Episode 5: Adapting to Change With Strategic Shifts

Jennifer Heath 0:14

Hello, everyone. Welcome. Thank you so much for joining us for the Hybrid Hangout podcast. My name is Jennifer Heath. I’m the Director of Product Marketing here at FM:Systems, joined by Mr. Brian Haines.

 

Brian Haines 0:27

Back again, I’m Brian Haines, Chief Strategy Officer here at FM:Systems, living the hybrid life.

 

Jennifer Heath 0:35

Same. Brian and I were just chatting about how we are real jetsetters right now, I think between the three of us, we’ve been in five different states in the last two months. And today, we’re luckily both working from home. And although we both do have that very problematic pet issue at home, we both have dogs that may chime in at any moment. So I think that’s one of the funny things about hybrid work is everyone is much more forgiving now of everyone’s at home situations.

 

Brian Haines 1:05

Yeah so if like you see me suddenly jump up, it’s because this cat jumped on my lap suddenly. And she usually does it with claws extended so i’m slightly cautious right now.

 

Jennifer Heath 1:20

Well, we’ll be prepared, if anything happens.

 

Brian Haines 1:22

All right terrific. Yeah let’s go.

 

Jennifer Heath 1:24

All right, so our topic today is adapting to change with strategic shifts. This is going to be a little bit of a combination of a lot of different things that we’ve talked about I really want to hone in on sort of three big areas of change, we can talk a little bit about some of the strategies and the iterative process that folks are taking to deal with those. And those three areas are the importance of an iterative process, the fact that your strategy will always be changing, we’re no longer in an era where you can put a plan in place, and then maybe reevaluate it five years, 10 years down the line. Things are much more fluid now, we have a much bigger impact on talent acquisition and recruiting and retention. And that really forces an iterative process. So we’ll talk a little bit about that. I also want to look at real estate as more of an investment than an assumed cost. I know Brian and I both have big ideas on the way we have kind of shifted the concept of ROI, what does it mean to get a return on your investment. And then finally, I want to look at ESG, the emergence of ESG, the increasing importance of ESG and corporate strategy, and how that is rolling into all these different real estate portfolios. So I tell you, what, Brian, let’s start with corporate real estate as an investment versus a cost. So for so many years, you had to have enough space for all your employees, and whether or not all your employees were always there, there was an assumption that you had to have space for everyone. And that, to me is one of the biggest changes we have seen, since the pandemic is the workplace, the office, your real estate portfolio really has to be something different today. What are your thoughts on that?

 

Brian Haines 3:23

Yeah, well, Jen, it goes back to some of the early conversations that you and I have had about this. You know, before the pandemic, when we were in primarily an assigned seating world, it was really easy to understand how your facilities were being used. You know, productivity was really measured by presenteeism. Are you at your desk? Or are you not? There was sort of a general understanding that that’s the way we’ve measured our performance, as well as the effectiveness of the use of our real estate. Well, now it’s obviously quite chaotic with the way people are using their real estate, and they need to think about it in an entirely different way. That way, also needs to be measured. I really think that all of us have an understanding that the modern workplace is much more about collaboration and a lot less about, let’s say, presenteeism. As we think about things like culture, ideation, team building, is really about bringing people together, we still need our real estate, it’s still as important if not more important than ever, but it really needs to be viewed as an asset to the organization in a way that’s flexible. And can change depending upon incoming information and information is key here. You’ve got to have a lot of it, you’ve got to be able to measure it because, you know, we as humans are just not really good at understanding complex patterns, especially when things are out of sight out of mind. There’s a lot of technology in our facilities or potential technologies that can be used these days to keep an eye on things and to track and maintain a deep understanding of the way our facilities are being used. And that matches up with being able to measure the chaotic nature of the way we’re using our facilities. I saw recently, you know, I think there was a thought, Jen, that a lot of organizations were going to shed a lot of real estate, because of low utilization. That’s actually not, it doesn’t look like that’s the case, it looks like organizations on mass are either, you know, they may have gotten rid of some, but they’ve added others in a different kind of real estate, right. Really focusing on things like collaboration spaces, huddle spaces, probably less dedicated workstations, a lot more dedicated space, or getting together for meetings, whether it’s virtual or in person or mixed. So I really think it is, it’s an absolute investment, as opposed to a cost, right? It’s really looked at very differently.

