Measuring the Economics of Engaged Workplaces

Image courtesy of SmithGroupJJR.
Image courtesy of SmithGroupJJR / © 2012 Judy Davis/Hoachlander Davis Photography, LLC

Only 30 percent of U.S. employees are “engaged” in their jobs, according to a recent headline-grabbing Gallup report. The report shows that a disheartening seven in ten American workers are “not engaged” or are “actively disengaged” at work, and therefore less likely to be productive.

So is there a secret sauce for engaging employees? Not yet. But measurable workplace strategies are a good place to start.

We know that physical work environments play an important role in shaping employee attitudes, even in today’s virtual world in which many employees are mobile. For example, Gensler’s 2013 U.S. Workplace Survey found that only one in four U.S. workers have optimal workplace environments—with 75 percent struggling to work effectively in spaces not conducive to their work.

The C-Suite is taking notice, and asking for solutions. According to Jones Lang LaSalle’s Global Corporate Real Estate Trends 2013 survey of 630 corporate real estate executives in 39 countries, 72 percent of corporate real estate executives face high expectations from the C-suite to deliver clear enhancement in workplace productivity and 65 percent are charged with transforming the quality of the workplace.

Challenging traditional thinking: beyond the cost-per-square-foot metric

To bring employee engagement and an efficient, productive corporate real estate footprint together, it is necessary to change traditional thinking about productivity. In today’s environment, in which workplace strategy is critical, workplace design should be considered a driver of employee output, rather than a project to be executed within a certain cost-per-square-foot or square-foot-per-person budget.

Furthermore, productivity is about revenue as much as about cost. An effective workplace strategy can influence business productivity by driving collaboration, employee engagement and output. Redesigning a workspace so that employees are most productive—and actually want to come to work—can go a long way toward employee engagement.

Given that the average knowledge-economy business spends 70 to 80 percent of its operating budget on its people, compared to only 20 to 30 percent on technology and real estate, workplace investment should be a given. Yet, companies struggle to measure return on investment in workplace transformation.

Too often, though, companies measure workplace productivity in terms of cost per square foot and square footage of office space per person. Achieving greater density is not the same as improving productivity. The true effectiveness of a work environment goes well beyond space. If an increase in performance and productivity—from the individual to the entire organization—is the ultimate objective of a project or program, companies need to define new metrics to provide proof points.

A company will need a deep understanding of its business units and departments to identify relevant key performance indicators (KPIs) that reflect the impact of workplace strategy. That is, one size does not fit all. Below is a basic roadmap for understanding and measuring productivity, but metrics should be specific to individual business units and departments.

Four ways to measure workplace environment productivity

Our experience is that by documenting achievements in four critical areas, the contribution of workplace strategy can be measured consistently and effectively over time, even in the context of shifting business priorities:

  1. Align supply and demand

    Corporate real estate executives often focus only on forecasting the demand for space and ensuring that the right amount of the right kind of space is available. Their success depends on three primary factors: the availability of accurate data, ongoing demand information and use of data to project shifting organizational needs. Over time, one measure of successful alignment is the difference between forecasted and actual demand, in terms of square footage. Another is speed of response to change—how quickly was the company able to address the gap between the forecast and reality?

  2. Channel information flow

    Water-cooler discussions have taken on new business significance, as adjacency studies show that innovation and productivity are materially influenced by putting the right collaborators in the right space to encourage spontaneous ideation. We recommend measuring the frequency of informal chats, progress toward cross-functional interaction, compliance with data security and confidentiality policies, and speed of decision-making. Adjacency studies, input from legal departments and documented meetings and outcomes from functional leaders can all contribute to measuring these outcomes effectively.

  3. Enable work

    Companies can use workplace strategy to improve individual productivity and satisfaction. Often, a company may find that an employee’s perceived level of productivity varies according to level of distraction, the flexibility to work in a variety of settings—whether alone, informally collaborating, formal face-to-face meetings or virtual conferences—and overall flow. Measuring the effectiveness of a workplace strategy can include revenue gains, speed-to-market goal achievement, individual employee performance and operational milestones achieved.

  4. Deepen relationships

    Employee engagement directly contributes to corporate performance, and workplace strategy sets the stage for it. Access to informal collaborative workspaces, for example, enables person-to-person connections that create a larger sense of engagement. Similarly, workplace strategies can enhance person-to-organization connections, resulting in strong brand engagement in the workplace, employee satisfaction and reciprocity of trust between the organization and its people. The depth of the relationship between an organization and its employees can be measured by identifying the sense of community, employee pride, level of satisfaction and employee engagement.

The reality is that investing in creating a smarter, more engaging workplace can enable both people and processes. It can increase speed-to-market/decision-making, improve customer service, break down the silos between teams and drive agility. That’s why, with the right strategy, a redesign can contribute business value well beyond traditional cost savings.

Building bridges: design and human resources

Of course, the workplace can’t compensate for ineffective managers and outdated HR policies and procedures, nor can it compensate for employees who don’t support the corporate mission. But the office environment encourages employees to express dedication of organizational culture and brand, and plays a critical part in enabling relationships to thrive, building trust and providing a positive workplace experience critical to productivity and growth.

The physical work environment affects just about every part of an organization, from finances to work process to human capital. When the workplace enables work and deepens relationships, employees become more engaged and more productive—a clear key for overall business performance.

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