For the first time in more than a generation, businesses are contemplating and, in many cases, implementing, dramatic changes in their office design and space utilization. In some instances, these changes were instigated by permanent paradigm shifts in their business as a result of the Great Recession of 2008. For others, the changes reflect a desire to stay current and competitive, and otherwise ensure that their space supports the way their employees actually work today. Regardless of the motivations, more and more companies are looking to shake things up. However, with change often comes fear, confusion and stress for the project leaders and employees.
Perhaps the greatest evidence of the dramatic change in space utilization can be seen in the region’s largest law firms. This legal industry was uniquely impacted by the Great Recession and many firms have concluded that resulting changes were not merely a temporary disruption, but rather a permanent paradigm shift. In the past five years, many of the largest firms have either moved locations (Cozen, Reed Smith, Marshall Dennehey) or completely renovated and restacked their existing space (Ballard, Drinker, Pepper, Saul Ewing). Because moving a large, high end law firm can cost upwards of $130/sf, and renovating and restacking an existing firm can take 18 months or more and likewise require considerable capital outlay, these transactions are not undertaken lightly by firms. To justify the expense and inconvenience, the firms first had to conclude that their space didn’t work for them. In the case of law firms, the leverage model of the 1980s and 90s has disappeared. Whereas older space was configured with two or three associate offices for every partner office, many firms today have a ratio closer to 1:1. Likewise, the secretarial to attorney ratios have gone from 1:2 to 1:4 or more. The way they interact with clients and practice law have also had an impact on space. Clients visit their lawyers less frequently and the multi-conference room closings of the 1980s and 1990s are now done by email. Libraries are a thing of the past and record storage has been reduced. In sum, most law firm space constructed more than 8-10 years ago no longer reflects reality and is inefficient. Whereas law firms used to aspire to a ratio of 750sf/attorney, many today are driving to a ratio of 650sf/attorney. That’s why most large law firms whose leases have expired in the past three years have shed material amounts of space when they renewed their lease or shrunk significantly upon moving.
The Great Recession and cost savings are not the sole drivers for change. Companies are looking to the West Coast and even Europe to see what dynamic, cutting edge businesses are doing. Companies see that the young workers of today and the future don’t want the same environment their mothers and fathers aspired to. Sustainability, “live, work, play” environments, worker collaboration and hoteling are all driving dramatic change in how we lay out our work space.
With all this change, it is not surprising that the executives tasked with their next lease transaction are confused and stressed. Many want to know how they “get from here to there” with a workplace change given their own unique needs and requirements. Real estate decisions are long term commitments and necessarily require long term forecasting as to headcount, business cycles and how the company will operate in the future. In today’s world, where even forecasting the next year or fiscal quarter can be difficult, 10 years seems like a lifetime. Further complicating matters is the fact that most people resist change and prefer the status quo. As Woodrow Wilson once said “If you want to make enemies, try to change something.” As a result, executives worry about the impact on employee morale, retention and hiring that will come from significant change. Going from an office intensive environment with lots of personal, private space to a very open, collaborative environment with little privacy is a major change. Where some people see challenges, others find opportunities. Thus, an entirely new profession of “change managers” has sprung up in recent years. These consultants work with companies to help ease the transition (and trauma) from one corporate work environment to another through internal messaging, conditioning, and salesmanship.
How do companies get from where they are today to where they need or want to be in the future with regard to their space? Following what other firms have done simply because it appears to be cutting edge can be disastrous if their business doesn’t work the way yours does. Thus, while Glaxo Smith Kline’s new European inspired workplace at the Navy Yard resulted in a breathtaking density of less than 140sf/employee with no private offices, that won’t necessarily work for another company. Companies need to involve their stakeholders in a candid dialogue to determine how they work, what they want to be as a company and what they want their space to do. For example, one company that is about to begin this journey stated that they wanted their space to be reflective of their “corporate mission and values”. When articulating these values, they spoke of collaboration and openness. Yet, when looking at their existing space they saw lots of closed offices with little face to face interaction. In sum, the space did not promote the values they felt were critical for their company’s success.
In allocating space today, many companies are looking at the actual work an employee does as opposed to how senior the employee is. Thus, a senior employee who is rarely in the office or rarely makes confidential calls or takes private meetings may not need a private office; however, a more junior human resources employee may require a private office due to the sensitive nature of HR duties and responsibilities. Again, these types of decisions require that companies completely reevaluate and challenge the status quo. Feelings will be hurt and change may not come easily. Senior employees who grew up in a world where the size of his office was reflective of his status and accomplishment will have a hard time dealing with being in a workstation or even a non dedicated workspace.
Change is stressful and the path to change is not always clear. The good news is that there are professionals who have been down this road and can help. In order to be successful, you must involve key stakeholders in the conversation early on and work together to clearly articulate the goals and objectives for your business. Once you can articulate these, the space plan will follow naturally in support of these objectives. Learn from, but don’t necessarily be bound by, what other companies have done or are doing. Finally, understand that change can be scary especially if it is not explained. As a result, engage professionals to help employees understand, prepare for and ultimately embrace the change. The future is coming and, in many cases, it doesn’t look like the present when it comes to work space. If your space does not support your current business or the business you aspire to have, it will need to change. By carefully managing the change, you will not only transform your business, but you will also have fun in the process.
For more information contact Glenn Blumenfeld