Boosting the effectiveness of the American workplace
Leesman’s North American MD, Eleanor Forster, discusses the need to optimize processes in every element of business.
In late December 2015, Leesman CEO Tim Oldman was asked to present at a roundtable event for over 100 American and global real estate executives. A mere month later, following a wave of interest, Leesman landed in the US with a permanent home in New York City. Since then, we have actively engaged with an array of North American businesses, spanning a wide variety of sectors and sizes, due to a new and improved focus on the importance of the workplace and its link to organizational performance.
As a global, independent think-tank, Leesman measures how effectively a workspace supports the activities undertaken within the built environment in question, and our survey has been designed to accurately record employee satisfaction levels with over ninety workplace features and services. We have spoken to more than 155,000 employees across the globe and the latest data has revealed that office environments can and do hinder productivity. The failings of a space also impact employee engagement, health and wellbeing and, ultimately, talent retention and staff turnover - not to mention profit margins.
Europe, particularly Scandinavia, is viewed as one of the thought leaders when it comes to workplace effectiveness. However, the USA is one of the world’s top global innovators, only pipped to the post by Japan (Thomson Reuters Derwent Word Patents Index), and this natural wave-making ability appears to be evident in the approach to creating workplaces that work. The Leesman Index data, amassed from our work with American businesses, reveals that the USA has scored eight percent higher in employee satisfaction than Europe when it comes to creating productive work environments.
That being said, our research has revealed that employees on both sides of the pond are increasingly looking for a variety of workspaces, including social, informal areas to collaborate and communicate with colleagues - yet their employers are failing to provide them. So although the US has begun to take the reins on the subject, it’s clear that more work needs to be done.
What we see in the highest performing organizations that we’ve worked with is the investment in choice. These businesses are creating the right environments for their people - and they have only achieved this by understanding the needs of their workforce. It’s not just about plonking people at a desk and hoping for the best; the key is offering a range of spaces that suit the various activity portfolios within an organization.
From our conversations so far, American business leaders are bracing themselves for a deeper delve into the components of a workplace that can help their organizations flourish. Businesses dotted along the East Coast are crying out the loudest, and we chose New York as our base so we can easily access and respond to the influx of requests coming in. We’re currently in talks with entrepreneurial leaders in New York, Toronto, Boston, DC and Philadelphia, as well as other cities along the D.C. corridor. These are the most densely populated cities in terms of building stock and employees. The physicality of Manhattan, for example, has created a largely vertical city and although the stereotypical view of New York is a varied collection of gleaming towers, the reality is that the majority of buildings are around 70 years old, with old and extremely challenging infrastructures.
The main challenge faced by businesses in these areas is the cost of space. Given the soaring price of CRE, businesses need to be increasingly savvy about creating work environments that support employees in their day-to-day roles, regardless of the limitations posed, if they’re to succeed. And when square footage is squeezed to breaking point, it’s imperative to maximize the offering of the space. Having powerful data at your fingertips to make informed decisions is crucial - hence the newfound drive to explore the link between workspace, real estate and productivity.
This is the reason why we are having a lot of conversations around the adoption of Activity Based Working (ABW) models. There’s a new wave of curiosity here in North America and Canada about the potential of such work environments. In order to respond to this interest and offer invaluable insight, Leesman has recently undertaken an extensive research project in partnership with IFMA Sweden on ABW and Employee Mobility - particularly how it actually works in practice. The results of the research, harvested over 70,000 employee responses, were presented at a Data Deep Dive event on the 23rd of June at our NY offices. This offers business leaders a new way of thinking about unharnessing the potential of their workspace.
One thing is clear – we are in an era of unprecedented complexity and transformation. Thanks to rapid advances in technology and the emergence of new ways of working, the traditional workplace as we know is undergoing a period of constant evolution. Along with this shift in the nature of work, organizations are increasingly looking for business strategies that fuel growth and competitive advantage. Some of our clients are looking to expand or consolidate their US-Global portfolios so investment in a data driven strategy is essential for focused change, as is creating environments that fully support employees in their daily activities. Space is essentially a tool that will allow organizations to gain returns on their RE investment.
Now we have a base here in New York, we are looking forward to our continued work with American organizations in the drive to optimize the efficiency of work environments, and to contribute towards the ever-evolving dialogue and debate concerning the world of work.
Eleanor Forster is Leesman's North American MD.
Read the August issue of Business Review USA & Canada here
What’s Causing the Global Supply Crunch?
As the global economy gradually recovers from the impact of COVID-19 pandemic, worldwide supply crunch is intensifying, spreading not only from one country to another, but also from one industry to another.
A year ago, when the pandemic continued to spread, economies around the world were severely hit and there was panic buying among consumers. Today, it is companies that are trying to go on a stockpiling, buying more raw materials than they need to keep up with rapidly recovering demand. The panic buying is fuelling more shortages of raw materials, including copper, iron ore, steel, corn, coffee, wheat, soybeans, wood, semiconductors, plastics, cardboard, etc. As a result, inventories of seemingly every raw material around the world are running low. “You name it, and we have a shortage on it,” Tom Linebarger, chairman and chief executive of engine and generator manufacturer Cummins Inc., said earlier, and he noted that his clients are “trying to get everything they can because they see high demand”.
