Where Is the Workplace Headed?

It depends where in the world you are planning for and who you are

Just two years ago HOK surveyed 50 corporate real estate managers worldwide about their workplace solutions and published the results in a Work Design magazine article entitled “Global CRE Challenges and Opportunities.” (1) In that article we described how many companies were developing and implementing workplace standards in locations all over the world.

Our key takeaway from that report was that:

“It’s not enough to understand each company’s unique set of business attributes. We also need to understand the cultural influences of who they are and where they work, as well as the challenges and opportunities of each location. A successful strategy depends on creating spaces and guidelines that are flexible enough to accommodate the cultural attributes, work styles and needs of each region.”

But we are living in fast-changing times. Having a global position that entails a considerable amount of international travel, I make these observations based on firsthand experience dealing with clients globally and navigating the different perceptions, practices, cultural differences across those locations. Over the past two years, while collaborating with clients all over the world to create the most effective workplace environments, we already have seen new challenges and opportunities emerge. There have been enough changes that we wanted to revisit how companies are managing their global real estate needs in 2018.

CHALLENGES

Corporate real estate (CRE) executives looking to deliver space globally are dealing with a wide variety of issues including:

  • Attracting and retaining the best, brightest people
  • Breaking through employees’ traditional notions of space entitlement
  • Overcoming reluctance to change
  • A need for accelerate the design and delivery of space that supports the changing needs of employees and organizations
  • The emergence of coworking and remote work as viable options for staff and as part of a real estate strategy
  • Driving up employee space utilization and reducing occupancy costs
  • Complying with new legislation and regulations
  • Managing requirements for enhanced physical and online security
  • Tracking the rise of nationalism, Brexit and the unknowns of the Trump era
  • Geopolitical unrest and trade wars
  • New security vulnerabilities introduced by connectivity

But for all the differences we see around the world, some commonalities are being embraced internationally:

  • Giving employees choices about how and where they work
  • Promoting the health and well-being of people who will occupy a workspace
  • Designing spaces and communities that promote a live, work, learn and play lifestyle
  • Creating vibrant and engaging destination spaces
  • Fostering a sense of community
  • Implementing tech-enabled and data-driven solutions
  • Ensuring an underlying sense of security and safety
  • Designing for space fusion: Blending workspace with elements of retail, hospitality and residential environments

GUIDELINES VS. STANDARDS

In our 2016 report we noted that many companies were shifting from developing global space standards to global guidelines. Though this may appear to be a subtle shift, it is a critical move with a big impact on space delivery.

The global standards of the past focused on providing a consistent kit of parts, design elements and strategies for rapid deployment and ease of management. But strictly enforced, standardized programs failed in many regions. Attempts to achieve uniformity across all regions have inherent challenges. Codes, regulations, and even construction and real estate practices often vary across locations. Personal space preferences and space allowances also differ from region to region. Even the significance of specific colors and acceptance of different color palettes can vary.

Guidelines, on the other hand, offer direction with allowances for flexibility related to variables like cultural norms, access to resources for FF&E and technology. This is why many of today’s companies are putting in place global guidelines that strive to create consistent work and cultural experiences. These guidelines account for each region’s unique cultural, legislative, style and lifestyle influences, which must be embraced for the space to succeed.

CULTURE AND ORGANIZATIONAL STRUCTURE

Every company has a corporate structure, whether it’s hierarchical, an adhocracy, clan-based or market-driven. But so do countries and regions. In some countries, a hierarchical structure embedded into the cultural fiber permeates into the business environments. In India, the Middle East and South America, for example, the society’s class system often affects the office’s organizational makeup and goals for adopting new ways of working. In many parts of the world gender is also a factor in how space is designed. Companies seeking to create a flatter organizational structure—and a workplace that supports this—must take this into account in their space guidelines and understand that hierarchy still exists in the cultural fiber of many regions.

