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Align Workplace Operations and Assets to Business Strategies
A substantial innovation in business management over the last decade is the advent of business performance management, or BPM, which is a combination of business intelligence technology and disciplined process design and management.
BPM links business strategy with key performance objectives to identify accountability and improve operational processes. In a recent Business Week study, which surveyed more than 100 senior executives in global enterprises, more than fifty percent of the responders advocated a systematic business performance methodology as a critical success factor in improving financial performance. An equal number of responders reported significant improvement in bottom-line performance with an average of thirty percent in cost savings when the methodology was implemented along with a business performance management system.
Workplace performance management (WPM) is a subset of BPM and is applied to one of the most valuable assets and third largest expense of an organization, real estate assets. It creates a framework that aligns workplace assets and operations with business strategy to drive greater shareholder value. WPM provides a means to establish objectives that flow directly from the goal-setting process into the workplace organization, and to establish key performance metrics that analyze and report on progress against these objectives. Equally important, it evaluates management’s and individual contributor’s operational and financial performance against these objectives to ensure their individual actions are aligned with business objectives.
One of the challenges today is that more than sixty percent of organizations report workplace assets and operations are misaligned and not integrated with the overall business strategy1. Without this important alignment, real estate leaders and executives miss significant opportunities to increase shareholder value by improving profitability through space efficiency, cost reduction and capital minimization. Another conclusion from the same survey reveals more than seventy percent of financial executives report that they lack systems to measure and manage the performance of these assets. Workplace performance management provides a measurement system that creates direct linkage between corporate real estate goals and stakeholder interests. Moreover, it provides specific insight into actions that increase the value of workplace assets and lower the cost of operations. Organizations that have implemented performance management systems can drive three to five percent increases in return on assets, which correspond to $30 to $50 million per year for each $1 billion of workplace assets under management. In addition, these same organizations have been able to increase operating margins as much as five to ten percent, representing an increase of $50,000 to $100,000 for every $1 million in workplace operations costs.
Workplace performance management delivers effective tools to measure and manage the impacts of workplace organizations on both costs and return on assets. WPM relies on an underlying integrated workplace management system (IWMS) for operational data, and pulls data from financial management systems, to provide a single source of workplace portfolio information to measure performance. It does so by measuring:
__ Financial performance: WPM measures the costs and financial impact of workplace assets and operations such as operating costs, capital costs, total occupancy costs, budget adherence and overall profitability.
__ Operational performance: WPM measures the efficiency and effectiveness of workplace operations such as schedule adherence, cycle times, labor utilization, work order and service productivity, and service response times.
__ Portfolio performance: WPM measures the growth and competitive advantage of workplace assets and operations such as speed-to-market, return on assets, competitive benchmarks, space utilization, incremental revenue and worker retention.
__ Customer satisfaction: WPM measures the alignment of workplace assets and operations with the organization’s business needs, such as customer satisfaction, service delivery satisfaction, workplace environment satisfaction and service response time satisfaction.
__ Environmental performance: WPM measures the environmental impact of workplace assets and operations with respect to energy consumption and greenhouse gas emissions as well as the broader areas required for LEED certification (i.e., carbon intensity, water efficiency, overall waste, sustainable site management and indoor air quality).
These five categories form a comprehensive workplace performance balanced scorecard for the workplace management organization. This balanced measurement system ensures that the workplace organization leaders remain focused on the activities that contribute directly to the organization’s financial success and communicate the value that workplace assets contribute to the enterprise.
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