If your corporate real estate portfolio has more than a handful of locations, you likely face frequent questions about the overall plan for each location. Which locations are closing over the next 2 years? Do we have plans to refresh any of our offices next year? Could any of our locations accommodate another 100 people before the end of the year? How much space do we anticipate having by year end?

A poorly organized Plan of Record can become a drain on resources, lack credibility, and eventually be abandoned.

While these questions can be answered on an ad hoc basis by running around pulling together information from anyone who may have some insight, having a single source from which this information can be pulled at any given time can impart order, save time, eliminate stress, and increase accuracy. Such a source, a Plan of Record (POR), can be extremely valuable – but not all are created equal. A poorly organized Plan of Record can become a drain on resources, lack credibility, and eventually be abandoned. In order to make your CRE Plan of Record successful, here are five tips that should be taken into account when implementing it.

1. Understand your audience

We often jump into creating a Plan of Record without fully thinking through who our target audience will be. Just as with a business plan or a presentation, we must understand who will be viewing and using the information in the Plan of Record. Is the POR for internal use only? Is it for reporting up to senior leadership, or will we make the information broadly available? The answer to this question will impact how to structure the POR and what information to include in it. The five audiences I recommend considering are:

  • CRE Managers – Those within corporate real estate (portfolio managers, analysts) on the front lines making recommendations and decisions about space. These individuals work through multiple, oft changing scenarios and manage potentially sensitive information.
  • Trusted Partners – Individuals, both internal and external to CRE, that require information about locations well in advance in order to properly perform their jobs. These include individuals in IT, HR, Finance, Facilities Managers, and real estate brokers. They need this information to plan budgets, develop hiring plans, determine investments, etc.
  • Leadership – Senior leaders of the organization or business units who have approval authority over location decisions and overall real estate strategy.
  • Impacted Employees – Regional leaders and local employees who may be impacted by location decisions
  • Public – Others within the organization beyond those stakeholders already listed, and the general public including journalists, local government, competitors, etc.

2. Clarify which “plan” you are tracking

Once we understand that a Plan of Record may have multiple audiences we quickly realize that the information provided to one should not be the same as that provided to another. Our Plan of Record may indicate the closure of five underperforming locations. This might be vital information for our trusted partners, but disastrous to share prematurely with the media. There may even be discrepancies in reporting between CRE Managers and Leadership; CRE managers might recommend a location expansion, but are not ready to present the business case for approval, so showing that as the plan might cause a lot of unnecessary confusion.

Unfortunately, this sharing of information creates another dimension to our tracking that increases complexity. Not only do we have to track multiple locations and the regularly changing plans for those locations, but we have to maintain an understanding of how advanced that plan is in the planning process and therefore how much of it can be shared. Indeed, for one location we may have multiple “plans” depending on the audience – which seems entirely contrary to having a Plan of Record to serve as the single source of truth. Nonetheless, once everyone within CRE understands that multiple plans may exist, they can more effectively report the correct information for a given situation. I recommend tracking the following three plan categories:

  • Expected Plan – This is what CRE believes will occur at the location based on currently available information. By default, prior to any real analysis, the Expected Plan may always be to renew as-is or, if aggressively pursuing cost reductions, close. As portfolio managers and analysts understand more about the situation, the Expected Plan may be refined further to an expand, shrink, move, or close strategy. CRE Managers and CRE’s Trusted Partners are most likely going to be the audience for the Expected Plan, as they will need whatever information is available across the entire portfolio, even if it is highly variable. Further, the Expected Plan will still be undergoing refinement and will contain a high level of confidential information, so keeping it within a small group of trusted individuals (on a need to know basis) is better for information management. Sometimes this is referred to as the Plan of Intent.
  • Approved Plan – Once a plan is fully vetted and officially approved by the authorized parties, it becomes the Approved Plan. In theory, the Expected Plan is refined during vetting so that it aligns with the Approved Plan at the point of approval, and then does not change. Unfortunately, not every organization has a clear event that marks the approval milestone, so the line between Expected and Approved can blur. Further, external forces can impact the plan after approval; in this case the Expected and Approved Plans may get out of sync until an amended approval can occur. The Approved Plan is what would typically be considered the official Plan of Record, but its rigidity and timing (official approval often does not occur until near the end of the planning process) limits its use for reporting and decision making. The Approved Plan will most likely be what is used for communication to leadership.
  • Communicated Plan – Simply because a plan is approved does not mean that the information about the future of a location can be shared openly. Closures or contractions can be extremely sensitive if individual jobs will be relocated or eliminated. Public knowledge about a company’s plans could constrain real estate negotiations. Keeping track of the Communicated Plan helps to ensure consistency in messaging and highlights where future communication may be necessary. The communicated plan will likely be the source of information for impacted employees and the public.

