People and place: how HR took over commercial real estate

Once the remit of the CFO or COO, HR executives are now having much greater influence over corporate real estate decisions as companies continue to re-evaluate the purpose of the office

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The role of the office has undergone an evolution. Its purpose is no longer simply as a place in which to work, it’s now vital for employee experience, corporate culture and establishing an organisational identity. With this change in emphasis, HR leaders are having much greater involvement in corporate real estate decisions.

Around a quarter (24%) of real estate professionals reported directly into HR leadership last year, according to research from commercial real estate firm CBRE. This represents a 14% increase on the previous year. “Even in companies where there is no direct line into the CHRO, we’re seeing a growing partnership between HR and real estate,” adds CBRE’s head of human capital consulting Georgina Fraser.

Corporate real estate is increasingly being seen as an enabler to the core business and a function that can support talent attraction and retention and improve productivity, rather than just a business cost. This means it has developed a “natural alignment with HR, whose raison d’être is to look after people”, Fraser adds.

Silicon Valley roots

Peter Miscovich, global future of work leader and executive managing director for real estate services company JLL, traces this change back to the 2010s, when the likes of Google and Facebook (now Meta) established suburban campuses for their workforces. “As we saw the Silicon Valley tech firms put a much greater focus on the role of the workplace as a talent attraction tool, we saw the HR function become more engaged in workplace strategy,” he says.

Corporate real estate has developed a natural alignment with HR

As with many workplace trends, the pandemic also had a significant role to play in accelerating this trend. “Since 2020, HR has had to take the lead on establishing hybrid working, workplace health and safety and the return to office,” Miscovich adds. “As a result, corporate real estate teams have had to align much more strongly with HR leadership.”

This stands in stark contrast to what Miscovich saw earlier in his career, where the corporate real estate function would almost exclusively report into the CFO, COO, chief administrative officer or chief procurement officer. “When making real estate decisions, the emphasis used to be on making it cost-effective for the business,” he explains. “Location was also less of an issue, as there was an expectation that people would move to wherever the enterprise was located, but these considerations have shifted to be much more in favour of the worker.”

The rise of hybrid working in particular has forced many companies to change their approach to workspace utilisation and design. Businesses often refer to making the office a “destination” that employees want to commute to, rather than just a place of work. This has meant CHROs are now at the forefront of shaping their organisation’s workplace strategies.

Balancing people and place

One person who is well-versed in balancing HR and workplace priorities is Sharon Doherty, chief people and place officer for Lloyds Banking Group. She oversees 60,000 employees and 1,000 buildings, including the bank’s branches and head offices. 

Doherty’s first experience with the construction and design of corporate buildings was during her time as HR and change director at Heathrow, between 2002 and 2007. During this period she was heavily involved in the building of the airport’s Terminal 5 building.

The knowledge gained from this experience is something Doherty has carried with her throughout her career. “I would find it odd not having places as part of my remit, rather than seeing it as something that’s unusual,” she says. “People and places are two massive cost centres for any business… so both of them are really important.”

You can’t just delegate it, you need to be prepared to get your hard hat on and get stuck in

The main difference between the two remits is the amount of future planning required for each business function. While an organisation’s people strategy might be redesigned every three years, with annual reviews and adjustments, corporate real estate requires a longer-term vision.

“It’s an agenda that people need to take a five- to 10-year view of,” Doherty explains. “It’s a different cadence, so you need people that have that longer-term perspective.” 

Health and safety, maintenance and sustainability are all key considerations when designing a corporate real estate strategy. These aspects of the role can come with much more technical complexity and those that oversee these issues can be held personally accountable, should things go wrong.

“As head of place, you’re balancing business-critical issues and overseeing a big budget, so you can’t afford to get these things wrong,” Doherty adds. “You also have to manage a massive cost centre that goes right across the balance sheet in a way that HR’s normal costs don’t.” 

HR leaders who want to take control of corporate real estate need to be financially astute and have an interest in areas outside of their usual role, such as sustainability and construction. Doherty says: “You can’t just delegate it, you need to be prepared to get your hard hat on and get stuck in.”

A natural fit

But in spite of these differences, there are many crossovers that make corporate real estate a good fit for HR leaders, should they be up for the challenge. “It’s important for HR people to see this as an opportunity,” Doherty says.

Some elements, such as the ability to design engaging workspaces that enable new ways of working, are “in the sweet spot” for an HR director. This type of thinking can be seen at Lloyds’ recently opened Wellington Place office in Leeds, which features a games area, workplace hub and treadmill desks. 

HR’s involvement can also help to make the built environment more inclusive, through adding quiet zones for neurodiverse employees, gender-neutral toilets, braille signs on doors, hearing loops in meeting rooms, prayer spaces or wellbeing rooms for returning parents. All of these considerations will be much more familiar to HR executives.

Despite being chief people and places officer at her previous company, Finastra, Doherty says that she had to “fight” to get both aspects added to her title when moving to Lloyds. “Before I joined, there was a view that places should sit under the COO,” she explains. 

While it is still unusual for businesses to combine these two roles, for Doherty, the pairing of people and place just makes sense. “For me, it’s such a big part of the people proposition – to attract, retain and increase the productivity of our talent – it was too important to let someone else take care of it.” There are a growing number of HR leaders who think the same.