Efficiency and Cost-Reduction Initiatives

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Efficiency and Cost-Reduction Initiatives

During the third quarter of 2022, we launched certain cost and operational efficiency initiatives that will further improve the company’s resiliency in an economic downturn while enabling continued operating platform investments that support future growth. The efficiency initiatives include management and workforce structure simplification, occupancy footprint rationalization and certain third-party spending reductions. As part of this, we incurred certain cash and non-cash charges. Non-cash charges are primarily associated with acceleration of depreciation and write-down of lease and related assets, partially offset by release of lease liability, as part of our lease termination activities. Cash-based charges are primarily related to employee separation, lease and certain contract exit costs, and professional fees. During the three months ended March 31, 2023, total charges (excluding depreciation) incurred were $138.2 million, related to employee separation, lease termination, and professional fees and other contract exit costs. Management continues to evaluate and modify these initiatives, which are likely to continue over the next few months.

The following table presents the detail of expense incurred by segment (dollars in thousands):


	Three Months Ended March 31, 2023
	Advisory Services		Global Workplace Solutions		Real Estate Investments		Corporate		Consolidated
Employee separation benefits	$	17,175	$	28,894	$	13,158	$	2,538	$	61,765
Lease exit costs	39,273		731		4,204		1,143		45,351
Professional fees and other	6,090		19,763		4,093		1,185		31,131
Subtotal	62,538		49,388		21,455		4,866		138,247
Depreciation expense	5,440		79		3,482		—		9,001
Total	$	67,978	$	49,467	$	24,937	$	4,866	$	147,248

The following table shows ending liability balance associated with major cash-based charges (dollars in thousands):


	Employee separation benefits		Professional fees and other
Balance at December 31, 2022	$	37,014	$	10,600
Expense incurred	61,765		31,131
Payments made	(44,672)		(37,392)

Balance at March 31, 2023	$	54,107	$	4,339

Ending balance related to employee separation was included in “compensation and employee benefits payable” and the balance related to professional fees and other was included in “accounts payable and accrued expenses” in the accompanying consolidated balance sheets. Of the total charges incurred, net of depreciation expense, $17.9 million was included within the “Cost of revenue” line item and $120.3 million was included in the “Operating, administrative, and other” line item in the accompanying consolidated statement of operations for the three months ended March 31, 2023.