(2008), "Interview with Rick Bertasi (Vice President and General Manager, Global Workplace Solutions EMEA)", Journal of Corporate Real Estate, Vol. 10 No. 3. https://doi.org/10.1108/jcre.2008.31210caf.001
Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
Interview with Rick Bertasi (Vice President and General Manager, Global Workplace Solutions EMEA)
Article Type: Talking heads From: Journal of Corporate Real Estate, Volume 10, Issue 3
by Debbie Read
Can you explain to our readers how Johnson Controls Global WorkPlace Solutions EMEA came about? What exactly does it do?
Global Workplace Solutions is the business unit within Johnson Controls that addresses corporate client portfolio solutions – occupancy portfolio solutions.
Global Workplace Solutions grew out of the legacy of the Johnson Controls business, which originally specialised in the supply of thermostatic controls and other building management systems, and became a key part of the organisation over 20 years ago. When our clients started expanding, they’d ask us not just to sell them the equipment, but to maintain the equipment, to maintain the whole building, and then to maintain more than one building. That evolved into a facilities management company, which was grown through acquisitions.
Initially, in the late 1980s we acquired the business of Pan Am World Services. By then we’d already been in the facilities management business for 30 years. Through the 1990s and in the early part of this century the company acquired Procord, a facilities management company in Europe. Then we acquired United Systems Integrators, a real estate firm in the US, and Fulcrum Corporate which is a real estate firm here in the UK, as well as a series of other smaller global acquisitions.
The acquisition of these firms, or should I say the combination of these acquisitions, created a spectrum of services – Global WorkPlace Solutions – which has the expertise and the ability to manage an integrated offering for the client. The integrated offering is: real estate, projects, facilities, consultancy or strategic thinking around these topics, and then the delivery of those solutions globally through a combination of supply chain and self performance.
Can you tell us about your day-to-day role at Global WorkPlace Solutions?
I have responsibility for the Europe, Middle East and Africa business here. We call it EMEA. It stretches essentially from Iceland to the far side of Russia to South Africa. That includes 140 clients, 30 plus countries, and everything from high-rise buildings in Canary Warf, London to remote sites in Angola and Nigeria – and everything in-between.
How does Global WorkPlace Solutions remain committed to strong corporate governance?
Global WorkPlace Solutions does this in the same fashion as the rest of Johnson Controls – it really is a corporate wide commitment.
Johnson Controls has fantastic set of corporate values and a very strong focus on integrity, customers and employees. We have a couple of things in particular that drive this. It is something that is communicated repeatedly from the top leadership of the organization. This can be seen, for example, through initiatives such as our 10 year marker (our 10 year vision of where the company is going) where “integrity” forms an explicit part.
All of the middle and senior management of the company annually complete a web based ethics training and ethics certification. It’s a really good process. We have a behavioural methodology around leadership expectations, and our leadership expectation model talks about the behaviours that support the company’s vision and the values that the company promotes. The leadership expectation model is part of how the middle and senior managers are reviewed and evaluated annually.
It’s not enough to just get the right results – you have to get the right results behaving the right way!
The ‘behaving the right way’ part includes sustainability, community involvement and community support. We have an initiative programme, called Blue Sky Involve, where the company provides funding for any initiative that employees are involved in for charity that develops leadership and promotes the values of Johnson Controls. So, any employee anywhere on the globe, if they are working with a charity and investing their time in a programme that helps to develop leadership, the company will provide a grant in support of that. They have to fill out papers and have to prove it, but the concept is fantastic. Within EMEA alone this year we had 30 plus grants and they are not insignificant grants either.
With our client relationships there is a strong focus on the governance model for each, because they are relationships that typically last for very long periods of time. Certainly, our goal when entering a relationship with a corporate client is for it not to be a single contract term – we want it to be something that lasts 20 years or more. For that to happen, you have to work through the governance on the relationship. So, for example, when we do work with Proctor & Gamble or IBM or a number of our other blue chip clients there is a significant focus on having the right governance model with the customers as much as with ourselves internally. And that governance model has to support the values that Johnson Controls as a company supports in order for it to succeed.
Can you tell us about the VISIBLE Living Lab Space technology, which won Johnson Controls the Innovation in Real Estate Award?
The VISIBLE technology that we use is a web based wireless application that allows you to actually understand the utilization of your space. So, you have an office from which people come and go all day – they are at their desk, they’re not at their desk, they are in a conference room, they are not in a conference room … to actually track that space utilization is very expensive if it is done manually. It can be done by samples, which are inherently wrong because it is only a sample and it’s very difficult to tell how utilized your space really is.
