“How you choose to invest in the space, the people responsible for it and the solutions you seek from the supply chain can change overnight with one simple shift in focus. Reframe your focus to revenue per square foot, not cost per square foot. In doing so, unlock your hidden performance lever. CEOs ignore the economic potential of smarter workplaces at their peril”.
Polly Plunket-Checkemian, programme director of the Stoddart Review
The Stoddart review (www.stoddartreview.com) reveals that an effective workplace can improve business productivity by as much as 3.5%. Economist Duncan Weldon states that this could add up to £70 billion to the UK economy. But we are missing a trick!
We tackle workplace productivity by making the workplace more efficient, not the people. We think in cost per square foot, not revenue per square foot. The Stoddart review urges businesses and workplace industries to question their workplace strategies now and seize the opportunity to change how people work for the better. To focus on activity not area. Create the best environment, good lighting, acoustics, temperature, ventilation and use it intensively.
We have all done it haven’t we? Judged our assets on a cost per square area basis. Hey, maybe we even got to benchmark buildings on this basis. Which is ok, but it really loses an opportunity to drive utilisation and performance. In the public sector, revenue is probably not appropriate, but consider assessing buildings on units of activity per square unit of area. The potential is huge. Why is one asset delivering more services than another similar sized asset? Typically both assets will be fully let to providers but the hidden cost of underused space is not apparent. A change in focus would really expose assets we are sinking cash into but are not contributing to the delivery of the service plan. And the cost of this? Well with population growth and change in clinical models it may give rise to demand for a new asset. And that costs!!
And we can take it further. We know (or should know) what service each room can deliver. We know standard appointment times so we can create a model that will tell is what an asset is capable of delivering in terms of service output. Let’s call that the activity budget for the asset. If we can then track actual activity by room we can create a building account and look at variance analysis to drive performance. We can look at metrics of cost per client visit rather than cost per unit of area. When output is high and utilisation gap low we have reached a real value for money point. Imagine the potential of benchmarking assets across a system and really getting an understanding of productivity. We can use the data to link estate planning to service planning and reduce areas of non utilisation, drive productivity upwards and really demonstrate how the built environment can add value to delivery of organisational strategy.
But do we have the data? Good things are happening out there. Agility is an essential. The introduction of agile working practices is a good thing. But can we measure its impact? The public sector model is moving towards core spaces for anchor tenants with flexible spaces on licence or short term leases. This portfolio approach should allow peak and troughs of activity to be planned and managed in line with supply and demand. But do we actually understand the concept of supply and demand in granular units of activity? If we want assets to perform well notably in the community NHS with multi tenanted buildings we must foster collaboration to drive a high performing asset. We must have data, share data and use data. So we have to get the data.
Workplace technology can drive flexibility and collaboration. We cant keep using buildings the way we have been. The money has run out. By using technology that gathers quantifiable data we can develop better and more productive workplaces. The Internet of Things (IoT) offers the availability through analytics to intervene faster and smarter with results driven interventions. The ADP Research Institutes study shows that tech and workplace strategies need to be in step.
The strong message for the Review is with careful leadership consideration the tech enabled workplace can become the best workplace.
For the NHS, leasing space on an activity basis may offer a more commercial rental strategy…but that’s for another paper!
Note: The Stoddart Review was published to commemorate the work of Chris Stoddart, MCIOB, FBIFM and can be downloaded from www.stoddartreview.com