WHITE PAPER
02
THE TECHNOLOGY WORKPLACE
ISSUE 02/2
Over the past seven years Bates Smart has designed over 60,000 sqm of technology workplace. Through workshops, surveys, analysis and utilisation studies, what have we learned?
1. SPACE WORKS HARD
2. TEAMS COLLABORATE DIFFERENTLY
3. ‘FLIP’ THE ‘SPACE SPEND’
4. WHAT THE TALENT WANTS
5. WHAT THE BUSINESS NEEDS
ISSUE 02/4
SPACE WORKS HARD KEY FINDING 1
Tech teams spend more time in the office and more time at their desks than any other industry. They are in the workplace 12% more often and at their desks 14% more often than teams in other industries.
AREA PER PERSON IN TECH COMPANIES IS REASONABLY GENEROUS Technology company fitouts have mid-range space allocation, averaging 12.4sqm per person.*
Finance ABW 9 sqm pp Property ABW 10.3 sqm pp Traditional Finance 11.5 sqm pp Technology 12.4 sqm pp
Insurance 14.3 sqm pp
Government 14.9 sqm pp
Legal 17.5 sqm pp
* Area includes both staff work area and visitor / reception spaces. Source: Bates Smart workplace database
ISSUE 02/5
TIME SPENT IN THE OFFICE BY SECTOR
11%
Workplace density is determined by how many people are in the workspace at any one time.
17% 15%
While tech workspaces may have more space per person, they will still be highly activated, because more people are in the office, every day. Space Utilisation
15%
13%
47%
48%
50%
Finance
Property
Legal
10%
15%
69%
Percentage of people at desks
55%
60%
Percentage of people in the office, but not at a desk (e.g. in a meeting)
45%
Source: Bates Smart workplace database
IT Agile
IT Non-Agile
Fintech
Government
SO WHY ARE DIGITAL WORKERS NOT DIGITAL NOMADS? In a world where technology encourages us to work anywhere, anytime, why do digital teams spend so much time at their desks, in their office. There are two main reasons: 1. Most software development teams work in close collaboration and this type of work is most effective when you sit with your team (See following page ‘Agile isn’t agile’). 2. Tech companies collaborate with their clients and customers in the office, either in review meetings or online. WHAT ABOUT DISPERSED TEAMS? There are always anomalies that sit outside the main trend. Not all teams need to be located together to collaborate or work effectively.
‘You can’t develop [software] if your team’s not around.’
– ‘Innovation takes one person to have an idea – and that person needs quiet.’
– ‘I need to move between absolute quiet and teamwork – at the moment that’s called headphones.’
We have worked with teams that have a work from home policy and teams that collaborate effectively across continents and time zones. In this situation, we specifically address the issue of remote work and adapt their workplace to compensate. The most common solution is to use technology (usually a form of continual telepresence) to give a remote team a seat at the table – creating a seamless virtual workspace.
Source: Quotes from staff of major Australian digital businesses, obtained during the briefing process
PICTURED Campaign Monitor, Sydney Previous page: Twitter, Sydney
ISSUE 02/6
TEAMS COLLABORATE DIFFERENTLY KEY FINDING 2
“The ideal office environment is about finding the right balance between socialising and getting stuff done... It should be easy for everyone to remove any distractions, put their head down and get into the zone. They should also be able to hang out and generally switch off.” Dave Greiner – Co-founder Campaign Monitor
PICTURED ASX, Australian Liquidity Centre, Artarmon, Sydney
ISSUE 02/7
AGILE TEAMS SPEND THEIR TIME DIFFERENTLY Agile development teams have very different work styles to those of traditional development teams. Their priority is team productivity and this is demonstrated in their time allocation – more time working in teams and less time in individual focused work. Source: Bates Smart workplace database
Ag
39%
ti o
Meetings 8% more formal meetings
na l
+8%
il e
il e
Individual 11% less time doing individual focused work
17% Trad i
na l
-11%
Ag
11%
ti o
na l
Team work 13% more time on team work
8% Trad i
ti o
na l
+13%
Ag
16%
il e
il e
38% Trad i
ti o
26% Trad i
Ag
27%
-7%
Out of Office 7% more time in the office
DEVELOPMENT COLLABORATION AGILE ISN’T AGILE In workplace design, agile working is often used as an synonym for Activity Based Working – a style of workplace allocation where seating is unassigned and zoned based on tasks and functions. However, the term agile has a different meaning for technology companies. In the property market, the two are often confused but they are vastly different. Agile Development – in brief In software development, agile working is a collaborative and incremental project management process. The agile team works in short ‘sprints’ or iterations (often 1-4 weeks). At the end of this process, a working version of the ‘product’ is demonstrated to the stakeholders; where the project, it’s aims, design, requirements and viability is reviewed. The workplace as a collaboration tool The workplace implications for these teams are that they have multiple short progress meetings and regular one-on-one and team chats during the day. For the team to work at its best – they all need to be in close communication, which means sitting together.
