Millennials have dominated discussions of generational change, but the generation to follow (born 1996 to the present) – called Gen Z – is poised to make waves in the workforce in the coming years as well, according to panelists of “Competitive Workforce Strategy” at NAIOP’s Commercial Real Estate Conference 2016. Statistics suggest that Gen Z includes more than 60 million people and could outnumber millennials by more than 1 million. The oldest members of this cohort are 20 years old and will be arriving in the workforce in the next five years, making now the time to anticipate and prepare for the next shift in the workforce.
As commercial real estate professionals, it’s critical to understand the workforce and their needs, the panelists emphasized. Employees can choose from a wide variety of compensation benefits but often struggle to come up with a compensation structure that works across all generations currently in – or soon to arrive to – the workforce. More recent generations, for example, may prioritize employer assistance paying off student loans over expanded healthcare benefits, but companies typically offer a “one size fits all” benefits plan.
“The cost equation is sometimes surprising to real estate professionals,” said Mark Seeley, senior vice president of the CBRE Labor Analytics Group. “It drives the real estate decision.” Labor makes up 70-80 percent of operating costs, he said, making it a foremost consideration for his clients. In the near future, we can expect to see companies hiring more freelancers than full-time employees because they can save 30 percent more on payroll costs.
“There are smart companies, and there are healthy companies,” noted James Stabilito, senior vice president with Lockton Companies. Companies are looking for employees that are humble, hardworking and smart who will stay at the organization longer – making it essential to understand what employees value and what will retain them. A modern workspace with abundant amenities may be great in theory, but if the office culture doesn’t support it, the draw won’t be there for employees.
As one example, a company piloted shared workspaces with the goal of being “flexible and cool, like Google,” said Alicia Mandel, principal and founder of Medius Advisory Group. However, the office culture required that “you need to be present to win,” at odds with the flexibility of the shared workspace concept. What was intended as a gift to employees create headaches for employees as they carted their work from one space to another. The primary benefit ended up being cost savings rather than employee productivity and retention.
CBRE has implemented collaborative and huddle spaces, standing desks and other modern amenities as part of its Workplace360 initiative, said Seeley. Gone are the days when unemployment rates were high in many fields and companies had their pick of top employees; now the focus is on how you differentiate yourself as a company to attract and retain the best talent, he noted. “It’s not technology for technology’s sake; it’s technology that enables.”
By 2020, futurists predict that 50 percent of the workforce will be part of the “gig economy,” said Laurel Lewis, senior vice president with NAI Horizon, moderator of the panel. Gig employees include people who are supplementing their incomes through work with companies like Uber, lyft and Etsy. Other examples include people taking on short-term or freelance work. The panelist noted that forward-thinking companies are looking at urban B-list cities like Charlotte, Nashville, Austin, Phoenix, Denver, Orlando and Pittsburg to find talent in areas with lower costs of living – an ideal place for gig economy work.
Mandel pursued a new path as a freelancer after 30 years at major corporate offices, a decision that paired personal risk with the benefits of maximum flexibility and independence. Looking ahead, flexibility is the key word for CRE, echoed Seeley.
In 10 years, our panel predicted the workforce buzz words to be:
- Flexibility, connectivity and human creativity – Seeley.
- Growth, innovation and learning – Mandel.
- Engaged at a deep level, humble – Stabilito.