of millennials prefer to work in teams rather than separately
Working with the inevitable to make the office digital
In 30 seconds
The world is changing but the workspace is not keeping up, neither with the way that business is being done nor with the nature of the workforce
- Whilst there are clear advantages to aligning the workspace to more modern approaches - including talent retention, more flexible business practices, as well as lower costs - many organisations find they cannot simply update existing workspaces for a variety of complex reasons
Workspace change involves largescale transformation due to its impact on working practices, company structures and personal lives. The way to resolve this is to see existing workspace change projects as opportunities to take the organisation and its people much further than a mere relocation or office move might suggest
Introduction: towards the knowledge space
Here is a fact: current working environments are inappropriate for the businesses of tomorrow, let alone today. ‘The geographical boundary between the work and home is changing, with remote working, working from home, and so on. So what does the head office, the physical office become? These questions are changing all the time,’ says Didier Caramello (note 1), Director of Real Estate Projects at SNCF Gares et Connexions.
To enhance innovation, collaboration between previously unrelated people is recommended
Traditional answers are becoming obsolete: real estate has traditionally been a fixed asset [see infographic], but the five digital lenses transforming the wider business environment [see box-out] drive the need for a different kind of workspace. The increasing need for creativity and innovation across sectors is changing how work is approached. ‘90% of the discussions taking place in front of a coffee machine are more creative and positive than working at one’s desk,’ says Sophie-Jeanne Hales-Le-Menestrel (note 2), Director of Real Estate and General Services at Google France. Florence Peronnau (note 3), Vice President of Real Estate for SANOFI makes the point more directly: ‘We need to enable people to work together who were not previously used to working as a team; to open the silos and break down the walls.’
THE FIVE DIGITAL LENSES AND THEIR IMPACT ON THE WORKSPACE
BearingPoint research has uncovered five lenses, each of which have an impact on the workspace:
• Inside out workforce: need to support collaboration (can be as basic as letting people badge in with their phones if they are on a project or booked in a meeting room). Align with demographic changes (young generation).
• From supply chain to village: need to have porosity in the workspace to allow virtual teams working globally but delivering cohesively
• Intelligence everywhere: information and insight are becoming available in digital form, so people do not need to be in the office to know what is going on
• Rise of the machine: not only are sensors and automation becoming a significant information source, they can also be applied to the workspace itself, delivering flexible, smart buildings and environments, which effectively can put the employee at the centre of the space
• The role of trust: organisations need to empower their people and their need to share while maintaining data integrity
Whilst these drivers have been emerging for some time, it is the way they act in tandem that creates impetus for a changing workspace.
Such discussions are not only between employees but also involve partners, freelancers, clients, suppliers, patients, and any other third party. The very nature of work is changing, with 25% of today’s full-time employees estimated to be working ‘on demand’ as freelancers on short contracts in the near future. In the race for innovation, collaboration with third parties can generate competitive advantage. As a result, the workspace is moving from simply being a physical space to an intangible asset, with the environment itself being a creator of business value.
The challenges this creates are very real. For example, the image projected by the workspace can become an issue when it comes to attracting young ‘talent’ who regard it as their number one criterion when choosing an employer. ‘Studies have indicated that as many as 88 per cent of millennials have expressed a desire to be part of a collaborative working culture,’ says Andrew Needham (note 4), Chief Executive and Co-founder at HeadBox, a concierge service for shared spaces.
The same principle applies to attacting start-ups with whom to collaborate. The latest trend is for large firms dedicating a special workspace for start-ups, hosted in the company’s premises. As a case in point, one of the largest banks in France (Crédit Agricole) created ‘Le Village’ at a dedicated location in Paris, to host and support selected start-ups over a two-year period.
The broader rationale for this is to:
- Promote an image of a cutting-edge company that fosters innovation by being an incubator
- Develop the digital culture and usage internally with the help of start-ups on the site
Finally, the workspace is becoming as much digital as it is physical – both environments need to accommodate and facilitate collaborative work and communication with the widest pool of stakeholders. Physical and digital workspaces need to work together to drive the knowledge economy, such that neither creates a bottleneck for the other. But how successful are organisations being in response?
