Towards a Strategic Approach to Workplace Solution Planning for Multinational Professional Services Firms


Master's Thesis, 2014
37 Pages, Grade: B

Excerpt

Table of Content

PREFACE

1 INTRODUCTION AND OBJECTIVES
1.1 Strategy, CREM and Workplace Solutions
1.2 Professional Services and Knowledge Work
1.3 Strategic Driving Forces and CRE Strategies in P-KIBS Firms
1.4 Objectives

2 LITERATURE REVIEW
2.1 Integrated Resource and Infrastructure Solution
2.2 The Business and HR/Office User Perspective
2.2.1 Work tasks, styles and roles in professional services firms
2.2.2 Significance of the workplace in a generational and cultural context
2.3 The CREM and Finance Perspective
2.3.1 Resource and infrastructure costs in a multinational context
2.3.2 Performance Measurement

3 CONCEPTUAL FRAMEWORK

4 CONCLUSIONS

ABSTRACT

Purpose – To explore current practice and integrate proposed concepts from academic literature into a more comprehensive conceptual framework for workplace solution planning that is applicable to professional services firms. The paper aims for facilitating holistic considerations of strategic opportunities and, therefore, may enhance approaches in the early stages of workplace transformation projects. It also presents a critical reflection of the contemporary cost reduction paradigm.

Design/methodology/approach – Review of literature from a wide range of academic disciplines and practitioners.

Findings – In the realm of contemporary workplace solutions there is little evidence to be found of an evolution of CREM towards a truly strategic discipline but it still appears to be focused on operational metrics in the aftermath of the greatest recession after World War II.

Originality/value – This paper integrates findings and theories from different disciplines in order to create a contextual understanding about the nature of knowledge work and the requirements for productivity-focussed workplace solutions in professional services firms.

Keywords – Corporate real estate management, strategy, workplace, knowledge work, performance measurement

Paper type – Conceptual paper.

Figures and Tables

Abbildung in dieser Leseprobe nicht enthalten

PREFACE

In late 2012 the author took part in a comparative field study on the traits of contemporary corporate real estate management which was conducted by a group of postgraduate students from the Real Estate and Planning Department at Henley Business School, University of Reading, UK.

The study was based on anecdotal evidence from a convenience sample of three publicly-listed, international, technology and/or manufacturing and trade-oriented companies originating from three different continents. It comprised a critical review of both publicly available information on the firms and presentations by the corporate real estate executives given to the postgraduates, brief interviews of those executives as well as personal observations made during visits of the companies’ premises.

It turned out, that, despite differences in strategies, structures, planning, execution and so forth both on corporate and real estate levels all corporate real estate units examined were concerned about changing requirements for office workplaces. One company had already adopted a “workplace concept for flexible working, that encourages communication.” While at another company, their first “office layout policy” was to be released in early 2013 giving “flexible workspace more emphasis for cost cutting reasons”, the third company had just carried out a study of workplace utilisation. 60% utilisation, i.e. number of people per desk, was measured through access control cards and the new target was set at 75% utilisation rate. The average size of office workplaces at that company was 11.3sqm per desk.

In his paper, the author concluded, that despite significant differences in industries and, hence, strategic drivers as well as cultures and pursued corporate strategies, all sample companies seemed to apply similar workspace “strategies”, namely cost reduction by increasing workspace density and reducing the number of workplaces per employee through the promotion of desk sharing and hot desks. The author found little evidence of thorough strategic planning based on the analyses of, for instance, specific requirements for different departments, roles, generations, or cultures in order to exploit strategic opportunities in attracting and retaining employees. As for strategic control, workplace related key figures appeared to be predominantly driven by cost efficiency rationalities with hardly any kind of user satisfaction surveys.

At that time the author’s employer, an international professional services firm, had also started a global “workplace of the future programme” that “improves [their] brand and the way [they] serve [their] clients, drives engagement of [their] people and helps them work more effectively [and, again] achieves real, tangible cost savings.” Interestingly, the latter objective could almost always be observed in proposals from consultancy firms specialised in workplace transformation advisory.

Though, undisputable, cost reduction may contribute to a company’s competitive advantage and, generally, modern office work in an ever-changing business environment may demand for different office work concepts than in the past, however, some questions came to the author’s mind: Is it a fortunate coincidence that modern and strategically optimal office space in all cases comes with lower real estate costs irrespective of industries, strategies, type of work, cultures etc.? What are the relations and interdependencies of real estate costs and other costs such as HR and IT? What may be a strategically optimal office space for an international professional services firm in general? What are the strategic drivers and relevant aspects to be considered in truly strategic workplace solution planning?

