The advent of the internet and rapid spread of cellular technology has revolutionised the workspace. More workspace transformation has been witnessed over the last 20 years than the time (before that) since the industrial revolution.
The gap between ‘social generations’ has dramatically dropped in the last few years and the primary differentiator increasingly is the degree of familiarity, use and dependency of technology. More people have been added to the global workforce during the last 20 years than ever before. People have greater access to data and unparalleled global visibility than ever before.
Yet (for a large part) corporate workspaces have historically been designed by those still influenced by generations past and organisational ‘legacy’.
The typical workplace usually seen / provided across a cross section of entities in India (both MNC and India conglomerates) are often considered as ‘old world’ by younger talent. Basic furniture, cubicles, fixed desks, minimal (and often restrictive) IT infrastructure and staid work & HR policies have been the norm.
‘Old world’, ‘government-like’, ‘modern’, ‘hot desking’, ‘flexible’, ‘agile’ are terms colloquially used to define the workspaces. However, each term has significantly larger (said & unsaid) context when used to describe an organisation. One can infer organisation culture, speed, growth, stability, people centricity etc. through use of a single term.
Contrary to popular perception, the appeal for modern workspaces is not limited to younger staff. If one believes that eyes are the gateway to a person’s soul, then the workspace is a clear reflection of organisational thought and culture. One either adapts to today’s rapid pace of change or gets left behind.
The India Story
A close look of India’s real estate commercial market stock (both multi-tenanted buildings and campus spaces) reveals that approx. 85% been introduced over the last 20 years. Further activity is led by demand from IT / ITES firms that account for over 80% of total stock. This showcases the heavy orientation of Indian firms towards the services segment.
Workspace transformation in India over the last five years has been primarily driven by cost. Whilst cost continues to be the biggest driver even today, a significant underlying factor that has emerged is the cost of attracting, engaging, retaining and growing human capital. A multitude of new spaces and associated technologies improving collaboration and agility have flourished during this period.
Still, large size Indian multinational companies (MNCs) provide spaces that offer little in the way of significant workplace engagement. We’ve seen such businesses suffer a 15 % to 20% arbitrage in hiring cost when compared to the likes of industry leaders like Google, with talent asking for significantly high remuneration to work in perceived traditional environments.
A knock-on effect of increased hiring cost has been offsets in talent quality to match budgets. The direct result of this is the diminishment of an organisation’s product and innovation quality. Interestingly, we’ve seen the increased use of Artificial intelligence (AI) across businesses (initially in predictable process oriented work) to minimise dependency and cost of human involvement. With AI still in the infancy of its potential; program development, big data crunching, client and people engagement are still managed (and limited) by the humans that orient AI.
If a business wishes to compete and retain good talent today, they must offer a workspace that is both modern and appeals to their operational style of talent. The expectations of experience from the new generation of top talent is often radically different from that expected by children of the mid- to late-20th century. The thought processes of how spaces (and associated empowering policies) work must therefore be redefined, with the changing way we engage with workspaces at the heart of this transformation.
In essence, an agile workspace is the culmination of quality design, technology, organisation culture and policies that shape and support the same.
We’ve seen new spaces being introduced across India that increasingly reflect such philosophies. In an extremely competitive and price sensitive market, where real estate rentals are one of the biggest costs for a business, Indian occupiers are increasingly coming to us with the question, how do we right size our Real Estate? How do we lower or rather optimize our real estate footprint and associated costs?
This brings us back to the question of going agile. One of the biggest for drivers for occupiers to adopt an agile way of working is the significant cost implications and real estate savings it has the potential to generate. An agile or shared work environment enables you to plan for fewer seats than the headcount of the organization. This can result in one of the two financial benefits – either a reduced take up space subsequently leading a reduction in operating costs (10% – 40% reduction) or containing costs by growing the company’s headcount within the same space. In either scenario, coupled with better prospects of talent retention and increased productivity of staff – an agile work environment works out to be a win-win for the organization.
To determine whether an organization has the potential to go agile, it is critical to understand the utilization levels in the office. It is key to note that despite their best efforts, occupiers often misunderstand their actual space requirements, usage or people needs.
A time utilization study offers a critical understanding of how spaces are really being utilized, with results based on empirical rather than anecdote data. The results can sometimes be at times obvious, stark, interesting and sometimes downright scary. For example,
- The HR and accounts department often need significant allocation of collaborative spaces for interview, audits etc. Though obvious, this facet is often overlooked.
