Exploring new performance metrics in the flexible work era
How can Corporate Real Estate leaders respond to the shifts occurring in the world of work? A new report by Locatee explores new metrics for workplace performance in the context of flexible working
The Corporate Real Estate (CRE) industry is experiencing a revolution as it adjusts to flexible workplace strategies becoming more permanent. CRE departments are shedding their status of support function and transitioning into a strategic function as their decisions are having greater impact on key C-suite agendas.
This new role for CRE is set to last well beyond the pandemic, according to a new report by CoreNet Global on behalf of Locatee. The report entitled, ‘No Guts, No Glory’ examines how the CRE industry is embracing new ways of working to revive workplace performance in a hybrid era. The research is based on a survey of 97 CoreNet Global members.
New workplace metrics
In the wake of flexible working, there is an emerging debate within the CRE industry about the need to depart from a sole reliance on static, quantitative measures such as the number of full-time employees multiplied by a factor for square metre or square foot consumption. Workplace solutions based on industry benchmarks are losing significance and giving way to workplace solutions that are unique to the organisation and personalised to fit individual company visions and goals.
‘Workplace solutions based on industry benchmarks are losing significance…’
CRE management is evolving to include employee experience and new performance metrics. This means that CRE managers need to cultivate a growth mindset to build agility into the scope of their workplaces for the medium to long term to survive and thrive in the changing landscape of work. In the scope of the report, ‘agility’ means incorporating more impermanent workplace solutions allowing for experimentation around the future of work and new purpose of the office.
Adapting to new ways of working
Hybrid and flexible work models are becoming favourable for staff and organisations alike, therefore CRE needs to follow suit. When asked to what extent their organisations would incorporate a flexible work arrangement going forward, 85 per cent of respondents in the report said they will move to 2-3 days of remote work or full flexibility. The latter gives employees complete autonomy in deciding when they would like to go to the office and when they would like to remain at home.
With the move to hybrid work creating opportunities to capture significant benefits, it is clear to the vast majority of CRE managers that CRE must also go agile or risk losing out on those opportunities. More than three-quarters (76 per cent) of respondents in the report were in strong agreement that CRE needs to become more agile – while almost all (99 per cent) of respondents believe that agility is the future of CRE.
One of the reasons remote working continues to disrupt the CRE industry is that it is impossible to stick to traditional benchmarking for space planning. The market has now become very dependent on individual company values, strategy and departmental management to derive the value of real estate.
CRE managers consequently reported that future space demand will be determined by ‘Scenario Planning’ (47 per cent) and ‘Based on Functions and Workplace Types To Be Provided’ (35 per cent). However, these new ways of space planning will not be heavily performed in the CRE industry until more managers and teams have the skills required. Accordingly, more than half of CRE managers (54 per cent) say they would like to build on or expand their scenario modelling skills.
Realigning the criteria
Agility starts with being able to make decisions fast and effectively. However, CRE decision making typically requires factoring in lots of different criteria and liaising with numerous stakeholders because CRE decisions have reverberating impacts on the company at large.
Additionally, there is misalignment of decision-making criteria, KPIs, and important decisions. Three-quarters of CRE managers note ‘employee wellbeing’ as an important criteria in their decision-making process. But, when it comes to forming opinions in order to make and assess decisions, only 46 per cent use employee satisfaction ratings as a KPI.
‘Judging performance on cost doesn’t come as a surprise as 36 per cent of CRE professionals sit in finance divisions’
Instead, CRE performance is judged primarily or solely by cost, as 82 per cent of respondents said. This doesn’t come as a surprise as 36 per cent of CRE professionals still sit in finance divisions and 76 per cent stated that finance is involved in their decision making.
The problem with using cost as the sole or primary KPI is that it often tells you little to nothing about whether you are making the best decisions for your company and for the objective at hand. The report identifies the top three important decisions CRE managers are making right now: changing workplace type mix (62 per cent), changing from fixed space to flex seating (58 per cent), and determining optimal space ratios (56 per cent).
When queried about which workplace insights were desired to have more informed decision making, over half of the respondents said they would like to have employee feedback insights, which suggests a move to improve the misalignment between employee-related criteria and KPIs.
Building a database
The majority of the industry (82 per cent) is still looking to headcount projections to measure office real estate. However, 75 per cent would like to tap into utilisation data to inform CRE strategy. Currently, organisations still fall short in exploiting available data sources to fill the gaps of traditional data with only 35 per cent of CRE managers having already explored ethernet/wi-fi as a data source.
The CRE function has expanded over the years, most dramatically in 2020 as a result of the pandemic. With this expansion of responsibility has come elevated prominence, new expectations and the influence of CRE professionals to design a CRE portfolio that best conforms to the uncertain times and evolving corporate mandates. When looking to improve performance at the organisational level, the top three next steps were unsurprising as the common challenge for all CRE leaders is more staff, more budget and more power.
It lies within the nature of business that decision making doesn’t come easy. But building an encompassing workplace insights model and equipping CRE staff to adapt new skill sets will make the difference. Corporate Real Estate professionals willing to adopt a growth mindset need to equip themselves with traits of organisational psychologists, data scientists and marketers to be able to read from the emerging workplace insights centring around employee experience.
Adapting to new ways of thinking
According to the report, organisations sticking to their old ways and a narrow cost view will risk driving their workforce away and harming company culture and community. Corporate Real Estate managers now need to adapt to new ways of thinking.
The report suggests that CRE leaders start with outlining the pressing needs of their organisation, workers, customers, and other stakeholders going forward in the short, mid, and long-term. Next is to assess how the current portfolio structure can enable or prevent agility. It is also crucial to look at current KPIs and explore new metrics that truly reflect a holistic view on workplace experience while avoiding limiting paradigms, such as the only important KPI is cost.
It will be helpful to then explore what technologies are available to efficiently, accurately, and dynamically assess the data points needed for a quantified workplace. Only those who measure will truly be able to manage and master a new workplace world.