The recent rise of adhocracies reflects the rise of the gig economy. In Asia, many countries are encouraging entrepreneurialism to offset slow growth in other industries such as manufacturing. The new entrepreneurial spirit in the East is fueling the rapid growth of many startup companies that need to enable quick, seamless deployment of their services or creation of their products. Their hunger for easy access to highly flexible space is fueling the growth of co-working spaces and fully equipped serviced offices.

Increased mobility is moving us beyond brick-and-mortar solutions to a more experience-based society, thus changing the importance of place. The rise of Activity-Based Working (ABW) and Neighborhood-based Choice Environments (NCE) in countries like the Netherlands and Australia established a new model that other regions of the world have adopted at varying rates. Enabled in part by the egalitarian nature of its society, Australia embraced these free-range solutions over a decade ago. But now more U.S. companies are casting aside traditional hierarchies and beginning to venture into the use of ABW and NCE spaces. Cultural and organizational structures also play a major role in the adoption of new ways of work and their acceptance from one region to another.

REGIONAL ATTRIBUTES

The viability of telework varies across regions. Companies with offices in cities with less traffic congestion than the world’s largest metropolitan areas, where average one-way commutes can run to well over an hour, may not need formal telework programs.

In Asia, where so many people live in smaller, multigenerational housing units, the ability to work remotely was limited until the recent emergence of co-working. This is one reason the need for flexible office space has seen such a sharp uptick in Asian markets.

With record numbers of Millennials in the U.S. living with their parents, working from home can be a struggle for some. For this generation of young adults, having a place to work outside the home—be it an office, a café or a co-working space—is usually preferred. CRE managers need to be understand how these cultural nuances can impact real estate strategies from region to region.

Style and personal preferences also can vary by region. Different color and material preferences, space allocation, privacy levels and personal space standards must be considered if we are to create workplaces that attract individuals and make them feel welcome and comfortable. Just as having too little personal space can be viewed as a negative in some regions, for example, in other parts of the world having too much personal space also can have an adverse effect. Space allocations and density must vary for each region.

DEMOGRAPHICS

As the number of workers in the U.S. and other major industrial countries continues to decrease, the ability to replace the existing workplace will be a challenge. Asia is also dealing with an aging population. Most of the population growth is occurring in developing countries, where secure jobs are scarce. As there are more deaths than births in many countries, immigration can be a potential solution to replenishing the workforce. Yet there are geopolitical challenges and a populist movement is on the rise.

As workplaces move to become more “egalitarian,” the shift is often felt the most at the middle manager level. Workplaces that focus less on hierarchy and more on function upend people’s perceptions of workplace rewards and status, affecting how they work and interact with others.

But those who embrace the ability to work flexibly also have the most to gain. These tend to be the Gen-Xers and Baby Boomers. They have kids, aging parents and often live in the suburbs. They are also more likely to have “tenure” and, having proven themselves, are granted more freedom. And finally, they realize that they will likely be working longer than expected and are interested in a “soft retirement” or the option to work part-time or consult to the firm.

The younger generation, the Millennials, are more about the “We-volution. They travel in packs and want to make their mark. To do that, they need to be in the office, where they can be seen and heard. 

MARKET CONDITIONS

In Asia, where the average commercial office space lease is three years, the buildout of space is considered more temporary. In Europe, where lease terms tend are longer, buildout still typically takes place from the underside of the finished ceiling to the finished floor. Compare this to the U.S., where lease terms are longer and build-outs more comprehensive. This explains the “get it right” attitude and inclination to err on the conservative side for many U.S.-based companies moving into new workplaces.

Shorter lease terms encourage more experimental approaches with a mindset of, “If it doesn’t work you can change it in a few years.” This difference has fostered innovation in Asian markets. In Australia, workplace innovation has been fueled by the can-do, egalitarian nature of the people. In the Netherlands, where we see some of the most innovative workspaces, the open embrace of technology, coupled with a democratic culture that values great design, has led to many experimental spaces and advances in workplace design.

