.
For example, Accenture - a global management consulting, technology services, and outsourcing company - created a shared need to align its real estate and information technology functions. The firm allocated a portion of the real estate cost savings associated with its workplace flexibility initiative to fund technology reinvestment for all employees.
In order to facilitate open communication, a scorecard should be used to monitor and report results against program costs and savings. This tool reinforces the shared need and creates interest at all levels within the organization.
2. Shape the vision.
• Build a business case.
• Assess current workspace utilization.
• Analyze information and develop scenarios.
• Identify necessary changes in processes and systems.
• Address "what's in it for me" issues.
Once senior leadership signs off on project goals, the next step is to analyze opportunities and model outcomes to create a business case. Assembling a team of action-oriented problem-solvers is key. The expanded team that includes business leaders impacted by this change will collect data, analyze information, and identify possible scenarios before moving forward.
3. Mobilize commitment.
• Involve stakeholders in the design process.
• Engage key process enablers.
• Establish a blitz team.
• Plan rollout.
• Manage the change.
With the value proposition and desired outcomes clearly in place, the next step is planning and implementation using a blitz team approach. This team would refine the vision for the new work environment, create a comprehensive plan for change, and develop the tools. As part of the plan, the team would also address potential roadblocks and determine how to overcome obstacles.
At this stage, business leader participation is critical. Getting business leaders and line managers on board can be difficult as they may be reluctant to alter their line profitability mindset. Engaging business partners early increases the likelihood of program success. This team must assume joint accountability for successful delivery of the initiative based on the established metrics.
In some cases, a phased implementation affords time to test concepts, communicate outcomes, and refine plans before any significant changes are implemented. This approach also helps allay fears about the proposed changes and increases adoption across all the stakeholders.
4. Monitor progress.
• Define shared metrics to gauge progress against goals.
• Monitor feedback.
• Conduct post-occupancy surveys.
• Communicate successes.
Applying a balanced scorecard approach - one with multiple metrics that are shared across business units - allows an organization to gauge its success against stated goals. This also avoids the danger of a single measure, such as employee satisfaction, that may undermine this initiative if it is not met or circumstances change. Measuring several elements - such as employee turnover and retention, employee engagement, customer satisfaction, innovation, utilization rate, and occupancy - gives a broader and deeper picture of the change's impact. A key component at this stage is to communicate the program's successes to all stakeholders, including the executive leadership and business partners.
For example, a large insurance firm that practices this approach tracks its progress using a balanced scorecard. The company measures the impact of reduced carbon emissions and gas consumption, improved employee retention, real estate costs, and technology costs. These metrics must be shared to achieve true corporate agility.
5. Make it last.
• Engage in continuous program improvement.
• Re-evaluate and improve.
• Revise rewards systems to remove siloed compensation structures.
This agility model is a vehicle for change. As such, it needs an occasional tune-up to maintain top performance. Sustainable solutions need to be informed by real-world experiences and feedback from employees. Continuous program improvement requires dedicated time to re-evaluate and check progress against goals.
Making It Work in the Real World
Sabre Holdings - the parent company of Travelocity, Sabre Travel Network, Sabre Airline Solutions, and Sabre Hospitality Solutions - is one company that's on the leading edge of agility and workplace flexibility. The company first initiated Flexspace, a holistic and multiregional flexible workspace program, in 2007 at its headquarters in Southlake, Texas. With Jones Lang LaSalle as its strategic real estate partner, Sabre shifted to an alternative, flexible space model, achieving significant savings within an 18-month timeframe, reducing global real estate costs by 25 percent, and enacting a sustainable enterprise transformation that created value beyond the bottom line.
The strategy enabled Sabre to fold its five headquarters offices into two LEED-certified buildings, reducing its footprint from 1.04 million square feet to 470,000 square feet. By moving to an open floor plan model where only a percentage of cubicles were assigned and others remained available for "flexible use," Sabre cut its cost per employee at its headquarters in half - moving from a ratio of 0.81 employees per cubicle to 1.35. As a result, its annual operational expenses decreased by $10 million.
Cubicles, which previously varied in size depending upon an employee's position and level within the company, were reconfigured into a standard size and outfitted with the same technology so that employees could expect the same environment regardless of where they sat. Executives, including the CEO, who previously had hardwall offices, moved into cubicles to make room for the additional meeting space required.
Sabre's goal was to create a system that would recapture the real estate value lost on all of the days employees' desks sat empty, while allowing the company to shift to the concept that "work is something you do, not someplace you go." The unexpected outcome was that this radical shift in the workplace put a premium on agility within Sabre's work force. It created not just a physical transformation, but also a crucial business transformation that added flexibility and agility, i.e., it accelerated a transformation in Sabre's employees and its work culture.
Sabre's employees adapted to their new environment and began working more closely with each other, breaking down many of the silos between projects and departments. This helped to create a more collaborative environment that ultimately strengthened Sabre's competitive position in the fast-evolving travel technology industry.
According to Leilani Latimer, Sabre's director of sustainability initiatives, flexible and efficient workspace programs are also now an integral part of the company's environmental sustainability strategies - given that real estate and facilities are one of the greatest areas of opportunity for reducing its environmental footprint. Flexible workspace programs achieve this by helping to reduce energy and water consumption as well as employee commuting trips to and from the office, while making more efficient use of office resources. (See Triple Pundit for more on flexible workspaces.)
"In order to stay ahead of the game, our employees need to move quickly to meet our customers' needs and anticipate new needs - so having a flexible, nimble, and collaborative environment is critical to our company's success," said Sabre Holdings Chief Executive Sam Gilliland.
In the new layout, managers have became more accessible and more in tune with their teams. Many who were used to dealing with employees face-to-face have learned new skills for managing people remotely and trusting that the work is getting done, even if they cannot "see" their team members. Employees enjoy better work life balance by having the choice and tools to work from home, a customer site, or on an alternative schedule.
Flexspace helped position Sabre to operate more efficiently as a global company, significantly reducing real estate costs and reducing its environmental footprint. The program's success provided a template for a viable real estate strategy as the company considers new leases for many of its 101 global locations.
The key element in the process of instilling increased flexibility and agility into the workplace is integration - working together as a collaborative team and aligning behind shared goals. For Sabre, building a business case with key stakeholders from disciplines such as corporate real estate, facilities management, technology support, environmental sustainability, and human resources and then securing executive management endorsement and support were critical to success. Clearly communicating the plan to employees and giving them the opportunity to raise concerns and ask questions were also crucial for the implementation to go smoothly and the maintenance of productivity.
Using the five-step process to achieve agility will result in a highly collaborative business team that supports the company's work force, manages operational cost, and maximizes competitive advantage.