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20 June 2019

Find the correlation! Connecting real estate to organisational goals using analytics

One of the things I have seen over the course of my career is that real estate and facility management traditionally do not get much attention at C-level. Real estate and facility managers often wish executive boards would pay more attention to the raw data they present. But it is just not happening. So why not?

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I would say it is largely because the metrics, numbers, and analysis they do on their domains can be very insular and self-contained. It is rare that a real estate director will relate his reports to an important corporate metric such as revenue, profit, or earnings. But that is exactly what the C-suite wants to see.

What is the connection between the RE and FM data and key corporate metrics? What is the impact of real estate costs and activities on those metrics? How can real estate numbers relate to the ones we hear about on Wall Street or in the stock market: the earnings, the profits, the revenues? Real estate and facility management teams need to take a good look at the relationship between real estate metrics and overall metrics and report differently to the C-suite.  Of course, this is easy to say and difficult to do.

Corporate metrics get attention

Real estate and facility managers do not usually present this context, so the impact of what they are reporting on is reduced. A good example that we have seen recently is all the attention given to the new lease accounting guidelines . These new guidelines require leases to be capitalised and reported in the organisation’s books, resulting in an impact on the balance sheet and P&L for the corporation. Suddenly we had a situation where the real estate strategy had an enormous potential impact on corporate finance. And what happened? The C-suite paid attention. Real estate departments want to be strategic players in the corporation, so it is their responsibility to demonstrate that relationship.

Analyse your reporting for better analytics

There needs to be a shift towards cross-referencing of data between departments to discover patterns and trends. Tools such as Planon’s new product, Planon Connect for Analytics, can help with this.
Rather than focusing on graphics or a presentation style, what RE and FM managers need to be concentrating on is the potential power of marrying their real estate data sets to other corporate data and discovering patterns and correlations. It is always worth looking at these correlations to discover whether there is a closer relationship.

Another example of what forces the C-level to pay attention: The struggle to fill positions in their organisations. Talent is becoming more difficult to find, hire and retain. Because of this, it is costing more. There is pressure on salaries and benefits, things that corporate C-level executives are much more aware of than real estate. So, a correlation, for example, that is discovered through analytics between workplace conditions and the ability to hire or retain talent can be made much more concrete. Of course, we talk about this in the abstract but with advanced analytics tools, it is possible for RE and FM managers to show these correlations much more effectively.

I recently spoke to Erik Jaspers, Global Product Strategy Director at Planon who interviewed René Buck, CEO and Founder of BCI Global, for the Planon Podcast series “Key takeaways shared by Real Estate experts on how corporate real estate contributes to the company’s business .” He mentioned that René also spoke about the essential role location and buildings play in finding talent and ensuring business continuity. Where is the office located? Where are we going to find the right talent? What do we need to do in terms of the workplace to retain that talent, to keep people happy, to keep them on board? So, if you can connect RE to this talent issue, you can start to see something emerge that will force C-level executives to pay more attention to the real estate strategy.
And that is where the power of analytics comes into play.

David Karpook
Vice President of Operations, North America