Third Areas

Startup Stock PhotosHoward Schultz, the founder and CEO of Starbucks once said that he wanted his stores to become the “third place” for people. Traditionally people spent significant amounts of time at home and at work, and the corner bar was that “third place.” People stopped going to the corner bar years ago and to a certain extent, Starbucks (and similar coffee shops) have filled that gap.

The same concept can be applied to office design. Office space had been designed with two primary places for people to go. Either their work area, (whether that’s a cubicle or office) or a conference room to attend a meeting. But people can now work almost anywhere thanks to a variety of technological innovations. So now there’s an opportunity to create a “third place” within an office. Whether it’s soft seating, a large cafeteria, or outdoor patios, options abound.

Studies show that people who can choose where they work are more engaged and feel more connected to the company than people who are forced to work in a specific area. Companies should be designing space that takes this into account and offers employees the option to take their work to a comfortable couch, a bar-height table in the kitchen, or outside to soak up some sun. This can be accomplished by having the company build out this third space within their demised premises or leverage a landlord that has constructed it into the building’s master plan.

Many landlords have identified this trend and are retrofitting their buildings to provide this amenity. They are installing high-end food service, comfortable seating areas, and wifi throughout their buildings. They are providing tenants with the ability to create a third area while in some cases, allowing tenants to actually shrink their footprints.

Work/Life Balance

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It’s a buzzword that we’ve heard a lot about over the past few years and is clearly a trend that is going to continue. So much that the Gallop 2017 State of The American Workforce survey shows:

“53% of employees say a role that allows them to have greater work-life balance and better personal well-being is “very important” to them” while “41% of employees say a significant increase in income is “very important” to them when considering a new job.”

People are weighing the opportunity for higher pay versus balancing their work and personal responsibility. Balance is winning.

It’s critical that employers consider these factors when working through the real estate process. Does their facility show that the company is sympathetic to these needs? Does the facility offer easy access to shopping and services? Are there a variety of transportation options available? Does the facility offer space to disengage from work for a little while to exercise, relax, or otherwise get away for a few minutes? While space usage and design are only part of the equation, creating an engaging and thoughtful workplace can help create “stickiness” among current employees be a strong recruiting tool for attracting top talent.

The competition for quality staff is fierce and only going to intensify. Population trends show that there is just over a 1:1 replacement as boomers retire and are replaced by millennials. Losing quality people because you’re not sensitive to what modern workers are looking for is foolish and short-sighted.

Today’s employees want engagement, fulfillment, and meaning in their work. It’s important for managers to understand how employee needs are changing and pivot their styles to meet these needs. Designing a facility that helps employees create their own best work environment will help create that sense of balance in their lives.

The new way to work

pexels-photo-112571The latest research from The Gallop State of the American Workplace survey shows that 51% of people would change jobs for a flexible work arrangement (allowing them to choose where and when to work.) Accommodating this demand has dramatic implications for the future of work, completely changes the way managers will interact with their staff, and alters what companies will need from their office space.

For the employees: Allowing employees to work at a location of their choosing requires a shift in the way people think about communicating, collaborating, and achieving objectives. Employees have to get used to providing real time updates, working in a transparent way, and constantly demonstrating results. They can no longer hope that they will get credit for time served and will instead be measured solely on their results. There is less opportunity for politics, more emphasis on demonstrating value. Employees need to work hard to stay engaged, focused, and on-task.

For the manager: When everybody was in one location, it was easy for the boss to change direction or chase a new idea. He had to stick his head out of the office and and tell people what he wanted. With distributed employees there has to be clear goal-setting, constant engagement, and an enormous focus on building camaraderie digitally. This is hard stuff. It requires spending a lot of up-front time establishing objectives because changing direction with a distributed workforce is incredibly difficult. The success or failure of a geographically distributed team depends on the effectiveness of the leader’s vision and communication.

For the Company: According to the survey, only 33% of employees consider themselves “engaged.” Those disengaged workers? They are under-productive and are likely looking for a new job. Companies need to make sure they are creating a brand that helps their employees find meaning and connection with their work while also providing opportunities go grow within their positions. Companies need to be authentic with both their employees and customers, and ensure that the message is consistent across the organization.

The impact on real estate: A well thought-out facility should offer opportunities for engagement and be specifically designed to create that effect. According to Gallup:

Employees who say they can move around to different areas while working are 1.3 times more likely to be engaged than other employees. And those who say they have a space that helps them connect with coworkers are 1.5 times more likely to be engaged.