ISSUE 02/8
TEAMS COLLABORATE DIFFERENTLY KEY FINDING 2
“To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices.� An extract from the now famous human resources email issued to all Yahoo! staff in February 2013. This email cancelled any working from home arrangements calling all staff to come back into the office. It ignited a workplace debate that divided workplace commentators and still rages today.
PICTURED Twitter, Sydney
ALLEN CURVE FINDING: Staff have 4 times more communication with team members sitting within 2 metres; as opposed to team members 20 metres away.
Source: 1977, Managing the Flow of Technology, Thomas J Allen; 2014, Workspaces that Move People, J Magnofi, B Waber, G Lindsay
ALLEN CURVE 1977
FACE TO FACE 2014
COMMUNICATION
The physical distance between colleagues charted against the frequency with which they communicate – including digital communication.
EMAIL 2014
LESS
THE ALLEN CURVE – THE CLOSER YOU SIT, THE MORE YOU COMMUNICATE
ISSUE 02/9
MORE
LESS
PHYSICAL DISTANCE
MORE
PHYSICAL ADJACENCY BOOSTS COLLABORATION – EVEN DIGITAL COMMUNICATION The Allen Curve (developed in 1977) demonstrated that the further away from someone you were, the less you communicated. But surely this has changed in the digital age? The evidence says not considerably. Multiple sources have all recently revisited the theory with multiple experiments and endorsed the Allen Curve (above). One experiment tracked proximity and interaction with Bluetooth location and communication trackers. Both face to face and digital communication has been found to follow the Allen Curve. In one experiment, engineers who shared workspace were 20% more likely to communicate digitally and emailed four times more frequently when collaborating on a project, as opposed to a remote team. Most importantly these teams had 32% faster project completion times. The tyranny of distance prevails.
ISSUE 02/10
THEY ‘FLIP’ THEIR ‘SPACE SPEND’ KEY FINDING 3
Technology companies allocate space in different proportions to other industries. They prioritise social and team spaces over client and individual spaces; the reverse of traditional business priorities.
5 WAYS IN WHICH TECHNOLOGY FIRMS ALLOCATE SPACE DIFFERENTLY
1 2 3 4 5
Less individually-owned space Only 30% of space is assigned to individual desks. This is compared to to 40-45% for non-tech companies. Greater allocation of team space Up to 12% of the total floor area is set aside to enable immediate team meetings and collaboration in the open floor area. More enclosed meeting rooms Up to 8% more space is given to enclosed rooms to counter the ‘noise’ in the collaborative office. Spaces for ‘hanging out’ are prioritised Up to a quarter of the available floor space is given over to wellbeing and social spaces. Smaller reception areas Minimal space is allocated to reception and visitor hospitality. Tech companies have ‘flipped’ the traditional layout. Instead of impressive reception lobbies, the best spaces are given over to the staff breakout.
ISSUE 02/11
SPACE ALLOCATION BY FUNCTION Technology companies ensure all their spaces are highly utilised, and this influences how they allocate space. This is also the result of what stage they are at, their business strategy and their future vision.
