Last week saw the long-awaited publication of the Stoddart Review which provides the latest thinking on why the workplace environment is key to productivity. The Stoddart Review is named after a British Facilities Management stalwart Chris Stoddart MCIOB FBIFM and is aimed at continuing his work in raising awareness amongst business leaders of the importance of the workplace as a key organisational performance lever. The review represents the latest research backed up by the British Institute of Facilities Management (BIFM) and Sheffield Hallam University.
A Worldwide Problem
Whilst the report draws conclusions focused on the UK market, there is learning here for all of us outside the British Isles. The data is extracted from The Leesman Index which is a database of workplace effectiveness performance data from 63 countries around the world covering 1629 offices and incorporating survey data from nearly 204,000 employees. The Leesman Index is the world’s biggest and foremost independent performance measurement of how workplaces support the employees that they accommodate. It comprises a simple index (Lmi) which is based on a scale of 1-100 and allows employers to benchmark and compare the fitness of their corporate workplaces and measure their contribution to organisational performance.
The Leesman Index data shows us that on average only a shockingly low 53% of respondents believe that their workplace allows them to work productively. At the highest performing level, the index shows 86% of employees say that their workplace enables them to work productively. Conversely, in the lowest performing spaces, this figure dropped to just 15%. The room for improvement is vast and therefore the “deafening silence on the effect of real estate and facilities on production is all the more surprising” says Alison Nimmo CBE the CEO of the Crown Estate.
Drawing my own analogy, any production line in a manufacturing operation that was operating at 53% would go out of business. You can be absolutely sure that correcting this would be the single most important task of the entire management and board.
Knowledge work is an increasingly large majority of our western economies, so why then do we turn a blind eye to the productivity of our knowledge workers? I would turn to Patrick Lencioni’s explanation of Better Light in his book The Advantage where he recounts a story from his childhood of an old episode of the hit TV comedy series I Love Lucy;
Ricky, Lucy’s husband, comes home from work one day to find his wife crawling around the living room on her hands and knees. He asks her what she’s doing.
“I’m looking for my earrings,” Lucy responds.
Ricky asks her, “You lost your earrings in the living room?”
She shakes her head. “No, I lost them in the bedroom…… But the light out here is much better.”
And there it is, most leaders prefer to look for answers where the light is better, where they are more comfortable. And this is certainly the case where productivity is easily measurable and where a production line can easily be seen to be working or not. The productivity of knowledge workers is not so clear cut, but that does not excuse the lack of attempts to measure it. If you cannot understand it, you cannot control it, if you cannot control it, you cannot improve it.
How then can this be the way to run a business? How is it then that this subject has gone largely unnoticed for so long?
The Stoddart Review is a concerted effort to uncover the link between a workplace and the link to productivity.
There is a workplace productivity crisis around the world. Counter-intuitively as our workplaces become more technologically advanced, the productivity of knowledge workers continues to plummet. So, whilst the report confines itself to comments regarding the UK, these problems are universal, and connections and extrapolations can be drawn across all international boundaries.
Many opinions have been put forward about the reason for the productivity gap, but little or no evidence has been put forward about the connection between this and the workplace. The Review unequivocally makes the case about the connection of the workplace as a critical performance inhibitor or facilitator.
The Review brings into sharp focus the difference we see in the normal management appraisals of staff performance which happen in almost all instances on at least an annual basis. Conversely businesses typically only review the effectiveness of their infrastructure when a lease event arises which may only be every 5 or 10 years. This begs the question that with employees representing up to 90% of an organisation’s cost base, why is ensuring that their working environment is optimised to improve their performance, not a top priority?
Beware what you Measure
Back in 2012, I gave the keynote presentation at the South African Facilities Management Association (SAFMA) annual conference in Johannesburg. The subject of that presentation was that few organisations and the people managing those organisations seem to understand that savings in operational costs are not the primary ‘value add’ of FM and that the potential gains in their staff’s productivity are far more significant. This misalignment had come about due to the prevalent measurement of office efficiency as space utilisation as opposed to staff productivity.
