The workplace is rapidly evolving to accommodate hybrid and distributed working. Rather than focusing purely on achieving operational goals, there’s a shift to prioritizing employee experience and effectiveness. Workplace strategist and thought leader Kevin Sauer discusses how organizations can balance the two.
In the post-pandemic era, the old rules and metrics no longer apply. We’re optimizing physical spaces for human performance, and a new metric is emerging: Return-On-Workplace (ROW), the new return on investment (ROI) for achieving organizational and employee-centric objectives.
So, how do we evaluate the ROI on physical spaces and enhance human effectiveness and experience? We’ll need a new workplace strategy that leverages workplace analytics and technology to transform and quantify the impact in a way that benefits both the business and employees. Let’s begin by understanding the landscape.
The evolving landscape of workplace strategy: Hybrid work models
The pandemic hastened the hybrid model, but office attendance was already trailing pre-pandemic. I don’t see any companies coming even close to where they were before Covid. This transition is refocusing workplace strategists’ and technologists’ attention less on the space and more on work.
- How is work happening today?
- How have employee habits changed?
- What’s the best way to get work done?
- How to accommodate product/business cycles?
- How is the labor market changing?
We’re starting to think about space and technology as tools and work as the core function. There are things that help enable people to work more effectively, and then you need to consider health, safety, delight factors, attraction, retention, and human connection.
Workplace analytics: Transforming the approach to workplace design and utilization
Workplace strategies have evolved, becoming much more evidence-based in terms of workplace analytics and incorporating the data science behind it.
Now, we have different technologies to capture occupancy, utilization, and activity analysis, ranging from traditional manual observation studies, where you collect space utilization an employee activity happening in the workplace, to occupancy sensors to gather utilization in two dimensions, to Wi-Fi data, where you can start tracking how people move in three dimensions, horizontally and vertically inside the building and outside on a campus.
The question is: how do you humanize the data and understand what it’s telling you so that you can evolve it from a hypothesis into a solution and test it out before implementing it?
New AI tools allow you to bring in lots of different data, search for patterns, and test hypotheses at scale. This was possible in the past, but most corporate real estate organizations didn’t have access to the right people and tools to collect, synthesize, and test workplace data in this way. They may have outsourced this work to an outside consultant, but few data scientists fully understand how to humanize workplace data.
Return-on-workplace: Key metrics organizations should consider
Corporate real estate organizations, who often reported up through Finance, calculated and allocated workspace based on definitive metrics like square feet per person and dollars per square foot to consistently assess their real estate portfolio.
Now, we’re seeing more workplace organizations move under HR/People Experience, so there’s a greater focus on talent and a shift to qualitative data, complemented by quantitative data.
- Are our employees effective?
- Are they coming together?
- Are they satisfied?
- Are they engaged?
- Are they staying with the company?
Understanding how, when, and where employees work alongside the experience of working is a crucial step in understanding the value and purpose of the corporate office.
Many employees want to come into an office at certain times to perform different work activities. They have a desk at home, but they want to meet with their teammates to understand what’s happening in the company and to build connections—they want social spaces.
However, many pre-pandemic offices were designed with 70% individual space and only 30% collaborative space. Therefore, when employees return to the office, these collaborative spaces fill up quickly, effectively capping office capacity at less than half population supported pre-pandemic. We still need desks in the office, but desks are no longer the default workpoint for employees; closed-door rooms are the preferred workspace for both individual and collaborative activities. The office needs to be inverted to provide more collaborative and social spaces, and fewer desks.
After all, employees might have optimized their home environment with better connectivity, a personalized workspace, and necessary technology—so companies need to provide something new and different in the office.
Quantifying the impact of workplace design with workplace analytics
A workplace is a shared platform, making the measurement of whether we are satisfying employees or not key in determining the ROI of space.
Workplace analytics help you build hypotheses and test them. Looking at attendance and utilization data doesn’t tell you the sentiment of employees, so a qualitative and quantitative analysis is required. If you understand those inner workings, you can think about where to invest in space and technology and what elements are no longer needed.
For instance, several industry surveys have found that employees would like to be in the office more than they are today, but there are barriers to entry. If they show up to the office hoping to see their team and their team isn’t there, their expectations aren’t met, and they feel like they’ve wasted time commuting to the office.
Many young employees are coming in because it’s their first work experience and they want mentorship. They want to understand what it’s like to be in an office, how to work with their new team, how to find the right resources, and how to learn from others. However, all too often, their mentors and teammates are working from home. There is a significant opportunity for cross-mentorship but it requires both sides to commit. It’s much like a marriage; you need to find a common ground if it’s going to work.
