Human capital accounts for over 90% of a company’s operating costs. That means any investment to improve the physical work environment can have a huge impact on the bottom line. Typically, operating costs breakdown to 1% utilities, 9% rent, and 90% salaries and benefits. Commercial real estate firm JLL has dubbed the concept The 3-30-300 Rule™—$3 per sq ft per year for utilities, $30 for rent, and $300 for payroll. Associations like ULI and BOMA, and the industry as a whole, has been quick to refer to this rule of thumb when considering human capital and the relationship between sustainability and productivity. As the World Green Building Council summarizes, “What may appear as a modest improvement in employee health or productivity can have a significant financial implication for employers.”
While these figures are just archetypes, they’re useful in providing an order of magnitude between the three areas of expenditure most impacted by commercial real estate professionals. According to the 3-30-300 model, the greatest financial gain from greening a workplace is not energy savings, but improvements in productivity.
Let's take a look with a theoretical company called Wikisys a 25,000 sq ft workspace with 100 employees that is experiencing thermal discomfort.
The office is constantly too hot or too cold. The resulting distractions from thermal discomfort cause stress and irritation, negatively affecting employees’ ability to concentrate.
- manually adjust temperature settings throughout the office
- upgrade its HVAC system
- install a new work-order ticketing system
- install Comfy to provide on-demand personal control and learned settings
Anticipated Productivity Gain:
Studies show productivity gains of up to 20% can be achieved by more physically comfortable work stations. Nearly 9% of that gain can be attributed to improved personal control of temperature. Early results from Comfy's in-app survey show an average self-reported increase in productivity of 16%. However, let's assume an ultra-conservative estimate of only 1% improvement in productivity and work quality due to fewer distractions, the ability to concentrate fully on tasks, and not having to call facilities or office operations to fix the temperature. This 1% improvement is equivalent to 24 minutes per week, per person, in enhanced work performance—a gain worth 40 hours of work time per week for a 100-person office.
Assuming $300 per square foot for payroll, Wikisys spends around $7.5 million per year on salaries. A conservative productivity gain of just 1% would generate an improvement in quality of work equivalent to $75,000.
Every office and every building is different, but replacing equipment and upgrading an HVAC system can easily cost upwards of six figures. Manually auditing and adjusting temperature settings requires a lower capital expenditure, but an immense commitment of time and resources from building operators and continued monitoring. As a Software-as-a-Solution service, Comfy requires no upfront installation costs, no extra equipment, and a pay-as-you-go model, so employees at Wikisys can expect an improvement in thermal control from Day 1. With Comfy, the payback period is instant.
Investments that improve productivity and wellness—like lighting, temperature control, improved air quality, biophilic design, acoustic control, and flexible space utilization—deliver a direct and substantial gain on a company's largest operational cost: its people. In modern day business, when it's all about stretching the penny, employees are a company’s biggest asset and biggest cost. Make it count and invest in solutions that deliver immediate savings and positively impact the humans in the building.