In order to find answers to those questions, in this paper, the author attempts to take his previous research a step further by developing a comprehensive understanding of the influential factors of workplace design and a practical framework to evaluate workplace strategies while focusing on professional services firms for such firms are characterised by office use only and a special type of work and work force.

1 INTRODUCTION AND OBJECTIVES

In a recent survey, Cushman & Wakefield (2013) found that workplace transformation is a top priority for corporates around the globe. More than a third of participants indicated that their organisation was in the process of implementing a workplace change programme and another quarter of respondents were planning to do so in the short term.

Figure 1{SEQ Figure \* ARABIC }: Primary Drivers of Workplace Transformation

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Source: adopted from Cushman & Wakefield (2013)

The researchers assert that overall the ‘strategic factor’ and ‘human resource factor’ dominate the motives with the ‘financial/cost factor’ ranking only third (see Figure1). However, reducing real estate costs was the most cited driver from a list of twelve items from which respondents were asked to choose the top three.

Figure 2 {SEQ Figure \* ARABIC}: Developments of Office Innovations

Abbildung in dieser Leseprobe nicht enthalten

Source: adopted from van Voordt and Vos (1999)

General trends involve changes in office work environments on different levels:

- place
- space and
- use

(van der Voordt and Vos, 1999; see Figure2). While technological advancement (e.g. affordable mobile devices, ubiquitous broad band/WiFi and secure cloud computing) provide for the possibility to move from central to dispersed workplaces, i.e. teleworking from home or third places, social realities, labour market conditions, business and, perhaps, transportation as well as ecological sustainability concerns may require more flexibility in where (and when) people work in the twenty-first century. The changing nature of work in the knowledge economy and a new generation of workforce, i.e. the generation Y, lead to organisational changes with more team-driven settings requiring more interaction in both the virtual and physical space. As for the latter, many workplace experts suggest a transition from the traditional cellular office to an open-plan office or a diversity of space. Finally, the proliferation of modern building technology including electronic access systems provide the data for utilisation analyses as the basis for efficiency measurement in corporate real estate management (CREM) and lends quantitative support to the idea of moving from personal to shared/non-territorial use of office space.

At first glance, this seems to be a great opportunity for CRE managers to kill two birds with one stone: Both providing less (non-assigned) workstations than FTE accounting for workers’ mobility and moving to open-plan layouts increase utilisation rates and reduce space per worker as well as carbon footprint and at the same time may improve interaction, too, which all should ultimately add value to the “new bottom line”– people, planet, profits (CoreNet Global, 2014). This reasoning appears both efficient and effective. It may even be regarded “strategic” in a number of ways: allowing employees for more flexibility in place and time of work as well as newly re-designed offices with modern furniture and attractive interior designs reflecting the corporate visual identity may increase employer satisfaction and sense of community and, in turn, both improve retention rates and facilitate recruiting which the human resources department (HR) may consider a “competitive advantage” (CA) in the “war for talent” on tight labour markets. As for sales markets, higher satisfaction and better collaboration may boost productivity and innovation and enhance product/service quality and delivery time which, again, may constitute a CA.

Nonetheless, there are some, “paradoxes” (Pearlson and Saunders, 2001; Aaltonen et al., 2012) or “dilemmas” (Becker, 2002). For instance, if face-to-face informal interaction and collaboration is regarded crucial for creativity and innovation, telework, which over the last two decades has been growing, especially in governmental agencies (Pugsley and Haynes, 2002; NAO, 2006), ought not to be actively promoted by private companies, although it may need to be allowed under certain circumstances. In fact, Yahoo and Best Buy, for instance, have recently abolished their work-from-home policies for this reason.

If the workplace provided by CREM, FM and IT is optimally configured for office work with all the modern infrastructure required to perform office tasks efficiently including fast, stable and secure broadband connections, large screens, video conferencing facilities, high performance colour scanners, printers and fax machines, telephones with integrated directories and headsets, ergonomic furniture, comfortable lightning and air conditioning, perhaps on-site IT support, a library, (letterhead) stationary and so forth, employees’ homes and other third places are likely to be suboptimal to perform all the wide range of office tasks as efficient as in a workplace that is specifically designed and equipped for such tasks.

