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Lease versus buy: battle of effective vs. Efficient workspace

Abstract

 

The workspace is very important to companies because it is a cost which is being invested upon and an instrument that may affect the productivity of the workers. In this study, a survey will be conducted to several workers and employees to determine the extent of the effects of the facilities in the office and whether leasing is more cost effective than building a new infrastructure.

 

 

List of Illustrations

 

Illustration 1. Departments of Respondents

Illustration 2. Overall Satisfaction of Employees with their Workspace

 

 

 

 

 

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LEASE VERSUS BUY: BATTLE OF EFFECTIVE VS. EFFICIENT WORKSPACE

 

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Nature of the Problem

Employees’ moral and productivity is being affected by the quality of the workplace. Usually, if the quality of workplace is low, that is, it is overcrowded, not comfortable and makes interactions difficult, there is low moral and productivity. Conversely, a very comfortable, has sufficient space and can be utilized in team meetings, provides very well for the needs of the workers.

Purpose of the Study

Efficient use of financial resources is very important for any business entity. In this study, the efficiency of continuing leasing space as a workspace will be evaluated if it is more cost effective as compared to building a new infrastructure for the company.

Research Question

Is the current process for providing/managing office space providing the most effective and efficient workspace for employees to be collaborative and productive?
Hypothesis

Building a new building will provide a more modern, collaborative environment for employees and will boost performance and worker satisfaction.

Limitations

The survey was given to workers of Anheuser-Busch Companies, Inc. who already had experience working for the head office of the company. However, the workers who did not have such an experience may also have something to say about their moral and productivity being affected by the workplace. Also, the study was conducted only in the United States, thus not being able to determine if the same were of workers in other countries. Also, workers in different industries may also have different experiences in their workplace.

Assumptions

One of the assumptions in this study is that the respondents answered truthfully the survey that has been given to them. In addition, the increase in the moral and the productivity of the workers are influenced directly by different elements in the workplace. Another is that leased workspaces are located in a remote area which is not easily accessible.

 

 

 

 

REVIEW OF RELEVANT LITERATURE

As much as possible, businesses want to reduce their costs in every way. One of which is reducing the expenditure for the workplace which is being evaluated in this study.

Capital expenditure is the spending of a relatively significant amount of cash reserves which may be acquired from the revenue being incurred by the company or proceeds from debt financing which compared to that of operating expenses. Several examples are building of infrastructures, purchasing of machineries and equipment, and other similar expenses which need a considerable great amount of money. On the other hand, operating expenses are expenses which are usually spent on one budget cycle. These are what you call consumable supplies that will be used for certain duration of time which requires a lower amount, as said above, than the capital expenditure. Examples of these are: payroll, office supplies, vehicle fuel, utilities, paint and others. (Capital vs operating pdf)

The expense paid for workspaces may either be capital or operating expenditure. This is because the workspace of companies may either be leased or be spent on, by building a new infrastructure. However, the two types of expenditure have their own share of positive and negative points which make it difficult to determine what is more cost effective. This makes the company have difficulty in determining which is more beneficial. (Capital vs operating pdf)

Nevertheless, capital projects are also made with utmost consideration and analysis to determine the efficiency of employing expenditure and the resources which will be used in the spending will also be gathered through different methods aside from the existing revenue and earnings of the company. Also, a very considerable reason to resorting to capital expenditure is when the capital expenses offset the operating expenses. However, the maintenance costs of the capital that have been spent on should be considered in contrast with the operating expenses of leasing the workspace. (Capital vs operating pdf)

The workplace is very important because it is a cost incurred by the company. Also, it can be utilized to influence the efficiency and the satisfaction derives. Specifically, the daylight, air quality, recreation areas and travel paths are the characteristics of the workplace which greatly affect the viewpoint of the worker. In turn, it should be considered as an asset, rather than as just a cost by the company. It is best that a 3rd party consultant will be conferred to in evaluating the workplace which works best for the entire company. After all, success of the company include the people who are at work, work process being utilized in getting things done and technology tools, including the workplace (How big is a square foot of space?)

It can also be deemed important because of the alarming resignation incidences in the United States. A lot of workers have now been quitting their jobs because of the stress being encountered in their line of work and an unbalanced work and life (Gaudin, 2006). Consequentially, they find another job which may be able to suit their preferences, that is, the balance in the work and life and working capacity. Due to this, employers opt to improve the remuneration of the workers, however, it will be costly to improve the salary and others but improving the workplace is also a solution to retain the employees.

Also, improving the workplace may be needed because of the changes in the setup of the work. Because of technological advancements such as wireless connections and mobility of equipment, it may be wise to revamp office spaces to be able to give instant access for those workers who need it and also decrease the space being occupied before (Office space reconsidered).

