The following is a guest blog written by Kent Stuart, a Director of Grosvenor Management Consulting. With the core capabilities of CRE and organisational review, Grosvenor offers a distinct combination of best practice organisational design to the unique challenges of a CRE function.
Over the years there has been a lot of change in how organisations manage their Corporate Real Estate (CRE) and how they structure their teams. Despite many significant improvements, we still see a lot of focus on the technical aspects of property including the facilities, design, real estate and project management. And too often, we see little focus on the customers when approaching CRE team structure.
That’s a concern, especially given the increasing demands on CRE to implement workplace strategies that drive workforce productivity, enable collaboration, and improve employee experience. The new demands of the workplace require a CRM-focused model for CRE team structure that addresses relationship management.
Customer Relationship Management or CRM traditionally refers to an approach businesses use to manage a company’s interaction with their customers. CRM tries to analyze data about customers’ history with a company, to improve business relationships with customers, specifically focusing on customer retention, and ultimately to driving strategic growth.
In this article we describe some traditional CRE team structures, along with a new model that can better support client relationship management, which is essential for gaining a seat at the strategic table and implementing the modern workplace.
Traditional CRE team structure models
Client-centered CRE team structure
This model comprises multi-skilled, client-based teams for all service delivery requirements, with each team taking responsibility for the needs of an individual line of business (LOB). Teams are supported by centralised shared services and expertise including financial management, risk management and management information system support.
A dedicated team can develop a solid understanding of clients and their unique requirements, and clients may perceive a higher level of service. However, functional expertise of the team is often compromised due to working in silos.
Functional CRE team structure
This model comprises functional specialist teams servicing a client base. Like the client-based teams, functional teams are supported by centralised shared services.
In this structure, central specialized teams develop high levels of expertise in their area, often resulting in improved service outcomes. However, when teams are focused on their own area of expertise, they may not prioritise client relationship management or develop an understanding of each client’s unique requirements.
Geographic CRE team structure
This model comprises geography-based teams for all service delivery requirements, with each team taking responsibility for their allocated area. Multi-skilled teams are also supported by centralised shared services.
In this model, teams can develop localised relationships and expertise, such as local rental trends and knowledge about subcontracted providers, which can improve service delivery. However, teams may have difficulty achieving a consistent high level of service across all clients in each area. Functional expertise may also be compromised due to separation of teams.
Property type CRE team structure
This model comprises teams based on property type for all service delivery requirements. Multi-skilled teams are supported by centralised shared services.
Teams in this structure develop expertise about the property type they support as well as an understanding of their unique requirements, such as maintenance planning. However, like the geographical structure, they may have difficulty achieving a consistent level of service, and separation of teams can compromise functional expertise.
The new CRM-focused CRE team structure that better supports your business
Mixed structure: the emerging CRM-focused CRE team structure model of choice
This model combines the advantages of the other models, and is emerging as the team structure model of choice for industry service providers. It comprises a centralised team of functional experts in a centre of excellence, and client-based teams who leverage the centralised expertise in the performance of their functions. In recent years, industry providers such as JLL and Cushman & Wakefield have moved towards this mixed model.
Key considerations about the mixed CRE team structure
Like the client-centered model, CRE teams in the mixed model can develop a solid understanding of the groups they serve and their clients often perceive better levels of service as a result. However, this team structure can deliver better actual outcomes (as opposed to perceived service levels) due to the expertise provided by the Center of Excellence.
However, for the mixed team structure to deliver these benefits, relationship management is essential. Companies must embed client service managers on strategy teams within the business units they serve. It is critical for these client service representatives to be intimately involved with strategic decisions that impact property, manage how demand is articulated, and communicate needs effectively in accordance with lead times.
One challenge that can arise with the mixed team structure is what can be perceived as competing interests between client service teams (who are focused on meeting business needs) and Center of Excellence (who are focused on efficiency and compliance with standards). However, these competing drivers can often create a creative tension that results in improved delivery when teams collaborate to find good solutions that meet client needs without compromising standards.
Why relationship management is so critical to a successful workplace strategy
As anyone who manages a complex CRE portfolio will tell you:
“Being able to make long term commitments drives down the cost of real estate.”
However long term commitments require visibility of long term needs, which leads me to the second truism:
“The hardest part of effective portfolio management is being able to accurately forecast business demand.”
Portfolio management is about matching accommodation supply and demand in the most timely and cost effective way possible. Forecasting business demand requires an intimate knowledge of the business, the strategy and how that strategy is likely to impact accommodation demand.
In complex organisations, this means multiple strategies across wide geographies often with a range of property types each having its own specific locational and functional needs.
So if forecasting business demand is important and this requires a detailed and intimate understanding of business strategy, how does the organisational design for a CRE reflect this requirement for knowledge of business strategy? Answer – by having relationship managers whose role is to focus on the needs of the business. This is the strength of the mixed CRE team structure.
Relationship or client managers are responsible for understanding the needs of the internal clients and translating these into CRE deliverables. However, client managers can be much more: they can also be the advocate for CRE inside the client groups. They can be influencers who ensure that all programs and projects of the business consider the CRE requirements as part of the planning stage, not just at implementation.
By establishing trust and developing a detailed understanding of their clients and their business, a CRE client manager can become the trusted advisor on all things CRE. They must speak the language of the business (not CRE jargon) and they must be seen as an important voice at the time when businesses are considering the strategic options and developing their plans.
Relationship management is also key for supporting agile working and employee experience
CRE organizations face increasing demand to improve the experience of employees in the workplace, with the goal of growing productivity as well as attracting and retaining talent. At the same time, they face significant pressure to reduce property costs.
Moving to agile working environments is the strategy that is enabling organizations to do both. However, getting these workplaces right requires a deep understanding of each team and line of business and their space requirements. It also requires a high level of expertise in workplace strategy, change management, and implementing standards and new technology. The mixed CRE team structure provides the right balance of immersion in the business with the operational excellence needed to support modern workplace requirements.
The following matrix model below summarizes an excellent functional team structure for CRE in a complex business environment.
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Treating CRE as a business within a business
A great way to challenge current thinking is to ask, “How would we operate if our CRE function was a separate business? If the payments to landlords and contractors were expenses, and recovered occupancy costs from our internal clients were revenue, how would we change our team structure and our services?”
Invariably the answer includes a team of people focused only on the customer, their needs and expectations. That’s because a business without customers is no business at all and CRE function without a customer relationship management is only playing half the game!
Need help determining the best CRE team structure for your business environment? Contact Kent Stuart for an informal chat.