CRE Teams 'Penny-wise-and-pound foolish'?

  

Well quite possibly! This is the picture emerging from a new global CRE survey conducted by Cushman & Wakefield (C&W) in conjunction with CoreNet Global as a follow-up to their 2015 study of industry trends.

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The report states that 'CRE leaders around the world are focused on strategies to attract and retain superior employees and help enhance their productivity. At the same time, they must continually find ways to reduce occupancy costs. The overriding challenge is to balance these two goals, which are often in opposition to one another'. This is so true.

Talent management and innovation are considered top of company strategic challenges and the CEO agenda. One might expect these strategies would be aligned with CRE goals. Yet occupancy cost tops the CRE priority list and talent management slips to fourth when it comes to day to day decision-making. The CEO agenda is therefore considered as an 'aspirational' target for CRE teams.

It is unlikely that much of the above will come as a surprise to many in the CRE or service provider communities. Indeed 48% of CRE respondents said their CRE strategy was not aligned, or was only partly aligned, with their overall corporate strategy.

So why the disconnect?
The C&W report suggests that 58% of CRE respondents report to the CFO, 58% of whom have cost saving targets. C&W are right to view these results as a missed opportunity.

While nearly 58% of respondents have annual cost saving targets, very few take talent or innovation – let alone sustainability – into account when making budget decisions

CRE leaders clearly recognise this. They accept that the work environment is an important factor for attracting and retaining talent. 'Nine out of 10 global survey respondents said the physical workplace is a fundamentally important or critical factor in securing superior workers and enhancing their wellbeing'  Many respondents agreed that their workplace fell short of 'providing a great place to work' or ‘an ideal environment for attracting innovative workers’. Indeed the persistent gap between recognition and adoption is not a concept the real estate community is unfamiliar with.

The report concludes that there persists a 'penny-wise-and-pound-foolish' focus on occupancy cost reduction, often at the expense of furthering talent management and innovation goals. They balance this slightly negative conclusion suggesting that the rise of co-working, greater flexibility and changes to location strategy demonstrates a connection between productivity and cost saving. This is a move in an improved direction but I am not sure it wholly constitutes 'providing a great place to work or an ideal environment for attracting innovative workers’.

It is easy to sympathise with the CRE leadership teams caught between the proverbial rocks and hard places. However there is a clear opportunity for the Service Provider communities, especially workplace design and delivery, to empower their SME or CRE clients to have their equally proverbial ‘cake and eat it’.
cost neutral, or low hanging, health and wellbeing opportunities and strategies are available yet very few make it to the ‘drawing board’ let alone further

The rise of the health and wellbeing certification standards such as Fitwel and or Well Building Standard means that sustainability in so far as it relates to talent management or Innovation is now talked about regularly. An increasing number of cost neutral, or low hanging, health and wellbeing opportunities and strategies are available yet very few make it to the ‘drawing board’ let alone further.

High costs assumed with achieving Wellbeing credit categories in certification schemes such as LEED, BREEAM, where documenting achievements can be onerous, means the criteria or rationale behind Health & Wellbeing opportunities are often overlooked in search of cheaper points. This in part has conditioned industry to view Wellbeing at the top of the ‘nice to have’ list. CRE leaders responses reflects this ‘falling to fourth when it comes to day to day decision-making.’

A lower cost threshold will raise talent management up the CRE day to day decision making priority list, provided CRE leaders are aware of the opportunities and strategies available, allowing them to serve both CEO aspirations and CFO requirements.

The CoreNet Global UK Sustainability Community is collaborating with both the UKGBC, the World GBC and the British Council for Offices to put together a programme for all CRE stakeholders, to shed light and offer insights on both ‘near term H&WB benefit’ and ‘ease / cost of implementation’.

The programme is set to promote end user requirements to the developer, landlord, agents and service provider communities; to set guidelines for CRE and SME occupiers on the least cost prohibitive and most effective strategies.

The programme launches 2nd February 2017, at Standard Chartered Bank in the City of London, where over 70 CoreNet members and CRE stakeholders (end users and service providers - including transaction, delivery and design) are being brought together to debate the strategies, the evidence, the barriers and the solutions.

For more information on the Delivering Wellbeing programme can be found on the CoreNet Global UK website. If your are interested in contributing to the work of the CoreNet UK Sustainability Community please contact James Pack  

James Pack, is Managing Director of Sentinel RPI. He is Chair of the CoreNet Global UK Sustainability Community and Leader of the CoreNet UK CRE Health & Wellbeing Programme. He is a BREEAM AP and a Fitwel Ambassador
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