Is an office space an expense or an investment?

Many companies pay too much, on average, for their office space – largely because the use of office space is often very inefficient. Therefore, it is no wonder that many companies constantly experience a pressure to cut their office space costs.

– Typically, the greatest challenge for companies is to balance between the pressure to cut costs and investing in the work environment, says Leesman Development Director Peggie Rothe, who also studies the efficiency of work environments.

Far too often, the loser in this race is the efficient working environment – and of course the company’s employees.

According to a recent study by research company Leesman, over one third of employees feel that the physical work environment does not support productive working at all. At its worst, only a mere 15% of employees feel that they are able to work productively.

According to Rothe, paradoxically, one of the greatest reasons for the inefficiencies at workplaces is specifically that office space is perceived as a cost and not as an investment into the company’s success. This results in cost cutting most often occurring in the wrong areas, such as cheaper office space.

When focusing merely on the cost structure, the greatest hidden costs associated with office space can easily be neglected, as they incur from something completely different than the lease – from inefficiency of unmotivated employees and high employee turnover, for example. Poor personnel efficiency, in turn, leads to further cost saving pressure, which results in a vicious cycle.

– A cost-centric way of thinking is harmful, because the monetary value of an efficient work environment would be far greater than the small savings created by cutting corners off the cost structure, Rothe notes.

One reason for the inefficiency is that the different work methods of different employee groups are often not considered when designing the office space. According to Rothe, many companies also are too eager to follow the latest office trend.

– In recent years, for example, there has been a large focus on increasing communality, which is great as such. However, up to 93% of respondents to our survey say that in addition to communality, they need the ability to work on assignments that require being alone and concentrate, says Rothe.

– Problems will most certainly occur if communality is increased at the expense of being able to concentrate.

Leesman’s astonishing survey data with 400,000 responses is based on measuring the employee experience. But how good of an indicator is experience of work efficiency?

Very good, the studies suggest. Both Leesman’s data and other research results indicate that employee experience correlates with personnel efficiency, motivation, commitment and even the company’s success, among others.

In addition, a recent Oxford Economics study demonstrated that 75% of companies that have lower than average employee turnover and experienced revenue growth exceeding 10% had invested specifically in occupational well-being and overall satisfaction.

In conjunction with efficiency and experience, the sense of control is also a contributor. According to psychologists, the stress factors in the work environment can be tolerated better if they can be influenced. The efficiency of activity-based offices is believed to be based on this concept.

– Even common sense dictates that if there simply aren’t suitable meeting rooms and the discussions must be conducted in an open floor-plan office, it will inevitably affect work efficiency, says Rothe.

In light of the studies, it is therefore clear that an efficient work environment is a direct investment in the success of a company. According to the study conducted by Leesman, however, only 57% of all employees feel that the workplace supports working effectively. Why is this not commonly understood?

– One challenge is that the impact of the work environment on work efficiency is impossible to measure in a completely standardized manner, Rothe says.

Alternatively put, decision-makers in companies can too easily stare at traditional cost calculations, which omit the effects of noise and stress and other hidden costs from an inefficient work environment.

According to Oxford Economics, up to 96% of managers perceive employee productivity as a critical factor for the success of a company, but still only 40% understand the impact on productivity caused by constant disruptions.

So there is plenty of room for improvement, but luckily the trend is going in the right direction.

– A constantly increasing share of people deciding on office spaces are understanding the connection between work satisfaction and personnel efficiency, Rothe rejoices.