 

Jennifer Heath 6:05

Definitely. And I think, you know, historically, in our industry, we’ve talked a lot about different solutions and the ROI that they bring the return on that investment. And it was really always about cost savings, right? I mean, you would spend so much money on a solution or a process. And then you would expect to get some sort of cost savings back from that measure. And I think today people are really looking at what is the value that my real estate brings. And solutions are not always about cost savings. That may be an important component, but it’s very much more about what are you trying to get out of your real estate? Are you trying to drive utilization and bring people into the office? Is that really the value? Or are you trying to preserve an important historic building that’s, you know, like a centerpiece of your portfolio? Is that really the value? Or maybe it’s focusing on your sustainability goals. And so you want to invest in technology or solutions that are driving you towards more sustainability, more autonomous buildings. But those things are not always going to give you cost savings. And that’s why I think it’s important for people to think a little bit differently about that term ‘return on investment,’ it’s not always going to be about getting your money back. It might be about improving that utilization, or improving your retention scores, your recruiting capabilities, because you are offering that workplace experience that people are really looking for today.

 

Brian Haines 7:34

Yeah, absolutely. I couldn’t agree more.

 

Jennifer Heath 7:36

So the next sort of key change that we’re looking at is around that idea of an iterative process. And, again, this is something we talk a lot about, because in order to make those iterative decisions to make these small changes, and try to measure the effectiveness, you have to know what it is that you’re measuring. So really, identifying the workplace data sources that are important to you that you have access to, identifying which ones would give you the most value is really the first step in establishing that iterative process of making these incremental changes. And I think people are starting to recognize that. Early on in the pandemic, when we had a particular client, I can’t even remember now who it was. And we were talking about their transition to hybrid work. And he said that his whole team, his real estate team, they all agreed that there were no failures, they would try and they would learn and then maybe they would try something else, and they would learn. But they had a very open idea policy of there are no bad ideas, there are no failures, there are no mistakes, we just have to try and see what works. And I think that is a good mantra for anyone who’s looking to really make some strategic changes in how they operate their workplace.

 

Brian Haines 8:58

Yeah, it’s interesting, I think back to the way the workplace used to be. And whenever an investment was made, to maybe reconfigure a floor, maybe some renovation retrofit, it really all came down to the return on investment on making that big capital investment into the facility. What we need now is a lot more flexibility around when we think about space. It’s not just a one shot deal where you do it once and you hope that you got it right. The best organizations are the ones who aren’t afraid to fail, frankly, and try new things in this environment. As I was saying earlier, it’s it’s a lot more chaotic the way people are using our facilities. And the only way to truly understand that is to measure it. And to never make an assumption that you get it right the first time. That doesn’t mean that there’s not a lot of stories out there. I was just presenting with a client at Tradeline a few weeks ago and I’ve been following their journey to the hybrid workplace environment over the last year. It’s been fascinating and they have done a massive amount of homework and also a massive amount of inclusivity, in terms of including a really broad array of their employees, and understanding and designing what that new environment was going to look like and how it was going to operate. And they continually ask, the users of the space- is it working for you? What’s not working for you? ?hat’s going to get you to come in those X number of days per week?- in a way that’s going to make you feel good about coming to the office. And they, you know, in some ways, that first round that MVP that you know, that sort of the first pass of getting it, they didn’t get it right, and they had to iterate. But the really fascinating thing was, is that they had a tremendous amount of data, they had utilization data, they had feedback from employees, they had feedback from groups that had gotten together to talk about what was working, what was not working. And some of the things came down to, you know, some people wanted assigned seating, some people did not want assigned seating, they may not fit into a specific designation in the past that no longer reflected the way they did work. Some of it was even things like they had built some agile rooms where they brought teams together in an agile environment. And guess what, they got really loud. And they didn’t take into consideration things like sound masking, and that really presented its own challenges. And had, you know, people around that agile room complaining about the way the noise was working. And instead of sticking to it and just saying, well, that’s just the way it is. They changed, they iterated, they took that data, they took that feedback. And they made differences in the way that they were approaching that and they’re continuing to do that they’re going to continue to do it until they get it right before rolling it out globally across their very large real estate portfolio.

 

Jennifer Heath 11:51

And what’s interesting, too, is the workforce is also changing. We’re in this really interesting period where we have four, maybe even five generations represented inside organizations. And that’s going to continue to shift more towards the younger generations. And so the whole concept of assigned seating, is it too loud? Do we want agile work? Employees may feel differently about it 10 years from now, because it’s going to be a different sample set of employees that you’re looking at. And I think organizations really have to stay tuned in to those generational differences. Because the big difference across the generations, if you step back and look is really the technology. It’s the access to the technology, the access to information, and the younger generations are going to have different needs and different expectations for their workplaces. So not only do we have to think about the portfolios and the employees we have today, but you also always have to have kind of that future eye on what is my workforce going to look like in 5 or 10 years?