The reality of today’s workspaces
The answer is that a great deal more could be done. When we look at the data from our recent study, we find that workspaces are generally considered to be satisfactory by the sample. Of the 65 respondents, 47 (72%) said that their digital environment was adequate, and 44 (68%) said the same of their physical environment. This still means over a quarter in each case feel the environment is less than adequate. In what is an increasingly competitive business environment, ‘good enough’ should not be considered sufficient.
Physical and digital workspaces both need to strengthen collaborative work, they should complement each other.
In addition, working practices are changing. The growth of flexible working has resulted in an allocation of 0.8 workspaces per employee, as measured at Campus Sanofi Val de Bièvre in France. But according to Frédéric Goupil de Bouillé (note 5), Director of Real Estate Optimisation at SNCF, 40% of workspaces are on average left unoccupied, even taking flexible working into account. Whilst this is undoubtedly because of the growth of teleworking, it is also due to time spent collaborating, in meetings, working in project-specific areas, or simply due to holiday, secondment or external visits.
of office space is usually unused, leading to unnecessary business costs
In the medium-term, estimates suggest that the space allocation per workstation will decrease from 14.3m² to 12.8m², or roughly 10%. Some analysts go even further, suggesting the figure will be closer to 17%. Regarding rental costs alone, a 10% reduction equates to about €1,400 (note 6) per workstation per year of potential savings. This (unnecessary) cost of physical buildings is a compelling driver for change – although this is certainly not the only driver.
These pressures – the under-whelming nature of existing working environments, the changing nature of work and the falling cost-effectivness of the workspace – are creating the impetus for firms to make improvements. Organisations shell out unnecessary rent with mediocre results. Current workspaces serve nobody particularly well – not the company, nor its employees (see infographic). Clearly something has to change, as existing workspaces are not proving themselves cost-effective even as new pressures and costs drive the need for change, including:
- Savings through reducing the number of workstations per person, and space per workstation
- New costs linked to changes to office locations and new service delivery approaches
- Additional costs coming from workforce mobility, for example home office costs
Finally, we need to factor in the general nature of office relocations, as they are inevitable components of dealing with this situation. Relocations and building projects are seen to be of board-level importance, but also cause considerable stress for employees. The feeling that staff members are consulted relatively late in the decision process pervades – in France for example, legislation requires organisations to consult staff representatives before taking a major decision (such as the purchase of a new building), but this could often be better handled.
So, how could things be done differently? A good starting point is to consider the criteria that can define the ideal workspace.
The workspace of the future – key characteristics
In many ways designing the workspace of the future means ‘simply’ aligning with what is happening – adapting to modern, more collaborative working practices and delivering the services people need to thrive in a digital business. A place for the ‘head office’ still exists but there needs to be a major expansion of shared space, reshaped to align with satellite offices and teleworking, where employees come to meet colleagues and socialise. It should incorporate the following:
Higher focus on communicative workspaces will be vital for future organisations
Collaboration capabilities: Organisations are increasingly working with third parties as peers. Dedicated start-up spaces and pop-up workspaces are worth considering. In the years to come, workspaces will become more open in a number of dimensions – open plan, open to people, open access, open use.
Digital-first capabilities: This entails integrating a digital state of mind into building management, to maximise both efficiency and effectiveness. For example, smarter buildings reduce both resource costs and operational overheads; and better audio-visual integration benefits collaboration.
Location flexibility: Workspaces should be invested in, whether they are within the walls of an employee’s home or in a coffee shop. There is also a need to think how the home office space can be suitably equipped – this has a cost as well, which is solved if the person can take office with them.
Usage flexibility: These are pay-as-you-grow or by-the-hour options, enabling the monetisation of unoccupied space. Rental could be to trusted collaborators or third parties, with financial models adjusted accordingly – for example, incorporating rental into project costs.