Secondly, the underlying assumption of improved collaboration through open-plan layouts and non-territorial workplaces leading to higher satisfaction and productivity may be challenged and may not hold for all kinds of people, roles, tasks and work styles. There is evidence that workplaces that are not appropriate for distraction-free work make knowledge workers prefer to work at home (Haynes, 2008; Joy and Haynes, 2011; Greene and Myerson, 2011).

Hence, the asserted benefits of an increased workplace density and internal mobility require a sound analysis of processes on business unit level in order not to be perceived by employees as a fig leaf that covers pure cost saving motives.

People are very sensitive to what is honest, real and realistic (Pullen, 2001:122).

A deep and integrated understanding of the three P’s (van der Voordt and Vos 1999), i.e.

- people (HR perspective)
- processes (business unit perspective) and
- places (CREM perspective)

as well as their interrelations is needed for workplace planning to be truly consistent with strategy.

1.1 Strategy, CREM and Workplace Solutions

In order to achieve superior performance in a competitive and dynamic environment and, hence, create shareholder value as the primary goal of any enterprise, top management defines the business strategy leveraging sustainable CA based on a strategic fit of strengths and weaknesses of the business unit on the one hand (resource-based view/inside-out approach; Rumelt, 1984; Wernerfelt, 1984; Porter, 1985; Prahalad and Hamel, 1990; Barney, 1991; Hall, 1993) and opportunities and threats in its macro- and micro-environment on the other hand (industry-structure view/outside-in approach; Ansoff, 1965; Andrews, 1971; Porter, 1980). The selected business strategy needs to be translated consistently into functional strategies for the entire value chain (Porter, 1985) including corporate real estate as a secondary activity supporting the primary activities, which produce the market output customers pay for. Continuous strategic control feeds back to the strategy formulation (see Figure3; for a critique of this controlled, conscious ‘design school’ approach and an incremental approach for learning organisations see Mintzberg, 1990).

Figure { SEQ Figure \* ARABIC }: Design School’s Rational Model of Strategic Management

Abbildung in dieser Leseprobe nicht enthalten

As, eventually, shareholder wealth is primarily influenced by revenues and costs, especially the expectation of future potential revenues and costs, strategies should, according to Porter’s (1985) seminal work, focus either on one or the other side of the coin depending on their individual strategic fit. The author suggested two alternative generic ways of competitive positioning that he termed either with a broad market scope or a niche focus.

- differentiation on product/service quality and
- cost leadership

In a later article, Porter (1996) stressed that CA results from the selected combination of consistent and reinforcing activities, i.e. the fit of the entire ‘activity system’ that is different from that of rivals, which generates sustainability and forms the essence of strategy, i.e. a unique and valuable position. He pointed out, that, while important for achieving superior performance, pure operational effectiveness (OE) must not be confused with strategy since this can easily be imitated by competitors. OE includes but is not limited to efficiency and means performing similar activities better than competitors, whereas strategic positioning means performing different activities or similar activities in different ways.

Figure4{ SEQ Figure \* ARABIC}: Conceptional Framework for Strategic CREM Alignment

Abbildung in dieser Leseprobe nicht enthalten

Source: adopted from Haynes (2012)

Despite the emergence of CREM as a distinct discipline (Heywood and Kenley 2007) and CRE researchers having turned to the promotion of strategic aspects of CRE around the turn of the millennium, the relationship between corporate strategy and real estate decisions and operations is not yet well understood (Lindholm et al. 2006; Heywood and Kenley, 2008a). The majority of CRE literature deals with operational efficiency, i.e. the question how better management of the tangible asset may contribute to the firm’s bottom-line (Park and Glascock, 2010; Jensen et al., 2012).

Figure5{SEQ Figure \* ARABIC}: Value-add Model of CRE Strategies

Abbildung in dieser Leseprobe nicht enthalten

Source: adopted from Lindholm et al. (2006)

Haynes (2012) proposed a theoretical framework, “the ten P’s”, to achieve alignment of corporate strategy and CREM leading to enhanced performance and productivity (see Figure4).

On a tactical rather than strategic level, Nourse and Roulac (1993) presented ‘alternative real estate strategies’, which largely resemble the CRE strategies derived from international empirical studies by Lindholm et al. (2006) who asked CREM executives how they believe CREM adds value to the firm (see Figure5; order reflects frequency of executive’s definitions of added value of CREM).

While Burns (2002) claims that CRE can contribute to competitiveness both as a physical and as an intangible asset inasmuch as it supports organisational climate and workforce, most authors connected the concepts of the strategic management literature only to the physical CRE and its ability to facilitate competitiveness (O’Mara, 1999; Singer et al., 2007).

