Metrics that Matter: It's Time for a Radical Rethink of Performance Measurement

Guest Post by Cheryl Carron, Head of Global Workplace Management Operations, JLL 

As companies navigate a new world of work, their big-picture priorities are shifting. Businesses are now embracing a more human-centric workplace, one that supports the preferences and needs of individual employees, while also prioritizing sustainability, hybrid work and social value.

According to JLL’s recent Future of Work research, 75% of corporate real estate (CRE) decision-makers say their employees increasingly expect their workplace to have a positive impact on society and 74% say they are likely to pay a premium for green credentials in the future.

These updated business priorities demonstrate how corporate real estate has shifted from a strategy of operational and financial efficiency to one of value creation. This sea change warrants a refresh of performance standards, particularly as it relates to metrics companies use to evaluate portfolio effectiveness against strategic objectives. Real estate performance measurement is dictated by what can be measured rather than what should be measured — so it should come as no surprise that forward-thinking organizations are starting to question the relevance of traditional performance metrics.

Between the shift towards new business priorities and the powerful performance insights made possible by data and analytics innovation, it’s time for a radical rethink around metrics and measurement. The new metrics that matter reflect the changing landscape of the workplace ecosystem and link real estate with organizational objectives and business strategy across three pillars: human experience and performance; responsible real estate and sustainability; and operational excellence and agility.

Human experience and performance

When companies prioritize physical and mental wellbeing in the workplace, employees flourish and grow — and businesses reap the rewards of improved performance. Positive staff retention, health, empowerment and engagement reflect the value of investing in human experience and performance. While some existing measurements, like attrition rates, can alert senior leadership when the business overall is not supporting its employees, those measurements alone paint an incomplete and lagging indication of how real estate is supporting enterprise performance.

While these can be considered standard metrics, a new class of workplace measurement is emerging to showcase how the workplace evolves to meet the shifting needs of hybrid workers. These next-generation metrics include:

• Workplace Flexibility: The ability of a workplace to be dynamic and accommodate rapid organizational change and support reconfiguration
• Wellbeing Index: Employee perceptions of their physical and mental wellbeing through five interrelated elements that make up well-being: sense of purpose, mental health, physical health and nutrition, social relationship with their community and financial security
• Meaningful Connections: Relationships across formal and informal teams with a shared sense and of belonging that reflects diversity, inclusion, and equity

Workplaces that are powered by human experience and emphasize the physical and mental wellbeing of employees will leverage the very best of human capital, allowing employees to flourish and perform in the long term. Effective human experience will result in positive improvements in staff retention, health, empowerment and engagement.

Responsible real estate and sustainability

Sustainability is an integral part of corporate culture and emerging as a decision driver across the real estate lifecycle. As companies commit to reducing carbon emissions, performance metrics that measure environmental impact are crucial to achieving sustainability goals. In addition, responsible real estate must support diversity, equity and inclusion across the workplace, including CRE operations.

Carbon footprint, GHG emissions and energy efficiency as well as supplier and workforce diversity are all measures being bolstered by refreshed metrics to account for heightened priorities:

• Responsible Procurement: Meeting business needs for materials, goods, utilities and services in an environmentally friendly, responsible and ethical way
• Environmental Resilience: Proportion of portfolio that is at risk due to climate change
• Clean Transportation: Percentage of distance traveled with clean transportation by employees
• Inclusive Workplace: Ability of the workplace to drive engagement and inclusion through design

Commitment to reducing carbon emissions and to nurturing a continuous cycle to transition towards sustainability and net zero outcomes, all while achieving operational efficiencies, is now a common corporate goal. Sustainability is being deeply engrained in corporate culture, emerging as a CRE decision driver across the real estate life cycle and for the benefit of the whole workforce.

Operational excellence and agility

Corporate real estate needs to respond to evolving business priorities with flexibility and agility — especially when it comes to the widespread adoption of hybrid work. For CRE portfolios to remain resilient and competitive in this changing landscape, decision-makers need to adopt performance metrics that support future transformation and demonstrate ROI to the C-suite and other stakeholders.

Key metrics for effectively measuring operational excellence and agility include longstanding measures like space utilization, capital planning, costs savings and total CRE cost per person, but also real-time stats on space utilization that show how, where and when space is being occupied. The emerging class of operational excellence metrics include:

• Predictive Capacity: The proportion of CRE processes using predictive analytics
• Total Cost of WFH/ Remote Work: An organization’s total-spend to allow employees to work from home
• Proactive Maintenance Cost: The proportion of proactive (planned, reactive and predictive) maintenance against the total maintenance cost

The capacity of real estate to be flexible and agile is crucial to driving the future transformation of portfolios so they have greater resilience and remain competitive. CRE is a key enabler for greater business excellence, innovation, ROI focus, efficiency and productivity through predictable and automated workplace platforms that generate improved service delivery.

The way forward

In a post-pandemic world where traditional norms about where and how we work are rapidly evolving, corporate real estate’s performance and value have come under intense scrutiny. In response, real estate managers are rethinking the metrics they use to evaluate performance. Some of the more advanced and non-traditional metrics are still aspirational for most organizations: only 13% of the executives JLL surveyed said their businesses are collecting data on an ongoing or real-time basis using advanced analytics. However, as CRE leaders adopt the metrics that matter, they will effectively demonstrate to stakeholders that their real estate portfolios are aligned with the organization’s long-term priorities and effectively supporting business goals in an ever-changing landscape.