How LED Lighting Powers Employee Productivity

How LED Lighting Powers Employee Productivity

If you’re going to be stuck in the car for the next eight hours, would you rather be cruising in a jet black Tesla X, that new autonomous SUV with the panoramic windshield, or cooped up in your grandpa’s sputtering, muggy Buick LeSabre?

Easy call, right?

That’s exactly how people feel about office buildings. The stale recycled air, fluorescent glare and mismatched carpet squares are a telltale sign you’ve entered an obsolete building. How people feel about the spaces and places they work in is pretty important, given that we spend more than 90 percent of our lives stuck inside buildings (WELL Building Standard).

Some of us get to spend that time in state-of-the art spaces with ample access to natural lighting (Tesla X, for instance, or these cool naturalistic spaces) but a lot of us don’t. And there is ample qualitative and quantitative data to show that office environment affects productivity in a big way.

Consider that 90% of employees admitted that their attitude about work is adversely affected by the quality of their workplace environment (U.S. Workplace Survey, 2006).

It makes sense. If you don’t feel good about your surroundings, how are you supposed to churn out your best work day after day?

According to ASID Productive Solutions, "productivity gains of 6% to 16% and reduced absenteeism were achieved by converting to improved lighting."

By now most people know that LED lighting can have a very beneficial impact on energy savings. In fact, that may be the only benefit of LED people know about. Facilities that upgrade to LED are going to achieve a massive 40-50% energy savings over fluorescent lighting. And when paired with controls, LED lighting can save almost 80% over traditional lighting.

But those who think LED is the answer to just their utility bills are missing the bigger picture. The right LED lighting solution has the potential to positively impact employee productivity. That’s because LED lighting not only uses less energy, but can offer a higher quality, more natural light that is more appealing to workers. The color and intensity of LED lighting can even be “tuned” to match employee tasks and circadian rhythms.

A McKinsey report found that people-related gains from Internet of Things (IoT) sensors are five times higher than energy savings and make much more of a significant impact on the organization. Productivity gains from IoT technology accounted for 75% of the benefit, while energy savings accounted for only 14%.

To put it simply, making changes in the office environment can enhance employee well-being, and will have a much greater impact on the bottom-line than mere utility bill savings.

A helpful way to see this impact is the 3/30/300 rule, which states that on average organizations spend approximately $3 per square foot per year on utilities, $30 for rent and $300 on employees.

According to Jones Lang LaSalle, the commercial real estate firm that developed the 3/30/300 rule, a 2% energy efficiency improvement is equal to $0.06 per square foot, while the same 2% gain in productivity is worth $6.

So let’s say you have a 25,000 square foot building. According to the formula, here’s a breakdown of your spending:

3: $75,000 (utilities)
30: $750,000 (rent)
300: $7,500,000 (employees)

=$8.3 million / year

That means if you would:

  • Reduce energy consumption by 50%, you would save $37,500
  • Improve space utilization by 10%, you would save $75,000
  • Improve worker productivity by 5%, you would save $375,000

The difference in savings when people are the driver for building upgrades, rather than just energy usage, is stark. It’s common sense, and an often-repeated maxim in HR departments, but investing in people delivers a higher return on investment.

Lighting upgrades hitched primarily to energy reduction miss the bigger picture. Building owners and facility managers should look past the $3 utility bucket to the potentially greater effect on employee productivity. When paired with other LED lighting applications, such as “smart lighting” fixtures that can collect data and insights on space usage and tunable lighting that matches light color to employee tasks, it becomes clear that LED is far more than just a way to save on energy usage and reduce electric bills.

McKinsey & Co. Executive Summary
The WELL Building Standard