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How ServiceNow is consolidating office space to reflect shrinking employee demand

October 6, 2022, 12:12 PM UTC
ServiceNow office building
Sixteen of ServiceNow's 79 office locations will have consolidated office floors allowing employees to work in closer physical proximity.
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Can you have your cake and eat it, too? ServiceNow says, yes. The enterprise software company, a sponsor of CHRO Daily, announced today that it will consolidate several of its offices, but will not release or terminate any of its office leases. Sixteen of its 79 locations will have consolidated office floors that allow employees to work in closer physical proximity and decrease the company’s office footprint within its buildings. It plans to lease out some of the newly vacant floors to other companies and use others for corporate events.

The move speaks to an issue most large companies are working to solve right now: How can employers adjust their workspace to reflect significantly decreased employee demand for the office? While some companies are selling their headquarters or backing out of commercial real estate leases, Jacqui Canney, ServiceNow’s chief people officer, is hesitant to let go of all its space just yet, cautioning against the trend to “cut back and react.” 

Companies, especially those that are looking to scale, should not take real estate decisions lightly, she says. “We’re a growing company [and] we’re bullish that we’re not going to be shrinking. We’re expanding.”

ServiceNow isn’t shy about its aggressive growth goals. Earlier this year, the company said it plans to double headcount from just over 19,000 to 35,000 employees in the next few years. 

Setting the plan in action

ServiceNow employees had flexible work options well before the pandemic, but the company has more recently taken stock of how employees are using its offices. Conversations around space allocation and utilization are led by chief equity and inclusion officer Karen Pavlin, with input from fellow executives.

Canney says this structure differentiates ServiceNow’s approach to office space usage from other companies’ and helps ensure that redesign plans align with its DEI goals.

The consolidation process

The company made use of feedback tools to determine what employees want out of the office. It found that on most days, less than 10% of its staff utilizes the office unless there’s an event or a specific reason for employees to be physically present. 

Another finding is that employees don’t feel inspired or enjoy working in an office where they’re spread out. The company will reduce the number of floors used in its large offices, corralling employees into a smaller vicinity. 

“We’re just trying to put people in a more dense way together so that there is more connectivity, more reason for collaboration, more opportunities to have those spontaneous meetings,” says Canney. Still, retaining the unused floors will be useful in the event of hosting big meetings, or in case they hire additional employees in the altered locations.

ServiceNow plans to sublet some of the newly unoccupied floors and conference rooms to employers and transform others into collaboration spaces where employees can convene for intentional corporate gatherings. 

The anticipated ROI

Canney expects to see the biggest return on investment when it comes to talent engagement.

“We have to do more, know more, and care more about our people. So this kind of decision-making demonstrates that’s how we think about it,” she says.

Amber Burton
amber.burton@fortune.com
@amberbburton

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Around the Table

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- Elon Musk’s announcement last year that Tesla would build a robot was just a recruiting pitch to get robotics engineers to join the company and work on its self-driving cars. Wired

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Have a move? Let me know: amber.burton@fortune.com

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