Well, I’m back to the blog after something of a hiatus, and my intention is to post as regularly as possible from this point on. Yes, I know – everyone says that. But we all have demands on our time, be it work related or personal/family commitments, and this brings me nicely on to the point of my post.
There’s no question that social media has impacted almost every aspect of our lives; indeed, it’s hard to recall the time before Facebook when – if you had some news you wanted to share – you picked up the phone. Well, as an old hand at blogging but not exactly an early adopter so far as other forms of social media are concerned, I’m now seriously considering Twitter as a means of communication. More specifically, as a means of business communication.
The truth is that I can’t quite make up my mind… I haven’t yet determined where it’s benefits lie and to what extent tangible reward will follow the commitment of time and resource that I believe Twitter requires. What I do know is that many of my friends and colleagues in FM have embraced this particular platform wholeheartedly, so if you’re one of them I’d really like to hear your views. Of course, you need to bear in mind that if you tweet your response, I won’t know about it just yet…
It’s a while since I’ve posted on here (I’m nothing if not a master of understatement), not through any deliberate intent on my part but more as the consequence of being particularly busy over the last few months. Generally, I’ve been content to keep abreast of what’s going on within the industry and to discuss developments through the more “traditional” networking channels; occasionally, though, something hits my desk – or the screen of my Mac – which makes me sit up and take slightly more notice; or, indeed, put the figurative pen to paper. One such occasion arose when I read the i-FM report by Elliot Chase published on 23rd September and entitled “Recession drives procurement change”.
The subject was addressed at the latest BIFM Fellows’ Forum, hosted at Deloitte’s City of London HQ, and the main thrust as reported was that the recession has necessitated a shift in the approach to procurement . Attendees heard procurement specialists Martin Laws and Guy Palmer explain the results of both recent research and client experience, which confirmed (unsurprisingly) that cost control was a top priority, and that it would remain so in the foreseeable future. Then came the interesting bit (because, let’s face it, the issue around cost control is not exactly news), and I quote from the article itself…
Deloitte… is seeing a clear move towards increased interaction between buyers and suppliers in order to get the best results from a contract appointment. Increasingly tender decisions… are being made on the basis of cost, plus assessment of capability and fit… a maturing of the decision-making process in that it offers a better balance of previous approaches, specifically the technical-led and the procurement-led.
The pressures of recession… have resulted in more questions being asked, both internally and externally, as the procurement process develops. In many cases, this has had the benefit of working against short-termism, in which cost is the only real decision criterion – though there are still plenty of examples of that approach around, too.
Now, I posted an article on this blog about a year ago in which I expressed astonishment at the gulf that apparently existed between the property and FM sectors, and at the audacity of the former to tell the latter how to suck eggs. Once again, I’ve been left feeling similarly bewildered and bemused at how little understanding there seems to be in the wider world of the most basic of concepts that are the cornerstone of FM. This time, concepts relating to the procurement of FM services.
When I re-launched Edifice at the beginning of 2006, I reckoned that I had a reasonable pipeline based upon clear target clients and some quite decent market knowledge. However, the first company I went to see was one that had invited my previous employer to tender (for a hard services outsource); I’d led the bid but – although we’d been unsuccessful as a consequence of cost – I knew that the fit with the successful tenderer just wasn’t right, and that what had ultimately been procured was impossible to deliver within the accepted cost constraints. Sure enough, the new contract had proven to be a complete disaster and I proceeded to work with that client for over a year to provide a solution that met not just the budget constraints but also the organisation’s requirements in terms of culture, philosophy and customer focus.
To demonstrate this even further, the processes and systems that have been developed within Edifice to steer clients through the critical path of an outsourcing project effectively isolate cost as just one of a number of factors that should influence any sensible decision-making process. In other words, the question is “Right – given that cost comparison is going to be addressed as a discrete part of the evaluation process, what do you really feel about these suppliers? Can you work with the people you’ve seen, and have you actually seen the right people? Do their policies on sustainability, CSR and ethical procurement mirror yours? When they say they recognise the importance of training and development, do they put their money where their mouths are? Do they actually harness technology to demonstrably drive efficiency, or just spend money on systems that then has to be recovered from you, the client? And – critically – what do the clients say after working with them for x number of years? (The list could easily have gone on, but presumably the point has been made.)