In most cases, the Expected Plan will fluctuate a fair amount in early planning stages, but settle into a recommended scenario prior to approval and eventually communication. When planning is this straightforward, we could consider plan approval and communication as simply milestones in the overall planning process. However, if an organization is highly dynamic and often faces plan changes even after approval or communication, keeping track of what has been approved and communicated, rather than just if a plan has been approved and communicated can be critical to avoiding missteps.

3. Communicate level of certainty

Plans change, some more than others. While frequent changes are the very reason having a Plan of Record is important, the possibility of future plan changes reduces the value of the current information. The more uncertain the information, the less value it has. Also, because each location is unique, plan certainty will vary from location to location. Yet without an indication of level of certainty for each location, we would naturally need to assume a high degree of uncertainty for all locations. Eventually, if plan uncertainty is too high, the Plan of Record is worthless. Therefore, to ensure the Plan of Record is effective, we must include both the plan and the level of certainty for each location.

As planning for a particular location progresses, the level of uncertainty generally decreases (the cone of uncertainty.) One way to report the level of uncertainty is to indicate where it is in the planning process (e.g., Expected, Approved, Communicated). However, while there is a correlation between the planning stages and uncertainty, directly indicating a level of certainty, is even more effective. For example, level of certainty can be communicated by assigning a probability the plan will actually occur. In our early stages with many unknowns we may believe there is a 50% probability of moving to a new location. Once we conduct a formal analysis this probability may increase to 70%, and once the lease is signed, 100%.  (These probabilities will also be beneficial when using decision trees to make decisions and aggregating data for space and capital forecasting.)

4. Delineate key elements of the plan

Sure, less is more. Though sometimes less information means more confusion. When creating a Plan of Record, we must find a balance so that we avoid both too little and too much information. Plans can be multifaceted and should not be oversimplified. Two areas, in particular, that are typically rolled all into one, but should be delineated are supply v. demand, and size v. location.

  • Track Demand and Supply separately – A strategic plan designates its Boston office, with 40% vacancy, as “maintain.” CRE interprets maintain as the headcount will remain flat, so they commence discussions with the landlord to give back 40% of the space. HR interprets maintain as the business has decided to keep an office presence in Boston; they commence recruiting in that market. Six months later, the company has an agreement to give back 10,000 square feet, just as HR is sending out welcome letters to 50 new employees. Without clarity in a plan as to whether the action represents the demand (employees, production volume, etc.) or the supply (real estate) confusion such as this will occur. Examples include Maintain headcount-Contract location, Grow headcount-Maintain location, Grow headcount-Expand location, and Reduce headcount-Close location
  • Separate size and location - Often a Plan of Record will focus on a list of options for a location such as renew, expand, contract, move, close. Yet, because these options are not mutually exclusive they can result in confusion. Perhaps we are renewing and expanding. Maybe we are moving but contracting. By separating what will happen at the location (stay, move, close) from what will happen with the size of the space (maintain, expand, contract) we clearly cover all options (e.g., stay-maintain, stay-expand, move-contract, close-contract.)

5. Ensure information owners appreciate the value

Garbage in equals garbage out. One of the main issues a Plan of Record, or any tracking tool, can have is the quality of the information. The best reporting processes and tools are useless if the information inputs are poor, or even perceived to be poor. Much like level of certainty, just a few bad inputs will reduce confidence in all outputs and devalue of the Plan of Record. Some means of ensuring quality inputs are having an easy to use tool, providing automated inputs, creating a sound process, and mandating that it is updated regularly (the stick.) However, none of these will be fully effective without ensuring that those responsible for maintaining the information in the Plan of Record appreciate its value (the carrot.) Typically, CRE portfolio managers are responsible for the inputs. Yet, as noted, the audience for this information includes those CRE managers, as well as many other groups. If CRE managers frequently depend on information across the portfolio, not just their own area of responsibility, the benefit of a quality Plan of Record can be immense for them. However, if their effort to provide accurate and timely POR updates is greater than the benefit they gain from the collective information, they will be less inclined to give back to the well. In this case, the value a POR has for trusted partners, leadership, and others must be clear. This value is most clear when the audience actively engages with CRE managers in requests for POR information and follow-up discussion. Unfortunately, this is somewhat of a chicken-egg scenario, where quality inputs must be consistently provided to establish the Plan of Record as a source of truth before the audience deems it valuable and CRE managers embrace it.

A well-orchestrated Plan of Record can bring order to chaos, and become an invaluable tool to aid communication across an organization.

A plan of record can be an extremely powerful means of aligning stakeholders and eliminating confusion. Yet, too often, it is assumed that capturing each plan is as simple as providing a place to house the information and mandating that information holders provide updates. Without taking the time to understand the different stakeholders, accept that more than one correct plan can exist, track level of certainty, properly organize critical information, and ensure the value of the Plan of Record is understood, the entire effort will quickly fail. The Plan of Record will exemplify why people disdain the introduction of more process and tools. Instead, a well-orchestrated Plan of Record can bring order to chaos, and become an invaluable tool to aid communication across an organization.