Balancing ROI and Return-On-Commute
Some companies are starting to find that balance. One high-profile company built out what many would call an “opulent” workspace. Their focus was on their employees, who are responsible for innovation and cutting-edge technology, so they wanted the workplace to provide a variety of settings and environments that were truly unique, personalized and optimized for in-person engagement.
They were successful in creating an environment that supported work and created strong social cohesion. Their message was clear—we value our employees—and it was well received. Not only did they achieve a highly activated office during the day, but employees were even coming in on evenings and weekends to catch up with colleagues and build friendships.
The end result is that they are seeing much higher space utilization and employee engagement. Meanwhile, many other companies are still trying to force employees back to offices that no longer meet employee needs. They are also finding that employees are bringing their families into the office to showcase their workplace, and there is a palpable feeling of pride in their employer and their workspace.
Prioritizing employee experience while achieving operational goals
The basis of an effective and purpose-driven workplace is ensuring that the business strategy is aligned with both your talent strategy and your workplace strategy.
First, start with a discovery process to clearly understand business goals, drivers and leadership expectations. Then, compare/contrast this leadership view with that of managers and employees to determine the degree of organizational alignment. If everyone isn’t moving in the same direction, you’ve got a fundamental communication and/or culture problem that needs to be solved before you can think about what tools and processes are needed.
That’s where data integration becomes critical. Blending qualitative and quantitative data helps surface areas of alignment and misalignment which can be cascaded from leadership to managers to employees to gain agreement on where opportunities for improvement exist. At this point, you can begin experimenting to identify viable workplace solutions for large-scale deployment.
The future of workplace strategy, data analytics, and technology
The aviation industry has used digital twins to analyze extensive flight data to model and optimize aircraft performance for a number of years. They create virtual prototypes of aircraft and their systems, simulating various performance parameters using real-time flight data, weather conditions and more to learn how best to improve overall performance. This same technology can be leveraged to evaluate buildings, building systems, and workspace performance before proceeding with the final design and construction. After a building is constructed, the same digital twin can be used to monitor and improve building operations in real-time based on occupant behavior and experience, indoor and outdoor environmental conditions, and a host of other data-driven insights.
The time for the digital transformation of the workplace is nearly here. An incredible amount of data has been collected relating to human performance, space occupancy and utilization, and building performance. This data can be fed into a digital platform to model and test environments to reveal optimal solutions for future workplaces. However, this can no longer be a static system, it needs to learn and adapt to continually changing inputs so that each new building, and the furniture and components within it, are sufficiently flexible to support future activities and uses.
Workplace strategy too needs to evolve to encompass an even more comprehensive understanding and integration of people, place and technology. Our understanding of the diversity of people and work practices is increasing, the value, purpose, and proximity of workspaces are expanding, and technology is advancing faster than ever before. This requires a new breed of workplace expert, or more likely, a cohesive team of subject matter experts who help to improve business outcomes through the optimization of talent supported by physical and digital tools.
Staying ahead in the rapidly evolving landscape of workplace optimization through workplace analytics
In order to plot a course for the future of work and workplace, first you need to clearly understand what problems are you trying to solve and/or what hypotheses you wish to prove/disprove. This will help determine what data should be collected and what vehicles are available for collecting that data. The quantity of data is less important than the quality of data. As the saying goes, “garbage in, garbage out.” As data is collected the process of data analysis begins. Many of the observations and insights will be subject to interpretation which may require additional testing and validation. We are dealing with people which involves a lot of variables, so continued testing and validation will result in better outcomes.
Conclusion
Maximizing Return-on-Workplace is a balancing act between financial investment and employee experience and effectiveness. To stay ahead in the hybrid working era, we need to adopt data-driven strategies and leverage technology to create workplaces that cater to the needs of the organization and its workforce.
This will involve establishing new metrics and shifting from dollars and square feet per person to employee productivity and satisfaction. If you get the balance right, the workplace will represent a place where employees can meet their work and social needs, and companies can meet their financial objectives.
Check out our recent blog on hybrid workplace planning to dive deeper into what employees want from office space in 2024.
About the author
Kevin Sauer is a workplace strategist and thought leader with 20+ years of global experience in workplace strategy, corporate real estate, architecture, design, and workplace technology. His passion and expertise lie in partnering with diverse subject matter experts to uncover the relationships between culture, behavior, technology, organizational processes, and the creation and use of physical and digital environments—in particular places for work, innovation, and learning. Kevin’s journey has been marked by a passionate dedication to cultivating workplaces that are more than just physical spaces; they are the embodiment of culture, creativity, and productivity, designed to echo the values and aspirations of their users. He has developed high-performing workplace teams, created workplace strategy programs, and designed and built more than 100 projects in 30+ countries for Fortune 100 companies including: Microsoft, HP, GE, and Amazon, transforming business practices, creating workspaces, and improving the employee experience.
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