There's more to greening the commercial real estate sector than double-paned windows and curly light bulbs. George Bouri, a Principal of Deloitte Consulting LLP, calls for a wholesale transformation of the workplace.
George Bouri leads the Capital & Real Estate Transformation practice for Deloitte Consulting LLP. With 18 years professional experience, he has become a thought leader in aligning business and real estate strategies, particularly in articulating how “green” practices can boost ROI and generate shareholder value. His client roster includes multiple members of the Fortune 50. Network of Space tracked him down in late March to chat about the greening of American and global real estate.
NoS: Many people think of “green” real estate as a LEED (Leadership in Energy and Environmental Design) building. You approach the idea more broadly.
GB: LEED certification, while an interesting measure, does not fully capture the richness of what green means. I look at the corporate green movement more holistically than as bricks-and-mortar. That’s the easiest piece of being green. Green is a DNA, a way of life. It extends beyond the physical facilities to the relationship between the worker and the workplace, the company and its goods and services, the company and the community.
For instance, in Silicon Valley, employees are being bused by the tens of thousands from San Francisco 30 to 60 miles away to their day jobs. People say, “Well, we give them Wi-Fi connections and espressos on the bus making it attractive for them to come to work.” I have a very different approach. Instead of bringing Gen Y to Mountain View, California, why don’t we bring the work to them? If you cut back on commuting, you’re using less gas, you’re creating less pollution and you’re relieving congestion on major thoroughfares and over-populated cities.
NoS: So, greening the organization appeals to the values of young knowledge workers?
GB: The workforce is changing. There is a generational divide. As a Gen-Xer myself, I wanted flexibility of choice and a network of places to work from. I have not had a dedicated office for the past 18 years. It was easy for me to adapt. It was much harder for my baby boomer colleagues to do so. They grew up going to the office, watching their parents go to an office, measuring their social and professional status through the square footage of their office.
Now Gen X is being replaced by Gen Y. Gen Y, also referred to as “Millennials” require a totally different interaction with the workplace. People wonder, how do they sit there playing their iPods all day and still get their work done? I’m not clear why people are so shocked by it. Gen Y grew up with a completely different social contract with the workplace. While Gen X accepted the notion of mobility and demanded flexibility, Gen Y takes it to a totally different extreme. Gen Y’s social contract is, “I want flexibility and mobility, and I want to pick what time I work, and work however I want and on any device.”
Gen X pushed the envelope on the workplace. Corporations began asking, “How do we organize the workplace differently than in the past?” Now Gen Y is forcing us to think, “Do we even need a workplace at all in the places we’re accustomed to having them? Maybe we don’t need a sales office in every city, a regional call center in every town. Maybe we don’t need a headquarters building any more.”
If I’m running on a treadmill and dictating a message to my assistant, that’s a way of working. If I’m at the ball field with my kid and on a conference call, that’s a way of working. If I’m at the beach in Maui watching my kids learn how to surf, that’s a way of working. So is sitting in the office and working…
It’s disruptive! We’re living through a wave of “creative destruction” caused by mobility. Mobility is not about cool technology. The tools are cheap. Everybody has a laptop, everybody has a PDA, everybody has a cell phone. And there’s more to come. New collaborative tools and technologies are emerging, like social networks and virtual technologies. Everybody is on Facebook. Everybody is on You Tube. Many are experimenting with Virtual Communities that push the boundary of our work place and the whole notion of how we work.
NoS: Which comes first, the greening of the workforce or the greening of the workplace?
GB: It’s a chicken-and-egg discussion. The human resource people are talking about transforming the relationship between people and their work. And the bricks-and-mortar people are talking about transforming the relationship between people and the workplace. They’re carrying on separate conversations, but in a way they’re talking about the same thing.
It all comes together when you talk about greening the organization. Ninety-nine percent of all office buildings are the result of industrial-era thinking. When you design and retrofit your buildings to create a smaller environmental footprint, you’re much more energy efficient. You save money by cutting your energy bills. You improve employee satisfaction by giving them the mobility and flexibility to mesh their work lives and personal lives. You improve employee productivity by using more natural light and cleaner air.
I’m not a Greenpeace guy. I didn’t grow up screaming green, green, and more green. But it is obvious that we can truly contribute to making the world a better place. Leaving the world a better place is at the core of Gen Y’s value system.
NoS: What factors do corporations need to consider when implementing a mobile workforce strategy?
GB: Companies need to get a clear assessment of their real estate footprint. They need to know what they already own and lease. They need to understand their brick and mortar infrastructure. To impart mobility, they have to understand the relationship people have with their buildings. How much of the infrastructure is vacant and underutilized?
Based on what they uncover, organizations need to build a fact-based business case on why mobility makes sense. You don’t win the debate with, “This is good for the environment. This feels good for me. This will ultimately improve productivity.” That’s not how you sell it. Companies that are pushing mobility and green programs are selling them on the basis of dramatic cost reductions, dramatic gains in employee productivity, major improvements in recruiting and retention of knowledge workers, and much faster time to market for goods and services. Ultimately, these can be all be distilled into a quantitative and qualitative business case that the C-Suite can endorse and implement.
