Cushman & Wakefield- Sponsor of the Pulse Blog

How to move past functional obsolescence: five steps to empower your CRE organization in transformative times

May 9, 2023

From our Thought Leader Contributor, EY

This article is based on a podcast. To listen, click here or search for CoreNet Global’s “What’s Next?” podcast channel in your preferred podcast service.

Patrick Hoffman, Syneos Health; and Douglas Gottschalk, Ernst & Young LLP

As the corporate real estate (CRE) environment continues to adapt to the new ways of working, CRE leaders and their teams are confronted with a few pivotal questions:

  • How does the makeup of CRE organizations need to change to meet the new demands?
  • What can leaders do to anticipate and prepare for changes rather than just react to new developments?
  • How can leaders identify and implement behaviors that align best with their organizations’ strategic goals?

As Patrick Hoffman puts it: “We all went to sleep for two years in the corporate real estate world through the pandemic, and we woke up to functional obsolescence. Our legacy corporate real estate organizations and portfolios no longer aligned with the real organizational needs.”

Below are five points CRE organizations should consider as they evaluate their teams’ capability to strive in the new CRE reality.

  1. Look beyond outdated job descriptions and KPIs

The ability of CRE teams to pivot from standard or textbook facility management duties to actively supporting employees in their use of the workspace is a differentiator. In a hybrid environment, hospitality has become an important part of the day-to-day job of facility managers. There will be more people who need help connecting to the Wi-Fi, finding a spot for a private meeting or even knowing where to put their lunch when they come into the office. Small behavior changes are an opportunity for companies to demonstrate how much they value their employees. Facility management is still part of the job, but so are concierge services to ensure that those in the building can access the resources they need to do their jobs.

Similarly, the KPIs that are being used to measure productivity and service quality don’t necessarily consider the hospitality component that is now a job requirement. Organizations need to be able to measure if employees are having a good experience in the office and then tie that metric to interactions they have throughout the day.

  • See the workplace through the eyes of employees

Employees are looking for tangible reasons to come into the workplace. An example: Shortly after the office at Syneos Health reopened after the pandemic lockdown, Hoffman headed down the street to the local coffee shop. It was an eye-opening experience, as he discovered there were quite a number of colleagues in the coffee shop. When he asked why they weren’t in the office, a colleague told Hoffman, “There’s nobody there. And I like to be in a place that has a little bit of energy.”

Employees have established new habits and rhythms away from the office that have allowed them to maintain, if not enhance, their productivity. CRE organizations need to identify ways to bring these enhancements to the workplace. At Syneos Health, Hoffman says the company has taken steps to compress unused space into more dynamic settings — half the space, double the experience. Sensors were installed to provide metrics on how people work, where in the office they work and what they need in those spaces.

It’s more than just measuring badge swipes, Hoffman said. “We don’t want to just know that you’re in the building,” he said. “We want to know what settings are being used so that we can create more of that and repurpose underutilized space. Given that we’re just coming out of functional obsolescence and into the prototyping phase, we continue to think about our KPIs and how to measure them.”

A cross-functional team is leading the way in driving these changes, streamlining the organization and implementing staffing ratios to align resources and develop clear accountabilities. The goal is to create a frictionless environment where people come into the office and feel good about being there. It’s a net positive both to the productivity of their day and the wellness of their experience as an employee. “We want to make them feel connected to something bigger than just a laptop,” Hoffman said.

EY National Corporate Real Estate (CRE) Co-Leader, Strategy and Transactions, Douglas Gottschalk, recalled the perspective of a colleague who said, “There is no magic wand that’s going to bring these people back in (to the office), but it’s our job to at least try.”

  • Build connections between culture and mission

The mission at Syneos Health is “shortening the distance from lab to life,” said Hoffman. These words provide the north star for the CRE team.

“From a corporate real estate standpoint, we translate that, and we believe we can support that best by setting the stage for concentration and connection in talent centers and delivering special places for customer engagement. These are the two areas that we really focus on delivering, so that our employees can do their best work and our customers can come in, engage and collaborate to again, shorten that distance from lab to life.”

Companies that can embed the mission and vision of their business into their culture, and create a workplace that feels more aligned to what the company does, will have greater opportunities to build lasting connections with their employees. It can build a sense of purpose, an understanding that everyone is working toward common goals and has a role to play in achieving those objectives.

“CRE organizations should be designed for the companies they serve, and no two organizations should be alike,” Gottschalk said. “The No. 1 question I’m asked is: Tell me how everybody else is organized, aka benchmarking. They want to know what they are doing, what’s working, and what’s not working.”

Ultimately, that’s different for every organization. Success is working collaboratively across the leadership team to make the resources and experience in the workplace worth the commute. For most people, this means a place where employees can concentrate, connect in person and efficiently access resources.

“So in the morning, if it’s worth it to get in that car or get on that train and come to the office, that’s success,” Hoffman said. “That means we’re delivering value. That means we’re adding value, and we’re helping people get their job done.”

  • Establish governance to maintain alignment

Creating a governance layer that empowers the CRE team to drive decisions through a regular cadence of meetings and continuous dialogue ensures that the company is agile and responsive to changes that will continue to occur. This team can review metrics, such as office utilization, and ask key questions that need to be discussed:

  • Are we delivering the design and settings that people need?
  • Are we delivering the technology enablement and operational expertise that people need?
  • Do the metrics we’re measuring give us a clear understanding of what’s working and what’s not with our CRE functions?

There will be challenges and problems that are difficult to solve. This team can serve as a forum to address concerns at every level, from IT and finance, to procurement, facility management and space planning. These conversations can be used to make a business case for projects that create value and to inform decision-making. They can lead to the creation of guiding principles that serve as a foundation for how the company approaches various matters.

Perhaps most importantly, this governance layer can minimize redundancy.

  • Be ready for some turbulence

Comprehensive planning and clear communication are pivotal to reduce stress during times of transformation. CRE organizational leaders need to be able to articulate what change will look like, how it will be implemented, and what, if any, challenges could arise during the transition process. Key metrics may go down as employees balance the change that’s happening with their day-to-day work. New systems and protocols may not work smoothly in the beginning, and other issues could develop.

Spend time engaging your supporters, but perhaps more importantly, your skeptics who don’t believe in what you’re doing. Left unaddressed, negativity can spread and quickly create a difficult environment for everyone in the organization. If you’ve committed the time and effort to build a plan that fits your organization, the setbacks should be temporary.

To help make the transition easier, encourage people to help each other out.

“If you’re a security person and you’re walking by somebody struggling with a printer, maybe you stop for a second, ask them if they need help and just take 5 minutes and see if you can help them solve their problem,” Hoffman said. “My job is this. But just being kind and helpful I think is going to be a key skill set for corporate real estate going forward.”

Summary

Building a culture that actively supports and adapts to employee needs requires leaders who are intentional in their actions. Those organizations that can embrace change management and drive toward a desired outcome, accepting that there will be twists and turns along the way, will have a greater chance at lasting success.

More information is available at ey.com.

The views expressed in this article are those of the authors and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

CoreNet Global