From Low Utilization to Your Bottom Line: A Reality Check
Data on workplace attendance, occupancy and space utilization can be revelatory for a client.
Even prior to the hybrid era, clients were amazed to find out that average occupancy conditions were “low” in percentage terms (spaces occupied / total spaces). But too often we also saw kneejerk reaction to how much money can be saved by cutting “under-utilized” footprint. This value proposition – low utilization as savings – is common throughout the workplace analytics landscape. And while this can be true in many cases, indeed a central objective to much of our work is the identification of cost saving measures, this proposition can also be misleading given the characteristics of a high-performing and resilient workplace.
Average desk utilization of 50% does not mean that there are too many desks. Peak desk utilization of 60% doesn’t mean that 40% of desks can be discarded. A conference room that is utilized to capacity only 10% of the time does not mean the room is expendable.
Basic distribution measurements like averages and peaks provide some information on current workplace conditions, but not nearly enough to derive an informed decision with a realistic estimation of cost savings.
In our few decades of experience in workplace analytics, here are some key considerations when evaluating what is feasible. Each consideration can be treated numerically and their aggregate informs the right space program that yields neither a space surplus or deficit to what is required to support the business:
- Policies on assigned seating: assigned seating is the least efficient seating policy from a utilization perspective. But in many circumstances, assigned seating is a critical feature of supporting the job function of the occupant. There is no target utilization – high or low – for assigned seating. Should I get rid of my windshield wipers because average utilization is low?
- Proximity requirements: whenever individuals or teams need to sit together, space must be planned accordingly. Similar to assigned seating, team assignments are a space constraint driven by a functional need, with less regard to utilization and efficiency.
- Flexibility and choice: is the only seat available the one next to the most annoying person in the office? The importance of choice cannot be understated from the standpoint of employee “wellbeing”, a term too flippantly used in the workplace value proposition. In unassigned workplace environments, we consider empty seats to be a workplace attribute, not a liability. Sometimes people need breathing room and sometimes they don’t. Without just the right amount choice and flexibility, workplace performance can crater.
- Shared spaces: larger rooms with low utilization relative to capacity are not necessarily disposable. When needed, these spaces provide a critical business function. A more thorough analysis is required to justify the right quantity and mix of a room program. But utilization alone cannot be the primary determinant of a room program.
- Business growth: ensuring that a highly likely future can be realized. This sounds obvious but worth mentioning because workplace programs are often developed point-in-time, with too little regard for future conditions. If the intended design of a workplace is compromised and more people are crammed into too little space, nobody benefits. There is nothing more frustrating than experiencing the loss of an otherwise high functioning workplace by something so avoidable. This is probably the greatest risk of post-pandemic space contraction decisions.
- Resilience: many companies need to plan for unforeseen scenarios that would put stress on space use. Analyzing past data – such as badge data and sensor data - will not guarantee a future-proofed space program. Statistical simulation is one tool that is often used to build resilience into a program and longer-term portfolio strategy.
These considerations do not mean that massive cost savings aren’t achievable. The main takeaway is that basic utilization metrics cannot translate into cost savings without further evaluation. Jerde Analytics specializes in numerical approaches (e.g., correlation, clustering, time series, forecasting, simulation, etc.) to these (and other) issues that will balance the (sometimes conflicting) requirements of real estate, end users, and the business at-large.