However, Park and Glascock (2010) argued, that, due to its generic and easily imitable nature, strategic value rarely resides inherently in the tangible CRE as a valuable, rare, imperfectly imitable and strategically unique resource (Barney 1991) that – in an “isolating mechanism” (Rumelt 1984) – creates entry barriers at the firm level, but in intangible resources that create capability differentials from which sustainable competitive advantage results.

In the ‘knowledge economy’ sustainable competitive advantage is created through knowing how to combine and coordinate resources and capabilities, including, as argued by CRE researchers, the physical environment in which the firm’s activities are carried out (Park and Glascock, 2010:8).

Hence, from a resource-based view and organisational routines approach to organisational capabilities, advocated by Heywood and Kenley (2008a), CREM contributes to CA as part of an ‘integrated resource infrastructure solution’ (IRIS, CoreNet Global, 2004, rebranding Materna and Parker’s (1998) corporate infrastructure resource (CIR) management concept), i.e. through the ‘strategic fit’ of the ‘secondary activities’ supporting the core business (primary activities) and influencing individual and organisational behaviour and, hence, performance in the organisation’s ‘value chain’ and ‘entire activity system’ (Porter, 1985, 1996).

The structural aspect of workplace style is among the most positively and negatively influential domains of technical CREM practices as operational strategies supporting or retarding organisational competitiveness through both cost and differentiation as sources of CA, which was theorised based on literature and empirically confirmed in a small-scale survey by Heywood and Kenley, (2008a, 2008b, see also Lindholm et al., 2006; Appel-Meulenbroek and Feijts, 2007). However, the authors concluded, that contradictory effects in the empirical results call for further research on a larger data base and on the level of individual practices.

1.2 Professional Services and Knowledge Work

Professional services constitute one of the largest segments of what in a growing body of literature since the 1990s have been labelled knowledge-intensive business services (KIBS) which in developed economies contribute considerably to the gross value added, employment and even trade both in terms of absolute figures and growth rates.

In absence of a universally accepted definition of professional services and knowledge work, a purpose-oriented characterisation is adopted in this paper that relates to the resource-based view in strategic management.

Professional services firms provide, for instance, accounting or management consulting services as an intermediate input to other organisations. Though potentially also provided for final consumption to private consumers, legal and tax consultancy services are commonly included in the segment of the so-called P-KIBS. In contrast, technology-based services helping clients to exploit new technology (T-KIBS) as well as information-based intermediary services (e.g. real estate brokerage) are omitted from the working definition of professional services in this paper (see Miles et al., 1995; Sissons, 2011).

The production process of professional services is characterised by the application of knowledge by highly educated employees to provide a one-time solution to a client’s specific problem that escape standardisation, both operationally and conceptually. Hence, the key resource is codified and, in particular, tacit knowledge being both an input and output of the production process (Nachum, 1999; Muller and Doloreux, 2009).

Professional services typically constitute project work which often involves multiple professional disciplines or areas of expertise and globalisation has led to professional services firms operating more and more at a multinational level providing cross-border services to multinational clients.

1.3 Strategic Driving Forces and CRE Strategies in P-KIBS Firms

For P-KIBS, Porter’s (1980, 1985) key strategy tools – five forces, generic strategies and value chain – need modifications since they are too much oriented to industrial enterprises. Reputation, relationships and tying clients as well as experts to the firm have been suggested as strategic driving forces and a focus on value enhancement rather than cost reduction is advocated due to the quite fixed cost structure with high labour costs and little economies of scale (Stabell and Fjeldstad, 1998; Sheehan, 2005).

[...]

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Details

Title
Towards a Strategic Approach to Workplace Solution Planning for Multinational Professional Services Firms
College
Henley Business School University of Reading  (Department of Real Estate & Planning)
Course
Independent Study
Grade
B
Author
Year
2014
Pages
37
Catalog Number
V455174
ISBN (eBook)
9783668863040
ISBN (Book)
9783668863057
Language
English
Notes
Independent Study: The module is an elective part of the flexible Masters programme and an alternative to the dissertation module integrating the knowledge, understanding and skills developed previously across the whole programme in the context of a particular study undertaken. However, this final paper is somewhat less comprehensive than a full thesis.
Tags
Corporate real estate management, strategy, workplace, knowledge work, performance mearsurement
Quote paper
Diplom-Kaufmann Thilo A. Bäß (Author), 2014, Towards a Strategic Approach to Workplace Solution Planning for Multinational Professional Services Firms, Munich, GRIN Verlag, https://www.grin.com/document/455174

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