Minimizing costs is at the top of every facility manager’s to-do-list. While keeping budgets in check can be a challenge, global professional services company Jones Lang LaSalle posits that there is a simple way to estimate the order of magnitude for a company’s costs per square foot. It’s called the 3-30-300 rule, and states that, on average, companies spend $3 in utilities, $30 in rent, and $300 in payroll per square foot per year. One of the most immediate takeaways from this rule is that facility cost saving decisions should not consider physical space in isolation.
Of course, thanks to social distancing and the rise in hybrid and flexible working today, how we’re using the office and managing space is changing. The 3-30-300 rule can help facility managers determine recommended office space per employee, but they will likely need a host of other resources—including robust workplace reports and analytics—to properly plan their spaces.
That said, the 3-30-300 rule is still a useful strategy to keep in your back pocket when trying to reduce costs without sacrificing productivity. In this article, we explore how to apply it to your workplace and measure the results.
There are a variety of ways ways that your approach to the 3-30-300 rule can impact your workplace costs. For example, setting up your office to be 10% more energy efficient can save you about $0.30 per square foot. Occupying a space in an area that has a 10% lower rent can save you roughly $3 per square foot.
But the biggest opportunity for saving may come through people power. By making real estate decisions that enable your employees to be 10% more productive, you stand to save $30 per square foot. The biggest reward for your efforts comes in addressing your largest costs, and supporting your employees has the double benefit of improving morale while balancing out budgets.
So how and where should you apply productivity boosters? There are numerous ways to make life better for your employees; these are some of our favorites.
The commute to and from work can be one of the biggest stresses your employees have. Choosing a location that helps reduce commute times can increase your employees’ mood before they even get into the office. The closer a person lives to their place of work, the more likely they are to want to stay, improving your company’s retention.
While living close to the office isn’t always possible for everyone, strategic remote work and flex work policies can provide your teams with options for optimizing their own productivity. On days where a commute would cut into their workflow, employees can choose to stay local and dig in.
Think about what surrounds your office. Are you near a couple of great lunch spots? A park? A trending coffee shop? Studies have shown that employees who take a lunch break have higher overall job satisfaction, and providing appealing options for breaks can give your team time to recharge. While renting an office outside of the downtown core may be appealing rent-wise, it might come with limitations on how your employees conduct their days. Allowing employees to step away from the office for lunch or a 15-minute coffee break gives them the chance to return with renewed energy.
It is possible to combine energy saving with increased productivity. Take lighting, for example: switching out yellow-orange lighting to softer LED bulbs that mimic daylight not only saves on energy costs but can reduce eye strain for your in-house employees.
Creating green spaces inside the office also has a positive effect on the environment and employees both. Plants help clean the air, and intentional biophilic design can also boost productivity and employee wellness.
Sorting through the data that comes in the form of a utility bill is significantly easier than measuring productivity. However, when it comes to real savings, those utility bills are just pennies in the bigger picture.
So how do you measure productivity as a result of using the 3-30-300 rule?
Partner with HR to investigate a few classic productivity tells. First off, look at the average sick days taken by employees. Effective work environments and layouts should cut down on the circulation of germs around an office, and providing a positive workplace experience is a good first step in supporting your employees’ mental health.
Next, assess your employee retention. It’s no secret that hiring new employees costs companies more money than retaining current team members, even with wage increases. Lost productivity between one employee leaving and getting the new employee up-to-speed can be weeks, if not months. If your people are staying and your company isn’t experiencing excessive turnover, you may be getting your workplace initiatives right.
Lastly, use an integrated workplace management system to check on what spaces in your office are being consistently used, and when. Track whether employees are gathering for meetings, using available desks or choosing to work from home to gauge whether you’ve struck the right balance of boardrooms and flex spaces, remote work options and support tools. Over time you should be able to see employees using office resources to do their best work.
Increasing productivity is a company-wide responsibility. While FMs are charged with the upkeep and optimization of office spaces and resources, it can take buy-in from HR and senior leadership to really move the needle on company-wide initiatives. But when it comes to facilities budgets, FMs are on point, so don’t be afraid to advocate for decisions you feel will positively affect both employees and the company finances. It’s important for all departments to buy into the 3-30-300 rule in order to ensure productivity increases.
Poll your team leaders to see what changes might help their employees be more productive at work. Come to meetings with suggestions to help get the ball rolling. And start small: test out adjustments that can be implemented right away, such as adding green elements or tweaking lighting. Once your smaller initiatives have been successful, you have the track record in place to propose bigger-picture changes.
Investing in people is where FMs stand to cover ground on their financial objectives. Switching the conversation from “How can we lower our rent costs?” to “How can we increase productivity?” may give your business the best shot at both balancing budgets and increasing employee wellness and engagement across the board. Use the 3-30-300 rule to increase your company’s productivity and see the results!
Photo Credits: Shutterstock / fizkes, Shutterstock / bbernard, Shutterstock / LightField Studios