Legend Visitor Spaces
Visitor 7%
13% Team meeting space
Individual
5% 3%
43%
vid
ua
So
Circulation and support spaces
l
cia
7%
31% Individual
8%
12%
6%
l m
S o ci a
TRADITIONAL In the early 2000s, emerging technology companies mirrored their professional services counterparts: // Mainly individual owned space: 43% // Sizable visitor reception: 13% // Nearly no social space: 3%
m Te a
l
STARTUP A freshly started tech company is focused on innovation and prioritises collaboration: // Less individual owned space: 31% // Significant team and business wide shared space: 20% total // Less focus on visitor reception: 7%
Visitor
Visitor
7%
4% In d
29%
ual
Individual
m
10%
29%
ual
5%
iv id
Individual
i v id
In d
21%
21%
Te a
Source: Bates Smart workplace database
Te a
31%
Individual
Business wide meeting
In di
43%
Social space
tor
V i si
Individually owned spaces
22% S o c i al
ESTABLISHED Established and sustainable tech companies maintain the focus on innovation, prioritise team building and attracting and retaining the best staff: // Significantly less individual owned space: 21% // Large hospitality and social spaces: 22%
PICTURED ASX, Australian Liquidity Centre, Artarmon, Sydney Following page: Campaign Monitor, Sydney
4%
12% 13%
S o c i al
a Te
m
AGILE Delivery focused teams with a need for both collaborative and quiet work spaces: // Substantial individual owned space: 29% // Adjacent team meeting spaces: 12% // Social space remains important: 13% // Minimal visitor reception and hospitality: 4%
ISSUE 02/12
WHAT THE TALENT WANTS KEY FINDING 4
“Our staff don’t stay because they are paid well. It’s the intangible things; it’s not about money. If they tell me they are leaving for money, I don’t believe them; it’s because we’ve failed at all the other things.” Source: CEO interview - International financial technology company
SIX NON-FINANCIAL ATTRIBUTES THAT MATTER MOST TO TECH STAFF
As part of a workplace strategy, we analyse what is important to both staff and the business. While the order varies from business to business, here are the top six priorities for staff – and none of them are financial.
1
Lifestyle perks and wellbeing In house chefs, diving trips in Bermuda, poker tournaments… These perks are taken seriously in tech companies. So much so, that these are considered a baseline offer by most staff, not a differentiator.
2
Innovation and engagement It should come as no surprise that tech staff value innovation. These teams are competitive and driven to create the brand new world. They want to work in teams on ground breaking technology, alongside inspiring founders.
3
Team Culture (the TKG - tight knit group) People who have a best friend at work are twice as likely to be highly engaged and more likely to stay with a company. Tech staff prioritise working with talented and passionate people, whose company they enjoy.
4
Ability to make an impact Staff are looking for meaningful work and opportunities to develop their knowledge. ‘TED’ talk arenas for presenting back to the team, broadcast walls and whiteboards all assist in developing a culture of sharing and appreciating knowledge.
5
Technology and the ‘hackable’ work environment A dream hardware setup and the ability to reconfigure furniture and write on the walls. Surprisingly often tech businesses find this a challenge. In these cases, technology becomes a number 1 priority.
6
Access to leadership Without doubt the firms with the most highly engaged employees have the most inspirational leaders. Staff love that they are accessible and share their ideas – what they are doing and why they are doing it.
ISSUE 02/13
DIFFERENT TEAMS HAVE DIFFERENT PRIORITIES. Depending on how established a tech company is, the staff ‘top 3’ priorities order changes. Businesses develop detailed employee marketing strategies – spending time and effort understanding which priorities appeal to their ‘ideal talent.’ Startup tech
Established tech
1
Client studies have shown that perks are more highly valued by younger staff.
1
Ability to make an impact grows in importance. Staff don’t want to be lost in the crowd.
2
Personalities that value innovation are often linked to fast success and are a key attribute of startup talent searches.
2
Performance is measured on the success of the team. It becomes vital to have the right people.
3
High achieving talent look for the same in their team – they need to know they are ‘all in this together’.
3
Lifestyle and perks are a standard offer – aimed at consolidating the wider business group through social events.
Fintech
1
The importance of the ability to make an impact does not change.
2
Fintech have large quantities of hardware and slower turnover rates. Access to new technology becomes a staff priority.
