Cutting Costs Through a New Work Mode

Workplace design plays a pivotal role in overall business performance by supporting the new work modes of a knowledge economy, according to a nationwide study of office workers by Gensler, a global design and consulting firm.

The Gensler 2008 U.S. Workplace Survey reveals that top-performing companies are embracing a fundamental restructuring of work through workplace design that places as much emphasis on collaboration, learning, and socialization as on individual "heads-down" work. Companies providing workplaces that are more effective for knowledge work see higher levels of employee engagement, brand equity, and profit, with profit growth up to 14 percentage points greater than those with less effective work environments.

Leveraging Workplace Design to Meet Economic Challenge

"As cost control becomes an even greater business priority over the next several years, office space reductions will be a common cost-cutting strategy," says Diane Hoskins, Executive Director at Gensler. "However, companies risk creating inefficiencies if they simply shrink space and continue with the same workplace paradigm. Our research indicates that if organizations provide work settings that support today's dynamic ways of working, they can reduce real estate and improve their company's performance at the same time--they can do more with less."

The Gensler survey demonstrates that improving business performance via workplace improvements depends on the quality of space functionality and effectiveness, not the quantity of space. Specifically, designing a workplace to support the right proportion of four knowledge work modes--focus, collaboration, learning, and socializing--is a key differentiator between top-performing companies and average companies.

Top-performing companies are those identified by survey respondents as the most profitable, admired, and influential in their industries.

Gensler's research reveals that 36% of the average office is ineffective or ill-suited for the activities of today's knowledge workforce. In fact, employees believe that they could increase the quality and quantity of their work by an average of 25% by improving workplace areas to better support all four modes of work.

The Knowledge Workplace

Top-performing companies consider all work modes more important than average companies, spend more time in those work modes, and provide workplaces that support those modes more effectively, notes Gensler. For example, people at top-ranked companies consider collaboration twice as critical to job success as average companies (43% v. 21%) and spend 23% more time collaborating than average companies (36% v. 29%). Socializing was almost three times as critical to employees at top-performing companies who spend 16% more time in that work mode (20% v. 7%).

"The value of focus work is commonly understood, but there's clearly a competitive advantage for companies who see how collaborating, socializing, and learning add value to employee and business performance. For example, socializing plays a critical role in fostering social networks, the infrastructure that moves knowledge through an organization to create innovation," said Hoskins.

The ROI of Workplace Design

Gensler's survey not only measured what people do in the office, but also looked at where they do it in the office and how effectively their work spaces support them. Researchers created a workplace efficiency rating for all survey respondents.

According to this measure, top companies design workplaces that are 80% effective, while average companies only achieve 64% effectiveness. More specifically, 86% of top-performing companies rank their spaces effective for collaboration versus 72% at average companies and up to 14 percentage points higher for focus, learning, and socializing.

The survey also found that companies with higher-performing workplaces have greater revenue and profit growth than companies with low to moderate workplace effectiveness. At the high end of workplace effectiveness (91%-100%), three-year average profit growth is 28.2%. At the low end of workplace effectiveness (0%-40%), three-year average profit growth is 14.4%, which is 14 percentage points lower.

With research by the Gallup Organization pointing to higher performance, profitability, and tenure from more engaged employees, Gensler's survey maps two measures of employee engagement—workplace and job satisfaction—to understand how the workplace contributes to organizational success. Fully 82% of top company respondents report being satisfied/highly satisfied with their workplace; only 43% of average companies fall in the same range. Respondents who rate their workplaces more effective have higher levels of job satisfaction, with those in the highly effective range (91-100%) reporting three times the job satisfaction as those in the 0-40% effective range.

Higher workplace effectiveness is a strong factor in attraction and retention of talented people; ratings of a company's attraction/retention capability are almost three times higher when workplace effectiveness rises above 80%. "Businesses are viewing potential and existing talent as internal customers, and the workplace is a key part of the employment package that brings them in and keeps them working at their best for a company," says Hoskins.