These are difficult times for all businesses and the affordability of their support services will almost inevitably be called into question with the demand for budgets to be reduced if not slashed.
For many of us in the profession, we have been there before. There is a view at a senior management level that FM is one of the easiest areas to tackle. It is true of course. It is easy to reduce FM costs. Just stop cleaning, forget about planned preventative maintenance, close the staff restaurant. The possibilities are endless. However, we know, from bitter experience, that it is not that simple.
In the majority of organisations, the cost of their people is the highest overhead expenditure. It follows therefore that their productivity is a critical factor to ensure value for FM budgets. People are at their most productive when they feel free to concentrate on their work with minimum hassle. The more intensive their workload is, the more they will expect support service to meet their basic requirements without question.
Couple this with a general sense of concern about job security and you have the potential for a toxic mix of corporate savings demands with individuals’ perception of an uncaring company. How can the FM steer their team through these choppy waters?
Looking at FM costs
When considering cost cutting measures it is typically the service delivery budgets which are scrutinised.
There are other “hidden costs” embedded within organisations which are not as easily monitored. These include the costs of the Intelligent Client Unit; Procurement costs; benchmarking and performance management costs where consultants may be brought in and catering subsidies and other staff benefits.
In these difficult times we need to challenge all our areas to test where the real value to customers and businesses exists and not just aim for the simple targets.
When businesses struggle for survival, it is the role of the professional FM to apply cost benefit and risk benefit techniques to analyse the opportunities for savings and to involve their customers and suppliers in understanding the impact short term decisions will have on the medium to long term planning cycle.
It is the FM who understands that statutory maintenance cannot be compromised and that “losing headcount” is a dispassionate term for cutting jobs.
Those of us who remember the dark days of the 1980’s, will remember the impact of Compulsive Competitive Tendering, (CCT), on the public sector and its’ influence over many private sector organisations. Contracts were awarded on lowest price regardless of the capacity of the company to deliver. Low skilled workers were treated as a commodity rather than people. TUPE laws, although in existence, did not appear to protect workers from erosion of their pay and benefits. Many companies made use of the black economy where staff were paid weekly in cash and checks on illegal immigrants and those on benefits were virtually non-existent. These people were vulnerable therefore to exploitation by companies struggling to make a profit from badly constructed contracts. A vicious cycle emerged where mistreated people delivered poor service; leading to penalties reducing profit margins; which in turn led to bad press for out-sourcing and service companies in general.
Attitudes formed during this period still have resonance today where relationships between Client and Supplier Partner can still struggle in building a climate of trust rather than suspicion.
This time around, FM has come a long way and when we are considering sustainability, the forward thinking practitioner will be including the impact on people as well as the environment, when forming FM strategy and policies to weather the current challenging period.
Let’s make no mistake; this is a moral argument as well as a long term business viability challenge. If we neglect the weaker and most vulnerable workers at a time when we are still paying out huge bonuses to senior managers in the financial services industry, we are all culpable in paying lip service to corporate social responsibility. Why is this important in FM? Because we provide jobs for many unskilled workers and pay the minimum wage for many of our core services.
If we are to avoid declining service standards we need to continue work already started in the cleaning and security sectors. This work is looking at a Living Wage within the M25 and beyond; the Working Time Regulations, reducing shifts from 12 hrs to 8 hrs; investing in new technology and equipment and rewarding team performance with bonuses or benefits. Moving from part-time to full time posts will inevitably lead to fears of discriminating against those with caring responsibilities. Imaginative use of job sharing and flexible working can help to alleviate this concern.
Other ways to reduce costs.
One of the most productive ways of reducing operating costs is to review your property strategy with the business and HR. If you can mothball a floor you can save on energy and cleaning; if you can lose a building, this can have a dramatic effect on the balance sheet and reduce operating costs immediately.
Talking to staff about lowering building temperature by a degree or more to protect jobs is a way to focus on energy savings. There are many other ways and many organisations who offer free advice. Reducing your carbon footprint whilst delivering cost reductions is a complete Win, Win!
Using tele- and video conferencing to cut down on travel time and cost is another opportunity. Setting an example by reducing your own travel costs has more impact if you actually track the amount each week. Maybe set up a competition with colleagues?
