Bullish Noises For Bullish Noises’ Sake

I’ve written before about the “credit-crunch come recession” (have a read of Recession and the P-Word if you haven’t already done so). Whilst I know I’m not alone in doing so, I do sometimes wonder if I am alone in publicly acknowledging the effect that this economic downturn is having (or is likely to have) on our industry. The reason I say that as that (at least until this week) pretty much all I’ve seen in the media is a series of press releases from service providers talking up the market. Advising us that, actually, a global recession is uniquely good for the FM industry.

Strangely, this week seems to be one for telling it like it is. Firstly, i-FM reports that the cleaning sector is feeling the pinch; recent growth figures have hit 14% per annum but this is expected to slow to 2% for the current year and just 7% over the next 5 years. This tells us nothing of the effect on margin, of course, but we all know that higher turnover doesn’t necessarily mean that profits aren’t eroded.

Then there’s FM World, which also seems to be reflecting the true state of the market now. On the subject of projects and capital spend, we find that “Interior Services Group has reported that many of its corporate clients have delayed or cancelled projects due to start in quarter four of 2008 or next year.” No surprise there, and I doubt that it isn’t a picture reflected in many, if not all, of that sector’s order books. More worryingly perhaps, a report earlier in the week shed some light on what’s really happening so far as a response to the present economic climate is concerned: “Businesses across the service sector have reduced investment and spend in their buildings and predict that this will decline even further over the coming months resulting in a spate of job losses across the FM sector. That was the gloomy message from the CBI’s quarterly Service Sector Survey…”

“In the three months to November, firms reported steep falls in business volumes and profitability, as well as plans to scale back employment and investment. Firms selling services to businesses saw the volume and value of their business, profitability and numbers employed fall at record rates – the steepest declines since the survey began in 1998. Companies are also cutting investment plans sharply as worries about future demand intensified.”

Now there’s nothing wrong with being seen to adopt a positive stance in the face of adversity, but that’s not the same as making bullish noises for bullish noises’ sake. The FM sector, like all other sectors, is being hit hard and the position is unlikely to change as we head into a New Year that might well see a number of established players do well to last the course.

To my mind, I do believe that opportunity exists out there, but I would add a large dose of realism to what I’ve seen written by others. For client organisations, it’s time to go back to basics with a review of FM strategy, a reconsideration of business need both in terms of services and service levels, and – out of that – an appraisal of supply options. From my own experience, this process usually becomes part of a “contract life-cycle” but there’s no reason why special circumstances shouldn’t result in a different approach and a different timetable. For service providers, it’s absolutely imperative not only to be proactive, but also to be innovative. Doing nothing will simply result in margins being eroded or – worse still – contracts being lost as clients align themselves with those organisations demonstrating a commitment to delivering better value. That’s “better value”, not “lower cost”, and the two things are not necessarily the same (although I accept, of course, that they often go hand in hand).

One thing I don’t see for 2009, however, is a year of business as usual. Those who pretend that it will be are likely to be the first casualties of the media hype I referred to earlier.

Wake Up and Smell The Coffee

Shortly after I returned from the holiday referred to in my previous post, I was intrigued to read i-FM’s mention of the Drivers Jonas report about workplace productivity entitled Property in The Economy, and soon set about downloading a copy for later consumption. After all, we in FM have been pushing the convergence agenda for many years now (and long before we were talking about sustainability) and I was therefore looking forward to some leading-edge thinking from the property side of the fence; that said, I wasn’t altogether encouraged by the fact that the report’s subtitle was in the from of a question; “Workplace design and productivity: are they inextricably linked?”

Hmmmm… one could only hope that it was rhetorical and that all, perhaps, was not lost.

Anyone interested in the history of management theory might enjoy the some of the earlier sections, covering the Scientific Management of Frederick Winslow Taylor, Elton Mayo’s infamous Hawthorne Experiments of the ‘30’s and even Maslow’s hierarchy of needs. This is all very interesting (at least, to historical theorists) but is it relevant to the needs of the modern-day corporation? That’s debatable… technology and other factors have rendered today’s workplace almost unrecognisable from that of the 50’s (let alone the 30’s) and frankly this isn’t exactly ground-breaking stuff. There is some good content in the report, however, when it comes to justifying the push for a more efficient environment for the people that work within it. How about this:

• inefficient buildings cost British business £135bn per annum and a better designed workplace could improve productivity by 19% (Gensler, 2005);
• the economic loss to the US of poor indoor environmental quality was worth approximately $60bn in 1989 and the average productivity loss for all workers in the US due to poor internal working environments equates to approximately 3% for all white collar workers (US Environmental Protection Agency, 1989);
• the self-reported productivity loss for UK workers in a survey of office workers was, on average, 3% (Raw et al, 1999);
• US studies suggest that a 1% improvement in productivity has a larger economic return than a 100% saving in energy costs (CIBSE, 1999); and
• productivity improvement of a fraction of 1% would be sufficient to cover the cost of necessary infrastructure improvements to enhance the indoor working environment (Clements-Croome, 2003).

