Operational Efficiency: The Holy Grail of Facility Management

by James McDonald on February 1, 2022

A good facilities manager is, in part, like a good mathematician. A key function of a mathematician is to compile data to balance equations and search for the desired output. A key function of a facilities manager is to gather various data points – from your real estate, your people, and your systems – and keep everything in balance to produce the desired outcome of operational efficiency.

What is operational efficiency?

The idea of operational efficiency is to cut costs, increase production, and influence your bottom line by analyzing the ratio of inputs (production costs) with outputs (revenue.) Your operational efficiency ratio indicates your company’s ability to produce a higher revenue without increasing costs.

Operational Efficiency = Production Costs/Revenue

 If your company has $100 million in operational expenses to produce $300 million in total revenue, your operational efficiency is 0.33. If you multiply that by 100, it gives you your operational efficiency rate as a percentage; the lower the rate, the more efficiently your company is running.

Smaller companies tend to operate more efficiently because they use fewer resources. If you’re a larger company that requires more resources to hit revenue goals, it becomes even more critical to use technology to manage costs and improve processes.

Improving operational efficiency requires increasing revenue or decreasing costs, and for most companies, real estate is the second-highest cost.

How to reduce facilities management costs

Focus on space utilization

In its State of Remote Work 2021 Report, Owl Labs found 73% of full-time U.S. employees returned to the office at least one day per week in 2021. With the hybrid work model becoming more prevalent, your office space is being used differently and less consistently.

Deloitte’s 2022 Commercial Real Estate Outlook Report indicated that more companies are focusing on retrofitting properties and repurposing spaces for alternate uses to maximize value. Yet only 25% of respondents said their companies are substantially increasing technology to support managing their existing portfolios.

A strong space management software system gives you a clear picture of your entire real estate portfolio, how much you’re spending on rent, utilities, and maintenance, and what percentage of each building is occupied. This helps you make smarter decisions about which leases to renew, how many dedicated workspaces you actually need and how many you can designate as reservable, and which spaces you may need to reconfigure.

Occupancy sensors add a layer of intelligence to your space management software, giving you real-time data on actual space utilization. With that insight, you can determine what seating arrangements make sense (such as implementing office hoteling instead of assigned seats) and make smarter decisions about scheduling maintenance and cleaning.

Reduce manual processes

Administrative costs add up quickly, especially when you’re managing multiple buildings. If you’ve identified ways to reduce costs by consolidating two underutilized office buildings into one smaller space, planning and executing that move could take weeks or even months. Move management software streamlines these processes so you can get them done in just a few days.

You can also achieve significant savings by streamlining processes like service request management, energy management, and internal communications.

Consider simplifying your technology stack

While technology makes your processes more efficient, legacy software systems can be expensive to maintain and update. For a large organization, just keeping these systems current can cost upwards of $1 million annually. Moving to a subscription-based model that includes all updates and maintenance in monthly payments can result in significant savings.

Implement preventive maintenance

Facilities managers also need to look at the operational efficiency factors from a production, maintenance, and asset management perspective.

A strong facilities manager works hand-in-hand with the team in charge of capital planning and budgeting. Not having enough data or the right data with which to make plans about purchasing or selling assets, or maintenance and production schedules, creates opportunities for leaks in operational efficiency and can end up costing time and money. For your business to be competitive, you need to have a clear understanding of your asset portfolio’s strengths, weaknesses, and needs.

Tightening up your preventative maintenance structure and system is one of the first places to look to decrease operating costs and improve your operational efficiency ratio. Consider using software that tracks your inventory and helps you develop a preventative maintenance schedule. Rather than spending hundreds of thousands of dollars on unplanned downtime, planning ahead in your asset management will allow you to determine the best way to make repairs while keeping your equipment operational. An enterprise asset management system also cuts down on the time your team spends searching for work orders or invoices, managing parts and inventory, and updating files. Help your team work smarter, not harder!

How to improve productivity by focusing on the employee experience

An employee-centered workspace is designed to help better connect employees with their teams, with their supervisors, and with their company culture and values. The employee experience is affected by their physical location, their schedules, the way they interact with and can serve their customers, their ability to execute their work with the tools they are given, and how much they feel valued and engaged.

A recent Gallup report shows that only around 35% of employees feel highly involved in, enthusiastic, and committed to their work, and 2021 employee engagement stats estimate that U.S. employers are spending $2.9 million per day searching for new employees or replacements for those who quit.

Money spent looking to replace employees only increases operational costs and does nothing to enhance the revenue side until the new employees actually begin producing.

Software systems that enhance the employee experience either make their lives easier or more effective, or make them feel like an integral part of a bigger whole. Consider implementing a conference room and desk booking system to help employees find the right space to fit their needs at the time they need it. Perhaps a navigation or wayfinding system will help them better connect with their teammates.

Is your business running as efficiently as it could be? Take the iOFFICE + SpaceIQ workplace technology assessment to see how your technology measures up. Making even a small change to your systems solutions could drastically improve your bottom line!


James McDonald

James McDonald is a sports enthusiast, brother in Christ and once swam in a tank with the infamous TV sharks.

Capterra Ratings: ★★★★★ 4.5/5