June 27, 2007
HSBC Bank Saving Time and Space
By Bernice Hurst, Managing Director, Fine Food Network
Throughout the 1990s, companies in the U.K., at least, loved to boast “our people are our most important asset.” But for many, real estate has become just as important.
Michael Geoghegan, chief executive of HSBC, Britain’s biggest bank, announced at a recent conference that he wanted to reduce the 8,000 staff at its landmark Canary Wharf headquarters by 50 percent over the next seven years and sublet the pricey space to someone else.
But there is another important consideration to Mr. Geoghegan’s proposal. Many employees in this country prefer flexible working schedules, with many working part time or full time from home. Many companies have established a system of “hot-desking” (i.e., desk sharing when people are in and out of the office) and innovative ways to avoid time-wasting during the daily commute are much in demand.
“I don’t think we’re a really progressive, perceptive company if 8,000 people have to get up at some unearthly hour to come into the office and go again. Technology should change our thought processes,” he explained to the Guardian.
An
internal committee has been established to find ways to meet the goal, harnessing
technology so that people can work in different ways and different places.
The office block referred to was sold in April for more than £1bn, approximately
twice what it cost to build. It is currently used as a base for UK and investment
banking as well as human resources and executive management.
Having space that can bring in more money as well as staff who could work at least as well off the premises is an interesting challenge. In a world where talk of breaking up large organizations or merging them into even larger ones is pretty much non-stop, the HSBC move could be seen as a form of differentiation. HSBC shares have apparently not been good performers among banks recently and have been snapped up by investors in the Gulf looking for value. Creating efficiencies and, simultaneously, increased revenue could be seen as a way of providing just that.
Discussion Questions: Would corporations suffer if more employees worked from home and office space was reduced? Do you believe the typical person working on their own at home tends to be more or less productive than those working in corporate offices?
[Author’s comment] Mr. Geoghegan’s suggestion could tick all the boxes, creating a win-win situation for everyone concerned. In many ways it makes perfect sense. Productivity could well be increased by having fewer stressed out employees facing a long trek into the office every day. Hours would be shorter but put to better use. And with technology enabling instant communication as and when needed, there is really no need to have everyone under the same roof.
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This is an important issue towards which we will see many innovative solutions over the next five years. By balancing community issues of traffic, organizational issues of productivity and employee issues of flexibility, companies will explore options of having employees work at home full or part time, creating flexible starting hours or days of work, ways of utilizing office space and ways of addressing consumers 24/7.
There is no one right way that will work for all companies. What is clear is that a 9 to 5 occupation of office space by all employees is not the model of the future. Monitoring experimental configurations and measuring the results on productivity, synergy, communication effectiveness, traffic, consumer satisfaction and employee motivation will be important for companies when planning to make changes in their own organizations.
Two afterthoughts. As well as Roger, Lisa Belkin recently wrote in the NY Times about ROWE and its success. Secondly, back to HSBC, I read today that some 80% of their corporate outgoings are down to the costs of maintaining their buildings. They are investing huge amounts of money in reducing their carbon footprint and therefore costs; this would appear to be one of their solutions.
The nature of work and the way we work is changing. Yes, there are some negatives about having a remote workforce but many organizations have found the positives far outweigh the negatives.
Besides freeing up space that is very expensive, this becomes a great marketing tool when trying to attract potential employees or retain many of the employees you have. A couple of advantages include (not in order of importance):
1. Being perceived as environmentally friendly.
2. Higher productivity (think about all the time you spent in traffic getting to work this morning.
3. Only need to bring people into the office X days a week or a month so that you can keep teams intact.
4. Like Jet Blue can be able to call on people based on the work flow.
5. Having a competitive advantage over those organizations that do not allow telecommuting.
This is just a starter list. It’s the right move for lots of good reasons.
It depends on the type of job. If someone is rewarded by the their output then working at home should be no problem. No more wasting time commuting to work. No annoying coworkers stopping in to chat, no office bullies asking you to go get a VPs car washed, no dress code, you don’t have to shower and shave, and you can have beer for lunch. It works for me.
Have you heard about ROWE, results-only work environment? (I wrote about it last year in the November issue of Integrated Retailing.) In ROWE, most of the rules, restrictions and expectations within which corporate workers traditionally labor–such as keeping regular hours and showing up at the office each morning–are discarded. Instead, employees are allowed to decide how, when and where they get their job done.
Since Best Buy began switching to ROWE on a division-by-division basis, 60% of the 4,000 people at its headquarters campus have converted. Employees report better relationships with family, friends and co-workers, feel more loyalty to the company, and feel more energized about their work.
And oh yeah, PRODUCTIVITY JUMPED BY 35%. The company stands to save about $13 million a year from reduced turnover replacement costs alone.
