The traditional facility management model is changing.
Peter Ankerstjerne of ISS, a European-based facility management services firm, notes that the industry has changed from a focus on inputs, to outputs, and now to outcomes. Instead of focusing on how much effort or cost is required to fix a piece of equipment or provide a given service, building owners and operators instead want service providers to deliver tangible and beneficial outcomes. The ultimate outcome for an office building is delivering a compelling, productive space that enables occupants to do great work.
On the software side, many legacy energy management vendors are focusing on their ability to provide “facility optimization” capabilities, which is another sign of the move to outcomes.
Verdantix, a leading analyst firm, notes that “a new category of software is rapidly coalescing as vendors from multiple segments launch propositions to enhance the financial and operational performance of building portfolios. The prime objective is to link data about facility-level performance on multiple dimensions with financial optimization across the entire building portfolio.“
The increased focus on outcomes in facility management will only become more apparent in the future, especially as firms like WeWork continue to grow. Worker productivity will become an increasingly important metric. This raises a few important questions. What are the techniques that buildings can employ to help their occupants be more productive? What do these developments mean to building owners, operators, occupants and the vendors that serve them?
Current state of research on worker productivity in offices
There are a variety of research reports that have investigated worker productivity in offices. Some research has investigated the impact of temperature, while other studies have looked at indoor air quality. Other research efforts have looked at office design and its impact on worker happiness. Happier employees typically are more engaged and productive, and are more easily retained by the organization.
Specifically, the World Green Building Council surveyed office workers and found that 81 percent have trouble concentrating if the indoor temperature is too high. Moreover, 62 percent of those surveyed indicated that it would take 25 percent longer to conduct a task if the temperature is too hot.
Similarly, Purdue University and Jones Lang Lasalle conducted a two-year research study to understand the impact of giving employees individual control over temperature and light levels. The study looked at a group of employees who had individual control and compared them to those with traditional wall-mounted controls. They found that the employees with individual control were more engaged.
Indoor air quality also is becoming a key determinant of employee productivity. Harvard Business Review published an article on this topic, highlighting a variety of past research reports about poor air quality impacting worker health. The researchers also looked at how indoor air quality impacts worker productivity. To do this, they observed employees at two offices. One building was equipped with systems to provide conventional ventilation, and a second doubled the ventilation rate (i.e., it brought in twice the amount of outdoor air) and had fewer sources of volatile organic compounds such as cleaners, dry-cleaned clothes, dry-erase markers and certain building materials. The researchers also tracked indoor carbon dioxide levels. Both groups were given standardized tests at the end of each day to quantify their cognitive function. They found that the workers in the optimized space exhibited significantly better decision-making abilities.
Harvard Business Review has also written about designing office space to increase the number of “collisions,” or unplanned interactions between employees. The article profiles a Norwegian telecom firm, Telenor, which began using hot desks (unassigned desks that can be reserved on the same day) back in 2003. The firm credits the move with improving communication between employees and accelerating decision-making, which improves productivity. The authors also highlight their own research, which included deploying sociometric badges across a pharmaceutical office space to measure interactions. They found that individuals who had a 10 percent increase in interactions with other teams achieved a 10 percent increase in booked sales.
Finally, Dell and Intel have conducted surveys on worker views of smart building technology. It could be argued that more smart building technology, when desired by employees, will lead to happier and more productive workers. Their research, conducted by research firm Penn Schoen Berland, found that while 29 percent of office workers would prefer low-tech perks like a pingpong table or free food, 58 percent would rather have internet-of-things solutions, augmented/virtual reality tools, or AI-assisted features. The survey also found that tech issues, such as broken, slow or glitchy products, are the biggest time-wasters for office workers.
What does this research mean for vendors? It’s clear that building owners and operators will demand technology to improve the productivity of their occupants. But much of the research noted above is high-touch. It required many sensors to be deployed or depended on live, in-person testing of workers. At scale, it can be costly to deploy many sensors across a portfolio (though costs are coming down). And testing workers regularly for cognitive function (as an analog to productivity) likely will be out of the question.
Quantifying productivity in a scalable way remains an open question. It is incumbent upon technology vendors to lower hardware costs (or reduce the overall hardware burden) and explore ways to use data in novel ways to passively track productivity.
At the same time, it’s possible that while the technology and strategies to improve productivity get better, the technology to measure it does not. Maybe this is OK. Some experts have noted the difficulty of building a productivity-based return-on-investment calculation. For example, air quality sensors likely will see growth in the future. While air quality will be quantifiable, will building owners and operators trust that this means productivity also has risen? Or will additional technology be required to prove the productivity gains?
If employees like these productive spaces more, want to be in them, and will pay more for them, building a detailed business case for the technology may be unnecessary. Just as some of the research above is based on worker surveys, software vendors could integrate worker feedback surveys into their offerings to quantify occupant feedback. Uber and Lyft use this technique successfully: Averaged driver ratings are a key part of their offerings.
Despite the challenges, some firms are focused on building a productivity-based business case. JLL’s research on the average per-square-foot annual costs for energy, rent and staff notes that “a 2% energy efficiency improvement would result in savings of $.06 per square foot, but a 2% improvement in productivity would result in $6 per square foot through increased employee performance.“
Vendors currently selling products with an energy savings value proposition should broaden the solution to improve worker productivity. It’s more compelling and is revenue-generating (as opposed to cost-saving).
Implications for building owners and operators
Building owners and operators, especially staff in real estate, workplace-focused and facilities departments, need to consider how they will secure internal funds to procure these technologies and who should be involved in the vendor selection process.
The American Council for an Energy Efficient Economy (ACEEE) recently published a report on the non-energy benefits of “intelligent efficiency” solutions (which are information and communications technology products designed to save energy). The report highlights worker productivity as a key non-energy benefit, but also notes that in some cases, the individuals paying utility bills and procuring solutions to reduce energy may have no visibility into the productivity of workers. If building operators (who buy the software) are happy with an operational efficiency solution (which is saving energy and reducing maintenance costs), who else should be involved in subsequent procurements that is responsible for office productivity?
Echoing other experts, the ACEEE report notes that tenants are demanding better spaces, but it still can be hard to define the metrics that matter. The report cites research noting that advanced technology, indoor air quality, and personalized temperature control solutions all are installed to attract and retain tenants. However, the report notes that “defining productivity for an office environment can be challenging. What is considered important varies from person to person.“
From corporate offices that seek to attract and retain talent, to commercial real estate firms that seek to drive up rent and occupancy rates, there will be a growing market for solutions that can be sold on a productivity value proposition. Given these open questions, vendors should seek to find innovative building owners and operators that want to collaborate to establish techniques to quantify productivity.
Bringing it all together
The research on productivity in office spaces is clear. One takeaway from the Dell and Intel research notes that “44% of employees worldwide feel that their workspace isn’t smart enough, while more than half (57%) expect to be working in a smart office within the next five years. And when it comes to acquiring new talent, tech matters — Millennials in particular are likely to quit a job with substandard technology.“
Moreover, standards such as Well and Fitwel are focused on certifying healthy buildings, following in the footsteps of the successful LEED green building standard. While building and energy management software vendors have struggled to convince a wide market to adopt their technology, a productivity-centric value proposition may be just what they need to move their products into the mainstream. To building owners and operators, a productivity-based ROI, framed as a revenue generator, will be more compelling and easier to sell to other internal corporate stakeholders.
Joseph Aamidor(*) / Greentech Media