The VISIBLE technology allows us to make that utilization visible to the client. The data is refreshed every several seconds and so, in my offices, for example, where I have this technology deployed I can tell the utilization by hour of the day, by type of space, by department, in fact any of the data points that we track. What it really allows us to do is be much more efficient in the quantity of space that we need to provide. We can actually match the supply to the demand curve and we can, as a result, reduce the carbon footprint that we are actually generating by better understanding our true utilization. It is staggering, if you look at most office buildings most office spaces are never used more than 70 per cent of the time. The amount of opportunity to optimize there is just unbelievable. The challenge has always been the data. Corporations allow a desk per person or two or three desks per person if they are sharing and hot-desking, and use different methodologies to try and reduce their costs per FTE. What we find is that for some of our mobile workers we can get to 9, 10 or 11 to 1 – depending on the nature of their work, but people are concerned about going to those sorts of ratios unless they have the data to true utilization.
The technology that we have developed makes that utilization visible and makes it a lot easier to actually deploy, in theory, a much more densely occupied space. In practice, we actually reduce the gap in the supply and demand curves.
Does this technology fall under any ISO auditing processes?
Yes, it adheres to ISO9001. Johnson Controls is ISO certified in a number of things across the company, including within Global WorkPlace Solutions. This is part of that.
In the future, the VISIBLE technology has the opportunity to potentially automate a lot more of the building and controls systems. Today your building is heated and cooled on time and cycles, the lighting can be motion detected, but your HARC is not based on how many people are in the room, so it’s not real time enough. In the future, you can take this technology, link it to building control systems and be able to drive some of your heating and cooling loads off the actual occupancy in the space – not based on the time of day.
It has huge opportunity to add value and make the use of energy far more efficient for clients.
According to a study by Global WorkPlace Solutions “By 2030 the corporate office as we know it today will no longer exist”. What does the report, Tomorrow’s Sustainable Workplace, mean by this? What evidence is put forward to back up this statement?
I think there are four key trends that came out in that report. The first is technology. Technology enhancements basically reduce the cost and the difficulty in interacting remotely. If you go back 20 years, people were first starting to use cell phones. Now you have your cell phone with texting and pictures and with full web access. The cost of getting that information is now so much less than it was 20 years ago and it’s enabled all sorts of advances in how people work.
The second is the globalization of business. Increasingly, corporations are shifting work to locations where they can optimize skill sets. What that means is that you may be working more and more frequently with teams who are not in the same time zones, so that adds a significant impact on when you work and when you need to work. If you want to talk to folks in Asia, and you are working in London – that’s your morning, but if you are in the US it’s a difficult thing, just because of the time gaps.
The third is the whole focus on sustainability and carbon generation for the workplace. People commute. They come to the office to interact, to sit at their desk, to meet with colleagues. If you could drive those exact same outcomes without having people commute, it would have a huge impact on energy efficiency. That’s another significant trend that is driving the reassessment of the office space.
The last is demographics. The fact of the matter is that today the critical constraint for most organizations, or the single most frequent critical constraint that I hear, is about talent. Where are we going to get the people from in order to do the work and who have the training and the skills we need.
If you look at a lot of the western democracies their organic population growth rate is very low, and therefore people are saying “where are we actually going to hire the people to do the work?” Also, the very best people might not live near to where an organisation has been historically based. They don’t want to relocate and so the demographics of the workforce are changing.
Those 4 trends – technology, globalization, the focus on sustainability and just the fact that there will be increasing competition for talent – really raises the question of “do you need an office?” You do, but the question then becomes “well, what do you need it for?” It used to be that you needed it for people to be able to transact, to be able to work together, to process information and knowledge and share it through the organization. Whether that is purchases, sales or finance, or any of the different things that go on within a company. Today, you can do a lot of those things without sitting next to the person, and at relatively low cost because of the technology. That enables you to address the other trends: the globalization, the sustainability and the demographics with different answers than you had 20 years ago.
If, according to this report, we will all be working from home more, how can organizations retain “organizational connectivity”?
If you didn’t have the technology, I don’t know that you could. The interesting thing for me when we talk about “organizational connectivity” is that the technology is there, but do we actually know how to use it? When you start to get to people of my age and up, we’re not used to working with social networks and virtual social networks. It’s just not what we know. We are used to having networks of people, but they are all people we’ve met and built a relationship with in person. If you talk to young people today, they do all that electronically. It will be very interesting to see how that connectivity changes within the demographics of the organization.
You have previously spoken about the integration of property services being the way forward for large corporations. What are the benefits of integrating facilities management and real estate?