The result is a major reallocation of space. Even among more advanced environments that incorporate flexible working, common spaces occupy only about 25% of the overall usable space. At the new SNCF Wilson campus at Saint-Denis, the space is allocated 50-50 between workstations and shared spaces, a model that will likely extend across a broader range of organisations.
If the organisation wants to open itself to innovation and collaboration with third parties, then the working environment needs to enable this – if not, it will act as a brake on progress. Get it right and a number of positive benefits will flow:
- Deliver a positive image – The workspace can act as a positive image to enable the recruitment and retention of talent. More informal approaches and working practices are better suited to younger generations
- Promote staff wellbeing – Healthier staff are also more productive and innovative. Team building also benefits from more open environments
- Improve supervisory management – Workspaces and management approaches go hand in hand. Improved supervision / front line management becomes possible
- Reflect collaborative working practices – People are working in coffee shops better than at their desks, so why not bring the coffee shop into the workspace?
- Catalyse an innovation hub – In the knowledge that competitive advantage comes not from linear tasks but from innovation, organisations that catalyse innovation are positioning themselves better to grow and maintain market share
Only 1/4 of total office space is used as 'Openspace'
Of course, it is not enough to look at the environment without considering how people take advantage of what it facilitates, which needs to be driven from the top. Florence Peronnau (note 3), Vice President of Real Estate for SANOFI says, ‘Yes, the enterprise is transforming, but it is also about how management is changing. The fact that people will work less in fixed roles, and more in flexible roles - in terms of how they interact internally but also externally with other players who bring new experiences – will nourish the progress of these organisations.’
Costs and benefits of workspace transformation
Even with reluctance about engaging with trade unions on the topic of workspace costs, the result should be better working, not cheaper working (though the two objectives are compatible). Our approach is to take into account the total workspace cost per employee, which can be defined as the sum of:
- office space costs
- facilty management costs
- office equipment
- mobile equipment
- home space costs
- commute time
The total workspace cost can be weighed against business benefits including, but not limited to, productivity. As Figure 2 shows, the workspace can offer an improved image to clients, and therefore help raise revenues and attract better talent – such benefits should also be measured in financial terms.
By considering the total workspace cost, it is possible to get a more reasoned handle on how and where to focus investments. Organisations should not restrict what a workspace can be: consider how Swiss Railways is looking at creating shared co-working spaces in stations, with commuters getting a discount if they travel outside rush hour. Equally, why should an organisation not pay for additional space in the home? Why not move offices from a city location to a residential area?
Harnessing disruption to deliver a futureproof workspace
So the question becomes, how to create the right workspace, in the right way, to deliver the right benefits to both the organisation and its staff? People do not like change at the best of times, as the chart shows – respondents to our survey are least likely to want to move office as opposed to change in any other aspect of their working environment.
One starting point is that physical changes to the working environment are inevitable. Relocations are a frequent element of corporate life, which can be leveraged to create the kind of workspace environment required for the future. Indeed, given the reluctance to change, companies need to seize any opportunity to lead a transformation in terms of both workspace and work modes.
Understanding this latter point is crucial, as the working environment and working practices are bound together. Workspace changes are likely to impact a number of behaviours and habits at once – the way colleagues communicate and interelate with each other, and move across different work areas in a single day (from project space or meeting room to open-plan area or café); the way managers and staff interact; and the calibration of the work-life balance. These changes cannot be disconnected from the paradigm shift induced by the transformation.
Accordingly, to piggyback on an existing major relocation may be the only viable approach. We recognise this is difficult, not only in terms of delivering the physical and technological elements of the new environment, but also dealing with the change. Achieving success requires a holistic approach that considers not just the workspace but the overall transformation of working practices that result. This requires getting the right plan in place and involving the right people, including HR, that needs to address a number of questions:
Changing the idea of workspaces ultimately requires a change in routinised work practices
- Are employee representatives of those affected by the change being considered as partners, and involved in a constructive dialogue?
- Does their involvement help gain the support of those employees affected by the transformation process?
