This piece was originally published in the July/August 2019 issue of electroindustry.
For building systems, especially those used as corporate workspaces, the Facility Manager (FM) is an indispensable role. The FM bridges conversations with executives and building management professionals while also helping to implement a corporate workplace strategy.
If an FM gets involved in a discussion at a strategic level, the C-suite may shift their view of the manager as someone who creates value and minimizes costs. Tapping into C-suite dialogue requires FMs to approach their role differently. They can do so by using the 3-30-300 rule.1
The 3-30-300 rule provides a breakdown of what an organization pays per square foot, in terms of total occupancy costs—$3 for utilities, $30 for rent, and $300 for employee costs (salaries, benefits, etc.). These numbers aren’t set in stone, but they do put into perspective how an organization typically distributes its occupancy costs.
The rule can serve as a valuable tool for FMs looking for a different approach or viewpoint and can be useful when making cost strategy decisions.
Many FMs typically focus on the 3 and 30 portion—utilities and rent—as the areas where they can make the most substantial impact. However, when engaging in conversations with executives, it’s important to highlight how FMs can and do affect the 300.
Focus on Big Impact
Taking this approach focuses on big impacts—those that drive significant improvements concerning how employees work. This approach can change the way that FMs are viewed and can help create buy-in for a project.
For example, creating a “smart office” using the Internet of Things and sensor technology with a focus on improving utility costs can result in significant energy savings. A McKinsey report2 found that people- related gains from IoT are five times higher than energy savings and make a much more substantial impact on the organization. Productivity gains from IoT technology accounted for 75 percent of the benefit, while energy savings accounted for only 14 percent. Changes that affect human capital have a greater impact than those that improve only physical capital.
The Rule in Practice
Energy-efficiency issues are a hot topic. Many FMs are looking at ways to upgrade lighting and introduce better features within offices. One example of energy-efficiency upgrades is daylight sensors, which present both energy savings and health benefits for workers.3 Implementing such sensors results in blinds being open to allow in natural daylight, which is better than relying on artificial lighting. The resulting increased natural light has been shown to have positive effects on the health of employees, improving mood and workplace satisfaction. The results translate into happier and more productive employees within the workplace.
The focus on people is one of the reasons that the WELL Building Standard has been rolled out across the U.S. with early success. The Standard addresses seven core concepts that influence a worker’s performance and well-being: air, water, nourishment, light, fitness, comfort, and mind. It joins other certification programs like LEED, BREEAM, Green Star, and the Living Building Challenge in the green rating systems family.
While the costs for WELL certification can be significant, organizations that implement the Standard understand the human impacts that it has. Examples of these benefits include reduced absenteeism and strengthening employee culture, a crucial factor in workplace design.
“When looking at reducing energy and rent costs we have to focus on people,” said Barbara Ciesla, VP of People+Place at JLL, a consultant on the project. “If we can put people in better buildings and improve productivity by 5 or even 10 percent, 10 percent of 300 is your total cost of rent.”
Benefits to the 300 can easily offset and outweigh costs to the 3 and 30. It is essential not to lose sight of employee benefits in the pursuit of cost reduction in utilities and rent.
Considerations in Projects
Consider motivations around implementing changes. Are you switching to a more flexible office arrangement for greater collaboration and improved employee morale? Or are you making changes to reduce the cost of rent? Avoid making changes solely to reduce rent, as the impacts on employee happiness and productivity can outweigh the benefits.
In cases when new projects focus only on the 3 or 30 aspects, take a second look. Are these savings achieved at the expense of employee well-being or productivity? If this is the case, it is crucial to push back. Know your limits based on the type of organization you work with, but a healthy amount of pushback can be right, especially on an issue that affects the people inside a space, your commitment to the organization, and its broader goals for success.
Taking the 3-30-300 approach allows FMs to take a holistic view of the space they manage. Once FMs begin to highlight how they impact the 300 aspects daily, the step to a strategy conversation with executives becomes inevitable. ei
- A surprising way to cut real estate costs, JLL, September 2016, https://www.us.jll.com/ en/trends-and-insights/workplace/a-surprising-way-to-cut-real-estate-costs
- Unlocking the Potential of The Internet of Things, McKinsey Global Institute, June 2015, https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the- internet-of-things-the-value-of-digitizing-the-physical-world
- Sarah Garone, The Health Benefits of Natural Light, Healthline, October 2018, https:// healthline.com/health/natural-light-benefits
- Rebecca Melnyk, How TD Bank HQ achieved WELL certification, Canadian Property Management, June 2016, https://www.reminetwork.com/articles/how-td-bank-hq- achieved-well-certification