The first benefit is improved alignment and support of the company’s core goals – their strategic goals. Historically, these functions operated separately. By breaking down the silos and really truly integrating the functions, the communication and sharing of information is significantly better. There is an operating efficiency that comes from it as well, so there is also a cost reduction, and those two things ultimately allow you to get to better alignment with the corporation’s strategic goals.
You just need to look at organizations that operate their property and their facilities groups differently to see the inefficiencies. Where one group may be going in and investing in a facility and putting in new chiller units, for example, or putting in new carpeting, as the other group is going to talk to the landlord to try and negotiate a new occupancy term. At the very time that that group is negotiating and threatening to move out, the landlord knows that the other group is investing money in the site and there is no way they are moving out. So, just that communication enhancement adds opportunity.
That example is just on a very tactical level. At a strategic level the value creation opportunity is even greater.
Can you take us through an example where this integration has been applied successfully?
In the case of Barclays, historically the property and facilities groups were operated separately and when our contract was renewed with Barclays we began a process of integrating them. It’s actually been very successful and the information sharing between the two groups has been improved. Therefore, the opportunity for Barclays to get a single consolidated view of what’s going on within the portfolio is also improved. Frankly, they couldn’t get that before – you’d get a property report or you could get an FM report. By starting that integration process they are actually working to a different set of outcomes than they would have been, had they remained operating in silos.
You can’t do this unless the client is a willing participant. Barclays has been a strong advocate of increasingly integrating their property functions.
From a real estate perspective, what factors are essential to a successful office relocation? Are these factors the same when an organization relocates abroad, or are there different aspects to consider?
There are four factors that I would say are essential to a successful office relocation: goals and objectives, an integrated approach, milestones, and communication. These are conceptually the same, whether you are relocating across the street or to another continent, however the application is very different. If you are relocating across the street, the project plan is different and the communication issues are different. If you are relocating abroad, meaning from an office in France to Hungary, for example, you have a very different impact on your staff. So you have a very different communication requirement and a very different project plan around your people. When you are relocating across the street, many of your suppliers and your existing local market practices are going to be identical. If you are relocating abroad then they are going to be vastly different. You cannot underestimate the impact of the local culture, the differences in the way business is done in those local communities and the impact it will have on your people – if you are relocating people as well.
In concept, while those 4 factors that I talked about are consistent, in practice, the relative importance of some of these things changes depending upon the geographic change – across the street or to another continent, for example – or just the scale of the project itself. If you are moving the bank branch that’s one issue, if you are moving the bank headquarters that’s another issue.
There are many critical issues facing corporate real estate today, including CSR, benchmarking, and growth strategy. Can you expand on one or two such issues and explain how you deal with them at Global WorkPlace Solutions?
First, let me talk about CSR and what we do with clients in that regard. Corporate Social Responsibility for Global WorkPlace Solutions focuses primarily around sustainability and around employee engagement, and the employee communication part of it. We have a significant knowledge base and experience around the issue of sustainability. For Johnson Controls, given that we are in the buildings business, that’s where the legacy of the company started in the 1800s – in the thermostatic controls.
Energy efficiency is something that we know a lot about, and as a result we are able to work with clients and are able to say, “Let’s talk about what is the sustainability plan for you? What’s your strategy? What is your existing carbon footprint? What could it become? How do you get it there? And, oh by the way, we can actually achieve that outcome for you.” It’s not just that we are going to put together a plan and then hand it to somebody, and hope that they execute it. We can work with the client and say “Ok, we’ve agreed the plan. We’ll now go and execute it and guarantee the outcome for you.”
So, for CSR, that’s primarily where the focus is. We do a lot of communication management with clients where we work with their internal department around engaging their staff. Given that we are running the building, which for example involves all sorts of health and safety issues, we will be very intimately involved with the client.
Regarding our approach to growth strategy and benchmarking there are some important regional and global considerations. The growth strategies in Asia are different than growth strategies in Western Europe, so in each of these cases, although we operate across the globe as a single business with the client, the reality is that you tailor to the particular market circumstances and regional business model for the client. To do that you sit down with the client and focus on their business, and what the key issues are in that region. It may be that they are doing all their manufacturing, or big chunks of their manufacturing in Asia, and shipping their products back to western markets for distribution and sale.
Growth issues in Asia around more manufacturing capacity and more distribution and logistic support are different than the growth factors for the same company in more mature markets where it’s a distribution and sales focus, and you have to be able to address both of those with the clients. You can do that through tailoring the particular metrics for the operations in the region, setting up a series of KPI’s against that and then benchmarking those both internally and externally, which we do annually across our client portfolios as a way of saying “where are the opportunities for continuous improvement?” Then applying our continuous improvement methodology to try and drive better outcomes for the client.
