If you work for a trendy media company in London, it’s highly possible that you sit on bean bags and log-on to your laptop at a different desk every day. Most civil servants, on the other hand, eke out a living in man-made booths in high-rise skyscrapers.
These, at least, are the stereotypes we have formed around where people work. But whatever your line of business, improving the design of your office could see your pre-tax profits rise from anywhere between 25% and 150%, according to corporate real estate and workplace consultancy Haywards.
Despite these potential benefits, maximising office space tends to be fairly low on most organisations’ list of priorities, and few get it right.
Further figures from the British Council for Offices (BCO) found that moving or improving commercial office space could increase productivity by one-quarter, reduce absenteeism, help retain and recruit staff, encourage staff communication and increase profitability.
Sell the benefits
The BCO’s report, Workplace Productivity: design, location and people, makes a clear link between well-designed office buildings and business performance. The problem is that improving office design invariably involves spending money – often quite a lot of it.
So how should HR sell these benefits to the board? “You have to be able to put your case in very strong business terms,” says Nick Cook, managing director of Haywards.
Cook adds that good office design that meets the needs of the workforce and improves profitability creates a positive wealth cycle. “You can then divert some of those additional profits back into things like training, coaching, providing better systems and so on.”
To achieve this, Cook stresses that it is crucial to plan, assess and validate any refurbishment fully. Simply going for the smallest, cheapest space will only get you so far. “A lot of people cut their second most expensive cost – real estate,” he says. “They go open plan, do more hot-desking and let some people work from home. This might give you an instant profit, but it won’t give you sustainable results.”
That said, open-plan working achieves great success for some organisations.
When the Treasury underwent a £141m refurbishment a few years ago, one of the main drivers was to improve workforce communications. Previously, there had been a labyrinth of corridors and small, cellular rooms. The refurbishment removed more than seven-and-a-half miles of internal walls, and almost everywhere went open plan. The result was 23% more office space, a rapid and significant drop in internal e-mail traffic, and an increase in face-to-face communication.
Increasing internal communication was also a key motivator for Denise Collis, group HR director at venture capital and private equity company 3i, when it decided to move to new headquarters in March this year.
“We are a knowledge-based business and needed a physical environment that reinforced that,” she says. “Our new building does that and was an opportunity to get really good connectivity in the business by having everybody on three floors.
“Putting people together breaks down barriers, particularly between functional departments,” she explains.
Collis says there is a much stronger sense of workforce energy in the new building, whereas the old building sapped energy. The new building also won an award from the BCO.
Samantha Crothers, HR director at media company Smoothe, says that workforce morale and attitude improved noticeably after the firm moved offices and changed desk layout in July this year.
“People seem happier at work and we’re almost like a different company,” she says. “Before, everyone was set up in rows and no-one was communicating well. They are talking a lot more now.”
Get it wrong, however, and it could adversely affect your staff retention rates.
A report this year by Wates Interiors found that 30% of staff dislike their working environment, and many are so depressed by the architecture of their offices that they would leave their jobs if offered a role in a nicer environment.
This does not surprise Cook. “If people don’t like coming to work because the space is hot, noisy, untidy and a stressed environment, it can affect their creativity and willingness to come to, and stay at, work,” he says.
When Hayward was asked to overhaul the offices of a 300-strong market research company recently, he interviewed those people leaving the company to find out why. “We found that a very large proportion (60%) were leaving because they hated their workplace environment,” he says.
There were muggings outside the building, it was hard to access and, once inside, it wasn’t a very pleasant environment. As a result, the company had an attrition rate of 19% – 7% above that of its main competitor.
Hayward used various software tools to assess the cost to the company of this attrition rate, plus other costs, such as real estate fees and facilities management. Then, after consulting with team leaders, it came up with the design plan.
The result was a drop in staff attrition to 14%, a reduction of real estate costs by 32%, reduction of facilities costs by 12%, and a net profit increase of 50%. Staff morale also increased and the organisation recruited 10% more people, despite using less office space overall.
With results like these, it might be tempting to call in the removal men. But before you do, consider how your new environment will fit around what your organisation does, and be sure to put retention rates above rental costs on your list of priorities.
Build a better work environment
A report by the British Council for Offices and the Commission for Architecture and the Built Environment claims there is a distinct link between poor workplace design, lower business performance and a higher level of stress experienced by employees. There were differences in productivity of 25% reported between comfortable and uncomfortable employees, due to basics such as air quality, temperature, overall comfort, noise and lighting.
Good lighting design and adequate daylight have been linked to a 15% reduction in absenteeism, and increases of between 2.8% and 20% in productivity.
The report advises employers to focus on three key areas when considering their work environment:
Health and comfort – providing for the health and comfort of occupants.
Alignment with process – effective alignment of workplace with work practice and process.
Internal expression – communication of messages to employees about corporate values and how the business values the workforce.
Case study: Roche
Staff at healthcare company Roche used to work in 37 buildings across four main sites. Its new building houses all the staff.
With its move, Roche wanted to bring its workforce together, revolutionise working practices and encourage team interaction. And it has worked, according to Roche’s HR manager, Sarah Ridout.
“There is a lot more team interaction now, with people making more informal contact, more frequently. It has definitely enhanced teamworking,” she says.
So much so, that the building won the British Council for Offices ‘Best of the Best’ award, and the National Corporate Workplace Award in 2006.
The new building is designed around a covered ‘street’ that acts as a focal point. It contains a restaurant, café, health and fitness centre, and even a library. The offices are almost fully open plan, with quiet meeting rooms for more private conversations.
Ridout says it was important to have a building that encouraged staff to work more flexibly. For example, an on-site gym enables staff to choose when they wish to exercise. “We are now measuring output, not hours,” says Ridout. “But you have to have a building that supports that way of working.”
The HR team has just distributed a survey to find out what staff think of the building, but Ridout says the results are already apparent.
“It has definitely had a positive effect on recruitment as, without exception, people who come here say the building is fabulous.”