What is served for breakfast?*

Transcription

1 What is served for breakfast?* An empirical investigation of organizational culture and corporate real estate strategies Ilir Nase and Monique Arkesteijn TU Delft, Faculty of Architecture Department of Management in the Built Environment *The title is based on the quote Culture eats strategy for breakfast

2 Scope Knowledge gap: culture and CRE strategy Business strategy? This research: - Provides empirical evidence about organizational culture and CRE strategy interrelationships - Reports cultural variations for industry sector firm size and CRE department size Culture CRE Strategy Organizational Culture CRE Strategy

3 Organizational culture Competing Values Framework Based on two dimensions of organization effectiveness Quadrants represent four organizational culture types Cultures are competing at the diagonal after Cameron and Quinn (1999, 2006)

4 Competing Values Framework Detailed Flexibility and Discretion Internal Focus and Integration CLAN Corporate commitment to employees Employee-centric; mentoring, involvement & empowerment Extended family, nurturing Participation and teamwork Rewards based on teams not individuals Loyalty and consensus Informality Job rotation HIERARCHY Formal rules and policies Highly structured Control & centralised power Coordination Procedures govern employee behaviour Efficiency-driven Long-term stability ADHOCRACY Dynamic and Rapidly changing Entrepreneurial and risk-taking Innovation and creativity Temporary structure Power is not centralised, it flows from individual to individual or team to team Sometimes exist in large organisations that have dominant culture of a different type MARKET Minimising external transaction costs Results-oriented Emphasis on winning Success is defined in terms of market share and penetration Gets job done Competitive advantage Productivity and profitability Tough and demanding leaders External Focus and Differentiation Stability and Control

5 CRE Strategies Revenues and profitability growth for wealth maximization Convenient locations Pleasant workplaces Social/informal spaces Enhancing Employee Satisfaction and Wellbeing Tenure Short term leasing Flexible workspaces Multiple use Enabling Flexibility Attractive locations Symbolic buildings Brand enhancing workplace Promoting Marketing, Sales and Brand Suitable locations Risk management Obtain valuations Increasing Value of Real Estate Assets Increasing Sustainability Low energy usage Public transport Enhancing Employee Innovation and Creativity Knowledge work settings Collaborative spaces Participative design Increasing Employee Efficiency and Productivity Convenient locations Efficient layouts Productive environments Reducing Real Estate Costs Workplace efficiency Workplace standards Routine maintenance Acquisition Costs after Nourse and Roulac (1993), Gibler and Lindholm (2012)

6 Revenues & Profitability Enhancing Employee Satisfaction and Wellbeing Increasing Value of Real Estate Assets Promoting Marketing, Sales and Brand Strategies for revenue growth Enabling Flexibility Increasing Sustainability Enhancing Employee Innovation and Creativity Strategies for profitability growth Increasing Employee Efficiency and Productivity Reducing Real Estate Costs

7 Methodology Survey of corporate real estate managers, all members of CoreNet Global deployed on 21 April 2016 and ended on 08 June 2016 completed by 236 respondents response rate of 3% final set of 231 responses for the empirical analysis. Two main pillars CRE Strategy after 2010 CoreNet Global survey (Gibler & Lindholm 2012) Organizational Culture after the Competing Values Framework; 6 components Other general information industry sector firm size and CRE department size national culture

8 Organizational culture assessment 1

9 Organizational culture assessment 2

10 CRE strategy ranking

11 General findings: CRE strategy Very little change in priority from 2010* Top priority Reducing Real Estate Costs CRE Strategy 2016 Rank 2010 Rank Change Reducing real estate related costs 1 1 = Increasing employee efficiency and productivity 2 2 = Enabling flexibility 3 3 = Enhancing employee satisfaction & well-being Encouraging & supporting employee innovation & creativity Increasing Value of Real Estate Assets Least preferred Promoting marketing, sales and organizational brand Supporting environmental sustainability Increasing the value of the organization s real estate assets 8 8 = *Based on geometric mean comparison

12 CRE strategy ranking by culture grouping

13 Organizational culture & CRE strategy Employee centric Clan Productivity Satisfaction Clear division on the dimension that differentiates effectiveness criteria of flexibility & discretion from stability & control (vertical axis) Adhocracy Cost effective Hierarchy Creativity RE Costs Clan and Adhocracy cultures prioritize employee-centric strategies In the Hierarchy and Market cultures Reducing real estate costs is the single most influential strategy Market

14 Organizational culture & CRE strategy Competing value pairs Adhocracy-Hierarchy pair: - Seven rank difference for Employee creativity - Five rank difference for Reducing real estate costs Adhocracy Top: Creativity/flexibility Bottom: Real estate Hierarchy Top: RE costs Bottom: Creativity Clan-Market pair: -Six rank difference for Reducing real estate costs - Three rank difference for Employee creativity Clan Top: Employees Bottom: Real estate Market Top: RE costs Bottom: RE value

15 Organizational culture & Industry sector Banking & Finance Business consulting Technology, media & telecommunications 33% Hierarchy 8.5% 23% Hierarchy Clan 23% Market 26% Adhocracy Manufacturing Construction 2.5% Hierarchy Energy & Utilities 57% 0% Hierarchy Adhocracy

16 Organizational culture & Size Organizations with more than 10,000 employees CRE departments of 71 or more employees 32% 24.5% Hierarchy Market 35% 38% Hierarchy Market 14.5% Clan 5% Adhocracy 3% Clan 0% Adhocracy Large organizations are associated with Market and Hierarchy cultures. Large CRE departments associate themselves with the Hierarchy and Market cultures.

17 CRE Strategy Categorization 1 Correlations: Kendall s τ statistics Kaiser-Meyer-Olkin (KMO) = Bartlett s sphericity test values: χ 2 = , df = 28, p<0.001 good sampling adequacy for the number of variables being used existence of relationships between the variable being analysed

18 CRE Strategy Categorization 2 Principal component Analysis (PCA) Extraction: Varimax w/ Kaizer normalization

19 CRE Strategy Categorization 3 Two groupings from factor analysis: 1) Real estate related strategies 2) Image and employee centred strategies Corporate image & brand Employee centred Flexibility Further subdivision of Group 2 based on priority ranking of respondents and not indicated by the factor analysis

20 Acknowledgements CoreNet Global members for completing the survey Sonali CoreNet Global for administering the survey Karan Gupta for excellent research assistance White paper

21 Questions