Do You Really Need a Bigger Office?

 
 

 

“Why?” It’s a simple question that is not asked nearly often enough when it comes to real estate and workplace strategy. Today’s ‘tenant’s market’ means that rents are low and negotiating power is high, so many companies are—and rightly so—identifying their needs for more space, and signing leases.

But sometimes the best deal isn’t the lowest rent—it’s no new rent at all. Here are some questions that will help you explore why, and indeed IF, you need more space.

Are we using the real estate we already have as effectively as possible?

It’s 10:30 a.m. Do you know where your employees are? Many times, offices stand empty because employees are choosing to work from home, or are on-hold for open positions. But if those areas are on-record as being in regular use, that can become a significant material misperception. During a space audit of a prominent Pacific Northwest corporation, we discovered that the company had enough unused space in its main building to cancel its lease for significant space next door and to co-locate more groups, enabling collaboration. To avoid encourage more efficient use of space, some companies implement a charge-back system, putting real estate on division P&L statements.

Can we design the space differently?

Collaborative spaces are increasing in importance, while private offices are quickly going the way of the dinosaur. Rather than a new, expensive location, your organization could consider redesigning current offices in a way that would drive teamwork – while reducing the need for additional space.

Does the purpose justify the expense?

The cost of space should be justified by the activities the space makes possible (directly or indirectly). For example, if a new state-of-the-art lab is proposed, its cost should be justified by the results expected from the research it makes possible. Or, you may want a new location to reduce workforce commute times—and that should be a conscious decision made in partnership with human resources as a strategic direction of funds.

What functions are simply no longer needed?

Technology has moved faster than office redesigns; as a result, many law firms pay to lease space dedicated to functions that are no longer needed. For example, a rapidly expanding law firm may need more offices and workstations—but that same firm may no longer need large file rooms, a law library, or an onsite data center. If the less-strategic uses can be reduced, then there is more room for the new hires.  

Is our real estate aligned with our goals and business strategy?

Real estate decisions can both negatively and positively impact an organization’s ability to prosper. To swing the pendulum to the positive, look for ways that existing spaces can provide strategic support and brand visibility. For example, when a hospital system decides to invest in retail urgent care center locations, it is a decision to pay comparably higher rental rates. Yet the move typically makes sense, because it increases the quality and accessibility of patient care, and supports brand visibility objectives as well. You can also consider outsourcing some functions such as IT, payroll, and food service to further reduce your current footprint.

We’re used to doing things the way we’ve always done them. But it’s time to change. Exploring the “why” behind the need for more office space is increasingly essential in the slow-growth economy. By thinking through the strategy behind a space requirement in advance, and challenging traditional assumptions, you can align your real estate with your employment growth needs—while continuing to delight your CFO by challenging potential capital costs.

On Reflection: Corporate Game Changer

On Reflection: Corporate Game Changer

Gamification software from a UW startup makes biz-school case studies more authentic.
| FROM THE PRINT EDITION |
 
 

Imagine you’re the CEO of an airline in crisis. Customers and shareholders are unhappy. Your employees have just gone on strike. What do you do? Give in to union demands? Hold your ground and negotiate? Fire all the employees? 

It’s the first of a cascading set of decisions you must make in The Signature Case Study, a new interactive game developed by Seattle-based Recurrence (recurrenceinc.com) in partnership with the University of Washington’s Center for Leadership & Strategic Thinking (CLST). Players take one of five C-suite roles and each player’s decision changes the options available to the others and affects their total scores based on employee, shareholder and customer satisfaction.

The Signature Case Study takes the case-study method, a paper-based system pioneered by the Harvard Business School, and uses game techniques to make it more entertaining and accessible while also giving students and teachers immediate feedback on the quality of their decision making.

Data on 19 variables derived from real airlines on things like lost luggage, fuel costs, stock prices and customer satisfaction are built into algorithms that drive the game and can result in thousands of academically validated outcomes.

CEO and co-inventor Brayden Olson named the company after Friedrich Nietzsche’s doctrine of eternal recurrence, the notion that all life will repeat itself through eternity. The interactive case study, he says, allows people to learn from mistakes and develop critical thinking skills that improve their judgment so they won’t make similar mistakes in real life.

While traditional case studies depend heavily on the skills of professors to engage students, The Signature Game Study’s software uses game elements to require interactivity, says co-inventor Bruce Avolio, a professor of management at the UW’s Foster School of Business and executive director of CLST.

The game shows players how decisions made early on can narrow their course of action down the road. They also learn the importance of teamwork to overcome the toughest challenges. “Great games can be both more fun and more challenging,” says Avolio, who sits on Recurrence’s board of directors.

The product, released early this year, has already been adopted at more than 30 schools, including the UW, Stanford, Penn State, Johns Hopkins and the University of Texas, to teach leadership, organizational behavior and strategy. The cases sell for $47.50 per student; Recurrence is looking to add cases in areas such as operations, finance, marketing and entrepreneurship. It’s also working with the University of Alabama nursing school to develop a case study to teach such skills as diagnosis and health care management.

With more than 15,000 business schools in the world, Olson says the market is huge. He notes that publishers of printed case studies are selling 12 million a year, but they recognize that the interactive case study is the future and are looking for Recurrence’s assistance in developing them.