Occupier perspective Workplace strategies Focus on people March 2014

Occupier perspective Workplace strategies Focus on people March 2014

Creating a workplace strategy is one of the first and most important elements of portfolio / real estate strategy, which allows organisations to implement improvements in such areas as communications, operational activities and financial performance. New and effective workplace strategy can be a starting point for the process of redesigning work patterns of the entire organisation. Currently, 2 top challenges for the largest global organisations are: Human Capital and Operational Efficiency, both of which can be majorly addressed by the implementation of appropriate workplace strategies. The main factors which nowadays influence the workplace trends are: the emphasis on the collaborative way of working, development of new technologies (e.g. the possibility of working from different locations), innovations and the generational changes. Effective workplace strategy can influence the staff satisfaction and as a consequence increase the possibility of attracting and retaining the best talents. As each effective workplace strategy should be specifically tailored for each organisation, it is crucial to understand and thoroughly analyse organisational and business demand, such as the structure, headcount, requirements regarding image and technology, working styles and many others. Graph 1 Workplace strategy vs. location strategy and project management www.dtz.com Workplace strategies 2

Benefits Workplace strategies What is real estate strategy? Real Estate Strategy is the process of aligning operational portfolios to support the objectives of the organisation in a cost efficient manner. Especially nowadays, in the complex business environment DTZ can see a necessity for many corporations and public entities to create property portfolios that are lean enough to be cost efficient yet flexible enough to meet longer term objectives. There might be different reasons which determine necessity of developing a new portfolio / real estate strategy. These include amongst others: organizational changes such as M&A, cost restructuring, need to change or improve the image or relocations and consolidations. With a well developed and implemented portfolio / real estate strategy an organization can achieve both operational benefits and measurable cost savings, which depending on the change can reach up to 75% (graph 2). What is a workplace strategy? Creating a workplace strategy is the first and one of the most crucial elements of portfolio / real estate strategy. More and more organizations understand that they need to take a holistic approach towards designing the work space and developing work patterns which enhance their operations and long term strategy as well as improve effectiveness and creativity of their employers. Developing and implementing a workplace strategy is not just about creating a high performance environment on day one. It is about responding to a changing business environment and adapting to new directions and demand. Only such an approach allows organizations to take full advantage of benefits such as improvement of communication, operational activity and financial results. It should be stressed that a workplace strategy is not the same as workplace integration. Although these two terms are often confused or used interchangeably, it is important to understand the difference. Whereas workplace integration is the actual process of creating or changing the office design, the workplace strategy covers a much wider and more complex process which begins in a thorough understanding of the company s operations, goals and strategy and creating a work space which enhances all these factors. Graph 2 Financial benefits of real estate / portfolio strategy cost savings: the benefit / implementation timing curve Quick Wins Focused improvement Fundamental change Examples: Lease regears Disposal of surplus space (leased space) Renegotiation of FM contracts CAPEX prioritizarion Examples: Space use optimization Consolidations Redevelopment of surplus assets Financial engineering Examples: Workplace innovation Transactions such as sale & lease back 5 10 % savings 5 25 % savings 15 75 % savings Project based implementation Sustainable Management Infrastructure Required www.dtz.com Workplace strategies 3

Why is it important? According to a survey conducted by DTZ among CEOs of the largest global corporations, the top 2 challenges for their organizations in 2013 were Human Capital and Operational Excellence. The situation changed significantly in comparison to the previous few years when the key consideration was Cost Optimization. Graph 3 Top 2 priorities for the largest global corporations It is visible that after a few years of worse economic conditions when companies focused mainly on generating cost savings, the most important issue today is how to attract and keep the talent and how to increase operational efficiency of the organization. It is a natural way of thinking as personnel remains the largest cost and asset of any company. In many European countries and especially Poland the total workforce has started to decline sharply and with a recovering economy the war on new talent is intensifying. Workplace is a factor mentioned usually by 50 to 70% of young graduates in selecting their employer. One of the greatest challenges of all businesses today is to develop a successful workplace strategy which will support the objectives of the company, improve employers performance and organizational effectiveness and at the same time reduce real estate and facilities costs. Developing such a strategy and maintaining a high performance working environment may bring numerous benefits to any organization. It may, amongst others: Improve staff satisfaction and well being, Improve employee work-life balance, Increase efficiency of employers, Improve creativity, teamwork and cross-selling, Enhance image of the company, Increase organizational flexibility / ability to adjust to changing business conditions, Attract and retain the best talent, Reduce real estate and facilities cost, Improve work performance, Improve healthy work environment. The interest of organizations in workplace strategies is driven to a large extent by a change. As the business environment is evolving dynamically, improving the office s ability to accommodate change is one of the best methods to lower workplace costs. Table 1 Priorities of workplace strategies in key areas of interest Areas of interest PEOPLE FUNCTIONALITY AESTHETICS TECHNOLOGY COST Priority Attraction Retention Employees engagement Intra-team communication Collaboration Change management Workplace concept Cultural expression Company brand & team identity Impacts: team layout, visibility Support mobility and work anywhere Optimize office size, functions and amenities Increase flexibility www.dtz.com Workplace strategies 4