Supply shortages have driven prices up significantly, with the impact of rising prices for some key raw materials being significant. The prices of various industrial raw materials such as crude oil, plastics, and chemicals are rising. Some of the impacts of higher raw material prices have already begun to be reflected in consumer goods. Reynolds Consumer Products Inc., the maker of the namesake aluminium foil and Hefty trash bags, is planning another round of price hike, and this will be the third for the increase this year alone. Food prices are also climbing. The price of palm oil, the world's most consumed edible oil, has risen more than 135% over the past year to record levels; soybeans have topped USD 16 a bushel for the first time since 2012; corn futures prices have touched an eight-year high, and wheat futures prices have risen to the highest level since 2013.
Changes in factory orders due to the impact of the pandemic have also tightened supply in some markets and pushed up prices for raw materials. Some knitting enterprises in Dongguan, Guangdong, said that affected by the pandemic, about 40% of the orders have come back to China from countries such as India and Southeast Asian countries, while the factory utilisation rate has increased by about 30% to 40%, and now it has reached 100%. In Jiangyin, Jiangsu, a bedsheet enterprise adjusted its production capacity to accommodate a USD 20 million order from Southeast Asia. Increased demand from the textile industry has led to tight supplies of raw materials. In Wujiang, Jiangsu, where polyester filament yarn is the most in demand, the shortage of raw materials this year has been unexpected, especially in the current off-season, when there is not much stock. In Suzhou, also in Jiangsu, the export of polyester filament yarn increased by nearly 60% from January to April, while the price increased by 40% to 60%. Compared with the same period last year, the price of filament yarn increased by RMB 2000-3000/ton.
Remarkably, this hoarding frenzy is pushing global supply chains to the brink of collapse. Inventory shortages, transportation bottlenecks, and price increases are nearing critical levels, raising concerns that strong global growth could fuel inflation. The supply disruptions in the past are simply incomparable compared to the severe inventory crunch of 2021. Industry insiders predict that both large and small enterprises will be affected by this supply shortage.
Why are current supply shortages so acute?
Researchers at ANBOUND believe that instead of having one single factor, there are multiple reasons for the emergence of complex systemic problems.
First of all, there is the recovery in demand as the pandemic is brought under control. This year, as vaccination rollout efforts have brought the pandemic significantly under control in the United States and some European countries, the economy has begun to show significant momentum for recovery. This trend prompted a near-simultaneous recovery in most markets around the world. The collective recovery of global markets has led to a near-simultaneous increase in demand, exacerbating the mismatch between supply and demand. In the case of commodity futures, the capital was collectively bullish on commodities under such expectations, significantly driving up the prices of commodities (mostly upstream commodities) and spreading to midstream and downstream commodities. It should be noted in particular that the surge in demand for certain specific commodities under the pandemic has also exacerbated the supply-demand mismatch in some industrial chains. For example, the increase in the need of remote, online working and studying has increased the demand for all kinds of electronic products, leading to a surge in global demand for semiconductor chips, which affects several chip-requiring industries.
Another reason is that the pandemic has disrupted the global supply chain system, causing distortions in supply and demand in certain industries, which are transmitted along the supply chain, causing a wider supply crunch. As ANBOUND previously pointed out, the spread of the pandemic has dealt multiple blows to global supply chains. During the pandemic, China, as the "world's factory", was affected by the pandemic and its production side was disrupted. Then, the demand side of developed countries was suppressed by the impact of the pandemic. This is followed by the fact that the malfunctioning of the global supply chain system has exacerbated global supply distortions. To cite an example, the severe shortage of containers due to disruption of the supply chain has exacerbated the global supply distortions.
In addition, enterprises began to collectively increase their inventories, leading to the increase of inventories in the industrial chain and supply chain, amplifying the demand for all kinds of raw materials, intermediate products, and supporting products. In the past, in order to save costs and improve efficiency, many enterprises advocated zero-inventory production and tried to reduce the inventory in the production link, thereby reducing the capital occupation. However, the smooth operation of zero inventory production depends on the efficient global supply chain system. Once a problem occurs in the global supply chain system, it can lead to chaos in the whole supply chain system. The 2011 earthquake in Tōhoku, Japan has caused the shutdown of some key auto parts plants, which once led to the global auto supply chain being affected. Likewise, the global spread of the COVID-19 pandemic since last year has damaged, distorted, and even disrupted global supply chains.
Finally, geopolitical factors have also contributed to the tight supply of global commodities, resulting in the artificial disruption of part of the industrial chain and supply chain. For example, the U.S.-driven crackdown on chip supply to Chinese enterprises and related sanctions have seriously disrupted the global semiconductor industry chain.
How long will the supply crunch last?
Overall, the global supply crunch is due to a variety of reasons, including increased demand from the post-pandemic economic recovery, distortions in global supply chains caused by the pandemic, collective stockpiling by enterprises around the world, and geopolitical disruptions. However, this does not represent a significant expansion of aggregate global demand, but rather a distortion of the existing system as it is disrupted and broken. Judging from the current situation, this tight supply situation will last for a long time, leading to the price rise of raw materials and components. Therefore, both enterprises and governments need to be prepared for this scenario in the medium- and long-term.
Mr. He Jun is Partner, Director of China Macro-Economic Research Team and Senior Researcher. His research field covers China’s macro-economy, energy industry and public policy.