- What are the tools and negotiation levers between those parties undertaking the construction work?
- What is a good level of information exchange with employee representatives?
The result can be net positive. Bernard Saincy (note 7), President at French union organisation Innovation Sociale Conseil, suggests: ‘A union, such as our own, is designed to enable negotiation both in terms of employee representation (Instances Représentative du Personnel, IRP) and in general. A negotiation will inevitably result in some compromises. But if there is a compromise, there will be a successful move; that is, the people concerned are better off in the situation following the move, with better working conditions and so on.’
Opening the business, creating an environment for innovation and differentiation
From our research we see a new economic model emerging for the workspace. Whereas today, total workspace costs per employee are based on occupancy of office space for five days per week, future costs need to take into account a variety of workspaces, within and outside the office. This would give organisations more control over workspace capacity planning, covering all workspace types whatever they may be. Moreover, workspaces will be oriented towards business, the main driver being how well they contribute to an organisation’s ability to innovate and differentiate to the benefit of all stakeholders – including staff. Done right, workspace changes can have a positive impact on the work-life balance of employees, even if employees are still dubious about it (see Figure 4).
As we have said, workspace transformation is not something that can happen on a piecemeal basis. However, it does have to be started in the right way. The following activities should be kept in mind:
- Define working groups in the areas to be covered (HR, Real Estate, IT), with project leaders
- Look for direct opportunities for transformation as part of the relocation
- Don’t overlook the branding and image aspects of the resulting environment
All the same, opportunities to open up the previously siloed workspace are not just for digital start-ups. Sophie-Jeanne Hales-Le-Menestrel (note 2), Director of Real Estate and General Services at Google France, says: ‘Even a more traditional, large organisation like Sanofi can adopt, and indeed has adopted modern working practices. Google is a much younger organisation with new technology. Everyone thinks that Google is revolutionary but in fact Sanofi is on the same path, with the same approach – revolutionary, very open, with a great deal of digital.’
Employees are not keen to change their office environments
Achieving this means bringing the individual employee, or indeed collaborator, to the centre of the game. This represents a paradigm shift in that it optimises the employee experience, with people deciding where and when they work, in an integrated and aligned physical and digital environment, where the workspace is at their disposal rather than the other way around. And it is now within reach. Florence Peronnau , Vice President of Real Estate for Sanofi, says:
‘We have been guided by terms such as freedom and empowerment, as well as the management of people as adults.’
In the future, we will see hot-desk culture replaced by more socially-oriented environments, populated by empowered staff who choose their own hours. All of this raises many questions, such as: can staff play tennis at 3pm, and would managers be comfortable with this? Answers may vary according to organisation, but management by results, not physical presence, becomes the most important criterion. Underpinning this is the need to understand employee productivity and well-being. To achieve this, companies must consider at the outset why such changes are necessary – which is to enable and empower those on the front lines of the business.
‘Be open-minded about ways of working. After all, challenging your own ways of thinking is exactly the reason you have chosen this environment,’ says Andrew Needham (note 4) at HeadBox. Cost-savings may offset any additional costs involved in creating collaborative spaces and external workspaces, but more than this, business benefits can increase and talented people will be attracted to work in such places.
In a competitive environment increasingly dependent on innovation and differentiation, an investment in the workspace is an investment in people – organisations that do not recognise this simple fact could well put themselves out of the race.
• Today’s workspaces are ‘good enough’ but they are not ‘excellent’, which means that organisations are missing out on the benefits they could achieve
• Cost reductions are a compelling driver to change the nature of workspaces but it is important to think about the total cost of workspace per employee
• Collaboration and digital-first capabilities, location and usage flexibility are key characteristics of the future workspace
• Benefits include, but are not limited to, increased productivity, talent retention, staff well-being and improved management based on mutual trust
• Given that workspace change is inevitable, it makes sense to piggyback workspace improvement with workspace change projects
• Ultimately, the workspace exists to serve the employee, so putting the employee first can help to drive successful workspace improvement