The Leader Magazine

MAR 2017

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MARCH 2017 47 Additionally, we grouped CRE strategies based only on the strength of their correlation, avoiding any a priori researcher-defi ned categorization to understand the approach of CRE managers towards these strategies. Interrelationship between CRE strategy and organizational culture The results suggest clear patterns of association between preferred strategies and cultural groupings based on the attributes of each culture. Organizational culture effectiveness criteria emphasizing fl exibility and discretion, as opposed to those that focus on stability and control, provide a clear dividing line in strategy preference of survey respondents. Strategies that have employees as their core target are prioritized by the Clan and Adhocracy cultures, while reducing real estate costs was the main concern among respondents identifying with Market and Hierarchy cultures. The diagonally competing quadrants in organizational culture show clearly different priorities in corporate real estate strategies. The Adhocracy-Hierarchy pair is diametrically different in their strategy focus. The former prioritizes creativity, fl exibility and other employee-related strategies and tends to put less emphasis on real estate costs. The latter is highly driven by effi ciency, as indicated by a priority for reducing real estate costs and a lack of consideration for increasing employee creativity. Overall, increasing the value of real estate assets is the least-preferred strategy, consistently ranking bottom across the four culture groupings. Change in CRE strategy priority from 2010 to 2016 Compared to the previous survey of 2010, there were very little changes in the importance that managers responding in 2016 place to CRE strategies in supporting core business. Reducing real estate costs ranked at the top and increasing the value of real estate assets ranked at the bottom of the strategy-priority list. Second and third top-priority strategies remained unchanged, while the rest showed only one rank change. We interpret this as consolidation of knowledge among CRE managers of these particular strategies. Additionally, this might be attributed to the continuing trend of considering CRE from a cost-control perspective and prevailing of the leasing option in CRE procurement. Cultural variations across industry sectors Among the corporations operating in the banking and fi nance and business-consulting sectors, there is a clear dominance of the Market and Hierarchy cultures. This indicates clear inclination towards effi ciency-driven practices in these sectors. The corporations operating in the Manufacturing & Construction and the Technology Media & Telecommunications sectors do not identify with the Hierarchy culture. Particularly for the latter sector, this is an expected outcome since it tends to overcome formal rules and centralized power to promote innovation and creativity. From the respondents operating in the Energy and Utilities sectors, no association with the Adhocracy culture was reported, indicating a strong focus on effi ciency at the expense of creativity and fl exibility. Cultural variations across, fi rm size and CRE department size Relatively large organizations are associated with Market and Hierarchy cultures. Additionally, companies with relatively large CRE departments associate themselves almost exclusively with the Hierarchy and Market cultures. This indicates that large multinationals favor stability and control criteria to promote effi ciency and a competitive advantage. The results of the statistical analysis indicate two clearly distinguishable groupings of CRE strategies based on their scope as real estate and non- real-estate related. The fi rst grouping, comprised of reducing real estate costs and increasing the value of real estate assets strategies we label "real-estate-related," and the other grouping comprised of all the other six strategies we label employee-centric and corporate image focused (see Figure 3). Further steps This study confi rms association among organizational culture and CRE strategies. Its fi ndings are particularly important to CRE managers who want to shift from cost control to value creation for their core business. Ours was an initial effort towards exploring these new frontiers in the management of corporate property. Clearly, further steps are needed to improve our understanding of the role of culture in CRE management, including a more in-depth assessment of organizational culture through case studies of individual fi rms, a wider picture of the impact of both national and organizational cultures within industry sectors, and further investigation of the scope-based approach to strategy categorization. Parts of this article were adapted from the report, "What Is Served For Breakfast? An empirical investigation of organizational culture and corporate real estate strategies," available from the CoreNet Global Knowledge Center. Monique Arkesteijn is assistant professor and head of the real estate management and development section at Technical University of Delft. Dr. Ilir Nase, also of TU/Delft, is an assistant professor of real estate management. Figure 3: CRE strategy categorization

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