Moscow Workplace Strategies and Office Space Standards
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1 June 2013 CORPORATE SOLUTIONS RESEARCH Moscow Workplace Strategies and Office Space Standards Survey Results
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3 Introduction We are pleased to present Jones Lang LaSalle s first report on workplace trends in Moscow. As part of our commitment to stay on top of the latest best practice in corporate real estate, Jones Lang LaSalle has carried out a study on practices, and attitudes towards workplace strategy and office space standards across the principal business sectors in Moscow. The survey addresses a new direction for corporates based in Russia and identifies companies that already have a modern workplace strategy in place and those that are thinking about implementing one in the near future. The survey was based on face-to-face meetings and a questionnaire which was focused on development and application of the workplace strategy, workplace settings (office lay-out, interior design), technology and work style of employees. We are most grateful to the respondents to this survey who occupy over 11% of total Class A space in Moscow (approximately 300,000 sq m) and represent 7 business sectors. Several 20 international and domestic companies participated. Their input has helped to provide a picture of what corporates think about their current working space and gave a useful insight into areas that occupiers want to change in the future. Half of the responses came from companies employing less than 1,500 employees, while the other half was comprised of corporates employing between 1,500 and 3,000 employees. In terms of size of office premises, 6 corporates occupy more than 25,000 sq m, 4 have offices in the range 10,000 to 20,000 sq m, while the remaining responses came from companies with office premises between 2,500 and 10,000 sq m range. The research was conducted in May and June
4 What is a modern workplace strategy? As a first step to understanding modern workplace strategies it is important to recognize that the way in which the work process is taking place has evolved dramatically over the last three decades. Many organizations find themselves using offices with the same old design and build-out as they used in the last century, characterized by a certain focus on individual work, in many cases, represented by rooms in the form of cubicles or individual offices. However, the world is changing quickly driven primarily by globalization and rapid advances in technology. More and more companies and employees realize that the final work product is a result of collective team effort. Workspace should be designed to reflect this transition by providing more areas for teams of varying sizes to gather and work. In many cases, an increased percentage of collaborative space is needed to support the evolving approach to work. Moreover, for several business sectors the physical presence in the office is not significant anymore as many employees are either working on-site at client office, working from home, or on the move. All these factors are stimulating companies to take a flexible approach and to be agile while responding to current and future workplace trends. The role of property is becoming ever more strategic and important in supporting business requirements with metrics shifting from pure space savings to driving innovation, sustainability and knowledge based working. An effective workplace strategy must both align with the business and support the new generation of employees. A modern workplace strategy aims at developing and delivering tailored and innovative strategies that optimize real estate assets, reduce operating costs, attract and engage company s workforce, improve employee s productivity and satisfaction. Given that cost savings is one of the primary driver of workplace programs, organizations need to leverage lease events as opportunities to implement workplace programs. By proactively monitoring upcoming lease activity, organizations can better plan for and manage the changes. The benefits of a modern workplace strategy: Increases space efficiency Increases productivity and performance through appropriate space, technology and occupancy planning Reduces real estate costs Improves recruitment and retention of staff through an enhanced workplace that provides flexibility and mobility Enhances the brand and culture of the company Increases organizational effectiveness 3
5 Summary of findings All of the respondents indicated that their real estate strategy includes a workplace strategy; 70% percent mentioned that a formal strategy is already in place and the remaining 30% percent are in the process of implementing one in the next 12 months. Half of the companies that responded cited that their workplace strategy has been developed within the last three to four years. 90% of all respondents indicated that one of the key pillars of their workplace strategy is to utilize a majority of workstations in open space with some individual/shared closed offices. Two-thirds of the respondents use an Electronic Document Flow system. Depending on the business unit the desk-sharing ratio will vary from 1.2 to 1.5 employees per desk. More than half cited that when planning the lay-out of their new office, the number of meeting rooms increased significantly. Change management programs were conducted by 65% of all respondents in implementing their current workplace strategy. The majority view the workplace strategy as an important and powerful tool that drives employees productivity. Respondents noted that employee satisfaction with the approach to workplace is typically measured annually through annual global satisfaction surveys. Most companies regard sustainability as an important element of their overall real estate and workplace strategy. 85% of the foreign companies confirmed that their current workplace program in Moscow is in line with company s global workplace strategy guidelines. Desk-sharing is implemented by 6 out of 20 respondents. Flexible hours are allowed by 45% of respondents, while 35% of corporates are sometimes allowing working from home. 9% 4
