Re:Suburban Office Parks Increasingly Obsolete; Businesses C...
by ChuckMcM on Tuesday December 22, 2015 @12:49AM
(#10776076)
Of late I've been thinking about the relationships between offices and productivity.
Right at the turn of the century people were thinking about "revenue per employee" as a metric for how efficient a business was. That was silly off the charts when you get to some software startups where a group of 15 or 20 people are generating 20 - 30M$ a year in revenue.
The thing that stuck out for me is the cost of offices as a cost of doing business. For years folks have been working to fit more and more people into fewer and fewer square feet because the office expense was a serious impediment to profitability, it added to the "loaded cost" of your employees, and that combined with salary was your biggest cost.
But here is the thing, if your employees are generating these huge revenue per employee numbers, what that means is that small percentage changes in their productivity has a huge impact on your company's revenue and profitability.
Employers need to look at what would be the impact if your employee was 10% more productive, which means your revenue per employee number went up 10%. How much cost would you be willing invest to make that happen? Even at crazy SF levels of $100/sq ft / year, that is $10,000 for an additional 100 square feet for an engineer. $10,000 represents perhaps a 5% increase in the loaded cost of that employee. But if they boost their productivity by 10% they return 200 - 300% on that investment annually.
Bottom line, build environments that maximize the productivity of your employees, not ones that minimize your real estate costs. Its a better investment than hiring more people.
Right at the turn of the century people were thinking about "revenue per employee" as a metric for how efficient a business was. That was silly off the charts when you get to some software startups where a group of 15 or 20 people are generating 20 - 30M$ a year in revenue.
The thing that stuck out for me is the cost of offices as a cost of doing business. For years folks have been working to fit more and more people into fewer and fewer square feet because the office expense was a serious impediment to profitability, it added to the "loaded cost" of your employees, and that combined with salary was your biggest cost.
But here is the thing, if your employees are generating these huge revenue per employee numbers, what that means is that small percentage changes in their productivity has a huge impact on your company's revenue and profitability.
Employers need to look at what would be the impact if your employee was 10% more productive, which means your revenue per employee number went up 10%. How much cost would you be willing invest to make that happen? Even at crazy SF levels of $100/sq ft / year, that is $10,000 for an additional 100 square feet for an engineer. $10,000 represents perhaps a 5% increase in the loaded cost of that employee. But if they boost their productivity by 10% they return 200 - 300% on that investment annually.
Bottom line, build environments that maximize the productivity of your employees, not ones that minimize your real estate costs. Its a better investment than hiring more people.