Is the environment used efficiently?
This is the third main sub-question to answer ‘Is the learn/work environment adding value?’ What do you need as proof for regulatory reporting about the learn/work environment being sustainable, resilient, agile and thriving? Adding value by using the learn/work environment in a smarter way can be achieved at different levels of ambition. Ranging from a purely technical and financial approach to a level where the learn/work environment is regarded as a strategic asset for the primary process. Focus on resilience and adaptability rather than merely on costs.
Through professional management of the learn/work environment, it can act as a leverage for improvements in the primary process and in secondary business processes that seriously affect the bottom line in a positive way.
The learn/work environment is an enabler, not just a cost centre. Even when your present main objective is right-sizing your portfolio and reducing costs. It has both revenues and costs that have a direct and indirect effect on the cost structure of an organisation. The main focus on cutting costs means most of the time that corners are cut and quality goes down, along with customer satisfaction and brand loyalty. From a cost focus to an outcome focus. Money is a means to generate a positive impact. It is not only about Efficiency but about Effectiveness, Engagement and Evidence as well.
“Don’t think of costs, think of value. You don’t need permission to add value.” (René Stevens)
Value creation with the learn/work environment consists of:
- Direct income, through sales (positive difference between book value and sales price) and through rental income (shared use and/or rental to third parties).
- Direct cost reduction, by reducing the number of square meters of floor space and/or reducing occupancy costs per square meter of floor space.
- Indirect benefits, because the learn/work environment positively influences the return from the primary process. Plus contributes to achieving the sustainability objectives as part of the social return.
- Indirect reduction in total operating costs (excluding occupancy costs) through a more efficient and effective learn/work environment for the education process.
Smart Management is when the focus of a learn/work environment is on increasing the benefits of the activities in that environment and less on the cost reduction of the accommodation. Efficiency is intended sacrifices divided by actual sacrifices. Effectiveness is actual results divided by intended results. Productivity is the real results divided by the real sacrifices.
Analysing the annual financial report gains insight into the effects that the learn/work environment have on financial management, more in particular how the components Physical, Digital, and Social can be used as leverage to improve learning results, working conditions and cooperation between employees and/or co-users.
The utilization of spaces is based on parameters like capacity vs attendance (occupancy rate) and time booked vs time used (utilization rate). Knowing these rate scores of spaces can help you prioritize corrective actions to make more efficient use of the available floor space.
Focus on people and their behaviour
The prime focus of enhancing efficiency should be on people and their Behaviour instead of mainly on processes, procedures and structures of the organisation, the Bricks & Bytes. Only when employees share the dream of the organisation does synergy arise and that they become intrinsically motivated to increase productivity and add (more) value.
The Covid-19 pandemic has pushed us in economically exceptional times and has forced us into new situations for working. Stable environments can change in the blink of an eye. Creating organisations that move accordingly is vital to remain relevant.
By remaining transparent and involving your employees, you will see that confidence grows and, with it, the commitment to work together. These are also the moments when the bonds become stronger and the best new ideas emerge.
“Money does nothing, people do everything.” (Michael Tellinger)
Therefore make relevant key numbers understandable to everyone to give your employees insight into the current financial situation. Without transparency, your employees will lack the fundamental understanding on which they can base their decisions upon.
The effects of cost reduction have a limit, whereas the so-called soft outcomes of culture and process changes can be continuously reinforced and enhanced. “Growth and profit are a product of how people work together.” – Ricardo Semler.
Costs versus value
Based on a DuPont analysis, the possible effects of interventions in the learn/work environment can be simulated using ‘what-if scenarios’ within the context of the own strategic organisational goals.
We use the eight constraints of a project, Scope, Time, Risk, Experience, Resources, Information, Cost and Quality (STRERICQ). These aspects are made SMARTI, coordinated and integrated into one approach because they are all inseparable parts of the whole learn/work environment.
- RESOURCES: Who and What is Where required to do the work? Which capacity and competence are required for managing the required objectives and expectations?
- TIME: By when, and for how long, should the outcome be delivered?
- COST: How much money is available to achieve the outcome? Price is what you pay, value is what you get.
It is tempting to pay particular attention to the easily measurable direct cost reductions. Reducing occupancy costs is like slimming: as a temporary measure often fine, but it should never be an end in itself. Slimming can tip too far, which will be only noticeable after the turning point.
“A price is meaningless without an adequate measure of quality.” (Edwards Demin)
For a correct assessment of the amount of the occupancy costs, these must be compared with the performances provided, potential risk levels, health and wellbeing issues and occupancy and frequency rates of the places. Also, the effectiveness of the primary process and user satisfaction should be taken into the equation. The cost level in itself says too little.
By breaking the question ‘Is the learn/work environment adding value?’ up into chunks it becomes more manageable. To answer it, four main sub-questions must be addressed. But be aware that Engagement, Effectiveness, Efficiency and Evidence are not ends in themselves but means to an end. Pay attention to what is important, not just what is quantifiable. Go for the good of the whole.