The Leader - May/June 2008 - (Page 44)

W o r k F or ce lon GevitY a n a lYsis: a ss e s s i nG Future laBo r Marke t ri s ks Fo r co rp o rate real e s t at e FIG. 3 Q u e s t i ons to c o n s i Der Competitive Risk n What is our risk to competition? n What if a competitor enters our market requiring 500 people? n What if a current competitor grows? n How much growth will this market tolerate? Operation Size n What if we want to expand our operations? n Can we effectively add 200 jobs to this market? n How many jobs could we ultimately expand? Skill-Set Optimization n What is the best skill set to employ in this market? n Should we use our additional capacity for more customer service? n Can we employ financial analysts in this market? Wage n What is the market’s sensitivity to wage? n If I increase my wage $0.50/hr, how many more applicants will I get? n How many more years can I get out of the market by increasing my wage? n What is the optimal wage to pay in this market for 15 years of longevity? Attrition n How does our attrition rate impact our time in this market? n What if we decrease our attrition? n What if our competitor’s attrition increases? well as understand how future scenarios may impact their operations. These innovations have been developed through CBRE’s market intelligence, as well as through client requests to address specific and previously unanswered questions pertinent to successful CRE strategy. custoMizeD applicant pool Clients can adjust the model based on the specific skill set they are trying to attract, by customizing the applicant pool information. The model enables the CRE organization to analyze each market by skill set to optimize the hiring profile in each market for the best performance across the portfolio. The applicant pool shows which occupations the client is most likely to attract based on their wage and the density of each targeted occupation. sensitivitY analYsis only labor availability at a given point in time, the Workforce Longevity Model is extremely dynamic, allowing for customization, sensitivity, and scenario modeling over a long-range time horizon. These features allow companies to adjust the model to their specific operating conditions, as A core innovation for the Workforce Longevity Model is the ability to evaluate how each input drives the success of a client in a market. This capability answers essential questions that companies are constantly evaluating, including those listed in Figure 3. The answer to these questions impacts the sustainability of a labor force as well as present and future decisions regarding real estate and operations. Some factors are completely outside of the company’s control, such as competitive growth, but increasingly important to understand as a company evaluates the risk of continuing to operate in a market. By understanding how each of these key factors affect a company, CRE can better manage risk, developing more robust strategies behind expansions, lease renewals, build to suits, facility and space utilization, capital planning, and expense management. The Workforce Longevity Model not only shows how sensitive a factor is, but it also allows you to target optimal operations (e.g., At what wage can I realize 15 years of longevity in each market?). This enables management to prioritize expenditures and operations, rather than throw additional dollars towards diminishing returns. Arbitrage of wages or skill sets becomes evident as companies compare the same time frame across markets. In Figure 4, a corporation can target 15 years of operating longevity (red line). In this example, the skill set in Location 1 requires $7.50/hour to achieve this duration, while Location 2 requires $11.50/ hour. For a 500-person operation, this could result in over $4.2M in savings in labor costs alone on an annual basis. Utilizing space at a ratio of 1:125, this savings equates to annualized savings of $67.20 per square foot or $336 per square foot over a 5-year lease. The company now can form a long-term strategy behind the two sites – why pay more for the same results? Best use optiMization As portfolios expand through mergers, acquisitions or organic growth, facilities may become misaligned for current business operations. A company may find that a poor performing location for a specific skill set, that was scheduled for disposition, is an ideal facility for another skill set the company is looking to expand. This unique, labor-driven, “highest and best use” approach to portfolio optimization offers an opportunity to tH e le aDe r 44 MaY / j u n e 2008

Table of Contents Feed for the Digital Edition of The Leader - May/June 2008

The Leader - May/June 2008 Leadership Contents Message from the CEO Real Estate in the News Green Real Estate Work Without Boundries Building Flexibility Into the Business Strategy Multi-Generational Work-Force Design Work Force Longevity Analysis Wells Fargo's David Nelson Pennsylvania's Michael Rossman Globalization 2.0 Site Selection Consultant Directory The New York Report: A Core of Traditional and State-of-the-Art Opportunities Discovery Forum Findings Industry Tracker Young Leader Career Development Effective Leadership Economic Development in the News A Look Ahead In Our Next Issue Calendar of Seminars Index of Advertisers Executive Development Spotlight

The Leader - May/June 2008

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