In some industries like the Cisco IT, the workplace which consists of cubicles and private rooms for managers restrict movement of the workers, thus, decreasing the efficiency of the workers. Thus, the improvement of the workplace will hopefully be able to cater to the needs of the workers, which affects the moral of the workers, give the workers liberty to decide where they want to work, which gives the workers flexibility and motivation for them to do their work and connecting the workplace will reduce the properties being occupied, thus, less expenses and increase the productivity by making more rooms for the meetings and make the pathways easier to move about. (Cisco IT Case Study)

 

 

METHODOLOGY

The data were collected through an interview using a survey questionnaire. The questionnaires were given to 100 respondents working for the Anheuser-Busch Companies, Inc. throughout the United States and at least had an experience working for the head office at least once. The survey was conducted to determine if there was a relationship between the satisfaction derived from the position, department and the physical location of the workplace, that is, if there is satisfaction derived from the workplace which increases moral and productivity of the workers. A Strengths, Weaknesses, Opportunities, Threats Analysis was also conducted to determine which is more cost effective between building a new infrastructure in contrast with leasing the workspace, generally, for companies.

 

 

 

 

 

 

 

 

 

 

RESULTS

 

Survey of the workspace in Anheuser-Busch Companies, Inc.

Illustration 1. Departments of Respondents

 

Most of the respondents worked under the marketing department and comprised the 35% of the total number. The following are the percentages of the respondents for the other departments: Customer Service 6%, General Administration 5%, Professional Services 13%, Sales 16%, Systems Engineering 6% and other unspecified departments comprised 19%. On the other hand, most of the positions of the respondents are that of the Officer, Director, Manager, Supervisor (45%). Other positions of the respondents are: Professionals 42% and Administrative Support 13%. In addition, the respondent’s range of experience in the job does not fall below 1 year up to more than 10 years.

Most of the offices of the respondents were the traditional per cubicle and the traditional office, comprising 49% and 45% respectively. Other workers have home offices and an open pit with many employees type of office. However, their work relating to the Corporate Headquarters are not limited to the use of the Corporate Headquarters office itself. Although 59% of the respondents do their work at the said location, some still opt to go to a location not less than 5 miles from the headquarters (5%), more than 5 miles but less than 50 miles (27%), more than 50 miles (5%) and home office (3%).

 

Illustration 2. Overall Satisfaction of Employees in their Workspace

 

Surprisingly, only 3% of the respondents were extremely dissatisfied by the workspace and 40% are extremely satisfied. There were only 33% somewhat satisfied workers, 19% not having any qualms about deriving satisfaction or dissatisfaction and only 3% were somewhat dissatisfied by the workspace. In addition, the respondents were also asked as to what their offices should include. The respondents indicated that a personal desk, computer and phone (preferred by 89%), personal office or cubicle (56%), need for collaboration with or without doors (22%), audio silence space (22%) and wireless access throughout the building (32%) as very important. However, a significant statistics in the other levels of importance are: neutrality with regards for the need for collaboration with or without doors for 44% and audio silence space and wireless access throughout the building, not important for 32% and 33% of the total respondents respectively. Furthermore, most of the respondents were able to experience any relocation amounting up to 71% because of the expiration of the lease. Nevertheless, there were one-time relocations because of acceptance of a new position, expiration of lease in the building and renovation of the office space consisting of the 23%, 27% and 21% of the total respondents respectively.

Most of the respondents are working at offices, including attendance in meetings in the building and another building and have visitors in the office. Only a few have frequent company travels and work in their homes.

Nonetheless, 35% of the respondents are extremely satisfied with their office space, 10% for the available collaborative open space, 3% for the available collaborative semi enclosed space, 13% for the available collaborative enclosed space, 6% for the available multi-purpose space and 6% for the available quiet space. Only a few were extremely dissatisfied in their office space (6%) and available quiet space (13%). And others were just neutral with regards to their amenities in the office.

 

Strengths, Weaknesses, Opportunities, Threats of leasing versus buying (Driving Shareholder value pdf and Lease Vs. Build Analysis doc)

Buying
a.       Strengths

–          collocation of personnel

–          efficient use of staff time

–          improvement of communication and coordination among employees

–          decrease in the operating expenses of the company

b.      Weaknesses

–          very costly to build

–          expenses after building are of: maintenance, repairs and improvements

–          taxes that will be incurred (for the case of private companies)

–          inventories for the properties including the building

c.       Opportunities

–          the company will then have an establishment that may start the progress

–          opportunities of improving the collaboration and teamwork between colleagues

–          flexibility in the workplace

d.      Threats

–          the uncertainty of the stability of the company may lead to wasting the building of office space

–          the maintenance, repair and improvement costs of the building may be a problem for the company

 