LEGISLATION

European laws have put these countries ahead of much of the world’s workforce on the social curve. A desire to protect workers’ rights and the acceptance that technology is blurring the lines between work and personal time, often in unhealthy ways, has led to new legislation and work practices in some countries. In France, legislation (2) was recently passed to control email and its infringement of people’s personal time. To protect their people’s personal space, German companies including Volkswagen, BMW and Puma have put in place rules outlining when information can and cannot be sent through their servers. (3) And the German Labor Ministry passed guidelines that state staff should not be penalized for switching off their mobiles or failing to pick up messages during non-work hours. (4)

Mental health issues are being recognized in Europe and many are starting to understand the impact of stress on the workforce. This is one area where the U.S. lags. There is still much stigmatism associated with mental illness, emotional health and attention deficit hyperactivity disorder (ADHD). But the World Health Organization has noted that, “Stress is the health epidemic of the 21st century.” (5) And a report by Towers Watson noted that stress is the number one lifestyle risk factor that is negatively impacting workers today—ahead of obesity, drug and alcohol use, and poor health. (6)

As those issues increasingly impact businesses and the health and well-being of the workforce, they will need to be addressed. After all, the special needs of people with ADHD are covered by the Americans with Disabilities Act (ADA) and if requested employers are obligated to address the needs of workers in the workplace. An estimated 8 to 9 million American adults have ADHD and between 85 and 90 percent of adults with ADHD do not know they have it but are struggling at work. (7)

A growing number of countries are passing legislation impacting workplace design. Though these regulations vary by country, they often cover access to daylight and maximum distances from a workstation to the perimeter. Others are starting to address well-being and mandating that employees have access to sit-to-stand workstations.

IMPACT OF TECHNOLOGY

China is moving rapidly to become a leader in artificial intelligence and South Korea is investing heavily in robotics. In the U.S., the impact of autonomous vehicles is changing the conversation around how we plan buildings and parking garages and how our city streets can be redesigned to accommodate unmanned vehicles.

The emergence of the Internet of Things is also changing the conversation about we how design our spaces. Smart devices are beginning to interface with building management systems to leverage the power of the data being collected. Facility management software is also evolving, and there is a renewed focus on how data is being collected and used to impact the space, facility and user experience. Some organizations are focusing on automating building systems to enhance user control and comfort. Others want to use data to increase space utilization and refine how we design spaces. In Asia, where companies aren’t experiencing the same utilization/occupancy issues that their U.S.-based counterparts are going through, the conversation is less about densification and more about automation.

A 2018 study by PWC, “Workforce of the Future: The Competing Forces Shaping 2030,” (8) reported that 38 percent of U.S. workers are at risk due to automation, compared to only 21 percent in Japan. (9) Jobs are likely to emerge where innovation is happening, and according to a recent report by Bloomberg, South Korea, Sweden and Singapore top the list of the most innovative economies. The U.S. has dropped out of the top 10. (10)

The drive to innovation is changing the way space is designed and delivered. Agile spaces have emerged in Asia and Silicon Valley, where speed to innovation and to market are vital. The term ‘Agile’ is commonly used in the tech industry to support cross-functional, project-based teams working in close proximity so they can collaborate and deliver projects. With the focus on bringing teams together, these workspaces are more streamlined and have less variety in work settings. Think “scrum” spaces for project-based teams in pods with lots of whiteboards, sticky notes and reconfigurable furniture.

Like Agile spaces, Maker Environments for Mobile Occupants (MEMO) space provides innovation-focused teams with a variety of modes and agile environments that can be reconfigured to meet the needs of the task at hand. MEMO spaces put people in control of their experiences. These are often raw, immersive environments that embrace a “garage-ification” of space that focuses on connections, equality and breaking down silos. Whereas Agile space has little variety, MEMO spaces offer more choices and settings for extended periods of innovation.

