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Profiting from Workplace Design
During difficult economic times, companies will no doubt be looking for ways to trim expenses, including eliminating excess office space and consolidating facilities. But, while such cutbacks may be inevitable, a recent study by Gensler, a San Francisco-headquartered global design and consulting firm, suggests employers could pay a price for not factoring in the effect of such changes on the work environment. The Gensler 2008 U.S. Workplace Survey found a connection between workplace design and organizational performance, revealing that companies with workplaces that promote collaboration, learning and socialization were more likely to have more engaged employees and higher profits than those that focus on "heads-down" work. Indeed, the study revealed that profits at such companies were 14 percent greater than companies with more traditional work environments. (Top-performing companies were identified by the 900 survey respondents, using measures such as profitability and leadership position in their specific industry.) Even in a soft economy, HR leaders should view investing in improvements to the physical work environment as a strategic move that will contribute to both short- and long-term returns on investment, says Diane Stegmeier, author of Innovations in Office Design: The Critical Influence Approach to Effective Work Environments and president of Stegmeier Consulting Group in Cleveland. Companies need to view space in a different light in today's economic climate, Stegmeier says. Executives should be asking themselves, "How do we train existing supervisors, managers and executives to lead their direct reports in workplaces that have few or no private offices, work environments where workspaces are shared, where every workspace is unassigned and used on a first-come, first-serve basis or where employees telework from their homes?" she asks. Janet Pogue, a managing director with Gensler, notes that "the best firms are thinking about how to get the most out of every resource," including their work environments. She says the new study is the first time Gensler explored "quantifiable" measures to arrive at a connection between "work modes" and business performance. "We always figured it would play an important role, but not to the extent that it does," she says. The survey found companies with higher performing workplaces have higher revenue and profit growth than those with low to moderate workplace effectiveness. At the high end of workplace effectiveness (91 percent to 100 percent), three-year average profit growth was 28 percent. At the low end of workplace effectiveness (0 percent to 40 percent), three-year average profit growth was 14 percent. Employees at top-ranked companies consider collaboration twice as critical to job success as average companies (43 percent vs. 21 percent) and spend 23 percent more time collaborating than average companies (36 percent vs. 29 percent). Socializing was almost three times as critical to employees at top-performing companies (20 percent vs. 7 percent), compared to average companies. Gensler's research also found that more than one-third (36 percent) of the average offices are ineffective or ill-suited for the activities of today's knowledge workforce. Employees in the study believe they could increase the quality and quantity of their work by an average of 25 percent by improving workplace areas to better support different modes of work. "In the short term (approximately six to 18 months)," Stegmeier says, "significant cost savings can be realized by reducing real-estate holdings. Organizations are taking major steps toward immediately improving profitability by closing unprofitable facilities, consolidating locations and reducing the amount of space allocated per full-time employee. "Rather than measuring the effectiveness of the real estate using old methods such as occupancy (the number of people residing in the space), savvy companies are looking at the space in terms of utilization (the percentage of time the space is actually being used)." In the longer term, she says, these cost savings can be sustained and improved substantially, if the organization is committed to helping business leaders manage in a workplace that's different than the one they're used to. In a 10-year study she conducted of 140 organizations in 24 industries, Stegmeier found 89 percent of senior executives were concerned about the lack of innovation in their enterprises, and recognized collaboration as a means to improving innovative outputs. Referring to the Gensler study, Franklin Becker, a professor at the College of Human Ecology at Cornell University, says he isn't aware of solid research that demonstrates the connection between workplace design and actual changes in business outcomes and performance. HR executives, however, should keep in mind that the Gensler study is a "self-report measure," he says. "Employees' 'belief' that they could increase the quality and quantity of their work by an average of 25 percent is likely to be considerably inflated compared to actual improvement," he says. What's more, Becker says, profit depends on a wide range of factors and market conditions -- so HR leaders should be cautious about implying that it was the workplace per se that generated higher profits without breaking down the outcome by factors such as industry type, company size and workforce demographics.
November 10, 2008 Copyright 2008© LRP Publications |
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