With real estate being one of the top expenditures for most organizations, downsizing your footprint can be a strategic decision that results in an increase in cash flow and improved business efficiency. That said, with great opportunity comes great responsibility, as portfolio consolidations are no easy task. There are a multitude of factors that require consideration and unfortunately, there’s no cookie cutter application for this analysis. At TELUS, we’ve had some success in optimizing our footprint and are able to share a few tips on how to identify consolidation opportunities while keeping employee experience at the forefront. (Please note, with each portfolio differing in benefits and risks, an analysis that has worked for us, may not be suited for your organization).
Key consideration: Understand your workforce
The first thing to consider is where your employees live, commute, and meet customers to determine a central node that’s optimal for an office location. This kind of mapping can be formalized through a broker, or can be done yourself using a platform such as Google Maps. Data points may include postal codes for your employees and client work locations, with a goal to find an optimal mid-point. Review this information to see if you can glean any insights about your portfolio or office location. In doing so, consider the following:
Is it okay if you’re closer to your customers but your workforce has a longer commute, is this a tradeoff your company is willing to make?
How often is your workforce coming into your office?
Another key consideration is the demographics of your workforce. Younger workers have historically been located in city centres, while a workforce with young families tend to live in more suburban areas. Understanding where your company’s hiring efforts are focused, and what type of environment you want to provide to your workforce is an important factor in determining where to establish roots within a city. Taking this a step further, you also want to be strategic and add insight into where your workforce might be in the future in terms of any demographic shifts. Are you anticipating that your workforce will skew younger over the coming years, or will your business practices change to having a completely mobile workforce, negating the need for an office all together?
Further refinement: Geographic overlap
Consider whether your portfolio has redundant locations within the same geographic area that can be optimized. When looking at locations for consolidation, other factors to consider are more localized and should be considered if prioritizing locations. How is access to transit, food and restaurants, and parking comparatively.
Are these locations serving similar roles for your organization?
What’s the potential disruption to your workforce commute and how often does this commute take place?
What impact will the neighbourhood have on your culture?
Is it easy for your employees to socialize outside of work or will local factors discourage it?
In developing a relocation strategy, you want your employees to trust that you have taken their needs into account. The goal is to minimize disruption and enhance their experience while improving your bottom line.
Deep diving the lease terms and options available to you is a key stepping stone to getting your strategy to the next step. Although you may be bound to a physical space through a lease, there’s always opportunity to explore your options, so it’s worth your while to do so! Things to consider are:
Which locations are nearing a lease expiration?
Do you have early termination options that you can exercise?
How likely are you to sublease your space and is this a risk you are willing to take?
Do you have restructure opportunities?
Analyzing the on-site operations is critical to understanding whether the locations in scope to consolidate can logistically operate under the same roof. At TELUS, although we have multiple locations in a single region, the operational needs differ. One location may host critical operations with strict security access, whereas another location may be oriented towards welcoming team members and our community. Sometimes merging two locations may cause too many issues for operations and generate too many costs and risks. With each portfolio having its own set of opportunities and challenges, understanding on-site operations and their ability to adapt to the change is important when determining your strategy.
The last key consideration is how to manage the influx of new headcount and associated space impacts. With the ongoing health crisis, the majority of organizations are anticipating a change in employee behaviour when back in the office. With this, workplace strategies are evolving, and the following need to be considered:
How does your organization want to welcome employees back into the office?
Are you looking to redesign your spaces to accommodate a new way of working?
Do your floors have enough workstations, or do you need to consider densification?
Do you have enough meeting and social spaces?
Are your floors up to code with the increase in headcount? What associated changes do you need to make if not?
If you have a workplace strategy in development, a consolidation is a good opportunity to kickstart some of these new roll-outs. If your organization is keeping your workplace strategy status quo, think about how any additional headcount might impact the building.
At TELUS, we understand that consolidating a real estate portfolio is a decision that doesn’t happen overnight. There’s no shortage of considerations with this type of change, however, there are a few key factors that shouldn’t be overlooked. The end goal must always be to improve business efficiency – with cost savings as an added benefit. It’s essential to ensure that planning is centered on the employee experience, since this is the most important aspect of any real estate change.
For more information on our real estate consulting services and how TELUS can support your workplace strategy, reach out to [email protected].