FOCUS AND OPPORTUNITIES

Here’s a roundup of other current challenges and opportunities that are unique to different regions of the world.

In North America, as unemployment hits a new low and the talent war heats up, there is a growing focus on user experience, community and well-being in the workplace. Many of the most innovative workspaces can be found just north of the U.S. border, in Toronto. As a more egalitarian society, there is more of a willingness in Toronto to embrace activity-based working. Coworking, however, hasn’t taken off in Canada to the extent it has in other markets. This is partly because of pushback from building owners and developers, many of whom don’t want to take on the liability that comes with special project entities.

In Europe, smart buildings have emerged to the extent that they are setting global benchmarks. Worker rights, as well as their health and well-being, are a driving issue in the EU market. In Germany and France, legislation was recently passed to control the infringement of email on people’s personal time. There’s a major space crunch in London, where the market is being heavily impacted by an influx of creative office startups and co-working spaces. During the 2012 Summer Olympics, city leaders encouraged people in downtown areas to work remotely to alleviate traffic and congestion. They even held a “work remotely practice day” that was so successful that many downtown areas were underpopulated during the Olympic events. The experience resulted in a new awareness of the ability to work remotely in a city plagued by rail strikes, heavy congestion, security threats and high costs. Though the Nordic countries are far ahead on ABW and workplace strategy concepts, co-working has not hit the market as strongly as in other regions. And the enterprise version is unlikely to thrive due to the limited number of large corporations based in these countries.

More Middle Eastern developers in are leveraging smart building technologies and features to address the harsh climate and control energy.

The desire for flexible office space is growing faster in Asia than anywhere else–in part because of shorter lease terms, the higher cost of space and the desire of companies to simplify access to space in the market. The sustainability movement is also picking up steam and the rise of green building standards is influencing new projects and communities. Singapore and Hong Kong are two of the region’s most modern cities. Fueled by the influx of international companies and workers, companies here are starting to embrace world-class ideas around workplace strategy and evidence-based design. Whereas in the past mobility options for employees were limited, an abundance of options are emerging with the rise of coworking and serviced offices.

In Australia and New Zealand, one trend is to move beyond sustainability in the built environment—reducing the damage caused by resource use—to developing spaces that can contribute to the regeneration and health of the environment.

Africa remains challenged by a limited infrastructure. People in areas that don’t have paved roads carry mobile phones. Many large companies have come into the market and created islands of modern office buildings within an old-world structure. This is starting to have a trickle-out effect.

THE PATH FORWARD

As companies experiment with the notion of embracing new workplace concepts to prepare themselves and their organizations for the future, they often look to examples of what others have done. But few companies look far enough. We suggest you cast a wide net. There are few concepts that haven’t been vetted somewhere in the world and there are great lessons to be learned. But when looking to develop best-in-class workplaces and set yourself apart from your competition, it’s important to remember that just because a specific approach works for one company or in one region doesn’t mean it will work for you. Understanding your organization’s unique organizational DNA and regional attributes is paramount to determining the right solution.

A Tour of Booking.com’s U.S. Workplaces

As a leading digital travel platform with a truly global footprint, Booking.com’s approach to the workplace environment is all about creating an experience that enhances the quality of people’s working life, improves performance, and stimulates creativity and collaboration. While striving for consistency across their portfolio that reflects their mission to empower people to experience the world, they also want each office to be relevant to the region and the design to be locally-inspired.

ORLANDO

For Orlando, “The City Beautiful” has so much to offer from its lively downtown nightlife to its rustic old-Florida charm. Orlando exhibits a range of beauty and activities that influenced the design to become as rustic and natural as it was innovative and contemporary. A few of the intentional design features within the space include a walking path throughout the space depicted by carpets with varying textures, colors, and nature-inspired patterns; reclaimed features such as wood plank walls, a skateboard wall tile backsplash, and a focal light fixture constructed out of recycled bicycle parts; a putting green and rocking chairs facing the beautiful exterior views of Sand Lake; meeting rooms designed around Florida photography submitted by Booking.com employees; and vintage-inspired marquee lighting in focal areas such as the entry, gaming area, and break space.

