PERFORMANCE, PRODUCTIVITY, AND THE BOTTOM LINE

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1 PERFORMANCE, PRODUCTIVITY, AND THE BOTTOM LINE Does your workplace strategy support your business goals? WORKSMART SERIES An in-depth look at workplace productivity from the Welsh & Colliers Workplace Solutions Group

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3 Your Workplace has something to say. Are you listening? According to a Gensler workplace survey, 90% of leaders acknowledge that the workplace can enable or hinder productivity and culture. More organizations are discovering the importance that their workplace has on overall employee satisfaction and engagement but how does that translate into productivity, and, ultimately, profitability?

4 Engaged employees affect the bottom line Every company s goal, in addition to profitability, is to have happy, engaged employees. It s no secret that engaged employees are good for business but just how much does employee engagement affect the overall success of an organization? ENGAGED EMPLOYEES CREATE GREATER PROFITS THROUGH: 3X HIGHER CREATIVITY 31% MORE PRODUCTIVE 37% HIGHER SALES 3 TIMES HIGHER PROFIT MARGINS Source: Harvard Business Review Companies where the majority of employees are highly engaged experienced a 19.2% improvement in operating income, while companies where the majority of employees are disengaged saw their operating income worsen by 32.7%. Additionally, companies with highly engaged employees have almost 50% fewer accidents than disengaged workforces and 41% fewer quality defects and overall lower healthcare costs (Good.co). Staying future-focused Employee engagement and productivity extends beyond current team members to include future and potential employees. Today especially, more employees are choosing companies based on intangibles such as flexibility, connection, and integration with their lifestyle. By leveraging the workplace to promote brand and culture, companies can work to reduce this turnover rate, which is estimated to cost % of the base salary of each replaced employee (SHRM). A study by Leadership IQ shows that 46 percent of new hires quit or are fired within the first 18 months on the job, with 89% leaving due to lack of engagement and a poor fit with the company s culture.

5 Optimizing the workplace Top 4 Productivity Killers in the Workplace: DISTRACTION Noise and coworker interruptions disrupt the flow of creativity and innovation, which can reduce productivity. An effective workplace should support the development of more innovative and differentiated products and services that can be delivered to clients faster, and fit clients needs more effectively. In order to achieve this, companies must clearly understand what their clients need and expect from them, and then create an environment that enables employees to spend more time on the activities that create value for their business. To begin this process, companies need to identify: AIR QUALITY Poor air quality can decrease productivity by 3%. An average of $15 billion is lost by U.S. companies annually due to poor air quality What constitutes value in your organization? What does the ideal end result look like for your clients? What processes and behaviors are required to achieve those results? How can the workplace best support these processes and behaviors? LIGHTING Research shows productivity diminishes and employees also sleep worse when they are not exposed to enough natural lighting during the day. By beginning with this type of mindset, companies will be better equipped to find the right solutions for their workplace. Successful companies prioritize revenue per person over square footage and performance over presence. By leveraging the workplace, companies can improve performance, since the environment supports both the overall company goals and the way its employees achieve them. ACCESSIBILITY A lack of accessibility, both to office resources and supplies, and to other employees, can increase employee frustration, diminish morale, and restrict collaboration.

6 Don t get pigeon-holed Although overall perspectives need to be shifted when it comes to designing the workplace for productivity, this doesn t mean automatic adoption of specific trends that may not fit the way your company works best. Finding balance It s important not to focus on one certain type of workplace layout, but rather find the right balance for your company. One mistake that companies make is focusing on enhancing collaboration at the expense of concentrated work, which may decrease overall productivity. According to a study on environmental psychology by USC, the modern office isn t a one-size-fits all structure. Instead of focusing on one type of floor plan, such as cubicles or completely open floor plates, a popular layout includes clusters of intermixed individuals and collaborative spaces for spontaneous discussion and innovation. However, these spaces are only effective if they are being used. If employees aren t using these collaborative areas for meetings and discussions, then the unutilized or underutilized spaces end up costing companies more. Other ways to leverage the workplace to increase productivity may not be as easy to recognize as office layout, but they are still important. Take wellness, for example. How can organizations encourage actions and choices that lead to a healthier workforce, thus reducing healthcare costs and increasing engagement? Or, how can the color of the walls be used strategically to promote desired behaviors? Do employees have personal control over the temperature in their office? Are there different textures that can be used throughout the space to encourage sensory variability? These are just a few of the questions companies can address with their workspace, leading to increased productivity and employee engagement. The modern office isn t a one-size-fits all structure. What makes a productive office? Ample lighting Sound control Effective ergonomics Space optimization Task-specific work stations Flexible meeting space Collaborative and private spaces Integration of 3 Cs: Concentration, Collaboration, and Community

7 More than dollars and cents When it comes to optimizing the workplace, the old question of, How can we cut real estate costs? needs to be shifted. A new approach leads to new questions, such as, What environments do our employees need to be the most productive? The true value of the workplace is not in how it can be squeezed to minimize costs, but rather how it can be positioned to drive revenue. Focusing solely on costs can lead to missed opportunities for productivity and revenue improvement. $ Adding it all up Since companies pay office workers about 20 times more in salary and benefits than they pay in real estate, the focus should be on keeping employees engaged and productive, rather than cutting real estate expenditures. If a 10% savings in real estate costs results in a 10% loss in overall employee productivity, companies are actually losing two dollars for every ten cents they save. Source: US News

8 Learn more about Welsh and Colliers International news and current events: Subscribe to our blog on welshco.com Follow us @colliersmsp Connect with us on LinkedIn: Welsh & Colliers MSP Local Expertise. Global Reach. In partnership with Colliers International for brokerage and real estate management services, Welsh offers a fully integrated suite of real estate services to best address the ever-evolving needs of each unique client. EEO/AA Employer ARCHITECTURE BROKERAGE CONSTRUCTION FACILITY SERVICES PROJECT MANAGEMENT REAL ESTATE MANAGEMENT