Over the last generation of office design, technology has made everything smaller; equipment, desk surface area, filing, storage, mail and copy rooms, and so on. It seems like a no-brainer to reduce total office square footage.
But resistance to change in office design remains powerful. Many employees like the familiarity and symbolism of traditional layouts, even if it's inefficient. The battle between rational arguments for space reduction and emotional arguments to protect the status quo can be fraught.
Still, it's easy to make a compelling financial case. And its pretty obvious that 20% of office space is not needed for its former use. Wouldn’t you want to be the hero who takes those savings into the C-suite?
Not so fast.
The cost of payroll is about 10x the cost of real estate. (Office space costs around $6000 per person per year for a company with average salary and benefits of $60K.) If disruption or disgruntlement cause a drop in productivity of just 2%, ALL the real estate savings are wiped out, and then some! Do the math. The table below shows the details for a proposed 20% reduction in real estate and corresponding 2% reduction in realized annual revenue. The result is a $112,500 net loss rather than a $187,500 gain from real estate cost savings.
So be careful in how you approach efficiency initiatives. Productivity losses can offset gains from real estate savings. We’ll talk in a future blog about promoting productivity rather than efficiency as a way to move this conversation forward.
