Internal rents and corporate property management: a study into the use of internal rents in UK corporate organisations

Research in the late 1980s showed that in many corporate real estates users were not fully aware of the full extent of their property holdings. In many cases, not only was the value of the holdings unknown, but there was uncertainty over the actual extent of ownership within the portfolio. This resulted in a large number of corporate occupiers reviewing their property holdings during the 1990s, initially to create a definitive asset register, but also to benefit from an more efficient use of space. Good management of corporately owned property assets is of equal importance as the management of other principal resources within the company. A comprehensive asset register can be seen as the first step towards a rational property audit. For the effective, efficient and economic delivery of services, it is vital that all property holdings are utilised to the best advantage. This requires that the property provider and the property user are both fully conversant with the value of the property holding and that an asset/internal rent/charge is made accordingly. The advantages of internal rent charging are twofold. Firstly, it requires the occupying department to “contribute” an amount to the business equivalent to the open market rental value of the space that it occupies. This prevents the treating of space as a free good and, as individual profit centres, each department will then rationalise its holdings to minimise its costs. The second advantage is from a strategic viewpoint. By charging an asset rent, the holding department can identify the performance of its real estate holdings. This can then be compared to an internal or external benchmark to help determine whether the company has adopted the most efficient tenure pattern for its properties. This paper investigates the use of internal rents by UK-based corporate businesses and explains internal rents as a form of transfer pricing in the context of management and responsibility accounting. The research finds that the majority of charging organisations introduced internal rents primarily to help calculate true profits at the business unit level. However, less than 10% of the charging organisations introduced internal rents primarily to capture the return on assets within the business. There was also a sizeable element of the market who had no plans to introduce internal rents. Here, it appears that, despite academic and professional views that internal rents are beneficial in improving the efficient use of property, opinion at the business and operational level has not universally accepted this proposition.

Energy at work: a measurement validation and linkage to unit effectiveness

We introduce the notion that the energy of individuals can manifest as a higher-level, collective construct. To this end, we conducted four independent studies to investigate the viability and importance of the collective energy construct as assessed by a new survey instrument—the productive energy measure (PEM). Study 1 (n = 2208) included exploratory and confirmatory factor analyses to explore the underlying factor structure of PEM. Study 2 (n = 660) cross-validated the same factor structure in an independent sample. In study 3, we administered the PEM to more than 5000 employees from 145 departments located in five countries. Results from measurement invariance, statistical aggregation, convergent, and discriminant-validity assessments offered additional support for the construct validity of PEM. In terms of predictive and incremental validity, the PEM was positively associated with three collective attitudes—units' commitment to goals, the organization, and overall satisfaction. In study 4, we explored the relationship between the productive energy of firms and their overall performance. Using data from 92 firms (n = 5939employees), we found a positive relationship between the PEM (aggregated to the firm level) and the performance of those firms. Copyright © 2011 John Wiley & Sons, Ltd.

Construction management research at the individual-level of analysis: current status, gaps and future directions

Individual-level constructs are seldom taken into consideration in construction management research relating to project performance. This is antithetical to the objectives of properly conceptualizing and contextualizing the research we do because many project performance outcomes, such as the extent of cooperation and level of communication or teamwork are influenced and moderated by individuals’ perceptions, values and behaviour. A brief review of the literature in organizational studies centred on culture, identity, empowerment and trust is offered. These constructs are then explored in relation to project performance issues and outcomes, and it is noted that they are predominantly studied at the project and industry levels. We argue that focusing these constructs at the individual unit of analysis has significant implications for project performance and therefore their effects need to be systematically accounted for in explanations of the success and failure of projects. Far from being prescriptive, the aim is to generate interest and awareness for more focused research at the individual level of analysis in order to add new insights and perspectives to critical performance questions in construction management. To this end, a research agenda is outlined, arguing that construction management research integrating individual-level constructs and broader, macro-contextual issues will help define and enhance the legitimacy of the field.