- When you look at the typical space utilisation across a variety of different clients, we often identify that surprisingly, even at peak occupancy, utilization of the workspace is measured at only 65%. This is an incredible cost for businesses, not just in terms of rent, fitouts, support staff etc. but also in additional costs such as technology, which often costs far more than real estate costs.
Change Management at the Heart of Workspace Transformation
Spaces need to be viewed as customized solutions. What works for one entity doesn’t work for another. What’s more, organizations who make radical changes to the working environment, for example a sudden change to hotdesking, can often experience backlash from employees who did not feel included within the process. Backlash can often be avoided through effective change management.
Ultimately there is a path to reality that occupiers must go down when undergoing a workspace transformation. While a minority have created a great workspace environment over the years through instinctive solutions rather than a formalized process, the majority typically come at workspace transformation not from a user perspective, but from a trend perspective. This means that occupiers might come into a conversation with consultants with the goal of implementing hotdesking, rather than with the goal of increasing productivity or staff engagement.
A study undertaken earlier by C&W with select occupiers showed that while 90% of respondents had undergone a workspace transformation project; over 50% believed that their workspace strategy had failed some, if not most of their objectives. While it is easy to blame the workspace strategy, further analysis revealed that most of these objectives would have been met with proper ‘Change Management’.
The role of consultants in this process is to get clients to start thinking from an experience perspective by asking essential business questions as part of a workplace assessment such as:
- What are your businesses ventures dynamics?
- Are they growing or contracting?
- Are you optimally using your current space? What some key gaps therein?
- Does the space reflect your organisation culture or is there dissonance between the same?
- What do people need vs want? And what is real?
- How do we measure change?
The evolution of the CRE professional from being an administrative resource to an empowered professional has happened over the last 15 to 20 years. The surge in workspace projects in India in the last five years has mirrored the graduation of many professional CRE professionals into senior management. One of the core abilities that these professionals possess is agility: thought agility, agility from the perspective of the business and workplace, from the function of technology, and from the perspective of policies that link in to operations.
Agility is also a function of an organisation and its key drivers like nature of business, culture etc. Thus, organisations are unique as are their workplace solutions. A great example of agility in action is that of a MNC Bank, that recently (counter intuitively) relocated approx. 200,000 square feet (and associated staff) to a co-working space. In doing so they reduced CAPEX costs, while getting the most value out of the flexible and scalable space that they took up. This is compared to some technology companies where employees are (again counter intuitively) encouraged to work from the office rather than from home as they provide a highly innovative and engaging working environment.
Dealing with Reality in India
With travel in Indian metropolitan areas becoming ever more difficult, the onus is on organizations to either offer the agility for employees to work from home, or to locate their offices close to where employees live. Agility and flexibility are key tools in an organisation’s bid to survive and remain relevant.
The rapid introduction of commercial spaces across key corridors in India has resulted in the associated increase in vehicular traffic that often take 2 hours of travel time each way. This has led many employees to avoid coming into the office entirely, resulting in businesses being saddled with large, mostly empty office environments in select locations. One organisation (in such a corridor) has witnessed 60% of their total number of employees come in to work less than 15 days out of the month.
With many individuals choosing to work from home on days that they don’t have meetings, the question becomes “How do you create intuitive collaboration areas and meeting rooms that can make optimal use of the space?” Lessons can be learned here by looking at the evolution of the managed office sector in India. While managed offices have been in existence for a long time, they were traditionally set up with a focus on private cubicles and spaces. The remarkable success of the likes of WeWork, who prioritize collaborative space over private spaces, has created a great path to follow in terms of setting up and managing these areas. Of course, many corporates are deciding just to take the leap and move their staff to facilities managed by WeWork or their competitors.
Globally, managed spaces account for almost 20% – 30% of total stock in several major business cities.
Finding the Balance
While many try to frame the workplace of the future discussion around technology, for example around the Internet of Things, what it ultimately comes down to is a balance between experience and cost. If businesses can provide a working environment that can optimize productivity and space utilization, along with providing an attractive location to draw in top talent, then the workspace and the business at large can truly be ready for however the working world might change in the future.
This article was based in part on a panel session at World Office Expo, held on September 28-29, 2018 at the Nehru Centre in Mumbai.
Khurshed Gandhi is currently the Managing Director of Consulting Services at Cushman and Wakefield India. He has over 14 years of experience in providing real estate advisory and workplace services across the region to a wide spectrum of clients.