 

Brian Haines 12:57

Yeah, that’s a really great point. And it is really five, potentially five generations within any organization at this point. What continues to amaze me is the flexibility of people, I was thinking that there was going to be sort of mass rejection of the hybrid workplace environment or flexibility around, you know, three days in the office or maybe Monday, Wednesday, Friday, whatever it is, a lot of organizations have really different approaches to this. And what I find is that most people have been really adaptable to what we’re looking at, you know, before the pandemic, we had clients who had literally sat in the same cubicle or same office for more than a decade. And that was a pretty common story that we were hearing. Some of those people want assigned space when they come back, but really assigned versus reservable space, versus sort of reopen Wild Wild West. That’s not everything that defines hybrid. Hybrid is really a lot more about a mentality around the way we look at, the way we use our space, the flexibility, the ability to be able to adapt. Even bringing in things like healthy buildings, wellness, and sustainability. Those things are coming in to being part of the hybrid conversation. And the flexibility around when we think about things like the culture and the really using our real estate to meet the mission of the organization that we belong to. If it’s healthcare, it’s improving patient outcomes, it’s universities and higher education, it’s about improving that experience of the students who have come to learn from that institution, it’s corporate, it’s really about, you know, continuing to build that I would say a winning culture within most organizations and really being great at what they do and using real estate as a tool to deliver that.

 

Jennifer Heath 14:45

Yeah, I read an interesting description earlier today, and they described it as magnetizing the workplace. The workplace was more attractive than your home office, and I thought that was a really interesting use of that term to magnetize the workplace to really draw people in.

 

Brian Haines 15:03

Yeah, it’s interesting, because I think about that a lot. And I think about the things that we’ve tried and what our clients have tried, you know, free lunch Wednesdays or, you know, increasing amenities, maybe add be adding things like gym memberships, or giving employees DoorDash credits, things like that. I don’t think that’s it, I think it’s something different. I think, what we’ve seen and what the research is showing is that people actually, like people, and they like being around their teams, they want to be with other people, especially when they’re working on projects. And understanding when they’re going to be there really seems to be the thing that’s driving people back to the office. You know, we always say FOMO, or fear of missing out, you know, if everybody’s in the office, you dial into a meeting on teams, and you realize that 12 out of 13 of your teammates are in a room and they’re all having a good time, having coffee brought in Starbucks, or whatever it is, and they’re having a really great time and you’re like, Oh, my God, why did you guys tell me that you were going to be in the office. There’s sort of that mentality, I think that’s what I think that’s the magnetism. I think people like people, and that’s the number one thing that’s gonna do it.

 

Jennifer Heath 16:17

Yeah. And something else that I find really interesting. Going back to the conversation about the generations, when we first really started that shift to hybrid, it stood out to me that at FM:Systems, we have some younger employees that have never had that experience of going into an office five days a week. And in my mind, I felt like that generation will never adopt that idea. They’ll never want to go into the office. But the truth is that generation needs that social interaction, they need that mentoring, they need that onboarding, more so than maybe the older generations. And so I was wrong. And I don’t say that a lot, but I was wrong about that I was wrong, that I thought the younger people would be the ones least likely to want to go back in, but it’s because they crave that social connection.

 

Brian Haines 17:06

Yeah. And I think going back to what I was saying, I think as human beings, we’re all a lot more flexible than we give ourselves credit for. That idea that we come into the office at specific intervals to be with one another, I really think is the key. And you know, we’ve been looking at organizations across the board do this in different ways. You’ve got to be in the office five days a week, there’s not that many organizations that are really pushing that too hard. I believe I was looking at research Jen that you had sent to me that said something like, you know, 30% of us are now back into the office on a very frequent basis. I think I was really surprised by that number. I’m not quite sure they’re measuring. I think they may be asking employees, are you in the office every day that people are saying yes. Because they’ve got a mandate that says you have to be there X number of days. Yeah, yeah, then. But when you really measure it, and we do measure it, you know, we have technology, and we got sensors, and you know, we’ve got clients doing this globally, we’re really underutilized right now, especially in North America. We’re in, you know, maybe the teens, it was 35%, before. Asia Pacific is quite a bit different. It’s much higher. But the truth is, it’s lower. And we were seeing, you know, we were tracking the increase. And we thought that by the middle of this coming year 2024, we were going to return to pre-pandemic utilization levels. But it’s not happening, it’s suddenly flattening it out. And it’s really extending that sort of line into 2025. And I’m not sure if it’s just going to completely flatten, will we ever get back to, you know, 35% plus utilization, it’s going to be fascinating. But the way we know this is because you know, we can actually measure it. And that’s really what you need to do. I think asking employees about their behaviors is a great data point. I think it’s better to ask them about how they’re feeling about the return to work and whether or not they’re getting a good work-life balance. Are they enjoying the fact that they’re not commuting, maybe an awful commute every day, or they’re, you know, they’re saving on energy costs, because they’re able to stay home more often or, you know, just have a better work-life balance, I think is really important. I think looking at the actual data itself coming from technology solutions, combined with the softer data around how we’re feeling about it is really the key to creating success here.