Some of these questions are client-specific, but there are always a host of key areas that need to be addressed, and once done, the result is a framework within which “fit” can be accurately gauged. If the cost evaluation then suggests a similar solution, all well and good; if it doesn’t, then at least the client organisation will have the basis for rational and informed debate. In other words, if a decision is going to be made on cost, than understand the consequences of that decision before making it.
The procurement of facilities services can have a massive impact on an organisation’s performance, not just for the term of any contract let but for the additional time it takes to correct a mistake. And getting it wrong can also change the perception of a facilities team, or a procurement department, in the eyes of the end user (or, perhaps, the board). The danger, as I’ve been known to mention before, is in the “commoditising” of FM and it’s a danger that we must all be ever watchful against.
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.
Mike Liddle and I were very proud to be re-presented with the EuroFM Partners Across Borders Award 2008 at the PFM Awards held at the Brewery earlier this week. It’s always a great night and an opportunity to catch up with old friends as well as to network with new, but having such a personal interest in the proceedings made it extra special. (I well remember Edifice winning the marketing award too, back in 2002… it’s frightening how quickly the years go by.)
Anyway, this award was for work we carried out in support of Microsoft’s initiative to harmonise the management and delivery of facilities services across EMEA. The project started more than two years ago, and it’s interesting to see how the market has changed in that time. It’s still evident that a single-source solution across such a diverse geographic area is problematic, but there’s no doubt that the market is maturing quickly and that a host of the major players have aspirations to extend their reach well beyond the domestic market here in the UK. Indeed, many have already made major inroads, although in my view there’s still a long way to go if we’re truly to achieve consistency in terms of service delivery, the advantages of a uniform approach to reporting and information management, and a real benefit from the migration and sharing of best practice.
Another thing that I find particularly interesting is that those who practice within the “traditional” FM sector are finding that the real estate professionals are now muscling in on what is a growing and valuable market. The benefits of a professionally managed real estate portfolio are vast when one takes a pan-European view and big wins are available to those who are ahead of the game. The danger, as I see it, is that with this change comes an inevitable transactional focus; this might be where the headlines are made but – once FM becomes a bi-product of the real driver behind the relationship – the danger is that operational performance will suffer. Once that happens, the cost to a business can be more significant than any headline savings in real estate because, after all, it’s the people within a business who deliver the profit. Keeping FM on the agenda in such a scenario will itself be a challenge, but it’s a challenge that simply has to be overcome.
I suspect that the next couple of years are going to see a number of large-scale, cross-border contracts coming to the market, and the value of these contracts will inevitably shape the strategy of the more aspirational service providers as a greater and greater number seek to get their hands on a piece of the pie. Such a strategy is fraught with difficulty, with a need to focus on supply chain capability, management structure, training & development, system integration, etc – all across national borders… and that’s in addition to the cultural and legal issues that will inevitably arise in any such opportunity.
There’s no doubt that these are interesting times, particularly with a global recession adding fuel to the fire, and I feel fortunate indeed to be playing even a small part in navigating a way through the transition.
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.
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.
Anyone who attended this year’s BIFM Conference in Oxford would inevitably have been impressed – either positively or negatively – by James Woudhuysen’s rousing keynote address. Woudhuysen (Professor of Forecasting and Innovation at De Montfort University) made the subject of the sustainability “greenwash” his focus as he railed against both politicians and environmentalists for making the issue one of individual responsibility and personal guilt. Instead, he argued, the solutions had to be on a global scale and had to be practical rather than “moral”, citing nuclear power plants and bio-engineering as two potential ways forward. In some ways echoing what Al Gore’s been saying for years (you’ll no doubt by now have seen “An Inconvenient Truth”, but if you haven’t you should) it was a certainly strong message.
Actually, I couldn’t help but agree with him, albeit that I think we all have to consider our individual responsibility with regard to climate change too. In fact, the point was recently brought home rather forcefully as I traded in my beloved Alfa Romeo 3.2 litre beauty for something smaller, slower and less mouth-watering… the fact that the car’s emissions were identical to those of a Ferrari 550 was just too much for my conscience to bear. Maybe it’ll make no difference in isolation but – as I did when I started separating my domestic waste for recycling – I felt better about myself afterwards. It just hurt more this time.
