'Optimal office' productivity gains could unlock ?39.8 billion GDP for UK and Ireland

The United Kingdom could reshape its economic future and unlock its share of ?39.8 billion in untapped GDP if organisations were to optimise their workplaces, according to a new study by Ricoh and Oxford Economics, titled ‘The Economy of People’. The UK could achieve a 1.8% increase in GDP, equal to ?36.8 billion, which could pay for the cost of Brexit twice with change to spare.  Similarly, the Irish economy could expand by 1.0%, or ?3 billion, if businesses commit to creating the optimal office.

The findings from The Economy of People are based on forecasts of how productivity in various industries will improve, if investment in workplaces makes them optimal for those that work there and their employers. Surveys and in-depth interviews were conducted with employees and executives across the UK and Ireland to uncover how critical workplace elements, such as culture, physical workspace and technology, affect performance and productivity. Executives were also asked how much of their operating budget they plan to spend on workplace initiatives next year. The insights were used as a benchmark, along with economic factors including gross value added, labour productivity in industrial sectors and employment figures, to form an economic model that calculated the gross value-added contribution to GDP that an optimal office would deliver.

To put the findings into context, developing the optimal office could generate a boost to UK GDP (?36.8bn) larger than the economic activity generated in the London boroughs of Camden and Tower Hamlets, and the local authority of Birmingham each year. It would also be larger than GDP contributed by the architecture and engineering (?32.8bn), food and beverage serving (?32.4bn) and land transport (?32.3bn) (including pipelines) industries each year.

Phil Keoghan, CEO of Ricoh UK and Ireland, said: “Ricoh has always believed that the path to newfound performance and productivity lies in bespoke workstyles designed and developed around people and the way they work. As we reflect on the past 10 years of productivity and consider what the next two years hold, it’s clear 2018 represents a critical crossroads. As a business community we have a responsibility and opportunity to ensure tomorrow is better than the day before and improving the way we work together can positively reshape the United Kingdom and Ireland’s economic trajectories for the foreseeable future.”

Andy Logan, Associate Director at Oxford Economics, added: “The survey evidence shows both employers and employees think investment in optimally designed offices would boost productivity across the UK and Ireland. This would deliver a significant contribution to both countries’ GDP.” 

The study found that culture is the foundation of an optimal office, driving emotional motivators, which are a catalyst for creative thinking and performance. Technology proved critical to ensuring high output-per-hour, which equates to productivity. And the physical workspace was identified to be the bridge between culture and technology, influencing both performance and productivity.

Culture is a catalyst for creativity, but change is on the horizon

When comparing culture to workspace and technology, executives unanimously agree that strong company culture remains critical to improving employee trust (87%), motivation (83%) and well-being (69%) within the organisation. Culture is a critical foundation for attracting and retaining staff and can minimise disruption to the organisation and inspire better work.

Commitment to ethical and sustainable business practices is quickly rising as an essential component of culture. Surprisingly, 71% of millennials and 73% Gen Z employees feel their organisation’s approach to ethics and sustainability positively affect their productivity and performance, in comparison to older generations of employees who ranked this as more important. On a related note, only 73% of millennials report that incentives for innovation enhance their performance and productivity, in comparison to 88% of employees age 38-52 and 83% age 53 and older. Gen Z, however, presents a more complicated scenario as 90% feel incentives for innovation are important.

The rise of ethics suggests younger generations of workers are aligning themselves with organisations with similar ethical values and purpose-led approaches, whilst their Gen Z colleagues are adopting a similar mindset, in addition to calling for incentives.

Process and fixed location essential to workspace

When it comes to the physical workspace, 93% of all employees unanimously agree that working from a fixed location is where they feel most productive. In addition to working at a fixed location, 85% of employees stated their workstation is essential to productivity. Executives may underestimate the workstation, as only 64% saw workstations as a driver of productivity. This suggests that further process may need to be introduced to ensure employees have the right space where they can be productive and perform to their potential.  

Currently, only 26% of employees feel they are productive working from home today. However, given the right tools, 78% believe they could be more productive working remotely. Executives agree, yet only 44% feel they provide technology that is effective at assisting remote working.

Despite the cultural hype around remote working, the study suggests it is currently favoured as a perk or preference, rather than a driver of performance and productivity. Although, it has the potential to be both.

John Reiners, Managing Editor, Thought Leadership, EMEA, Oxford Economics, commented: “Though we hear often about trends to flexible co-working spaces and mobile working, our research shows that most workers want a private space at work with a workstation, environment and supporting infrastructure that helps them be productive.”

Technology drives output-per-hour, but c-suite not on the same page

Technology is agreed to be the greatest driver of output per hour by both employees (77%) and employers (90%). However, the study exposed potential disagreement between members of the executive team. CEOs clearly expressed a differing opinion around the current and potential impact of technology on productivity. Only 77% of CEOs said technology infrastructure can lead to greater business performance, versus 87% of CFOs, 86% of CHROs and 84% of CIOs, suggesting that executive teams will need to work together to achieve the optimal outcome.

Executives are investing, but plan to spend in the wrong areas

Nearly three quarters (74%) of business leaders in the UK and Ireland have already invested in workplace improvement have seen a positive return, and even small improvements to the office environment have made a big difference to employees, showing this is the right way to go.

The study revealed that 93% of executives planning to spend more than 10% of their operating budget on office improvements identified facilities management (sensors, monitoring equipment, temperature, etc.) as the biggest driver of productivity. This is out of alignment with employees who feel technology infrastructure and digitisation of information, two hallmarks of effective digital transformation strategies, are the most critical. 

Overall, the vast majority of executives (70%) feel that the impact of an optimal office environment could increase the productivity of their organisation by up to 10%, and is therefore vital to unlocking GDP for the country.