Companies are deploying these strategies not because Al Gore won a Nobel Peace Prize. They build a rigorous business case. The investments are huge. But so is the payback – within three to five years. From my experience, the norm is about three years.
In one case, our client is about to make $350 million investment over the next 12 months, and will yield a payback in 2.8 years. The annual net recurring benefit, once enabled, will become a quarter billion dollars a year. It’s not just a feel-good initiative. The client is generating major cost reductions. And the payback numbers don’t even factor in recruitment and retention benefits. Those are soft benefits, not a cash return that you can measure. Reducing employee turnover allows you to forego the cost of retraining and retooling people. But try and convince a CFO!
NoS: So, if you can justify the green initiatives on the basis of hard, measurable savings on energy costs and a smaller real estate footprint, you’ll reap the benefits of a happier, more productive workforce as a bonus.
GB: Yes, although I would say that productivity should be at the top of the list. For many companies, productivity is the holy grail – the silver bullet. I ask a lot of CXOs point blank: Why are you not willing to capture employee productivity when you’re calculating the ROI on green projects? “It’s nebulous,” they say. They can’t articulate a number. If I can prove that one of your top salesmen saves 45 minutes commuting time per day by working at home, and he’s calling X more prospects and generating Y more revenue, why can’t we take time saved and translate that into productivity?
NoS: But the hard savings from green initiatives are enormous, are they not? It’s not just a matter of better insulation, CFL bulbs and modern HVAC units. Green real estate means shrinking the size of your workspace. Fewer cubic feet of office space translates into less to heat, cool and light. Which brings us to a favorite topic of ours, office hoteling…
GB: One of the biggest sources of wasted energy is excess space. Why does someone get allocated a 250-square-foot office? Why does he or she get a 400-square-foot office when he becomes an EVP? You’d be shocked to find out why some of the world’s most admired companies have the policies they have. Often the policies can be traced back to a CEO who’s no longer there, and everybody just assumed that’s the way it’s done.
The first step is to analyze how people work in an organization. People don’t sit behind their desks the way they did. They go to lunch, they meet with clients, they go to the water cooler, they meet with Bob and Susie. Once you’ve determined that a vice president spends 30 percent or 40 percent of his time at the desk, it becomes a compelling argument when you sit down with him and say, “We can better leverage this expensive and wasted infrastructure.”
NoS: What are the major obstacles to hoteling?
GB: The brick-and-mortar redesign of a building is the easy part. Selecting the right tools to support mobility is harder. The toughest job of all is managing the cultural transformation. First, it can be a problem if people see the loss of a dedicated office as a take-away. When you shrink office space, you must give people something in return. What you can give them is better access to teaming spaces, to conference rooms, to natural light. You give them access to technology and tools they don’t have. Instead of getting a desktop, they get a laptop. And a PDA. And a Bluetooth headset. It resonates with people when they get something in return.
The other problem is the attitude that I can’t manage my people if I can’t see my people. That’s the single biggest inhibitor of workplace mobility today. Most managers – the majority – are of an age group where they’re struggling to adapt to the technology. They get it conceptually, but it’s not innate. They understand how young employees want to work, but they have a hard time with it.
But attitudes are changing. Gen Y workers don’t care about their individual workplace so much. They care about image. By “image,” I don’t mean glamour. It means, “Is my company doing the right thing? Is my company consistent with my values?” They care. Gen Y wants to be proud to walk into the nicest building they can that reflects their value system. By nice, they mean green. That’s the image they care about. They want green.
Also, we’ve been doing this long enough that we can document the savings. On average the cost of moving people from office to office in a campus is about $500. It can be as much as $1,500 to $2,000 depending on what costs are bundled into the number. Companies used to demand adjacency: People in the same department had to be located near one another. But the workplace is so fluid now – employees coming, going, transferring, teleworking, changing work teams – that the cost of achieving adjacency is huge.
But if people aren’t assigned space anymore, you can save yourself a lot. Show up, make a reservation and work anywhere today. I don’t need to see Susie or Bob the next cubicle over to know that we’re having a meeting today.
NoS: I understand that Deloitte follows its own advice. Tell us about the Deloitte Workplace of the Future.
GB: We’re in our Nth generation -- I don’t recall the exact number -- of innovative workplace design. 9/11/2001 forced a new reality upon Deloitte. One of our major locations in New York is World Financial Center, which is directly across the street from the World Trade Center site (Ground Zero). We had over 4,000 people in those buildings. The buildings were severely damaged, so we moved into the Marriott mid-town nearby and had to make do with locating people anywhere they were displaced. Deloitte functioned just fine. People had their cell phones and laptops and PDA’s. Our business world did not come to an end. Rather we realized that our people worked with little attachment to a physical infrastructure and were able to be productive even in the most desperate of times.
Our new generation of workplaces, called “workplace of the future” is being rolled out to all of our offices across the U.S. We’ll have a better carbon footprint, more energy efficiency, access to natural light, better teaming spaces, etc. We expect an ROI boost immediately. Once people are happier, by default they are more productive. More than being productive and happy, we are creating a corporate culture of what being at Deloitte is all about. And, it is unique…