dtz - agile workplace strategies

Occupier PerspectiveAgile Workplace StrategiesIndia - July 2015

DTZ Research

Introduction

Awareness

Implementing AWS

Post-Implementation Response

Outlook

Survey Methodology

4

4

6

12

13

14

Contents

ResearchRohit KumarHead of India Research+91 124 613 [email protected]

ResearchDominic BrownHead of SEA / ANZ Research+61 (0)2 8243 [email protected]

ResearchRichard YorkeHead of Occupier Research+44 (0)20 3296 [email protected]

PM/EPC (Fit-outs)Shashi BushanManaging Director+91 80 4123 [email protected]

Strategic Client Services and New BusinessesKarun VarmaManaging Director+91 80 4123 [email protected]

ExecutiveAnshul JainChief Executive+91 124 613 [email protected]

Occupier ServicesAniruddh WahalManaging Director+91 22 4223 [email protected]

InvestmentsApoorv KumarDirector +91 22 4223 [email protected]

Base BuildRudresh K.V.Senior Director+91 80 4123 [email protected]

Facility ManagementManny SagarManaging Director+91 124 613 [email protected]

Contacts

Authors

The way in which companies organise their offices to embrace changing technology and workplace culture is constantly evolving. In economic downturns, the focus has ostensibly been on reducing expenditure. However, while cost limitation remains a factor, workplace evolution is also seeking to make more progressive change that is forward-looking and focussed on the changing needs of the modern workforce.

In the period immediately following the global financial crisis, workplace strategies, in India and globally, were largely centred on cost mitigation through the adoption of higher density workplaces. However, a more intricate combination of factors is now driving decision making in this realm. As real estate is fast becoming a business tool to increase productivity and to attract and retain talent, organisations are increasingly transforming their workspace strategies. Occupiers are now remodelling their workplaces to provide optimum environments that enhance employee satisfaction and performance.

In line with these transformational strategies, the term “agile workplace” has emerged to reflect not only where and when workers undertake their tasks, but also how they work and interact with each other. Agile workplaces are based on the notion that different tasks are carried out at different times requiring a specific set of tools and tailored environments. These workplaces are structured by implementing varying spatial and behavioural solutions including increased agility, consistent space standards, alternative work-settings and cultural change.

Globally, occupiers are seeing the benefits of consistent occupancy standards across their portfolio, albeit with some local variations to meet business and cultural needs. Businesses located in key European and US gateway cities and major metropolitan areas are increasingly adopting various strategies to transform the workplace. Take-up in Asia Pacific, though has been more limited, either as a result of cultural differences or lack of expertise; though the latter is being rapidly addressed.

Turning to India specifically, multi-national corporations expanding their presence in country, especially in the knowledge industries, have been early adopters of aspects of agile workplace strategy. This has led to an increasing exposure, albeit slowly, to the concept and its potential benefits among corporate real estate decision makers over the past few years.

Led by Information Technology and specifically Software Development enterprises, India saw the emergence of agile workplace strategies way back in 1990s. Agile workplaces suited companies needing collaboration, innovation and transparency for enhanced productivity. Today, as the global recovery continues, an intense war for talent in certain industries has forced the adoption of global best practises to attract that talent. Underpinning this is the changing demographic profile of employees – the increasing presence of Generation X and “Millennials” in the workforce has been one factor driving this change.

To gain a deeper insight into the adoption, or barriers to adoption, of workplace strategy in India, DTZ conducted a survey of 48 corporate real estate decision makers across a range of industries to gather their perceptions and experiences on agile workplace strategy. In particular, questions centred on awareness of alternative workplace strategies, level of adoption, the process of implementing change and the outcome of moving to a new workplace strategy (see appendix for full survey methodology).

Introduction

4 | DTZ

To gain a deeper insight into the adoption, or barriers to adoption, of workplace strategy in India, DTZ conducted a survey of 48 corporate real estate decision makers across a range of industries

to gather their perceptions and experiences on Agile Workplace Strategy (AWS).