Once freed from old rules and obligations, employees and managers find ways to become more efficient. A lot of technology companies and other firms have been experimenting with such flexible arrangements for years. Some 30% to 40% of employees at both IBM and AT&T have no official offices.
Officials at Sun Microsystems came to the realization several years ago that 50% of their office seats were routinely unoccupied. So they cut their office space in half and trimmed their annual real estate operating budget from $1 billion to $450 million.
Not all of the implications and effects of the new work environment (or the lack of one) are fully known or understood. There are personnel issues, organizational considerations, human requirements, psychological needs, etc. Working remotely can leave employees feeling isolated and disconnected, and managers feeling they lack control. It can also be a real morale killer.
But if Best Buy can increase productivity by 35%, and Sun Microsystems can save half a billion dollars, I think we can expect a big increase in the practice over the next many years.
Traditional workplaces are expensive. In the era of high gasoline and urban sprawl, it is even more expensive for employees to get to and from. Plus they are noisy and disruptive. How many times during my career have I been unable to get a some important thing done because I couldn’t concentrate at work or was distracted.
Yet workplaces play a vital role in supporting the culture of a corporation, to provide training center, a place for coffee break, a place for a research library, a display about company history, a place to get recharged. No matter how wonderful the company’s IntraNet, there is nothing better than talking to someone in the flesh and blood. Corporations that embrace telecommuting need provide a center for all of its itinerants–much like a university’s student center.
There are a lot of angles to the “work at home” question. It continues to confound me why so many companies still require employees to come to a central location and why commercial real estate continues to increase in price. When this discussion comes up I always think of the California earthquakes in 1989 when the freeways were so badly damaged. The response was to create “work hives” where remote offices were set up and dedicated communications lines were installed to connect employees.
It seems like with today’s technology and the widespread availability of VPN’s that the work hive concept makes more sense than ever. With the added expense of increased energy costs and the increased contribution of virtual goods to the gross domestic product, it even makes greater sense. Some companies have already made the transition. Many call centers are now operated as virtual locations with their employees logging into the network when they’re on call. It is only a matter of time until other businesses are conducted the same.
But there are valid reasons why not all jobs can be performed at home. It often takes a team of people with a variety of skills to accomplish a task. But as businesses become smarter, they will realize that the teams don’t all have to be in one place. It makes sense to put the data center in a mountain somewhere that is remote from possible attack, but not all the company employees need to be isolated. The work hive is a good compromise, allowing employees to avoid long commutes yet share a common office environment. As more and more people turn to online shopping, maybe mall retail space will be turned into hives.
There have been several discussions about the Best Buy effort to reduce the number of employees who commute to the office. I think the risk in retail is that you don’t want to loose the customer contact that the store personnel provide. If a customer has come to your retail location to buy something, there need to be employees ready to meet their need. These employees could make the most significant impression on your customers. You don’t want work rules in place that seem to devalue the importance of this role.
There is a better way, and the technology is affordable. The only challenge now is the ability of management to recognize and sponsor the changes.
Some people have the focus and environment at home to perform certain jobs very well. For those folks, commuting to an office is a waste of time. But certain jobs require face-to-face collaboration. And some people have too many distractions at home or not enough space. The cost of renting office space in certain areas can easily be $10,000/year or more per person. Furthermore, some positions’ productivity can easily be measured, so the job location isn’t material. For example, it’s easy to measure a salesperson’s performance each week and each month.
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This is an important issue towards which we will see many innovative solutions over the next five years. By balancing community issues of traffic, organizational issues of productivity and employee issues of flexibility, companies will explore options of having employees work at home full or part time, creating flexible starting hours or days of work, ways of utilizing office space and ways of addressing consumers 24/7.
There is no one right way that will work for all companies. What is clear is that a 9 to 5 occupation of office space by all employees is not the model of the future. Monitoring experimental configurations and measuring the results on productivity, synergy, communication effectiveness, traffic, consumer satisfaction and employee motivation will be important for companies when planning to make changes in their own organizations.
Two afterthoughts. As well as Roger, Lisa Belkin recently wrote in the NY Times about ROWE and its success. Secondly, back to HSBC, I read today that some 80% of their corporate outgoings are down to the costs of maintaining their buildings. They are investing huge amounts of money in reducing their carbon footprint and therefore costs; this would appear to be one of their solutions.
The nature of work and the way we work is changing. Yes, there are some negatives about having a remote workforce but many organizations have found the positives far outweigh the negatives.
