Strategic Blueprint: Balancing Cost-Effectiveness with Support for Corporate Change & Flexibility

In recent years, organizations have increased their attention to facilities management — due in large part to a perceived need for increased consolidation in the procurement, specification, and project management of corporate office environments. As the cost of corporate real estate remains high, many companies consider facilities in terms of organizational efficiency and cost-cutting initiatives. However, this approach may need fundamental revision to keep up with the torrid pace of change within the knowledge economy.

In many corporations, the traditional view has been that in order to improve the bottom line, facilities costs must be kept to a minimum. One effect of this approach has been to increase the density of workers within office environments. Quite literally, many organizations measure building performance or efficiency in terms of how many workers they can accommodate with the least amount of floor space or technology support.

While this approach serves to maximize short-term returns on investments and assets, if the impact of employee turnover, absenteeism, and less-thanoptimal productivity are included in the measurement, the perspective that facilities costs represent mere red ink changes dramatically. If turnover or absenteeism drops — or productivity increases — even a few percentage points, the positive impact on the bottom line can be substantial, depending on company size. Over a ten-year period, the costs of employees’ salaries and benefits will be fully five to 13 times the costs of the initial investment in construction, furniture, interior furnishings, and equipment, plus building operations and maintenance, depending on proportion of leased to purchased real estate. The fact that personnel costs still represent the primary corporate expenditure — well ahead of facilities costs — suggests the need to treat space as an investment rather than as overhead. The potential for bottom-line impact from facilities has much more to do with support for  knowledge work than with merely trimming costs. Read more by downloading this whitepaper from Haworth.

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