Of respondents stated that employees preferred the new working arrangements. Where there was resistance to change, senior management needed to undertake a collaborative and open dialogue with employees to involve them in the whole process.

At present, agile workplace solutions have been adopted by only a small proportion of corporate occupiers in India. Nevertheless, it is expected that AWS will continue to gain traction and that it will begin to diffuse through other industry sectors. The increased availability and use of technology is only expected to accelerate this trend. The key to achieving success through AWS, though remains aligning the goal of the company and the needs of its employees to the overall workplace environment.

Agile Workplace Strategies | 5

space per workstation space efficiency

Increase the amount of open space

Increase collaboration

Point of differentiation from competitors

offer more flexible work practices

Attract talent

Using AWS to cut costs

1

1

3

2

246%

53%

35%

4

The most common measures adopted

main reasons for AWS implementations“agile workplace strategy” remains comparatively unknown

unaware of the concept No AWS measures implemented

Results from measures adopted

Adopters of AWS were mainly large IT firms.

6 | DTZ

Agile workplace strategy remains a niche concept

One of the most significant findings of this analysis is that “agile workplace strategy” (AWS) remains comparatively unknown. Among the survey respondents, 46% said they were unaware of the concept (Figure 1). More positively, this means that over half of the respondents were aware of the term, though only 35% have adopted it in some form. Further analysis of the responses shows that over half of those who had not heard of AWS wanted to receive information on the concept and discuss potential benefits that it may bring, thereby showing an interest in alternative workplace strategies.

Looking at those respondents who were aware of AWS but had not implemented it, the majority had never considered an AWS proposal, again highlighting lack of knowledge or exposure. Of the remainder, 33% rejected AWS as they perceived that it only offered limited benefits (Table 1). This was not only true of management’s view, with 11% of respondents dropping AWS due to the resistance faced from employees.

Overall, though, these results suggest that while AWS is not for everyone, one of the main inhibitors to AWS becoming more widespread in India is the lack of knowledge rather than negativity towards the concept.

With regard to those who had adopted AWS, it is clear that the concept is being driven by specific industry sectors and by the larger, multi-national companies. This is not surpris-ing for several reasons. Firstly, AWS is only suited to certain modes of work. Industries, or occupations, which are more process driven tend to have fewer reasons to adopt AWS and consequently derive fewer benefits. Secondly, a feature of AWS is increased collaboration between employees and so companies need to be of a certain size before more traditional communication and collaboration process begin to falter. Both of these elements were seen in the type and scale of companies that responded that they were actively using AWS:

• More than half belonged to “new-age” economy sectors including IT, ITeS and other Professional Services with revenues upwards of INR 100 Cr.

• Approximately 80% were companies with a workforce in excess of 300 in India and 5,000+ globally

The remainder of the analysis focusses on respon-dents that have adopted AWS, with a view to understanding more about reasons for adoption, outcomes and lessons learned.

Awareness

Percent of repondents aware of, but non-adopting AWS

Never considered AWS proposal 56%

Rejected due to limited benefits 33%

Rejected due to employee resistance 11%

Key Reasons % Response

46%

35%

19%Not awareAware and adopted AWS

Aware and not adopted AWS

Current awareness and adoption levels of AWS

7

Figure 1

Table 1

Source: DTZ Reaserch

Source: DTZ Reaserch


Implementing AWS

Reasons for adopting agile workplace strategy

AWS can be used to derive a number of changes within a company’s real estate portfolio. They can be from minimising costs to increasing productivity.

Responses

AWS “saves RE cost, moving to (an) open workplace environment provides better collaboration and shared spaces. Enhances employee productivity and builds transparency in the organisation.”

“Would recommend organisations to adopt open culture & agile workstation policy. This would definitely help their business to grow to the next level.”

The survey investigated reasons for adopting AWS. Interestingly, the majority of reasons for utilising AWS were considered positive – ie to instigate positive change. The most common reasons were to increase collaborative team working and to improve employee productivity (Table 2). To a certain extent, this shows that companies have begun to move on from using AWS as simply a cost cutting measure. However, that is not to say that cost cutting is no longer important.