FM has for too long neglected the significance of the properties in which corporations operate as a means to connect those corporations to their markets for resources and customers. It is this short-sightedness that has led to the dominance of the cost-based focus on property measures as well as our fixation with the measurement and benchmarking of performance from an operational efficiency perspective i.e.
- facilities cost as a % of the total operational cost
The Stoddart Review confirms that this focus is still prevalent with utilisation studies that continue to look at increasing workplace densities.
Typical densities of one person/7 m² are now being achieved. These projects may well deliver increased occupant to density and space optimisation but as the review states “They confuse spatial efficiency with the productivity of people and that these terms are being far too easily transposed” The Review further states, “…the key to increasing density effectively is mobility. The freedom to move coupled with a choice of working environments that suit different types of work and personal preferences is the key to improving productivity”
If the focus is on cost-based measures, it is no surprise that our Customers will continue to exert undue pressure to slash facility costs. These measures have little relevance to organisational health or corporate objectives and so consequently little attention is paid to the added value that FM can generate from supporting core business processes.
Unless we provide an alternative then we are doomed to measure costs and consequently costs will be all that is managed.
If, however, we align facilities strategy with business goals and objectives, then the facilities and the professionals who manage them will come to be accepted as the valuable assets they are.
The call to action in my 2012 presentation was that Corporate Real Estate and Facilities Management needs to be able to present the argument that Facilities are of no value to their Client, regardless of the economic value, if it does not support the objectives of the Client’s organisation.
In my 2012 presentation, I presented figures, which indicated a potential twenty-fold effect if we were to focus on productivity as opposed to operational cost savings. Better still the Productivity and Operational cost affect the numerator and denominator of the equation respectively. They are not mutually exclusive and so can have a ‘double whammy’ effect by increasing revenue on the top line and decreasing cost on the bottom line. This makes FM a revenue driver to be improved not just a cost centre to be reduced.
Strategic FM should be making these connections and measuring the effect of the ‘box’ on productivity of the people in the ‘box’
In the Stoddart Review, headline productivity increases are given at anywhere between 1-3.5%. This doesn’t sound like much but do not be deceived, that translates into potential productivity gains for the UK economy in excess of £70 billion.
The Review provides a clear understanding that the workplace itself can be a barrier to higher productivity and that large open plan offices do not necessarily result in greater collaboration, in fact, they can create resentment and increased stress levels in staff members due to a lack of privacy as well as being too noisy, distracting and irritating. The much quoted 2013 study by the University of California found that office workers were interrupted as often as once every three minutes and that once these distractions had occurred it could take as long as 23 minutes to get back to the task at hand. This is a damning indictment and akin to a low-cost typical supermarket retail strategy of Pack’em, Stack’em and Rack’em.
Clearly, the answers do not lay solely in the hardware of the workplace. When a workspace is aligned with the organisation’s purpose values and brand it drives pride engagement and unlocks the elusive discretionary effort of the staff. To illustrate this point research from Gallup on the 12 dimensions of a healthy workplace indicates some interesting pieces of data.
Firstly, people who have friends in the office are at least four times happier at work than those that don’t.
Secondly, 21 % of those respondents that indicate that they have a best friend at work report that ‘they have the opportunity to do what they do best every day’
The review is a wake-up call to our industry as we attempt to find relevance in today’s market by calculating the value that we add as the guardians of the workplace. The review provides us with plenty of examples and context for us to convince our customers that they cannot afford to ignore the opportunity cost of an effective workplace.
The review has gone to great lengths to include all aspects of the Real Estate industry in the panel as well as economists who examine the questions in-depth with a single purpose to help business leaders fully understand the contribution of the workplace to organisational performance. But as the Review points out, productivity is ultimately a human outcome, not an organisational one and the purpose of the workplace is the same as any other business tool and that is to make it as effective as they can be.
And that is the question for this week
Question: As an FM or Workplace Professional, what have you done lately, to ensure that your Customer has an opportunity to do what they do best….every day?