The past few decades have been defined by substantial changes in economics, society and politics around the world. According to data organized by the United Nations, of the top twelve largest economies in the world in 1997, only two still remain in the top twelve at present day. This accelerated change has been especially apparent in recent years, with issues like Brexit and the ongoing trade war between the United States and China fueling feelings of economic uncertainty and anxiety. This uncertainty can in fact be measured, with global optimism falling from 54% to 39% since Q2 2018. With global uncertainty posing a challenge to economic growth, companies must find new ways to adapt and stay competitive.
With long-term outlooks becoming harder to predict, companies need to think about how to adapt flexible strategies and plans that focus on the short-term. This spans all aspects of business, from financing, to hiring, to decisions about office space. Especially in Hong Kong where office rent accounts for a large percentage of costs compared with other major cities, companies need to understand how to evaluate different options to maximize resilience and flexibility.
Planning for Flexibility
Flexibility means creating an environment where a company can respond to ups and downs quickly and efficiently. A key way to understand this is through risk: what are the challenges that pose a financial or operational risk to the company, and how does this translate to choosing the right kind of office? For some, change in and of itself presents a risk. Particularly in large organizations with many senior or long-term employees, implementing changes can be jarring. These companies might instead rely on management tactics and new hires to promote a more flexible mindset in the working culture.
However, thinking critically about office space can present some inherent benefits in helping companies become more flexible. Flexibility hinges upon the ability to respond and adapt to issues such as trade restrictions, tariffs, or economic shifts as they arise. A company that has to quickly hire a group of employees with a certain expertise, or unfortunately let go of employees who are no longer essential will benefit from an office that can scale in the same way. Additionally, how much time and money is the actual management of your space consuming? It is important to have an objective sense of the resources spent on office upkeep. Minimizing this allows that time to instead be spent on other more important aspects of the business or even grow the business.
Resilience on the other hand means making sure a business can maintain operations in the face of unexpected challenges, and strategically positioning oneself to protect resources. Is your office contributing to, or a liability to the stability of your business? For some, long-term planning in and of itself offers a source of stability. With typical leases often running up to 8-10 years, that time frame means businesses can plan according to a steady, drawn-out trajectory. However that same apparent benefit can bring challenges. Unless specific break clauses are built into the contract, companies are also locked into that lease for the entire duration. Cancelling a lease is a very expensive prospect, and if economic downturn puts a strain on cash flow, then a business can be stuck paying for space they can’t quite afford, or if they need to cut staff, then paying for extra desks or rooms they are no longer using. Overall, planning for resilience means understanding your ability to project future financial plans, and not overstretching obligations with your office space.
How to Stay Agile
If you want to be able to keep up with the present, you’ll have to be able to anticipate and adapt fast. Whatever your current office looks like, here are some important principles to focus on in order to promote agility in any organization:
Balance long-terms plans with a realistic sense of short-term risk – With economic uncertainty increasing around the world, it is important to always identify and plan for the scenarios that can suddenly impact your core business. A flexible mindset means also choosing an office space that can adapt to your needs if they change.
Consider ways to minimize wasted investment in space – Don’t get stuck paying for space or infrastructure that isn’t being used. Freeing up unused resources allows them to be more efficiently reinvested in other aspects of the company.
Promote a working culture that is open to change and adaptation – Agility is a combination of strategy and mindset. Promoting flexibility is a dialogue between management and employees, and business leaders must regularly communicate this idea to create an organization that is open and receptive to change.
Focus on building network – Making connections and finding talent is a key part of bringing fresh thinking into an organization. Whether through traditional networking methods or by meeting new contacts in your surrounding community, it is crucial to stay exposed to new people and ideas.
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