6 Analysis of main findings Question 1: Which statement best describes your company s workplace strategy in Moscow? We see workplace transformation gaining relevance and momentum in Moscow. While some organizations are leading the industry by developing workplace programs that will allow them to gain cost efficiencies and be an employer of choice, there are still organizations that are proceeding cautiously. During our survey period largest international and Russian companies from seven business industries were interviewed. All companies indicated that they either have a workplace strategy in place or are in the process of implementing one in the next 12 months. The most common strategy used by the companies in our sample is the open-space lay-out combined with some individual offices for executive staff level and some shared offices for administrative functions (IT, Accountancy, HR, Legal). Only two companies cited that all their workstations are located in open-space lay-out. When asked if companies are thinking about headcount growth, 80% of interviewees confirmed that they have planned to allow an increase in headcount within their current premises. Question 2: How many individual and shared offices do you have in the main office site? Majority of respondents confirmed that individual offices are assigned for executive level and department heads only. The sizes of these offices vary from a minimum of 9 sq m to a maximum of 30 sq m per office. Shared offices are usually assigned to IT, Accountancy, HR, Legal and other functions that for regulatory and compliance reasons require separate rooms. Four to eight people was the most common answer for the number of people that share an office room. Question 3: How many individual workstations do you have in the main office site? All our respondents answered that the vast majority of their staff have their individual workstations set in an open-space layout. For individual workstations majority of corporates mentioned two standard desk sizes generally used: 140cm x 80cm and 160cm x 80cm. The smallest desk size of 125cm x 80cm was indicated by two companies. An international consulting firm says: Employees like to have their own space, even if they don t use it. This is a cultural thing very hard to change. Companies from the banking and oil & gas sectors that were analyzed are the most generous in terms of individual workspace allocated. Question 4: Is desk-sharing implemented in your company? How many unassigned workstations do you have in the main office site? The desk-sharing policy is implemented by some specific departments in 6 out of 20 companies. Our survey indicated that out of all business sectors analyzed, it is mainly international consulting & audit and manufacturing corporates that have a considerable amount of workstations that are unassigned. In some companies these workstations may be booked electronically and employees are also provided with individual lockers. Depending on the business unit the desk-sharing ratio will vary from 1.2 to 1.5 employees per desk. Two banks interviewed indicated that the hot-desking system is used mainly by their back-office personal. Unassigned workstations exist for the call center employees that work in several shifts. Two international pharmaceutical companies also confirmed that they use desk-sharing for their sales field staff. 5
7 Question 5: How many meeting rooms do you have in the main office site? The majority of companies answered that their meeting rooms are located throughout the space and are managed centrally. Three companies indicated additionally, that a dedicated area (separate floor) is assigned for meeting rooms only. Usually, all the meeting rooms are located in the main office site. Size of the room will vary from 6 to 11 sq m for a small room to 60 sq m for a large one. Majority of client meeting rooms are equipped with a phone, network connection, whiteboard, projector, etc. Several companies mentioned that specific meeting rooms can be transformed to larger ones if needed. Almost every company confirmed the existence of at least one conference room with total capacity varying from 50 to 200 people. Question 6: What types of team spaces do you have in the main office site? Quiet rooms, concentration rooms, round tables in workplace clusters, management reserve rooms, green brainstorming areas were mentioned as typical team spaces and alternative work-settings. Question 7: What additional types of employee-friendly / work-life balance space do you have in the main office site (within your company space)? All organizations confirmed the existence of several amenities located within their office space. Gyms, showers, kitchens, cafes, balconies and break-out areas were amongst those most popular. More unusual work-life balance amenities like yoga rooms, massage arm-chairs and play-stations rooms were also found in 3 organizations. Question 8: Does the company allow and encourage employees to use flexible working hours / home working? When asked if flexible working hours are allowed, the majority of respondents (85%) indicated that there is no formal policy that would specify this. The employee work schedule is decided on a case-by-case basis by the department head. 9 out of 20 companies confirmed that they allow their employees to have flexible working schedule as long as the total amount of hours per day is not less than 8-hours. Only one company mentioned that there is a strict policy of not allowing flexible hours. Home working was confirmed by 7 out of 20 companies interviewed, but this is rather allowed than encouraged. One manufacturing corporate cited: Not more than 10% of our staff is working from home. On average people are working from home not more than one day per week. Question 9: Are employees using desktop or laptop computers / other mobile devices provided by the company? Majority of companies suggested that depending on the nature of the work performed and the level of travel, employees are given work laptops. Some companies mentioned that blackberries and ipads are assigned depending on the corporate grade of employees. One corporate concluded: The space where you sit 8-hours a day will influence your behavior, because we know that - we thought about several work/life balance amenities. 6
