Four Corners of the Main Office – Part 2 | Detail-minded
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For a bank or credit union, the decision to relocate and build a new main office is not taken lightly. While in most situations, the combined wisdom of the C-Suite can be counted upon, the chances anyone on the team has been a part of this process previously is unlikely. And it’s not as if a masterclass on the subject is offered on Lynda.com. (Although we may add these Four Corners’ lessons to the curriculum soon.)
The previous article in our Main Office series, “The Big Picture” addressed the first corner, Begin With The End In Mind. This is about the vision needed by the C-Suite to plan for things like the site for the project, future expansion, contingencies, and other big picture items.
In this article, we’ll speak to more of the detail sides of the move: Space Planning, Environment, and Costs. The other three corners.
Corner 2: Space Planning
When we think of the ideal place for employees to work, it’s easy to be caught up in emotional or technology aspects. But, the functional needs of the workplace must be addressed, first (just like the branch). The best way to approach space planning is to break them down into three components: job function, department needs and organization needs. While not as fun as choosing wall graphics, color combinations, furniture or lighting solutions, it’s the dirty work that must be done.
By breaking down space planning to individual job functions, space needs for each job can be established. For example, what does new space mean for someone in the call center? What does it look like for collections, marketing, and sales? Each job function then can be amassed into department needs. So, in addition to each job requirement, the needs of the department are also included. For example, is there a need to foster collaboration? Furthermore, what about storage and conference rooms? As department needs are quantified and measured then they can stack together like Legos or Tetris (for all you Gen X’ers) to fit the needs of the organization.
Using smaller units, building into departments, and then amassing organizational components too, allows the space planning to be methodical, definitive and, well, ruthless. Ruthless in that the space planners are fanatical about sticking to the needs of the business as guiding principles for amassing space for the short-term, mid-term and long-term needs of the organization.
Corner 3: Environment
Now, onto the fun stuff. If the space plan solidifies the functional components of planning (call it the “left brain”), then the environment is the emotional piece (or “right brain.”).
Of course, few things in life (or main office planning) are simply functional or entirely emotional. When we speak of emotion, we want to address how each departmental environment (materials, selections, furniture and essential branded elements) serves the business. For example, what does the building and space say about the business’s brand? Said differently, what is the message needed to communicate to the community, the employees and the consumers of services through the building and space?
For many, the environment will also address the culture of the business. Is the space somewhere people want to work, spend time and promote the business? Will it help retain staff? And, can it be a key difference in attracting talent that will grow the business?
The aesthetic of the building (inside and out) does matter and matters a great deal. Any in many ways, the aesthetic is what brings the physical space to life. It activates the space and sets the tone for many desired outcomes for the individual worker, collaboration between teams, large meetings, and privacy to get stuff done.
Corner 4: Costs
No plan is complete without a firm grasp of costs. Two key axioms to remember:
Axiom 1: Everything is possible, it only takes money.
Axiom 2: Everything is on the table until budget sits down
But that’s the reality, right? At this point in the process, the selection of the correct partner to plan and implement the facility is crucial. Hopefully that partner doesn’t play games and actually listens. There are two key “Project Delivery Methods” in a partner selection. (We’ll help you debunk those choice in the next article. If you want to get a head start check out this Fox Article. )
The key centers of gravity for the cost of any building are three-fold:
- The Roof
- The Paving
- The Walls
All the other concerns in scoping a main office are secondary to these inputs. This is why the aforementioned ruthless space plan is a key driver to arrive at an accurate square footage. What’s more, stacking the floors efficiently will determine building configuration and materials. Material selections flow from aesthetic choices and will impact the cost of the interiors, work spaces and technology.
In total, the cost estimate cannot sink the titanic and should be based on:
- National Cost Databases – What does the industry tell us?
- Historical Cost Data – What does history tell us?
- Market Pricing – What is the local market telling us?
In Summary
These first 2 posts in our Four Corners of the Main Office series walk a bank or credit union through the planning for the facility. In the construction world, these are all pre-construction activities. A key element of a strong pre-construction team is gathering cost input from the local market to infuse predictability in the project. Pre-construction is where the business case for the project is won or lost. The entire process is about determining what the bank or credit union is willing to spend, and then aligning it with the design and supply chain. Once the plan is in place, it’s time to implement.
Now that you are better armed with the pre-construction process. The next article in this series will debunk “How to Procure” the Design and Construction Services you’ll need.
If you still haven’t read Part 1, then now is the time:
Is Your Branch Strategy Keeping Up With the Jones’s?
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The Five Questions Every Banker Needs to Answer About Their Branch Strategy
The traditional banking business model of the past was built around a decentralized branch strategy. Find a heavily populated area, sprinkle a network of easily accessible branches around it, and watch the growth happen. Pretty simple, right?
It worked like magic.
The psychology behind putting branches everywhere was intriguing: more branches implied a bank was doing well, so one’s money was somehow more secure. It wasn’t necessarily true, but it still seemed that way. Then the Great Recession hit. The large banks initially took the greatest blow, shuttering branches left and right. Then regional players continued the trend, despite the economic recovery that followed years later. Banks chose to put their faith more in cost reduction than customer service.
Market density matters.
What could have kept some of these recently closed branches open? Why close so many, even in places where there wasn’t a lot of competition? Turns out, maybe the bank’s misunderstanding of market density came back to hurt them. Given these ever-changing times, what kind of density solution is required to be successful?
Banks, particularly the larger ones, often close branches, not because of a shift toward digital and mobile channels (it’s certainly a factor), but a failure to plan for them in the first place. Though customers demand omni-channel options, at times, they still desire face-to-face contact with their branch. The latest surveys show the branch is a key channel:
What happens when a branch closes?
Closing a branch is a short-term solution, that while saving money initially, has long term implications. Studies have shown that up to 40% of customers change banks if their branch leaves the area.
Before you build your next branch, consider the following questions:
- Does your branch need to be large or small?
- Should the branch be fully-automated, or mostly?
- How can the bank’s or credit union’s people be convenient to the customer?
- Does it have to be a freestanding facility?
- Is a branch even right for the particular area?
So what’s the answer?
Perhaps bigger banks have done a poor job identifying the opportunities in their markets. Branching today takes considerable planning and precision, and if not done well can lead to unprofitable locations.
Market densities matter and the deployment of the right density matters even more. Density solutions are important and they do not always result in freestanding branches, which can be short-term considering the expense and risk. It’s really about convenience for customers and their needs.