Almost half of respondents (47%) that have adopted AWS have done so with a view to reduce rent, amongst other factors. A further 41% also saw AWS as a means to reduce expenditure on fit-out. The latter response could be considered somewhat optimistic as frequently high-quality AWS fit-outs can cost as much, or more, than a standard office and workstation approach given the variety of break-out space configurations and furniture required.

It is apparent that companies are also aware of the less tangible, but no less worthwhile, benefits of adopting a modern workplace strategy. Given that AWS is still a new concept in India, it is clear that early adopters of the strategy are using it to make a clear differentiation between themselves and their peers. Almost half of those adopting AWS have done so in order to attract and retain talent by offering a modern workplace for today’s talent pool. By corollary, 35% have also used AWS as a means to differentiate themselves from their competitors. However, it was not clear whether this differentiation was in relation to attracting client business, employees or both.

Key objectives for adopting AWS

Collaborative team working 82%

Attract and retain talent 47%

Differentiate from competition 35%

Improve employee productivity 77%

Meet global office standards 53%

Reduce rent 47%

Reduce capex on fit-outs 41%

Key Objectives

Table 2

% Response

Source: DTZ Research8 | DTZ

Open work areas

Work from home

Flexible work timings

Desk sharing

More meeting areas

Multiple shifts

Quiet areas/pods

0% 50% 100%Source: DTZ Research

Agile Workplace Strategy measures adoptedFigure 2

Measures adopted

Open work areas

Obj

ectiv

es

soug

ht Collaborative working

Improve productivity

Desk sharing

Quiet areas

Cross-reference of measures with objectives

Table 3

Source: DTZ Research

High overlapMedium overlap


Measures implemented

Following from the objectives for adopting AWS, respondents were asked about the types of measures that they have introduced. The most popular measure (83%) was to introduce a greater amount of open space and reduce the amount of partitioned cubicles (Figure 2). It is clear that by adopting such a measure, companies are seeking to offer their employees a greater range of choices in how they undertake their work. This is also seen by the fact that 72% of respondents offer options to work from home as well as flexible work timings. Unsurprisingly, the outcome of this is that desk sharing is also a major aspect of AWS adopted in India.

Together, these reflect the change in attitude towards measuring performance by results rather than by time spent in the office. The onus is placed on the employee to find the right environment for themselves, rather than one prescribed by the company such as break out spaces for collaborative work, or quiet areas in which to undertake detailed analysis and writing. Offering multiple work environments, in this way, ultimately aims to improve productivity as well as employee satisfaction, leading to greater retention levels.

There is also a close connection between measures implemented and outcomes sought. For example, respondents seeking to increase collaborative team working and improve employee productivity were the very same respondents who adopted ‘open work areas’ as part of their strategy (Table 3).

The benefit of introducing more flexible workspace, flexible work hours and the ability to work from home ultimately drives down the total amount of floor space required by a company. However, this does not necessarily mean that working conditions become more cramped as a result. The key is to have less redundant space within the office and maximise usage of all space that is available. In essence this means increased space loadings.

On average, companies responded that they had a space utilisation rate of 107 sq ft per workstation before adopting any AWS measures. Following introducing AWS, it was evident that on average the amount of space per workstation increased by 6.5% to 114 sq ft (Figure 3). This may seem counter-productive as AWS is meant to drive increased efficiency. The key aspect though, was that the number of full-time employees (FTEs) per workstation was increased by 20% from 1 FTE per workstation to 1.2 FTEs per workstation. By way of example, a company of 1,000 employees with a space utilisation of 107 sq ft per

workstation with an FTE loading of 1 requires 107,000 sq ft. In comparison, if the company were to increase space utilisation to 114 sq ft per workstation and increase loadings to 1.2 FTE, only 95,000 sq ft are required – an 11% decrease in floorspace, all other factors being equal.