8 Question 10: Has your company implemented Electronic Document Flow? If not, how do you store documents? The Electronic Document Flow enables companies to manage and store documents. Two-thirds of the respondents indicated that they have an Electronic Document Flow system in place. The existence of an in-house archive room was confirmed by some occupiers, banks in particular. All companies using this system have on-site server with an off-site back-up continuously updated. Question 11: Do you measure employee workplace satisfaction? Only 40% of respondents mentioned that employee workplace questionnaires are done on a regular basis (annually or bi-annually). Workplace satisfaction surveys are more commonly performed as part of the global employee satisfaction survey. Several companies said that they are currently in the process of implementing programs that would allow measuring the employee workplace satisfaction. By creating heightened awareness of the relationship between strategic business objectives and workplace change, executives will minimize workplace disruptions and more importantly, accelerate the rate of change in the organization. Change management programs were conducted by 65% of all respondents. They also agreed that employee trainings were an essential component to their workplace program. A typical training included presentations with the new office design lay-out, information on the move date, etc. Some interviewees mentioned also that specific attention was paid to the transition to open-space versus individual rooms, as many of the staff were not emotionally ready to accept the new without walls offices. Nevertheless, all respondents agreed on the benefits of the open-space lay-out, with a pharmaceutical company mentioning: The open-space lay-out has improved the communication between the teams, something that was on top of the agenda of our executives. Question 12: Do or did you have a formalized change management program in place to inform and educate employees on the company s workplace strategy? Change management is a key element in any workplace transformation, and organizations that proactively manage workplace change are better positioned to support rapid change often required from the business. 7
9 Question 13: What challenges, if any, has your company faced in implementing its workplace strategy in Moscow? Initial employee resistance was something that half of the companies faced with one international media/advertising company citing: In the first couple of weeks after we moved to the open-space lay-out the administrative department was receiving daily complaints on different matters. After 3 months these settled down. We had several employees trying to create plant walls around their working seats as another interviewee puts it. A company mentioned: Even inside our company there were different work cultures, as different departments sit in different offices. Integrating all divisions in one place is efficient but with no doubt not easy to accept for some employees. We know it will take some time for people to get used to the new office. Question 14: What are the key findings / observations / progress that your company has made in relation to implementing its workplace strategy? An international consulting company cited: We set our workplace strategy before the crisis, and therefore were very generous (in terms of space). If we were to do it once again, we would be more cautious. An oil & gas corporate mentioned: If we had to do it again, we would do it the same way. Every workplace program is a learning journey and we learnt a lot from ours. Today most important for me is to know that our staff is satisfied with their working place. A firm added: The most successful workplace journey is the one that really has the support from the very top level. Another interviewee added: In the past we had several offices in Moscow with departments sitting in different offices. The move with the new workplace program integrated all business functions and economized the time some staff used to spend on driving form one office to another. 9% 8
10 Question 15: Is sustainability important to your company? The implementation of a workplace strategy creates an opportunity for companies to improve their sustainability programs. Two-thirds of respondents confirmed the existence of specific recycling initiatives for paper (follow-me printing). Green corners (plants, exotic trees) were present in the majority of offices that were visited. The majority of companies stated that given the choice, they prefer a green building and that it is an important factor in choosing a new office. Nevertheless, when looking at prospective new office premises there are not so many existing buildings that comply with these standards in Moscow. Currently, the share of green buildings is less than 2.5% from total quality office stock. Conclusions Today s workplace can no longer be defined by a one size fits all solution. What works for one company, will not work for 9% another one. Each strategy is and should be different and would be very much influenced by each organization core values. Workplace is not only about space, but about people as well it is the physical expression of corporate culture. Executed correctly, workplace strategy can be an effective leader of change and can drive employee motivation and productivity. Workplace strategies are never really complete. Like all good business strategies, workplace strategies evolve constantly and require monitoring and ongoing refinement. As the business changes, so should the workplace. 9
11 Business Contacts Valentin Stobetsky Executive Board Member Regional Director Head of Office Group Kate McMurtrie National Director Head of International Client Services Corporate Solutions Group Alexey Efimov National Director Head of Corporate Solutions Group Research Contacts Tim Millard Executive Board Member Regional Director Head of Advisory Group Liliana Stoianova Head of Office and Occupier Research 9%
12 Jones Lang LaSalle Moscow , Russia 2 Letnikovskaya St., Bldg. 1 Phone: Fax: joneslanglasalle.ru 9% Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 242 million square meters and completed $63 billion in sales, acquisitions and finance transactions in Its investment management business, LaSalle Investment Management, has $47.7 billion of real estate assets under management. In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Aktau. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg.
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