Compelling stuff, for sure, but look at the dates of the research – 1989, 1999, 2003 and 2005… not what you’d call latest news! And some of the conclusions are equally worrying, not because they’re disputable (because I don’t believe that they are) but because they’re so obvious. It’s the kind of stuff we in FM have known for years!

“…there appears to be incontrovertible evidence that the working environment directly impacts the health and well-being of occupiers, and exhibits a direct causal link to sickness and absenteeism rates. An implication is that real estate professionals and building designers should work closely with HR professionals to help ensure buildings are designed, and continue to be operated, as occupier-friendly facilities.”

“…workplace design must not be regarded as a discreet activity but a link in an integrated process that starts with understanding what people need of their workplace to do business, and ends with an understanding of how the design has worked in practice – there must also be a feedback loop to re-engineer aspects of the design to fit the changing needs of people and the business over time.”

Even more astounding is the “advice” given to FMs in the report, which leaves me almost speechless (almost, I said. I’m not actually speechless very often, as those who know me would testify.) Citing temperature, lighting, noise, air quality, (environment) controllability, workstation design and configuration as examples of the factors involved, the report suggests that there’s “a causal link between physical factors in the workplace and the productivity of employees”. As FM practitioners we would never have guessed that, of course, which is why conclusions of the report also include the following recommendation:

“…a move within the facilities management industry to treat occupiers as customers could lead to increased customer satisfaction with the working environment – to be followed by an increase in the productivity level of those customers.”

Now, I should probably make it clear at this stage that my roots are firmly bedded in the property sector and I’ve always felt an affinity with and for my surveying colleagues as a consequence, but sometimes I can’t help but despair, and this is a perfect example of why. In fact, if you take a look at the Articles page on the Edifice website you’ll see an entry entitled “Diversify or Die” – a lecture on this very subject presented to the RICS by a former colleague in March 2002. (Maths isn’t necessarily my strong point, but I make that about 6½ years ago.) So, here’s a little advice of my own to anyone who’s starting to believe that there might just be something worth thinking about in anything I’ve referred to above.

Wake up and smell the coffee.

A Matter of Respect

We arrived back in the UK a few days ago tanned and rested, having spent a couple of weeks in the gloriously constant sunshine of Tenerife. With two adults and two children – and knowing the hotel in which we were staying – we’d pre-booked a couple of interconnecting poolside rooms (convenient during the day, and safe at night when the kids were in bed as they’d be overlooked from the terrace bar) and approached the check-in desk with a sense of expectation.

What we didn’t know was that the hotel had undergone a refurbishment during the winter months, and that a few rooms were still unfinished. Unfortunately, those we’d booked proved to be unavailable but, after explaining why the alternative rooms that had been allocated were unacceptable, we were offered rooms on the opposite side of the pool to those we’d expected but in an otherwise identical position. After unpacking we soon found that there were also one or two other problems (one of the TV’s had to be changed and there was a small leak from a service pipe that had to be attended to) but no matter what the issue, the hotel staff were understanding and helpful, and made it clear that they would ensure we were happy whatever means that took.

Now, we all know that the hotel sector has a reputation for customer service; it survives on it, after all. However, the ethos when one travels overseas, especially – but not only – to destinations that survive primarily on revenue generated from tourism, seems somehow different to that which we see here in the UK. Partly, it’s because in this country not everyone sees the hospitality industry as anything more than a stepping stone to another career… our economy, after all, is based on a position as one of the world’s leading centres of commerce. But I think there are other issues, which are in some way ingrained in our psyche, and these issues have more to do with our perception of those at the sharp end of customer service. And it’s about respect for those people, and those roles.

As a consultant I always find it interesting when evaluating the approach to customer service issues that I see defined in proposals and bid submissions, because over the years it’s seemingly become more and more about systems and technology… how metrics are collected, analysed and presented to the client; it’s as if the ability to produce a dashboard report is itself evidence of a commitment to customer satisfaction. Or as if there should be an automatic assumption that possessing a help desk capability means that an organisation is customer focussed. Personally, I look for something far more than that and will often spend a great deal of time with a supplier’s existing clients in order to determine just how committed to these issues that supplier really is.

What I really think, though, is that – here in the UK – we don’t necessarily appreciate what customer service (and customer focus) means because we don’t attach the appropriate importance to roles that are 100% customer-facing. Whether it be a waiter, a bartender or a help-desk representative, we need to properly value the work those people do to enable them to feel, and become, fully motivated and fully committed. In fact, I believe we have a lot to learn – not only from our continental neighbours but also from our friends in the States – in terms of the manner in which we perceive, value and support such roles.

Maybe it’s just a matter of respect.