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Property is a business resource

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While spending priorities in terms of finance, recruitment, sales and marketing and IT are typically subjected to a searching annual debate, too few companies ask the same tough questions of their property portfolio on an annual basis.

Sure, property is not as flexible as money or people but the main problem is one of attitude. Companies see property as a fixed asset, a cost of doing business, and so the actual workplaces provided for people also become a fixed asset. This is a mistake – companies should view property and the related workplaces as a flexible central resource, apportioned by management just like any other. As a first step towards adopting the right approach, businesses should initiate an annual, three year and five year “property/workplace budget”.

Too many companies don’t even know what they own. Property may be acquired in piecemeal fashion over many years, with senior management too distracted to ask whether individual buildings are still fit for purpose. Regional managers also tend to be territorial about space and are quick to defend their right to the buildings they occupy, even if their business has changed its model, shed staff or moved geographies.

The result is that companies end up occupying too many buildings, or too many of the wrong buildings. Staff is misallocated so that some of the company’s property is stretched to breaking point while other employees rattle around in cavernous offices. This all too common approach is inefficient and therefore costly, something no business can afford in this climate.

There’s a better way. In the same way that headcount, finance and IT is allocated according to need, so too should individual workplaces and related property. Subsidiary business units should be expected to put in their requirement and negotiate accordingly. By using this approach an IT company I worked with cut its property portfolio by 30 per cent and a financial services organisation accommodated 25 per cent more staff and increased employee satisfaction at the same time.

As part of the process, senior management needs to ask tough questions. If a subsidiary has 500 employees, it might fairly be expected to demand a property with 500 workplaces. But what of the sales staff, half of whom are on the road at any one time? What of central printing and binding of documents, so that clunking printers and copiers can be removed from expensive floorspace which is then freed up for staff?

Property, along with people, is often a company’s greatest cost, yet inefficiencies are tolerated that would never be allowed to occur in other parts of the business. A regular property/workplace budget will not supply all the answers, but it is a vital first step in the right direction.

*Andrew Carter is a divisional director at Appleyards, which supplies consultancy and support services to the public, private and third sectors.

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