3
High staff turnover rates can mean establishing a long term TKG becomes a challenge.
ISSUE 02/14
WHAT THE BUSINESS NEEDS KEY FINDING 5
The growth rates for tech firms are significantly higher, and more unpredictable, than any other industry we have encountered. The key challenge is how to accommodate growth within the existing structure of the property industry.
TOP 3 THINGS TECH COMPANIES LOOK FOR IN A PREMISES
1
Location, location, location As they establish a firm foothold in the list of the world’s top multinationals, tech is the fastest growing part of the premium grade market. While their brands align with city fringe locations, CBD properties offer larger floorplate sizes, options for expansion and diverse amenities. The stigma of the CBD as ‘suit city’ is evaporating.
2
Character Activated and energised spaces with individual character rate highly. Large marble lobbies don’t resonate with their brands. When they can’t find what they want, tech firms will strip out A-Grade space to find their brand within an ‘ordinary’ shell.
3
A flexible lease (+ landlord) Lease flexibility is crucial, for both expansion and contraction. Co-working hubs and incubators offer a social network and business development opportunities along with month-to-month leases for smaller businesses. Space delivered as a ‘warm’ shell with void and stairs are popular ways to avoid expensive make-good clauses.
ISSUE 02/15
SPACE REQUIRED BY TECHNOLOGY FIRMS AT VARIOUS GROWTH RATES
50%p.a.
Our tech company database has forecast growth rates as high as 50% p.a. – often across the term of a 10 year lease, or for the initial 3-5 years. SPACE GROWTH
Professional services companies grow at an average of only 2% p.a. This headcount growth can require as much as 57 times the initial space required over a 10 year period.
15%p.a.
2%p.a.
YEAR 0
LEASE YEAR
YEAR 10
GROWTH STRATEGIES
2-5% P.A. Standard non-tech growth rates
Flex the space you have With extra space and bench workstations most businesses can accommodate up to 40% headcount expansion. For tech companies – this might only get you to year 3.
15% P.A.
Established tech & fintech growth rates
Sublease options In the right building, leasing options might create the opportunity to expand into another floor at year 3 or 5. Depending on vacancy rates this could be a challenge. Or, if space is available the floors aren’t consecutive.
30-50% P.A. Large tech & startup growth rates
Campus Design When growth is established and predictable most large tech companies follow finance and look to create a campus building.
TECH COMPANIES WILL CONTINUE TO SET THE BAR FOR WORKPLACE INNOVATION Tech companies are masters at questioning the accepted. They live in a world where the impossible frequently becomes possible. So where to next? THE RISE OF BIG DATA When making large investments, not many companies would rely on gut instinct, yet when it comes to their workplace design – one of the largest outgoings after staff – many leadership teams end up making decisions without access to the relevant data. The last decade has seen the rise of a data-led design. Space utilisation studies, surveys, analysis and interviews have assisted in tailoring design to business culture and maximising space usage. SO WHAT IS BIG DATA? “Big data” commonly refers to the correlation of large volumes of data coming from multiple sources. Big data can take workplace analysis into hyper-drive, giving businesses the opportunity to correlate large data sets – phone calls, diary entries, location, contact lists, employee records, keystrokes, heart rates... to analyse and optimise performance. WHAT ARE THE POSSIBILITIES? Already many companies are working in this space to: // Predict when key staff may be tempted to leave // Link the heart rates of securities traders to performance // Programme delivery drivers’ routes to improve productivity and safety // Correlate diaries, email and output to identify opportunities for workflow efficiency // Identify guiding principles to automate ‘rule-based’ work The State of California has even gone so far as to pass a law banning the microchipping of employees... ISNT THAT JUST CREEPY? The goal is to put the right people with the right skills in the right workspace working at their optimum. When successful, this data improves the productivity and capability of their teams. The challenge will be employee buy-in, taking the data collection from ‘creepy’ surveillance to useful human capital insights.
To register for future Bates Smart White Papers please email: research@batessmart.com
PICTURED Facebook, Sydney Previous page: Campaign Monitor, Sydney
ISSUE 02/18
ARCHITECTURE INTERIOR DESIGN URBAN DESIGN STRATEGY
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