Of course, not every company, or business unit within a company, is suitable for increased workstation loadings. For respondents who indicated that they had adopted desk-sharing practices (ie increased FTE loading per workstation), they were asked about how they had employed this measure. Only 17% had adopted desk-sharing across all business units, ie company-wide (Figure 4). Moreover, it was constrained to the functions that spent a large proportion of time out of the office such as Sales (56%) and Operations (28%). For the more desk-bound and process driven units such as Finance and Administration, take-up of this measure was considerably lower or non-existent.

Area per employee (sq ft)Before AWS

116

114

112

110

108

106

104

102

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0After AWS

Efficiency (RHS)

Area per employee and efficiency (FTEs to workstation)

Figure 3


Sales

Operations

All of the above

Others

Marketing

Finance

HR & Admin0% 20% 40% 60%


Functions following desk sharingFigure 4

56%

28%

17%

6%

6%

6%

10 | DTZ

The results of the survey (self-reported by respondents) vouch that implementation of AWS seems to have effected positive change on performance on multiple fronts. The biggest and most direct impact has been the improved collaboration and communication that it has facilitated. Furthermore the impact enabled greater access to superiors and mentors which in turn resulted in improved productivity and better delivery timelines shown by higher scores (Figure 5).

Measures like desk-sharing and open work environments have resulted in better collaboration and improved productivity. Flexibility options including work-from-home and flexi timings have helped employees fulfil their family obligations better. These measures directly enhanced the work-life balance of employees, which in turn also helped reduced stress at work. By implication it is expected that a better work-life balance and lower stress will also assist in reducing staff-turnover.

There was also acceptance of the new AWS measures from employees’ perspectives as well, with over half (53%) of survey respondents confirming that they had received positive feedback from their workforce (Figure 6). In addition, a further 29% stated that after initial resistance to the measures they had subsequently been embraced by employees.

Analysis of the qualitative responses suggests that most initial resistance was primarily overcome through two main methods. Firstly, that senior management were the early adopters of the new AWS measures, demonstrating that they were willing to work under the new strategy. Secondly, senior management continued to engage in open dialogue with their employees and actively involve them in the decision making process. Some went as far as to hold focus groups and surveys to more closely measure the impact on performance and behavioural changes.

Although none of the respondents actively rejected AWS after trying to implement it, some made the observation that there are potential negatives. The most common of these was that in certain instances, open-plan and collaborative workplace environments led to increased employee distraction and interruption, which ultimately decreased productivity. This highlights the need to balance the availability of collaborative and quiet environments to allow for times of group and individual work.

Respondents also made observations concerning possible obstacles to implementing AWS. Most noted that AWS is not for everyone. The size of the company, the operations it performs as well as the demographics of the workforce are all important considerations. Consequently, at the outset it is important to understand the needs, requirements and expectations of the workforce before sweeping changes are made. The simplest way to achieve this is through open discussions and actively involving the workforce in planning for the transformation.

In broad terms, companies with a younger age- profile of employees and those that have a flat or matrix organisational structure reported easier implementation of AWS practices. Furthermore, companies which place importance on creative output are also naturally inclined to be adopters of AWS.

For any successful migration to AWS, it is important for real estate planners and strategists to be aware of the medium and long term goals of the organisation. The workplace strategy is a reflection of those goals which should be tailored to take into account all the unique requirements of the firm. Finally, senior executives should embrace the changes wholeheartedly at the outset. They should endorse and encourage the change within the organisation while assuring the employees that their genuine concerns will be addressed.

Post-implementation Response

12 | DTZ

Better collaboration 4.5

4.1

4.0

3.8

Improved productivity/delivery timelines

Improved work-life balance

Employees have reduced stress at work

0 1 2 3 4 5Source: DTZ Research

Benefits derived from adoption of AWSFigure 5

Majority liked new arrangements

Adopted after initial resistance

No discernible preference 18%

29%

53%

0% 20% 40% 60%Source: DTZ Research

Employee acceptance of AWSFigure 6


14 | DTZ

Outlook

At present, agile workplace solutions have been adopted by only a small proportion of corporate occupiers in India. However, in a globalised world, there is increasing exposure to AWS measures as companies seek to follow best-practise seen in other regions and countries.