Leasing
a.       Strengths

–          pass the obligation of paying for taxes for the lessors of the workplace

–          conserve the financial reserves of the company

–          generates more present returns for the company

–          less inventories

Weaknesses
–          for remotely located offices, increased travel time will lessen the productivity

–          coordination of services is difficult because of the location of the space being leased

–          clients also have difficulty in transactions because of the office space

–          increase in the expenses in the case of off-site programs

–          collaboration between employees may also be difficult given the workplace

Opportunities
–          in case the company has a growth prospect, venturing would be possible

–          higher growth rates

–          higher liquidity ratio

Threats
–          usually, leasing rates are indexed to inflation, meaning an increase in the inflation rate would also increase leasing rates

–          the cost of moving out should the company decide to move out is high

–          there are abusive lessors which may make the operating costs of the company be overspent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUMMARY, CONCLUSION, RECOMMENDATIONS

Summary

The study was used to evaluate how workers from the Anheuser-Busch Companies, Inc. are being affected by the quality of their workplace. This is to establish an idea that the workers are being affected by the facilities which the company is supplying to them. Also, this study tackles the strong and weak points of having to rent a workspace and building a workspace.

Conclusion

The current setup of the Anheuser-Busch Companies, Inc. for the workers is not the most effective and efficient workspace for employees to be collaborative and productive because the percentage of the workers extremely satisfied by the status quo is lower than 50% and some do not even have a bearing towards the satisfaction and the dissatisfaction in the facilities of the workplace. In addition, there are also extremely dissatisfied workers with regards to the workspace and the available quiet space.

Recommendations

As what have been said in the limitations of this study, it may be useful to apply the survey to other companies to see if the results will be varied or have the same effect. Also, all of the workers should be included in the selection of the workers. The newly hired workers also may have opinions with regards to the workspace. Also, due to limitation of the conducting of the survey only in the United States, it may be recommendable to conduct the study to companies overseas if the workers in other places are also affected by physical characteristics of the workplace.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCES
APPENDIX

 

APPENDIX A. The survey questionnaire that was given to the respondents.

 

Employee Satisfaction

As your Company grows, changes and faces new challenges, we recognize the importance of employee satisfaction. This survey is anonymous and your responses will be held in the strictest confidence. We thank you for your thoughtful feedback.

This survey will take approximately 5 minutes to complete.

 
1

Please select your department.

Customer Service

General Administration

Marketing

Professional Services

Sales

Systems Engineering

Other, Please Specify

 
2

What category BEST describes your job?
Officer/Director/Manager/Supervisor
Professional (salaried non-mgt.)
Technical (hourly)
Sales Rep
Administrative Support
Group Leader
Customer Service

 
3

How long have you worked for your Company
3 months or less
More than 3 months but less than 1 year
At least 1 year but less than 3 years
At least 3 years but less than 5 years
At least 5 years but less than 7 years
At least 7 years but less than 10 years
10 years or more

 

4

What type of workspace do you use daily?
Traditional Office
Traditional cubicle
Home office
Open pit with many employees
Varies

 
5

Where do you work in relations to your Corporate Headquarters (HQ)?
Corporate Headquarters
Off-site location less than 5 miles
Off-site more than 5 miles but less than 50 miles
Remote office more than 50 miles
Home Office

 
6

Overall, how satisfied are you with your workspace?
Extremely Satisfied
Somewhat Satisfied
Neutral
Somewhat Dissatisfied
Extremely Dissatisfied

 

7

How important is it to you to have the following:

1
Very Important
2
Somewhat Important
3
Neutral
4
Not Important
5
What is it?
N/A

Personal office/cubicle

Personal desk, pc and phone

Need for collaboration spaces (with & w/o doors)

Audio silence space

Wireless access throughout building

 

8

At your current company, tell us if and why you relocated, and how many times for each reason

1

2

3

4

5
or More
N/A

Accepted a new position in the Company

Lease expired in building

Your Department reorganized

Another Department reogranized

Renovation on your space

Renovation within your department’s space

Renovation outside your department

Other

 
9

On an average Week how often do you: (Please answer all that apply. Check N/A for all questions, if you are considred a Home-office Employee.)

1
0%
2
< 10%
3
< 25%
4
< 50%
5
> 50%
N/A

Travel

Work from home

Attend Meetings in building

Attend Meetings in another building

Have outside agencies/vistors in your office

 

10

Please rate your level of satisfaction with the following

5
Extremely Satisfied
4
Somewhat Satisfied
3
Neutral
2
Somewhat Dissatisfied
1
Extremely Dissatisfied
N/A

Your Office Space

Available Collaborative open space

Available Collaborative – semi enclosed space

Available Collaborative – enclosed space

Available multi-purpose space

Available quiet space

 

Thank you again for your feedback.

 

 

 

 

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