The Impact of Space Efficiency on Employee Productivity and Retention

September 11, 2017

An article written in this morning’s Denver Post states that Colorado’s unemployment rate of 3% is the lowest it has been in 15 years and tied for fourth lowest in the nation.  At this point in the economic cycle it certainly appears that many companies are faced with a challenge of hiring and retaining highly qualified employees.

Much has been written and discussed over the past 15 years about space design, space efficiency and the impact on employees.  The reason this is such a hot topic is that the overall cost a company incurs to occupy office space is typically its second largest expense.  The largest expense is typically human resources.  As the cost of office space has risen steadily during the current economic cycle many companies are implementing strategies to control occupancy costs by leasing less square footage than they may have in the past.  This has been accomplished primarily by reducing the ratio of square footage per employee through the reduction or elimination of private offices and the downsizing of workstations.  In some cases companies have eliminated workstations and are utilizing benching systems.

The benefits associated with open plan space design include increased collaboration as well as a reduction in occupancy cost.  However, taken too far this concept can have an adverse impact on employee productivity and retention.  In a recent study completed by Newmark across major metropolitan areas a 2%-3% decline in productivity could eliminate the savings in occupancy cost generated by reducing square footage.

It is important for companies to understand their workforce and industry and realize that there is a strong correlation between the location, quality and cost of office space and employee productivity.  In today’s business world the competition for talent is fierce and smart leaders may want to take a holistic view of their company’s two largest cost centers and create a synergistic strategy that works for them.  One size definitely does not fit all.

Please click on this link for a full copy of the report NGKF Employee Productivity WhitePaper 2-1-16

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