Workplace Design and Its Effect on Employee Retention and Fixed Costs

Does workplace design really have an influence on employee retention and fixed facility costs? Suspicions are that employee retention and engagement have a direct link to workspace design. In order to get to the bottom of the issue, Knoll, Inc. conducted a research project in partnership with a global management consulting firm to evaluate the effectiveness of its workplace strategy.

Employees of the consulting firm have a highly mobile work style. To support their work style, the firm has put policies, spaces, technology and administrative functions in place. The purpose of Knoll’s research was to determine what workplace design features (if any) influence the level of employee engagement and fixed facility costs.

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The Employee

The study evaluated several key factors concerning the employees.

1) Why do employees leaveBrain drain, or human capital flight, is a term used to describe a large emigration of individuals with technical skills or knowledge, due to lack of opportunity and engagement. Brain drain is an economic cost for the company in that employees who leave take key skills, knowledge, experience and organizational memory with them. As a result, the company incurs immediate costs related to hiring and training new employees.
2)  What defines an “engaged” employee? An engaged employee is someone who is fully involved in, and enthusiastic about, his or her work. Employees with the highest levels of engagement and commitment perform 20 percent better and are 87 percent less likely to leave the company than employees who are less engaged with their work. For Knoll’s study, employee engagement scores were collected through a survey that assessed employees’ perceptions of the following: job expectations, job recognition, feeling cared for at work, believing their opinions count, commitment to their work quality, adequate social support at work, and feedback on progress, growth opportunities and other work-related topics.
3) What is the Value of an Engaged Employee? A reduction in engagement scores of just .05 percent could predict an increase in overall employee turnover for a company of as much as 0.75 percent. In addition, many studies over the years have routinely found that employee engagement scores account for as much as half of the variance in customer satisfaction scores. Engaged employees are more likely to keep their current job, and are also more likely to have a positive influence on customer satisfaction — both could be considered invaluable to a company. 

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How engaged are your employees? Employee engagement can be determined with a survey evaluating your employees’ perceptions of the following factors:

1) How well does the employee know his or her job expectations?
2) Does the employee feel he or she receives adequate job recognition?
3) Does the employee feel he or she is cared for at work?
4) Does the employee believe that his or her opinions count?
5) How committed is the employee to his or her work quality?
6) Does the employee feel he or she receives adequate social support at work?
7) Does the employee receive feedback on his or her progress and growth opportunities?

The Results
Analyses show that regardless of job type, gender, geography or generational affiliation, there are specific workspace design features and capabilities that directly contribute to outcomes such as employee retention and fixed costs.

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As quality of meeting spaces increases, and as quality of administrative reception capability increases, net facility costs (as a percentage of revenue) are reduced.

Investing to improve meeting space quality and effectiveness of reception (whether by adding staff or hiring more experienced employees) will reduce fixed costs, possibly because employees can more quickly make effective use of space in getting work done. (knoll.com)

The ROI
The model below shows how the quality of meeting spaces in a workplace and effective administrative reception support predict fixed cost as a percentage of revenue and actual cost savings.

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As the proportion of individual workspaces — assigned or unassigned — to square footage within a facility increases, and as the quality of meeting spaces increased, the employee engagement scores increase. As the proportion of assigned workspaces to square footage and the quality of meeting spaces increases, employment engagement increases.

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The Recommendations
In order to improve employee engagement and reduce fixed costs, Knoll recommends the following workplace design considerations:

1) Creating a low proportion of individual workspaces within an office reduces fixed costs short term, but also reduces employee engagement. For a highly mobile office, Knoll recommends that at least 50 percent of all workspaces should be designated for individual use, unless the business or department is highly collaborative with a team-based style.

2) Generating a high proportion of unassigned workspaces reduces fixed costs, but also reduces employee engagement. Policies, technology for reservations, if used, and strong administrative support must be in place. Knoll suggests testing the waters with a mix of 20 percent unassigned workspaces as higher proportions of unassigned workspaces increases cost in technology and administrative support.

3) Access to appropriate conference and meeting spaces enhances employee engagement, and reduces fixed cost. Any organization supporting mobile employees should invest in a mix of appropriate meeting spaces. Meeting spaces must have the right technology for the varieties of work that will occur within them.

4) Better administrative and reception capability reduces fixed costs. For organizations that use reception or administrative services in a way that provides “concierge” support to mobile workers, continued investment in these resources is actually shown to reduce fixed costs within the facility. This is probably due to more effective use of space by visitors and less work downtime by these mobile employees.

Read the full paper, “Design Features and Effective Work” from Knoll here.

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