Trimming Federal Real Estate Spend — A 3D Approach to Telework

The following is a post that I wrote with colleague Jim Reidy that originally appeared in Deloitte’s HR Times Blog.

Given sequestration and other budget pressures, we’ve seen a strong push among federal agencies to trim their real estate footprints and the associated costs. Telework—the ability for employees to do some or all of their work away from their employer’s traditional office— is the enabling factor here. When people are able to work off-site, less on-site space is required, and the square footage retained can be used more effectively to avoid paying for unused, idle space. The potential is significant—not only for monetary savings that can then be used in a more productive way to promote the mission, but also to increase employee engagement and satisfaction and to attract new talent.

This is no small point. Like any employer, the federal government is competing for talent and faces the same demographic and economic issues as its private sector counterparts. Boomer retirements, a multigenerational workforce, the need to do more with fewer resources, ever-advancing technology fueling ever-stronger expectations for on-demand access and mobility—all of these are affecting the government’s human capital needs. It is here, with these “people” issues, that the process to modify real estate usage should begin. People are the starting point in a three-dimensional telework approach that also includes the space they inhabit (real estate), and the technology that enables them to work effectively and securely remotely or while on-site. There are many questions to be answered: What’s the composition of the workforce? How do people interact with one another? Who operates as a “traveler,” a “teamer,” an “independent,” or a “resident”? What technology is required for people to do their jobs effectively? How frequently might they need to be on-site and how much space do they require while there?

Broader people issues should also be addressed. Will the agency allow schedule flexibility? Can someone work nights or weekends or compress 40 hours of work into three days instead of five? Will the workplace culture support or hinder the effort? For example, does space allocation or design equal status in the culture? Would reducing office footprints (or eliminating offices altogether) cause push-back from employees? Conversely, would it attract younger employees more interested in job flexibility and who value the use of mobile technology more highly than having a personal workspace? While it’s crucial that senior leaders endorse and sponsor any telework effort, the impact on middle managers tasked with “making it happen” should also be assessed and mitigated.

Effective telework implementation requires careful consideration of all these factors and more—both before telework is adopted and after, such as change management and training. The benefits, however, can more than offset the challenges. At Deloitte, we applied the people-space-technology approach to develop our own Workplace of the Future. The effort resulted in a 30% reduction in square footage per employee and a 30% associated savings in energy costs—a savings of over $100 million per year within 2.5 years of implementation at Deloitte LLP. Deloitte also helped a major international financial services firm save over $400 million a year on real estate costs by implementing an alternative workplace strategy that addressed human capital, productivity, technology to enable workforce mobility, space utilization, and therefore space cost. A real estate assessment we completed for a federal law enforcement agency identified a 48 percent cost reduction potential—reducing real estate spend from $100 million to $52 million. These are big numbers on their own, and they become even more impactful when you consider how the savings could be used to directly further an organization’s mission.

Current and pending legislation may be heightening the focus on reducing federal real estate spending, including the OMB’s “Freeze the Footprint” memorandum issued in March. But mandate or not, the way to properly address reduction efforts is to look at the whole picture. People, space, and technology are essential keys to making telework not only cost-saving, but also productivity- and engagement-boosting.

I also invite you to attend an upcoming webcast, entitled Workplace Flexibility: Business Strategy vs. Employee Entitlement, on May 23^rd (2 – 3 PM EST), where we will be exploring a new approach to workplace flexibility.