If you are the client FM and have a support team working for you, now is the time to consider whether you are duplicating responsibilities and roles with your suppliers. There may be opportunity with your own people for voluntary redundancies, going part-time or natural wastage which will protect the employment of others in the team.
Discuss similar possibilities with your suppliers and get their insight into where “fat” has crept in to your operation during the years of plenty.
Can we reduce the cost of procurement? Or focus on measuring only the things that really matter and prioritise on motivating and acknowledging the contribution of individuals to ensure customer service is retained at an acceptable level?
Why is this an important sustainability issue?
The temptation for all of us is to go for the quick and easy wins to reduce costs overnight. There may be no alternative for some companies threatened with going out of business. Heads in the sand is as bad an approach in these circumstances.
The challenge, for those of us who are given time and opportunity to consider, is to take a holistic over-view of our contribution to business success, and to ensure that sustainability for people and our environments are important factors taken into account when making decisions.
In the medium to long term history tells us that there will be an up-turn and competition for both market share and the best talent will once again be top of the agenda.
People are not a commodity. Lose an individual and you lose their knowledge and experience, their relationships and probably the good will of their colleagues and customers.
Building a sustainable front line is all about encouraging everyone and giving them the tools and training to be the best that they can be. We are all different. Our abilities, attention span, memory function, dexterous and analytical skills and so on, are all unique to us as an individual. Having respect from others and acknowledgement for our personal contribution to society is what sustains us throughout our lives. This cannot be bought or sold. It can only be given or received.
It is our sense of identity and we dismiss it at our peril.
As managers and leaders in the world of FM, we have a social responsibility to make our personal contribution to the well-being and life quality of those who support the FM operation; whether in our own organisation or through a third party supplier.
So what can we do during the current recession?
Probably the most important single act towards front-line sustainability is to maintain positive cash flow right through your supply chain. We know that more companies go out of business due to cash flow crises than those who succumb to lack of profit.
In hard times it is not unusual for large organisations to squeeze their suppliers by arbitrarily lengthening payment terms; disputing figures or even “losing” the invoices.
This is especially disastrous for companies employing large numbers of staff where the fixed cost has to be met regardless of income.
Peter Mandelson, the government Business Secretary, has launched the “Prompt Payment Code” to protect SME’s from these business practices. What an example it would be to see all the major FM companies signing up to it, followed by their clients.
The second thing we can do is to look for our own “hidden costs”, bring them out into the light to be reviewed alongside our routine operating budgets. This same review should consider the benefit of project work in the pipeline, as to whether there would be any critical impact in postponing action until the economy recovers.
Now is the time to consider investing in apprenticeships and encouraging our suppliers to take up the current Government incentive scheme being plugged by Sir Alan Sugar. Training young people now in the key skills needed for sustainable front line service will pay off handsomely in the future. Graduate programmes are another way of offering work experience to those caught in the trap of “no experience – no job”.
Encouraging multi-skilling and flexible working in tomorrow’s workforce will prepare our next generation for the ongoing FM challenges which will inevitably lie ahead for years to come.
Whilst considering what positive steps we can take to build and maintain a sustainable front-line service, we must not forget the ongoing requirement to manage stress in the workplace. One out of four of us will experience a mental health issue in our lifetime.. One in six will require medical intervention. In an organisation of 2000 people this means that 333 people will have received diagnosis and treatment. (HSE statistics)
These statistics are of great concern, both for individuals and the economy. More days are now lost to stress related illnesses than back pain. This cost the UK economy £3.7 m in 2007/8, resulting in over £530 million in lost profit. ( HSE statistics)
It is known that dull repetitive work is one of the causes of stress and, during recession, pressures are likely to result in more examples of this problem. Awareness is key and the HSE have issued a set of Management Standards as guidance.
No-one said it would be easy
Those who work in FM are not people who value the easy life. Challenge and variety are what makes our profession so worthwhile.
No-one has a quick and easy answer to the many diverse sustainability issues which are now typically laid at the FM’s door.
This paper does not set out to over-simplify the complex and often disheartening decisions which have to be considered during economic downturns.
However, the importance and value of each individual in our team deserves an equal emphasis alongside the financial and business risks.
How we deal with those who provide our front line service and the companies who employ them will resonate for decades to come.
By Anne Lennox-Martin
HSE statistics http://www.hse.gov.uk/press/2007/c07021.htm