 

Jennifer Heath 19:39

I totally agree because while objective data will tell you a lot, it doesn’t always tell you the why. It tells you what happened but it doesn’t necessarily tell you why it happened and that’s where that employee sentiment really comes in. So our last big topic today is ESG this is the other thing that is really forcing a lot of strategy shifts. I think it’s probably happening in a much broader way overseas. But it is definitely rising in importance, I think here in the US. Hybrid work really creates some opportunities to marry your real estate strategy with your ESG strategy. And there are, I think just a lot of different ways that people can go about reconsidering the environmental impact, they have rethinking about, what are our sustainability initiatives? And how do we get there? And also, there’s kind of this broader context around inclusion, because it creates opportunities for people to work for organizations that maybe would not have been an option to them before. So I think there’s so many different ways that hybrid and ESG are merging together, and there’s so many potential benefits.

 

Brian Haines 20:54

Yeah, and I think that the ESG topic is actually quite broad. I think a lot of people are thinking about it as energy, saving energy. And that’s obviously a giant component. The buildings globally produce 40% of the carbon output. It’s an immensely high number of, you know, essentially pollutants going into our world from the buildings that we inhabit. And for the most part, when you look at those buildings, especially at nighttime, they’re lit up, like trees, right? It’s really amazing how much energy we’re actually wasting. So there’s energy tied to a couple of things. One is, you know, costs, it’s certainly better to turn the lights out and have a lower energy bill or to operate your facility more effectively. Don’t heat in cold spaces that no one’s using. There’s a lot of things that are tied to that. But I think it extends more broadly, it extends into how we feel when we’re in those facilities, you know, really extending into the area of wellness and sustainability as a component of that, right? Like, are we building better buildings? Are they more sustainable? Are they healthier? Is the indoor air quality better? And do we just simply build better when we’re in the office? So I think, you know, a lot goes towards ESG mandates, especially around saving energy, and, you know, polluting the world less. But honestly, when you pollute the world less, people get healthier. Isn’t that interesting? Which is really, I think, what we’re seeing is that institutions, organizations, they are totally on board with this. And there’s not a lot of pushback right now. It’s the right thing to do. Reducing costs coupled with producing a healthier, more sustainable environment. It’s kind of a win-win. And I’m not sure why somebody wouldn’t do that.

 

Jennifer Heath 22:50

Absolutely, and to your point about the importance of measuring and collecting data, you know, as you’re making different decisions, as you’re implementing these strategies. What I think is really fascinating on the ESG side, once you have all these technology solutions in place, and you have all these datasets, that’s when you can really start to think about AI and more autonomous buildings, because it’s the data that feeds those AI models. And so over time, your buildings literally get smarter. They know that there’s no one on the fifth floor, on Fridays. And so the building itself knows to shut down and to, you know, reduce the energy consumption in certain areas. So I think that is, when I look at the broader picture of hybrid work and ESG, that’s the piece that really gets me excited. Because we need all the data to be successful with hybrid, and then all that data can turn right around and feed into our ESG goals.

 

Brian Haines 23:49

Yeah honestly, that’s when we’re going to see the biggest impact, we are really on the precipice of autonomous buildings. And I’m not talking about buildings that don’t take into account humans. As a matter of fact, they completely take into account how humans use the facilities, how assets and you know, humans being an asset, space, being an asset, the equipment, things that we need access to all being assets. Being able to optimize the availability of those things to, you know, create that healthier, building environment, to create better collaborative workspace, to be able to provide better indoor air quality. All of that can be done because we’re linking the technology that measures the effectiveness. And then we’re sort of projecting into the future using things like AI and machine learning and attaching that to the actual building itself for building control systems. Everything from even access control systems, and being able to simply provide a building that understands how it’s used, and uses itself less when necessary.

 

Jennifer Heath 24:59

Yeah, it’s such an exciting time to be in this industry. And I feel like I say that all the time. And I really do mean it because for all the ways that the pandemic was so hard and so challenging, it has surfaced all these opportunities for us to do things differently inside our portfolios, and inside our workplaces. So I think it’s a fantastic time to be doing what we do, Brian.

 

Brian Haines 25:24

It is kind of cool, right? How lucky are we?

 

Jennifer Heath 25:27

How lucky are we? Alright, I think that’s probably about all the time we have today. Brian, as always great to catch up with you and visit.

 

Brian Haines 25:38

Really wonderful to just have these conversations. Jen, I always look forward to it.

 

Jennifer Heath 25:42

Same. Thank you to everyone who was able to join us today and we look forward to seeing you next time. Bye