Besides freeing up space that is very expensive, this becomes a great marketing tool when trying to attract potential employees or retain many of the employees you have. A couple of advantages include (not in order of importance):
1. Being perceived as environmentally friendly.
2. Higher productivity (think about all the time you spent in traffic getting to work this morning.
3. Only need to bring people into the office X days a week or a month so that you can keep teams intact.
4. Like Jet Blue can be able to call on people based on the work flow.
5. Having a competitive advantage over those organizations that do not allow telecommuting.
This is just a starter list. It’s the right move for lots of good reasons.
It depends on the type of job. If someone is rewarded by the their output then working at home should be no problem. No more wasting time commuting to work. No annoying coworkers stopping in to chat, no office bullies asking you to go get a VPs car washed, no dress code, you don’t have to shower and shave, and you can have beer for lunch. It works for me.
Have you heard about ROWE, results-only work environment? (I wrote about it last year in the November issue of Integrated Retailing.) In ROWE, most of the rules, restrictions and expectations within which corporate workers traditionally labor–such as keeping regular hours and showing up at the office each morning–are discarded. Instead, employees are allowed to decide how, when and where they get their job done.
Since Best Buy began switching to ROWE on a division-by-division basis, 60% of the 4,000 people at its headquarters campus have converted. Employees report better relationships with family, friends and co-workers, feel more loyalty to the company, and feel more energized about their work.
And oh yeah, PRODUCTIVITY JUMPED BY 35%. The company stands to save about $13 million a year from reduced turnover replacement costs alone.
Once freed from old rules and obligations, employees and managers find ways to become more efficient. A lot of technology companies and other firms have been experimenting with such flexible arrangements for years. Some 30% to 40% of employees at both IBM and AT&T have no official offices.
Officials at Sun Microsystems came to the realization several years ago that 50% of their office seats were routinely unoccupied. So they cut their office space in half and trimmed their annual real estate operating budget from $1 billion to $450 million.
Not all of the implications and effects of the new work environment (or the lack of one) are fully known or understood. There are personnel issues, organizational considerations, human requirements, psychological needs, etc. Working remotely can leave employees feeling isolated and disconnected, and managers feeling they lack control. It can also be a real morale killer.
But if Best Buy can increase productivity by 35%, and Sun Microsystems can save half a billion dollars, I think we can expect a big increase in the practice over the next many years.
Traditional workplaces are expensive. In the era of high gasoline and urban sprawl, it is even more expensive for employees to get to and from. Plus they are noisy and disruptive. How many times during my career have I been unable to get a some important thing done because I couldn’t concentrate at work or was distracted.
Yet workplaces play a vital role in supporting the culture of a corporation, to provide training center, a place for coffee break, a place for a research library, a display about company history, a place to get recharged. No matter how wonderful the company’s IntraNet, there is nothing better than talking to someone in the flesh and blood. Corporations that embrace telecommuting need provide a center for all of its itinerants–much like a university’s student center.
There are a lot of angles to the “work at home” question. It continues to confound me why so many companies still require employees to come to a central location and why commercial real estate continues to increase in price. When this discussion comes up I always think of the California earthquakes in 1989 when the freeways were so badly damaged. The response was to create “work hives” where remote offices were set up and dedicated communications lines were installed to connect employees.
It seems like with today’s technology and the widespread availability of VPN’s that the work hive concept makes more sense than ever. With the added expense of increased energy costs and the increased contribution of virtual goods to the gross domestic product, it even makes greater sense. Some companies have already made the transition. Many call centers are now operated as virtual locations with their employees logging into the network when they’re on call. It is only a matter of time until other businesses are conducted the same.
But there are valid reasons why not all jobs can be performed at home. It often takes a team of people with a variety of skills to accomplish a task. But as businesses become smarter, they will realize that the teams don’t all have to be in one place. It makes sense to put the data center in a mountain somewhere that is remote from possible attack, but not all the company employees need to be isolated. The work hive is a good compromise, allowing employees to avoid long commutes yet share a common office environment. As more and more people turn to online shopping, maybe mall retail space will be turned into hives.
There have been several discussions about the Best Buy effort to reduce the number of employees who commute to the office. I think the risk in retail is that you don’t want to loose the customer contact that the store personnel provide. If a customer has come to your retail location to buy something, there need to be employees ready to meet their need. These employees could make the most significant impression on your customers. You don’t want work rules in place that seem to devalue the importance of this role.
There is a better way, and the technology is affordable. The only challenge now is the ability of management to recognize and sponsor the changes.
Some people have the focus and environment at home to perform certain jobs very well. For those folks, commuting to an office is a waste of time. But certain jobs require face-to-face collaboration. And some people have too many distractions at home or not enough space. The cost of renting office space in certain areas can easily be $10,000/year or more per person. Furthermore, some positions’ productivity can easily be measured, so the job location isn’t material. For example, it’s easy to measure a salesperson’s performance each week and each month.