As a consultant, I’m beginning to think that the sustainability movement in FM might also be a little narrow-minded in the way it goes about its business. Yes, the issue is always high on any agenda at conferences these days; and yes, energy management, DEC’s and EPC’s are invariably discussed at some point whenever more than a handful of practitioners get together. These things are rightfully at the forefront of our drive to identify sustainable FM practice; in fact, according to the Carbon Trust, energy efficiency is now the number one cost-cutting priority for UK businesses looking to combat the impact of a potential economic slowdown. However, having acknowledged the importance of energy efficiency as a given, what else can we do? And how often do you hear anyone talking in any detail about sustainability in the areas of procurement/tendering and contract specification? Is at all, or only, about energy management?
Some time ago, I was at a BIFM International SIG event at which I made contact with a guy who was attending as the representative of a quango that promulgates a Green Procurement Code that’s available to any business operating in London. A quote from their website: “The Green Procurement Code is a free support service for London based organisations committed to reducing their environmental impact through responsible purchasing.” Sounds great, and a chat after the event confirmed that they would be delighted to work with me in order to support Edifice in the development of model processes and documentation that would ensure that all procurement activity undertaken for clients was awash with green credentials; that we were seen as an exemplar in the field of green procurement (yes, the pun was deliberate). However, I was unable to progress this initiative in the way I’d hoped due to a complete lack of response on their part, and instead proceeded without the benefit of their expertise. Or, apparently, their interest.
I’d be delighted to hear from anyone else who shares the view (or doesn’t, for that matter) that our focus within the industry has become a little narrow, and that there’s more to be done in a practical sense to ensure that FM meets its sustainability responsibilities. Because carbon reduction is about more than a metre reading, surely?
NB: Be careful when typing quango in MS Word. If I hadn’t been on my toes spell-check would have had me wittering on about guano instead. Mind you, at least it’s organic!
The comments on my “Welcome” post made consideration of what we now seem to be terming a recession as somewhat inevitable. One or two articles of late have addressed the question of whether or not FM is “recession-proof”, so I thought I’d offer a very summarised view of my own starting with what I see happening around me on a daily basis which – to my mind – answers the question unambiguously.
Firstly, clients tell me that they’re being asked to accept budget reductions, projects put on hold, pared-down maintenance regimes and continuous scrutinisation of headcount. When tender activity is considered, it’s more with a view to reducing expenditure than it is to aligning service delivery with business need, and this is reflected by internal targets that relate largely to savings and little to service enhancement or customer satisfaction. And the softer services – those that aren’t “critical” to the core business – are feeling the pinch most of all… never mind the effect on staff morale & retention, eh?
Secondly, suppliers tell me that they’re seeing their margins squeezed on existing business, and that client tender strategy is focussing purely on bottom line savings, regardless of service and quality issues that arise as a consequence (e-bidding/e-auctions are probably cases in point, and worthy of a post in their own right!). “Best value” at the bid stage is seemingly no more than a sound-byte as clients opt for the cheapest solution; consequently, innovation is the first casualty as the safe option is to stick with the tried and tested formula.
So… does this scenario suggest an industry that’s recession-proof?
Quoting from one of the comments I referred to earlier, how about this as a stake in the ground… “The resilience of the FM industry in times of recession is surely linked to the resilience of the clients that the FM industry serves”? That’s undoubtedly got to be relevant, but is it enough to simply acknowledge the issue without trying to be proactive and (dare I suggest) creative in overcoming it?
When purse strings are tightened it’s all the more important for the relationship between client and supplier to work effectively; that way, collaboration follows as a matter of course and both parties start to progress towards the achievement of common goals & objectives. Sensible sharing of risk, incentivisation as well as penalisation, and openness & honestly are all part of the equation.
Hang on, though… isn’t that what partnership is about?
Welcome to the Edifice blog – a place to discuss, comment and even argue about the issues that impact our profession of facilities management.
I’ll be endeavouring to post on a weekly basis, other demands on my time permitting. Please feel free to comment, as it’s the only way to make these pages dynamic and interesting. You can also contact me direct at the blog mailbox or, alternatively, through the comments if there are any particular issues or subjects that you’d like to see covered (or for which you’d like to write a “guest post” – no need to be shy!).
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Tony Angel – MD, Edifice Limited