HOUSTON

Known as the energy capital of the world, the Bayou City has a broad business marketplace with a cultural diversity surpassing New York City. With that as a framework, the HOK team brought together the uniqueness of the city with the values and culture that are distinctively Booking.com.

Located in heart of Houston’s downtown, the office overlooks the historic Esperson Building, flanked by today’s modern skyscrapers. The interior of the office takes you on a journey of what makes H-Town one of the nation’s most up-and-coming cities. The lobby welcomes you with blue skies and reflects the true Texas Piney Woods. With artwork that takes you from the molecular cell level of one of the largest medical centers in the nation to an out-of-this-world space shuttle, you begin to understand the true diversity of Houston.

CHICAGO

Like a miniature city, the Chicago office has areas to work, places to meet, spaces to play and relax, and routes that connect everything together. Designed around Chicago’s rapid transit system routes, the red, green, orange, purple, and brown carpet lines guide you through the office.

The vibrant colors and windows on the world allow the city to become part of the office. The office is infused with alternative workspaces for different kinds of activities—one huddle room captures the dynamics of the Chicago Theatre, while a side corridor is turned into a creative space. A local graffiti artist commemorates the city on the walls of a break out room and chain linked fence adds another touch of Chicago streets to the office. Training rooms feature a flexible design that is both functional and filled with employee travel photos from around the world.

SALT LAKE CITY

Set against the exquisite backdrop of the Wasatch and Oquirrh Mountain ranges, the Salt Lake City office has one of the county’s best backyards— five national parks and world-class ski resorts. Using the city and the state as inspiration, the Booking.com office faces westward with magnificent views throughout the office. The Booking.com brand is blended with rugged wood and stone from the region. Incorporating the natural beauty of the region, mountain range silhouettes are etched into the interior glass and murals of the historic rock formations capture the imagination.

Works Cited
  1. Sargent,Kay. “Global CRE Challenges and Opportunities.” Work Design Magazine, 14 June 2016. https://workdesign.com/2016/06/global-cre-challenges-opportunities-implementing-effective-workplace-solutions/
  2. Morris, David. “New French Law Bars Work Email After Hours.” Fortune, 1 January 2017. http://fortune.com/2017/01/01/french-right-to-disconnect-law/
  3. Gallo, Amy. “Stop Email Overload.” Harvard Business Review, 21 February 2012. https://hbr.org/2012/02/stop-email-overload-1
  4. Vasagar, Jeevan. “Out of hours working banned by German Labour Ministry.” The Telegraph, 30 August 2013, https://www.telegraph.co.uk/news/worldnews/europe/germany/10276815/Out-of-hours-working-banned-by-German-labour-ministry.html
  5. “The Health Epidemic of the 21st Century.” Sunday Standard, 18 April 2013. http://www.sundaystandard.info/health-epidemic-21st-century
  6. Willis Towers Watson. “The Business Value of a Healthy Workforce.” Staying@Work™ Survey Report 2013/2014, United States, January 2014, https://www.towerswatson.com/en-US/Insights/IC-Types/Survey-Research-Results/2013/12/stayingatwork-survey-report-2013-2014-us
  7. Attention Deficit Disorder Association. https://add.org/workplace/
  8. “Workforce of the future: The competing forces shaping 2030.” 2018. https://www.pwc.com/gx/en/services/people-organisation/publications/workforce-of-the-future.html
  9. “UK Economic Outlook.” March 2017, http://www.pwc.co.uk/economic-services/ukeo/pwc-uk-economic-outlook-full-report-march-2017-v2.pdf
  10. Ritholtz, Barry. “50 Most Innovative Economies.” The Big Picture, 24 January 2018, http://ritholtz.com/2018/01/50-innovative-economies/
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