workplace transformation: using human capital metrics to create a business case

16 the LEADER | March/April 2014

COVER STORY

to Create a Balanced Business Case for

Using Human Capital

B Y A N I T A K A M O U R I , P h . D . a n d A M A N D A A V I L E S

Open, collaborative areas (branded as “Connect”) address the need for impromptu meetings and also provide a standing-height work area.

human capital (cover story).indd 16 2/14/14 10:49 AM

As more companies adopt fexible workplace strategies, there has been increased interest in their potential impacts on human capital outcomes. However, in contrast to projected cost savings due to changes in

workspace utilization, the projected benefts of new workplace strategies on human capital outcomes are not as easily quanti-fed. To support acceptance of fexible workplace strategies, the potential benefts of workplace design for employee engagement, performance and collaboration need to be made as salient to business decision makers as workplace cost considerations. Tis article describes an approach taken by Apollo Education Group’s Real Estate and Facilities (REF) team to create a balanced busi-ness case for implementing a fexible workplace strategy that includes both workplace and human capital metrics.

Apollo’s ‘MyWorkplace’ Program

Apollo Education Group, Inc. is one of the world’s largest private education providers and has been in the education business for approximately 40 years. In 2011, REF initiated consolidation of its Phoenix-based corporate portfolio in an efort to reduce vacancy rates and space costs. As part of this efort, internal research was conducted with about 12,000 Phoenix-based employees that sug-gested the need for the workplace to support greater fexibility, col-laborative work practices and employee engagement.

In response, REF developed a new fexible workplace program called ‘MyWorkplace’ as an integral part of an overall portfolio optimization plan by integrating industry best practices in work-space, technology, human resources and fexible/remote work practices. It was intended to meet both cost savings and business goals by enabling a more productive and engaging workplace experience for employees.

March/April 2014 | the LEADER 17

Workplace Change

Using Human Capital Metrics Exterior of Apollo Education Group

headquarters in Phoenix, Ariz.



data-based and cost efective (i.e., not require costly changes or investment in a pilot). REF faced the challenge of creating a data-based business case prior to implementing the program and without conducting a pilot.

After exploring the options, it was decided that the best way to build the business case would be to capitalize on naturally occurring fexible/remote work practices that already existed within the workforce. Fortunately, at the time the business case was being developed, Apollo had approximately 700 employees participating in a legacy telework program. REF believed that an evaluation of this group could provide an indication of the potential impact that might be expected from the MyWorkplace program while satisfying the goals of being Apollo-specifc and data-based.

Te next step involved quantifying and measuring the Success Criteria for the legacy telework participants as well as for a matched group of non-telework employees. A rigorous data-gathering approach was used to isolate the impacts of participa-tion from confounding factors, such as participant selection, and changes in economic conditions and business processes

Creating a Balanced Business Case Approach

Te frst step in creating a compelling business case for the MyWorkplace program involved meeting with senior stakeholders from across the organization to identify their criteria for business success. While acknowledging the potential cost savings of fexible workplace strategies, the potential risk to employee productivity or collaboration was a key issue, since any decline in business perfor-mance could quickly outweigh the fnancial value of workspace cost reductions. Te resulting Success Criteria clarifed that both human capital metrics and workplace cost metrics need to be included in any evaluation of the fexible workspace strategy. Next, using a Balanced Scorecard framework as a foundation, a Balanced Business Case model was created that incorporated four measurement perspec-tives based on critical human capital and workplace Success Criteria: Efectiveness, Employee, Environmental and Efciency.

Building the Business Case

Although industry benchmarks and fexible workplace research data were available, discussions with business leaders indicated that a convincing business case needed to be Apollo-specifc,

Project Lounges provide an informal environment to spark creativity and innovation. They are equipped with e-Beam© technology, writeable walls and mobile furniture.

Focus rooms are one of the most highly used spaces in the MyWorkplace environment,providing employees with drop-in space for privacy and quiet when needed.

