Commercial real estate services firm JLL introduced the concept of the 3-30-300 rule, a valuable tool that breaks down a company’s total occupancy costs per square foot of space.
This principle can be an exceptionally effective technique for organizations to decrease corporate real estate costs. However, not every enterprise understands the best way to apply it.
Here’s how you can use the 3-30-300 rule to guide your own workplace management decisions.
What Is the 3-30-300 Workplace Rule?
The 3-30-300 rule states that for every square foot of space, a company will spend an average of $3 on utilities, $30 for rent and $300 on payroll each year. The 3-30-300 rule is a compelling way to illustrate the order of magnitude between the three typical categories of expense.
For example, while increasing energy efficiency by 10 percent would save $0.30 per square foot and decreasing rent by 10 percent would generate $3 in savings, a 10 percent boost in productivity would yield $30.
How Does The 3-30-300 Rule Impact Employee Productivity?
Applying the 3-30-300 rule means taking a holistic approach to managing and optimizing real estate expenditures. You need to consider how changes to the workplace affect not only hard costs like rent and utilities, but also how they impact employee engagement and productivity.
JLL refers to this latter metric as “productivity potential” and argues it’s a more accurate method for determining a building’s true costs.
Before making any office design modifications or finalizing relocation plans, ask yourself: what are the motivating factors behind this decision? Are they purely based on reducing annual expenses? While increasing the cost-effectiveness of your real estate portfolio is undoubtedly a priority, it should never come at the expense of employee happiness.
In most cases, a real estate decision that hurts the employee experience (and, in turn, retention and recruitment) will far outweigh the savings. On the other hand, a change that has a positive impact on employee productivity can absolutely offset any incremental raises in rent or utility costs.
Understanding How Space Impacts Productivity Potential
The layout and design of your workplace has a significant impact on the potential for employee productivity. While poor working conditions make it difficult to concentrate, a comfortable, inspiring environment encourages employees to do their best work.
- Better ventilation improved employee productivity by 11%
- Better lighting improved productivity by 23%
- Access to nature improved productivity by 18%
- Raising the thermostat to a more comfortable temperature improve productivity by 12%
Taking elements like these into consideration as you design your workplace can help you ensure you don’t compromise employee productivity for the sake of cutting costs.
Using Space Management Software to Apply the 3-30-300 Rule
Space management software gives you the power to make data-driven decisions that impact real estate costs at the $3, $30 and $300 levels. This technology gives you full visibility into actual space utilization and helps you determine sources of wasted space in the workplace. With this insight, you can find opportunities to reduce rent and utility costs by consolidating vacant and underutilized workspaces.
Space management software also allows you to see where employees spend the most time in the office and identify potential issues that may make a certain space less appealing.
For instance, if you notice a certain conference room is hardly ever used, it might be due to outdated technology.
These insights enable you to create a smart, connected workplace that is not only cost-effective, but also enhances the employee experience. In other words, you no longer have to choose between smart space management and employee happiness.
You can have the best of both worlds.