Workplace Planning – Growth & Uncertainity

Your workplace reciprocates the work culture and values promoted by your organization. At one end of the spectrum are organizations which promote themselves as workplaces with high fun quotient and at other end are the ones who believe in serious working environment. The Real Estate or Workplace planning team plays a vital role in creating the physical infrastructure around the organizations philosophy.

Workplace planning start with a basic requirement

• Number of productive seats required by the business

Other ancillary spaces such as cabins, meeting rooms, tele-presence, cafeteria etc. are added up and design brief is prepared. Organizations operational culture and industry best practices play their part in finalizing the brief.

The general thumb rules of density are applied to calculate the area to be leased out. In Indian conditions, this ranges from 50 Sqft / Workstation for BPO’s & Call centers to 200 Sqft / Workstation for MNC’s in FMCG & Financial Services. Higher the density lower is the RE leasing cost per workstation. The excitement starts in planning the workplace to incorporate future “Growth” which is “Uncertain”.

Growth can be Uncertain

Commercial Leasing

The commercial lease has two components - committed space and hard options with rights to first refusal. Hard option commitments provide additional time to decide on the future growth. The leasing team assesses the level of uncertainty and negotiates the hard option accordingly.

Workspace Planning
The business plan considers capital expenditure budgets that cover only the committed area and calculates the number of productive workstations based on the general density guidelines of their respective corporate culture and past experiences. The two important ratios which form part of business plan are “Capex / productive workstations” and “Percentage Seat Utilization”.

Broadly, the workspace planning distributes the available space between:

1.          Productive Spaces – Workstations, Cubicles & Offices

2.          Engagement Spaces – Reception, Security, Conference Rooms, Utility Room, Cafeteria & Pantry, Recreation & breakout areas, Storage & Compactors etc.

3.          Circulation Space – This is usually 30% - 35% of the total area covered in point 1 & 2

Planning “Productive” & “Circulation” Spaces is straight forward but planning of “Engagement” Spaces tests your risk appetite. Some of these spaces like conference Rooms, Training rooms, Pantry, Breakout areas etc are also easy to decide and can be located such that they are distributed uniformly around productive areas. They can be increased later along with the future growth.

But certain areas (such as Reception, Business Center, Board Room, Cafeteria & Kitchen, Interview rooms, Back of the House etc.) can’t be located at multiple locations and would require advanced planning for future growth. The real challenge lies in finalizing the size and location of these areas.

Strategize early
Conservative – Execute based on current situation without thinking about the future: As the saying goes “it’s better to have one bird in hand than two in bush”, close your eyes on future requirements and work towards executing the current needs. The project will be completed within approved budget and timelines. On a bigger picture, this approach can be more disadvantageous as additional time, money & resources will be spent in future when growth becomes certain.

Progressive – Prepare a long term strategy: This is high risk, high gain approach and tests the risk appetite of the business head. If growth happens, he will be known for his long sightedness and will benefit from this approach in future. The ratio of “capex / productive employee” goes up in short term but when Growth is certain it reduces drastically and saves lot of inconveniences later. Refer Exhibits.

Exhibits show the pattern of space utilization or density (Area / Workstation) with reference to the increase in Leasable area. It shows the density increases as the different phases are executed. The area under each phase is considered same for the purpose of this analysis. (For example: If each Phase has same area “X” and total area after Phase 3 is “3X”). Phase I has all the engagement spaces large enough to cater to all the 3 phases and hence the production density is very low.

Exhibits show the pattern of Capex / Production seat or Cost / FTE with reference to the increase in Leasable area. It shows the cost per production seat is reduced as different phases are executed and number of production seats are increased. The Engagement spaces are considered part of Phase I while Phase I & II are completely production spaces.

Adaptive – Develop Scalable Model customized to Organizations requirements – Prioritize between Productive and Engagement Spaces. Business comes first and some of the Engagement areas can happen later with growth. On Flip side, Employees are connected emotionally to Engagement spaces and compare them with other organization. Are you prepared to convince employees if some accessories are missing from your office?

End Note
Time is money. Choices are straight but tough, revenue or employees!! The decision making skill gets tested not only at the time of planning but also after start of operations. Can you strike the right balance? Are you prepared to face the challenge!!