Sell any company building itself a new HQ?
Alarm bells about profligacy and incompetence at Croydon council should have been ringing very loudly after the local authority spent more per square foot building its new headquarters in 2013 than was spent on the Shard, Britain’s tallest skyscraper.
At £144 million, the shiny glass building is thought to be the most expensive council office in the country.
It’s a theory of organisations, not companies.
Does this one have a fountain in the atrium ?
I can’t remember who it was now, but in a docu about the collapse of RBS, a major shareholder told how he sold up when he saw their new corporate HQ.
Even worse than an atrium, a special scallop kitchen for Fred Goodwin
The absolute cost is not as important as the cost on a £/m2 basis;. An inside Croydon article from eight years ago gives the cost at £6,280/m2, which, for then, would be utterly ridiculous.
Was this another Scottish parliament situation, where the client kept changing the brief as the works were ongoing?
Even assuming no malfeasance, the profligacy with public funds should see those in charge removed from office and the council’s staff managing the project sacked for incompetence.
In the organisation I used to work in it was an accepted truism that any General Manager that built or bought a new Area Office would shortly lose their job. Didn’t stop them though. You can always ‘justify’ spending money.
I think Parkinson said that any organisation that builds itself a big new HQ will have stopped doing any useful work, but I can’t remember if he actually recommended selling the shares in businesses that do.
Quote: “It is now known that a perfection of planned layout [of administrative space] is achieved by institutions on the point of collapse”
Parkinsons Law (p.84)
I can think of a good example. Nixdorf,the German computer firm went around the world building new country HQs all on the same model.
They were in fact tremendously badly designed buildings, their uselessness gold plated by the moronic management that took over when old Heinz Nixdorf pegged it in the late 1980s. The UK office in Bracknell had a car park designed for left hand drive cars, so there were almost daily occurrences of cars hitting the walls on the back to front ramps.
Jim,
“I think Parkinson said that any organisation that builds itself a big new HQ will have stopped doing any useful work, but I can’t remember if he actually recommended selling the shares in businesses that do.”
An organisation might still keep spinning profit growth for a few years because of existing market share, brand value etc. But the innovation will have gone. At some point consumers will realise they can go cheaper, or someone will come along and disrupt what they do. It’s why I’m always wary about “safe stocks”. You get little growth, and these companies are never prepared when disruption happens.
Otto – the fountain: was that Standard Chartered in Bishopsgate?
Respect to Jim for finding the Parkinson quote I couldn’t be bothered to look up. I’m fairly sure, from memory, that he didn’t consider anything as vulgar as trade in shares. I’ve always thought it a pity that, of his 2 books of laws, only 1 law is well known. On the other hand they might by now have been taken, like 1984 and Brave New World, as instruction manuals for doing the wrong thing.
Also…sell any company with the director of HR on the board.
Standard Chartered is just west of Moorgate. It had, until recently, an historic Asian wooden house in the lobby along with several Asian historic art pieces. Was a lovely lobby.
Goldman Sachs on Fleet Street had a glass backed waterfall in the area behind the security gate line. They turned it off in 2008.
You don’t need a great lobby to be a rubbish company… it’s quite possible to just be rubbish everywhere.
The quirkiest business lobby I saw was at Whale Tankers. They made high pressure tanks, cesspool emptiers etc.
The walls were covered with photos of whales (Right, sperm, fin, Minke etc). Loudspeakers played the songs of the humpback whale.
No receptionist. You phoned through from a red telephone box in the corner.
This was in 1999. The company is still there too.
Parkinson probably wrote best book on economics. Wealth of Nations is fair, but anyone with a bit of experience in industry & commerce could write it themselves. But no one would want to go through the experience lead to Parkinson’s tome.
Apple shares are up 4x since they opened their fancy new Norman Foster designed circular HQ in April 2017.
Sell any company building itself a new HQ?
Is there a statute of limitations on that? When Steve Jobs began planning and designing (in secret for property value reasons) his shiny new $5billion, 360 acre HQ, Apple stock was about $2 (2006). When the plans (typically elaborate and anal, including an eighteen month debate on the door handle designs, and the purchase of an abandoned christmas tree farm in the Mojave desert just to get the right kind of tree for the park) were presented to the city council, Apple stock was about $18 (2011). Construction began in 2014 – $20; opened for staff 2017 – $34. Stock had a peak at $180 in 2022 and is currently bouncing around a 52 week average of $150.
Maybe an ostentatious value add HQ is appropriate for Apple.
Pipped by Andrew M. That bloody Christmas tree research . . .
“Apple shares are up 4x since they opened their fancy new Norman Foster designed circular HQ in April 2017.”
One swallow doesn’t make a summer. More to the point if you made a portfolio of shares of companies who open massive new swanky HQs would you be ahead or underwater?
As a (much smaller) counter to Apple I offer you Vodafone, its swanky HQ outside Newbury opened in 2003 when the share price was about £1.75 (and had been as high as £4.50 in 2000, presumably about when the decision to move was made) 20 years later its a pound……..
The Apple HQ isn’t just for mahogany row. It’s for work as well. 12,000 employees.
https://9to5mac.com/guides/apple-park/
Good point, BlokeInTejas. More equivalent to, say, Caterpillar moving their assembly to a new purpose-built plant rather than just throwing up a city head office.
Parkinson unshaken.