MyWorkplace Program

• New workplace design standards

• Hoteling space in satellite Apollo buildings closer to home

• On-campus hoteling

Workspace TechnologyHuman

Resources

Flexible

Work

Practices

MyWorkplace

Success

• Offce-in-a-box

• Virtual desktop

• Follow-me phones

• Website portal for tools and support anytime, anywhere

• Suitability assessment

• Change management program

• Manager and employee training

• Management tools via website portal

• Part-time or Full-time Work at Home

• Mobile, Virtual and Flexible Work Options

• Work from non-dedicated workstations


Business Case approach helped create momentum for the pro-gram and secure support for both the new workplace standards and work arrangement fexibility options.

Te resulting MyWorkplace implementation captured the principle design goals of the MyWorkplace Program and included a mix of both private and collaborative workspaces.

May/June 2013 | THE LEADER 13

over time. To create the most meaningful business case, REF worked with each business unit to identify how they measure and track work productivity. Tis helped focus data gathering on the most valid and reliable, current and historical data.

Quantifying Business Case Benefts

Once the data were collected, a systematic evaluation was under-taken to determine the impact of the legacy telework program in each of the four business case perspectives. Data analyses revealed that legacy telework participants were signifcantly more engaged, more satisfed, less likely to leave the company, and more productive than before telework. Te same results were also found when comparing telework participants to the matching non-telework employees. In addition to the positive human capi-tal impacts, cost savings from reduced real estate footprint and emissions reduction from commute mitigation also were found.

Because these results were specifc to the legacy telework program, they needed to be extrapolated to the MyWorkplace program. Te potential impact of a MyWorkplace pilot imple-mentation with 700 pilot participants was estimated (see table, top right) using both tangible and intangible data, and entered into a cost/beneft analysis:

1. Tangible Workplace Metrics. Estimated benefts associ-ated with seat savings, cost savings and environmental impacts and the expected investments due to space changes, new tech-nology and training/change management were extrapolated using the expected number of program participants. Te esti-mated workspace savings attributable to MyWorkplace partici-pation produced a positive ROI and under one-year payback relative to up-front investment costs.

2. Tangible Human Capital Metrics. Several human capi-tal metrics could be cost-valued using salary and replacement cost data, based on the number of expected MyWorkplace program participants. Financial estimates for these measures showed that fexible workplace strategy investments can be ofset by not only workspace savings, but also by reduced vol-untary turnover, lower absenteeism and greater productivity associated with participation.

3. Intangible Human Capital Metrics. Several human capi-tal impacts, such as employee engagement, were not able to be directly valued in terms of dollars so they were not part of the cost/beneft analyses. However, they were still presented as critical components of the Balanced Business Case because they represented important Stakeholder Success Criteria, were driv-ers of other tangible metrics (for example, employee engage-ment as a predictor of productivity), and represented important organizational goals.

Building Organizational Support

Te Balanced Business Case approach demonstrated that a strong argument for workplace fexibility can be created – one that emphasizes both real estate cost savings and the human capital beneft of fexible workplace strategies. Furthermore, being able to quantify and extrapolate business case metrics proved to be invaluable to REF in soliciting organizational support for the MyWorkplace program. Overall, the Balanced

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Balanced Business Case Success Criteria