For those corporate occupiers who have adopted AWS, the experience has largely been positive, with the benefits of AWS outweighing its limitations. Some of these key benefits include fostering a culture of open and direct feedback, transparency, improved work-life balance and higher employee satisfaction, apart from the cost saving opportunities it provides.

This is not to say that AWS does not have its challenges. AWS still broadly remains the remit of larger companies – scale is a vital component in requiring and successfully achieving a move to AWS. Furthermore, in moving to a more open and collaborative workplace environment, companies still need to provide areas for individual analysis – not all work is undertaken at the group level. Equally, not all business units within a company are suited to desk-sharing. In these instances, a hybrid approach that combines some elements of AWS together with a more “standard” workplace may be more acceptable and beneficial.

Nevertheless, it is expected that AWS will continue to gain traction in India and that it will begin to diffuse through other industry sectors, not just IT and ITeS companies. The increased availability and use of technology is only expected to accelerate this trend as employees are offered increased flexibility in how they carry out their roles. The key to achieving success through AWS, though remains aligning the goal of the company and the needs of its employees to the overall workplace environment.



Delhi NCR Mumbai Bengaluru Chennai Others

14% 25%

19%

23%19%

City-wise representation of survey respondentsFigure 8

Survey Methodology

The purpose of the survey conducted by DTZ was to understand the level of awareness of the AWS, its relevance, degree of adoption, the process, the key changes, the benefits and challenges faced. Respondents were principally senior management, including chief executives.

Geographical spread of respondents

The survey was conducted in November 2014, amongst a total of 48 respondents, mostly from Delhi NCR, Mumbai, Bengaluru and Chennai (Figure 8). The remainder of respondents were from the growing markets of Hyderabad, Pune, Kolkata and Ahmedabad.

The online questionnaire was a mix of both close- ended and open-ended questions to understand the decision making process in considering agile workplace strategy together with the changes that were made. To that end, questions were asked on the following aspects of agile workplace strategy prevalence in India:

Awareness levels, Acceptance levels, Key changes implemented, Key benefits, If rejected-key reasons, Outlook on the strategy, Profile of the firms

The largest industry segment represented in the survey was the IT/ITES sector (Figure 9), which accounts for 38% of office space demand in some markets. Other key segments represented in the survey included consulting and pharmaceutical/healthcare sectors.

In terms of scale of operations and turnover, the respondents were mostly from mid- to large-scale corporations. Among those who gave an indication of their size, about 40% recorded a turnover in excess of INR 1,000 crore in the last financial year. Meanwhile, another 30% of the firms recorded turnover in the range of INR 100-1,000 crore.

With regard to the size of their office portfolio, about half of all respondents came from organisations that employed over 1,000 people (in India). Meanwhile another quarter of the respondent firms have between 250 to 1,000 employees.

IT/ITES

Others*

Consulting

Pharma

Retail

Manufacturing

BFSI

0% 10% 20% 30% 40%

38%

29%

10%

8%

6%

6%

2%

Sector-wise representation of survey respondentsFigure 9


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Publication Date 05.2015 Copyright © 2015 DTZ. All rights reserved.

DTZ is a global leader in commercial real estate services providing occupiers, tenants and investors around the world with a full spectrum of property solutions. The company’s core capabilities include agency leasing, tenant representation, corporate and global occupier services, property management, facilities management, facilities services, capital markets, investment and asset management, valuation, research, consulting, and project and development management. DTZ provides property management for 1.9 billion square feet, or 171 million square meters, and facilities management for 1.3 billion square feet, or 124 million square meters. The company completed $63 billion in transaction volume globally in 2014 on behalf of institutional, corporate, government and private clients. Headquartered in Chicago, DTZ has more than 28,000 employees who operate across more than 260 offices in 50 countries and represent the company’s culture of excellence, client advocacy, integrity and collaboration.

This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ.

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DisclaimerThis report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ.© DTZ April 2015

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