How One of The Largest Employment Companies Manages Its Real Estate Strategy
Talent and real estate are attached at the hip. You need real estate to house your talent, keeping employees productive and happy to operate a business. You need talent to make real estate a worthy investment. Both must be aligned.
Indeed is incredibly successful at meeting their mission—to bring talent to companies around the world. While they offer users the ability to post jobs for free, they also aggregate existing jobs from company websites and job boards. Their clients on both sides of the aisle are happy. Although Indeed had a slower start, it has scaled incredibly over time. Derek Stewart, Indeed’s head of Real Estate, explains, “We can get a lot more jobs on our site with a lot fewer people than anyone else.”
Due to its great success, Indeed’s employee numbers are growing rapidly, which means that real estate is becoming more important. Stewart explains, “As we keep growing, we have folks joining us around the world throughout the year. On a basic level, my goal is to get enough space globally to support these hiring targets.”
Stewart is no stranger to growth, as he started his career in CFO/COO positions, running finance and operations teams at high-growth startups. Most small startups do not have standalone departments for finance, insurance, legal, real estate, accounting and office operations, so those responsibilities usually fall on the shoulders of the CFOs or COOs. Stewart had exposure to each of these functions. After working on real estate deals to support the company’s operations, he discovered that he really enjoyed real estate. When he discovered the opportunity to work at Indeed and focus exclusively on real estate, he was all in.
Stewart used his financial perspective to constantly assess how real estate impacted Indeed’s profitability. Over the last two years, he and his team have improved forecasting their growth and have created better quality office space more consistently. Indeed is expanding rapidly, so Stewart and his team are preparing to turn up the volume, bringing new spaces onboard faster and on a much larger scale. Luckily, after all this growth, Indeed is well-known, and Stewart is trusted as a tenant when they enter a new market.
Stewart explains that (as most commercial real estate professionals know), location strategy significantly impacts recruitment. “People can tell within the first couple of minutes if the company culture they are walking into is one where they want to work,” he explains. A bright and airy office with music in a cool building at a good location attracts potential employees who want to become part of this desirable culture. The environment and work atmosphere are compelling factors in employment decisions.
Stewart meets his ambitious goals by looking beyond cost-per-square-foot and other general building metrics. “There is so much more to a deal than that.” The location strategy should complement the business. “The worst possible deal I can sign is really long-term with no flexibility. I have no idea how the company will evolve in three years. We may be willing to pay more or absorb capital expenditure, as long as we have shorter terms,” Stewart explains.
Stewart constantly attempts to align the location strategy with HR, and believes his varied background in real estate accounting helps him achieve this. His past experience with construction enables him do better research prior to making a deal. “I try to analyze if this is an easy building to build space in. Can you get permits? Is it a union building or not? Those things all go into the mix, and help improve the deal,” Stewart says.
To improve productivity, efficiency and effectiveness, a real estate professional must think about how space is actually used. “We have spent the last year creating observation studies, tracking where people are actually going in the office, how much time they are spending where and what they are doing. The results are really interesting,” Stewart explains. After one such study, they reduced the number of lounge areas from nine to six. It encourages its employees to be productive throughout the day so that they can go home and enjoy life outside of the office. Indeed offers unlimited vacation time and allows people to work from anywhere. Perhaps contrary to popular belief, “People still like going to work to be collaborative in the office. It is easier to get more work done there,” Stewart explains.
To attract talent, Indeed puts its offices in “really cool and attractive” locations. Indeed has opted for central business districts surrounded by vibrant communities and a wide selection of interesting things to do. “Stuff outside of the office like cool parks, gyms and restaurants are more important to our employees,” explains Stewart. This has also reduced the need for internal amenities like gyms.
Stewart also feels that co-working spaces like WeWork can make a very large impact on real estate in the future, potentially shifting the function from real estate to HR altogether. Such providers are revolutionizing the construction process by pre-building offices to client company standards. This reduces the company’s capital expenditures and provides it with flexibility to grow or shrink. It also reduces the real estate component of hiring, which can now be handled by the co-working provider.
There is definitely heightened competition for good talent and real estate plays a prime role in attracting these qualified people. While salary and benefits are important, real estate is the most visible reason why an employee would want to work at one company versus another. Accordingly, driving hiring through this real estate and environmental feature can be crucial to a company’s success.