Quantifying Business Case Metrics

Hu

man

Cap

ita

l

Me

tric

s

Wo

rkp

lace

Metr

ics

Effectiveness¶ Productivity

¶ Work Performance

¶ Teamwork and collaboration

Employee¶ Engagement

¶ Retention

¶ Attendance

¶ Satisfaction

¶ Work/Non-work Balance

¶ Sense of Community

Effciency¶ Workspace Cost Savings

¶ Employee Commute-related

Expense Savings

Environmental¶ Commute Avoidance

¶ CO2 Emissions

Hu

man

Cap

ital

Metr

ics

Wo

rkp

lace

Metr

ics

Effectiveness¶ 34% more productive on

average across 16 objective work

performance indicators

¶ 49 fewer minutes/ day (200

hours/year) being distracted and

interrupted

¶ 60% of avoided commute time

(120 hours/year) is reallocated to

additional work hours

¶ 79% of managers report

positive impact on workgroup

productivity/ production

¶ 84% of managers report neutral

or positive impact on teamwork

and cohesion

Employee¶ 12% higher Employee

Engagement

¶ 56% lower voluntary

turnover rate

¶ 88% reduction in unapproved

absences and 100% reduction in

tardiness events

¶ 94% satisfaction for partici-

pants and 77% for managers

¶ 34% higher Work/Non-Work

Balance

¶ 98% of participants and 87%

of non-participants are satisfed

with the spirit of cooperation

and teamwork

Effciency¶ 500 fewer seats required

¶ $3M annual savings from rent

and capex depreciation

¶ 99% of participants report

commute-related expense savings

Environmental¶ 7.7M commute miles per year

avoided

¶ 3.1M Kg fewer CO2 emissions

per year (commute-related

carbon emissions)

Note: Results are based on comparisons before and after participation, and between participants

and matching non-participants.



In summary, the Balanced Business Case approach was suc-cessful in generating the leadership support necessary for the MyWorkplace program’s adoption. It also introduced metrics that can be used over the lifecycle of the program creating the ability to directly evaluate whether the project is progressing as intended. As REF works toward improving its physical foot-print to support business success, these new perspectives and approaches will continue help drive the long-term success of Apollo’s new workplace strategies.

Driving Workplace Change

Creating a Balanced Business Case with an emphasis on human capital metrics encouraged REF to assume the role of a strate-gic partner that supports corporate real estate and business suc-cess. What were the major factors that supported this new role?

• Aligning CRE Goals with Business GoalsREF had to change its mindset and think beyond traditional

workplace metrics and adopt new measures of business success. It became important to speak the same language as the business and to demonstrate that business goals drive REF decisions.

• Taking Time to Build a Compelling CaseRather than pushing forward to achieve only workspace

goals, REF took the time to gather evidence and build a case that demonstrated the business ef cacy of the solution. T is proactive, measured approach increased leadership’s comfort level with the program.

• Measuring Work Performance and ProductivityHaving an operational def nition of work performance or pro-

ductivity is critical to ef ective implementation of f exible work-place strategies. If the business does not def ne performance when people are in the of ce, performance management of people work-ing remotely and evaluation of the new program will be dif cult.

• Creating Cross-Functional PartnershipsTaking the time to collaborate with HR and IT partners

on business case data collection was instrumental in gathering functional leadership support for MyWorkplace. T e involve-ment of HR and IT partners in creating the Balanced Business Case helped secure investment commitments from functional leadership that were needed for the future success and scalabil-ity of the new workplace strategy.

• Building Awareness Early and OftenFindings such as those reported in the MyWorkplace business

case can challenge some of the perceived barriers to workforce f exibility. Data demonstrating the human capital benef ts of new workplace strategies can be used to create “success stories” and support change management ef orts within organizations who want to introduce or expand f exible workplace initiatives.

About the Authors

To read this case study in its entirety, please search for this title on

our Knowledge Center Online.

Balanced Business Case: Using Human Capital Metrics to Drive

Workplace Change

Anita Kamouri, Ph.D., is Vice President and co-

founder at Iometrics, Inc. She has been working with

clients to design, implement and evaluate alternative

workplace strategies for over 15 years.

Amanda Aviles is Apollo’s Director of Real Estate

Strategy and Planning. Apollo Education Group is

one of the world’s largest private education providers.

Amanda is the Program Manager of the company’s

MyWorkplace Program.

Valuing the Tangible Human Capital Impacts

Perspective Business Case Results Estimated Financial Value (USD) for 700 MyWorkplace Participants

Effectiveness 34% more productive on business performance metrics $11M value of improved performance/year

Effectiveness 49 fewer minutes/day (200 hours/year) being distracted and interrupted $3.2M value of productivity/year saved

Effectiveness60% of avoided commute time (120 hours/year) is reallocated to

additional work hours$800K value of productivity/year gained (salaried participants)

Employee 56% lower levels of voluntary turnover $2.1M in replacement hiring cost avoidance

Employee 88% reduction in unapproved absences $500K value of productive work time/year gained
