Don’t put office costs before staff comfort, Morrell cautions firms

Former Davis Langdon boss Paul Morrell has called on business leaders to put design quality before cost in order to improve the performance of their businesses.

Morrell claimed that creating better office environments would improve staff performance as employees saw their office space as representative of how they were viewed by the company.

In his foreword to a report on office design written by the British Council for Offices (BCO) and design watchdog CABE, Morrell writes: “A company’s most natural response to the force of competition is to seek to drive down its costs – and premises represent a cost that is both readily identified and readily comprehended.

“As in so many facets of life, however, a preoccupation with cost may actually destroy value: but the ways in which office accommodation can create value for a business, not just through economy but also through improving the effectiveness of its people, are inadequately understood.”

Morrell, a CABE commissioner and president of the BCO, said the report – The Impact of Office Design on Business Performance, due to be published next week – was timely and important.

The report provides evidence linking poor workplace design with lower business performance and higher levels of employee stress. It claims there is a 25% difference in productivity reported between comfortable and uncomfortable staff, stemming from basic requirements such as air quality, temperature, overall comfort, noise and lighting. Good lighting design and adequate levels of daylight have been linked to a 15% reduction in absenteeism and productivity increases of 2.8–20%.

Relative costs

It also points out that, over a 25-year period, the cost of constructing and maintaining an office is minimal compared with staff costs (see box below): while 85% of total cost goes on salaries, just 6.5% goes on construction.

From these figures, it claims that a typical service business will accrue construction costs, running costs and staff salaries and other business operating costs at a ratio of 1:1.5:15.

A company’s natural response to competition is to drive down costs, but this preoccupation may destroy value

Paul Morrell, president, BCO

The report says: “The context for considering savings is therefore that factors influencing the effectiveness of staff will lead to far greater financial impact than those which affect efficiency.”

However, it goes on to point out that in corporate real estate, efficiency has come to mean spatial efficiency. This, it says, has four components: landlord efficiency (the rent-earning proportion of gross floor area); tenant efficiency (the percentage of rentable area that is genuinely usable); density of occupation (the amount of lettable area allocated to each desk space) and utilisation (the number of people allocated to each of these).

Efficiency, it says, must be considered holistically, citing an example in which efficient layout has saved 30% in occupancy cost.

Business goals

The report also includes an essay by influential interior architect Frank Duffy, in which the founder of DEGW says the results of the study reveal that much work needs to be done on proving the economic value of design.

Duffy says: “There is certainly a disappointing lack of relevance in most office workplace research to business performance, and we believe that a different approach will cumulatively lead to much more useful results.”

He adds that more study is needed to measure the performance of business space in relation to business goals, comparing the current lack of knowledge to early 19th century physicians and their vague notions of how diseases were transmitted.