Workplace trends Optimal workplace will be different for each organization as it depends to a large extent on the culture, type of operations and many other factors typical for every company. There are however some common trends resulting from the dynamically evolving business environment, development of technology and generational change which strongly influence ways people are working. Service Sector output is increasingly the result of collaborative work - some surveys indicate that this is the case in as many as 60%-70% of companies. Whilst employees increasingly need to collaborate, the traditional office space is dedicated usually in 70-80% to individual work this needs to be reversed! Development of technology expands ways of communication and allows people to work from different locations, both within the office premises and elsewhere. It is a reason why traditional offices are changing and assigned places are becoming less important. That doesn t mean that the most effective way is working from anywhere, however it gives possibilities of choosing the best solution, which supports operational activity and working patterns in each organization. Generational changes influence the demand for modifications in the work place as people expectations towards work environment are constantly evolving. Therefore organizations need to look for appropriate solutions to address factors such as work-life balance, aging, recruiting and retention. Key characteristics of the new millennial generation: Collaborative rather then top down approach > removal of space hierarchy markers Result oriented rather then presence based management > flexible environment, smaller office footprint Blending professional and private work end of work life balance > home working, highly serviced offices in central areas Digital / mobile natives: using mobile devices will be the norm > ability to work from anywhere Given the trend mentioned above, DTZ is planning to conduct a survey among students in different countries, which will focus on their expectations towards work space. It will help to predict future trends and prepare organizations to be more efficient in creating workplace strategies and as a result more competitive in recruitment of the best employees. Table 2 Different ways of working examples On Premise Assigned Shared Address Group Address Free Address Hoteling Individually assigned work setting for anchored employees Two or more employees sharing a single assigned workplace Designated group of team spaces used for a specified periods of time Workspaces shared on a first-come, first served basis Spaces are reserved in the main office (there are fewer spaces than staff - hot desking ) Distributed work off premise Satellite Office Remote Telecenter Home Office Virtual Office Full service alternate office environment, conveniently located Office drop-in-center located away from main office, closer to clients Support connectivity and an appropriate working environment in the home Work anywhere anytime www.dtz.com Workplace strategies 5

Process of developing a workplace strategy Developing a workplace strategy is a comprehensive process as a number of factors need to be taken into consideration and analysed. Since each company is different, it is important to understand and thoroughly analyse its organizational and business demand (structure, headcount, requirements regarding image and technology, working styles and many others). At the same time, issues connected with the current workplace need to be assessed in order to identify opportunities, potential constraints and ways of resolving them. Once these stages are completed, it is time to identify and analyse options and choose the most optimal workplace strategy which supports business objectives of the organization. Conclusion In today s war on talent and fast changing business environment, it is crucial for all organizations to have an efficient work space that motivates talents whilst allowing adapting to new directions and organisational demand. According to DTZ improving the office s ability to accommodate change is also one of the best methods to lower workplace costs. As personnel is the key resource and cost of every company, the focus is currently on people and their needs. Therefore the main goal, apart from improving operational efficiency of the organization, should be increasing staff satisfaction and well being. This in turn will translate into better efficiency, creativity and improved performance of the company. Development of the work place strategy is a first step of the redesigning of the work design and in some cases work patterns of the organisation. Graph 4 Workplace strategy model INPUTS ORGANIZATIONAL AND BUSINESS DEMAND Business direction and key objectives Operations and key services Organizational structure Cultural aspirations Budget and funding Headcount and department breakdown Brand and identity Technology requirements Work style analysis Policies and protocols BUILDING AND WORKPLACE SUPPLY Building and location appraisal Effectiveness of support spaces Building performance and review Space opportunities assessment Furniture and equipment constraints Accessibility issues Tenure and cost analysis PROCESSES Gather and interpretet data, challange assumptions, identify and assess options, test and redefine Articulate and distinguish between requirements and aspirations ( Need to haves vs. nice to haves ) Identify and quantify opportunities and impact of / ways of resolving constraints OUTCOMES OPTIMUM WORKPLACE STRATEGY AND SOLUTIONS www.dtz.com Workplace strategies 6

Author Katarzyna Lipka Phone: + 48 22 222 31 32 Email: katarzyna.lipka@dtz.com DTZ Business Contacts Head of Central & Eastern Europe Alan Colquhoun Email: alan.conlquhoun@dtz.com Chief Executive, EMEA John Forrester Phone: +44 (0)20 3296 2002 Email: john.forrester@dtz.com Head of EMEA Consulting, Chairman of DTZ Airport Group Tamás Polster Phone: + 32 2 629 02 58 Email: Tamas.Polster@dtz.com Head of Consulting & Research, Poland Kamila Wykrota Phone: + 48 22 222 30 00 Email: kamila.wykrota@dtz.com Office Agency Barbara Przesmycka Email: barbara.przesmycka@dtz.com Retail Agency Renata Kusznierska Email: renata.kusznierska@dtz.com Capital Markets Craig Maguire Email: craig.maguire@dtz.com Valuation Arkadiusz Bielecki Email: arek.bielecki@dtz.com Corporate Real Estate Services (CREM) Ian Scattergood Email: ian.scattergood@dtz.com Property Management Christopher Rasiewicz Email: christopher.rasiewicz@dtz.com Project and Building Consultancy Andrew Frizell Email: andrew.frizell@dtz.com Industrial and Logistics Agency Marzena Pobojewska Email: marzena.pobojewska@dtz.com DISCLAIMER This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ. DTZ March 2014 www.dtz.com Investment Market Update 7