In your experience, are these corporate real estate issues the same around the globe?
I think it’s a little bit like the relocation question earlier, the issues are fundamentally the same, but the priorities are different. The fundamental issue of corporate social responsibility exists everywhere, but is it top priority in certain countries versus others? For example, in the US until just recently – probably the last 12-18 months – CSR and sustainability did not have the same attraction as it does today. Employee retention and productivity is a key fundamental issue for corporations, and real estate has an impact on that, and flexibility for corporations is a key issue. For companies who are in a world where, increasingly, the product life-cycle is shorter, where their competition is much more global than it used to be, flexibility becomes really important.
So, while I think these are fundamentally all the same issues, how they prioritize those and the application of those is different. If you look at China, the growth rate is predicted to be almost 10 per cent next year, and in India where the growth rate is predicted to be north of 8 per cent next year, they are going to prioritize some of these things differently than in economies right now where we are concerned about recession next year.
In terms of struggling to find the right talent, do you find that it is the same across the globe?
I think it’s a challenge globally, but it manifests itself differently. In high growth economies it’s not just finding the talent, it’s keeping the talent because the pay scale changes so dramatically and so quickly. If you are in Shanghai, there is no career downside to changing your job every year – if you are good people the limited talent pool ensures you will have opportunities. If you change jobs every 12 months in London, at some point people are going to think maybe you’re not an appealing candidate.
So, while everybody is looking for talent, the retention of talent and the application of that, manifests itself a little differently.
For us, we can’t hire enough talent quickly enough to service the growth opportunities that we have. So, at Global WorkPlace Solutions, we have invested significantly in Training & Development programmes for our people, so that they can grow into the jobs that we really need to fill. Our people are our greatest asset and we are committed to investing in them. However, whilst we will put the money in, they have to invest the time! If they don’t want to learn and grow, then that’s Ok, they don’t have to, but if they do, then there are significant opportunities in what we are doing and in the way that we are growing for anybody in our industry who has that level of ambition.
We have recently launched a project called Oxygen, which is all about Generation Y, where we talk to 18-25 year olds and what they want from their workplace of the future. It is very much about looking at the talent that’s out there and what we need to do to attract them to our business and to our clients’ businesses. It gets people talking about how they see themselves working in the future, what their preferences are, the expectations they have of their corporate employer, the importance they place on technology, sustainability and all those sorts of things. The research is being conducted on a global scale – so you can slice and dice by country, culture, age, gender, and by a number of other categories. You can see that there are significant differences between countries, and really get to grips with the expectations that Generation Y has. It’s fascinating research!
Global WorkPlace Solutions has the capabilities to predict how and where we will be working by 2030. Where do you see Global WorkPlace Solutions in 5 years’ time?
Our business today is customer centric – we shifted it 2 years ago and organized it around our customer base, rather that around geography. I think that in five years’ time it will be typical of companies trying to do what we do to be organized that way. Today that’s not the case.
In 5 years’ time I see us being even more global. Today, Johnson Controls operates in 120 countries, Global Workplace Solutions is in around 80 countries – from Angola to the US to Shanghai to places in China! When you support the client you have to support them wherever they are.
I think in five years’ time you’ll see three or four firms emerge who can deliver globally. Today, I would say that there are probably two to three who can manage globally, but I would argue that really only one or two that can actually “deliver” globally. I think that only a small number of firms can do it, because it is expensive to develop that infrastructure unless you have clients already in hand. Going out and setting up in 80 countries if you are currently in five is really tough, so I think that there will be a small group of firms who can really truly deliver globally.
We have a very high growth rate going on in our business because clients are increasingly looking to combine property and facilities – and as a result significantly improve communications and efficiency. They are all already outsourced, or most of them have outsourced previously, so what they are doing now is saying “Ok, what’s the next level of evolution?” and that’s leading to a lot of opportunity.
I see continued consolidation in the industry as a whole. The market, in my opinion, will basically move to big global organizations who can compete locally, but who can also deliver across 30 countries without blinking.
We are pretty much there now, but we will be there in an even stronger way in five years time. It will be a fully integrated service business, so if you want to talk about any of the service lines in any of the geographies we can deliver it. We are on a journey to that place today – it’s one of those perpetual journeys – and as we get close to it, we’ll just keep moving the finishing line and raising the bar!
Over the next five to ten years, the focus on sustainability will increase. Even if oil prices back off a little at the end of the day I don’t think that will change the focus. The issues around sustainability are here for a long time.
In ten years’ time, my expectation is that we’ll have the same key corporate clients that we have today and we’ll have some more!