When employees come into the office, they should be given opportunities to engage and connect with their team and organization organically. That means designing space that allows teams to assemble as they choose, whether it’s in the cafeteria over lunch, at a conference room table, in cubes, or some other open environment. Bringing people into the office should create strong connections to the company and team members.

Recruiting & Retention

Startup Stock PhotosI recently finished a report on the condition of the New Jersey economy and the challenges facing companies that call the Garden State home. While we can all whine about cost of living, high taxes and excessive regulations, we should all remember the quality of life and education levels of the population.

None of those even come close to dealing with the challenge of recruiting and retaining quality talent. Baby Boomers will start retiring en masse in 2018 and there won’t be enough talented people to replace them. The New Jersey Department of Labor is projecting that the population will remain essentially flat, meaning that competition for quality talent will be fierce. The recruiting pool will be comprised of Millennials and Generation Z, with all of the opportunities and challenges associated with those groups.

We will see more demands for “work/life balance” along with a willingness to work anytime and from anywhere. Straight compensation will still be critical, but creating a workplace that encourages “stickiness” will be just as important. Companies will have to re-think how they design space and the work styles that can be accommodated in those spaces. Employees are already looking for work environments that encourage creativity and engagement, allow collaboration, and disengagement, when necessary.

Cost control will always be a part of the real estate decision but employee retention, recruiting, and productivity will outweigh any marginal cost reduction opportunity. Employers will start demanding that buildings be well appointed and fully amenitized. The cost for these features will be more than outweighed by the gains created by lower turnover and increased workplace effectiveness.

Savvy landlords will understand that they need to evolve from simply delivering an office space to becoming a partner in creating a dynamic work environment.

Excuses are like…

Frazz My father is fond of a quote that he attributed to Henry Ford: “Don’t make excuses. Your friends don’t need them and your enemies don’t care.” While I’m not sure Henry Ford ever actually said that, I like the quote.

My other favorite quote about excuses was proffered by the girl’s soccer coach at my high school:  “Excuses are like a**holes.  Everybody’s got one, and they all stink.” I always thought that screaming that line to a bunch of 15 to 18 year old girls was pretty ballsy.  (They did win the county championship, so I guess he knew what he was doing.)

A few weeks ago I wrote about over-communication and the importance of keeping everybody in the loop. That said, there is no reason to create excuses if things aren’t going as planned. It’s tempting to offer a series of excuses when you have to deliver bad news. The problem is that excuses don’t usually provide satisfaction and can on occasion even anger the offended party even more.

Of course, the best policy is to not disappoint the client in the first place. I do everything I can to manage the process and avoid disappointment. If the project heads off track, my general policy is to deliver the news devoid of any editorializing until I’m asked. Then if I can, I provide some context and a reason for the delay.  But never an excuse.  If there isn’t a legitimate reason (which is different from an excuse) for the project going askew, I’ll just apologize and try to identify a new solution.

A final thought… when you have to present a problem to a client, it’s often received much more favorably if you offer an alternative or two.  So instead of looking like a whining toddler making excuses, you’ll look like a consultant that is focused on finding solutions.

Fascination with population

people-new-york-train-crowdIn addition to all the other stuff that I can get nerdy about, (virtual reality, market trends, automation, artificial intelligence,  customer service,  education, etc) I am fascinated with economics, population, and productivity. I was digesting this report from the McKinsey Global Institute and proprietary research from Colliers’ Workplace Innovation Team showing that the United States is going to hit peak employee population around 2020. Between baby boomer retirement and stagnant population growth, there won’t be enough people to replace the aging population.

This fascinates me on a macro level as I wonder where growth will come from (I’m hoping for improved productivity via  automation and AI) and on a personal level, where office demand will come from. If I’m a landlord that is trying to serve office users, I’m facing shrinking tenant demand as companies:

  1. Consolidate their footprints to maximize productivity and cut costs
  2. Demand highly amenitized space to compete for a shrinking employee pool
  3. Evolve their infrastructure to accommodate automation and AI
  4. Require flexible workplaces to scale for contract employees

A big chunk of office stock must be re-purposed for alternate uses. Whether its residential, medial, logistics, or something I haven’t thought about, it’s going to require creativity and capital.