Flexibility: A Smart Way to Cut Real Estate Costs

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New Ways of Working panel tells how to reduce real estate expenses through workplace flexibility.

The opportunity to reduce facility costs, by reconfiguring office space or reducing the average space allocated to each worker is an opportunity corporate leaders cannot ignore

In this challenging economic climate, companies are looking for innovative ways to reduce cost. Facilities represent the second highest expense for large businesses yet many organizations continue to provide more workspace than needed. “The opportunity to reduce facility costs, by reconfiguring office space or reducing the average space allocated to each worker is an opportunity corporate leaders cannot ignore,” said Jim Creighton, co-founder of New Ways of Working.

New Ways of Working, (New WOW), a member organization focused on alternative workplace solutions, recently hosted a roundtable to examine how to decrease real estate expense while maintaining a steady workforce or even increasing headcount. A panel consisting of Chris Hood, Program Manager, the HP Workplace at Hewlett-Packard, Clark Sept, Co-Founder, Business Place Strategies, and Mark Wartenberg, Founding Partner, Co3 Group, Ltd., tackled the problem of cutting real estate costs by 50% while accommodating more employees in less space.

Real-world examples, such as those accomplished by Hewlett-Packard, have shown that companies can save millions of square feet of real estate and reduce occupancy costs by optimizing footprint, employing workplace flexibility, and implementing processes and places that support mobile work. “HP has just about halved its office space worldwide, and has reduced operating costs by about 40%,” said Chris Hood.

11 steps toward workplace reduction
Panelists, along with New Ways of Working members, came up with a list of eleven steps companies can take to shrink facility space:

1.    Start with a fact-based discussion about utilization and mobility. Conduct research to understand the existing situation, such as utilization, rather than rely on assumptions.
2.    Consolidate facilities. Enterprises can save overhead and lease costs by combining data centers, lab space, demo and training centers.
3.    Strengthen/streamline supply chain – accomplish more through supply chain optimization—reducing the number of suppliers/contractors to cut administrative costs.
4.    Drive workspace design based on utilization studies. Track who works where and how often. Develop ratios to help allocate workspace. For example, knowledge workers might be out of the office 40 to 70% of the time, giving a company an opportunity to share workspaces.
5.    Optimize workspace size based on type of work performed.
6.    Create policies giving people choice about where they work.
7.    Ensure the technology will support people wherever they choose to work.
8.    Establish processes for developing service level agreements with employees
9.    Update performance evaluation process to make it performance-based rather than traditional activity-based.
10. Set up mechanisms so team members can review workloads and balance them within teams.
11. Reinvest a portion of the real estate savings into improving the workplace.

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Jim Creighton

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