Will you pay extra for the Living Wage?

Fundamentally most of us believe that the reward for a fair day's work should be a fair day's pay, so why is it taking so long for the Facilities Management industry to embrace the UK Living Wage? People tell me that it's because no one wants to pay extra, but what most don't realise is just how much that decision costs. In this blog I argue that the Living Wage is a lot more commercially viable than is popularly believed.

For those not familiar with it, the Living Wage is quite simply the hourly-rate a person needs to earn before they no longer qualify for state benefits. It's a little more complex than that of course, but that's the synopsis. If you're interested in learning more check out  the Living Wage Foundation (livingwage.org.uk) which promotes a scheme of accreditation for employers who voluntarily agree to pay these rate. The UK Living Wage (LW) is calculated to be about 20% above the National Minimum wage (NMW). In London it's approximately 40% due to the cost of living in the capital.

Though I promised that this blog would be about the commercial aspects of the LW, rather than the moral justifications, it's still worth saying that in 2014, we should all feel a little outraged at the idea of employers earning a profit whilst paying people less than they need to live on and passing on a burden to the tax payer. Some might think that statement evocative, but in an age of Corporate Social Responsibility(CSR), there's a growing expectation on employers to act responsibly towards both their own staff and the communities they are part of (it's why tax evasion gets so much press) and the above demonstrates neither. Ok, moral-rant over, let's get commercial.

I'm going to start building my case with a simple statement: Good, well motivated, loyal employees are more reliable, more productive and less likely to be absent. I'm not going to bother backing most of that up with facts: it's not exactly controversial stuff. But there is one statistic from the Living Wage Foundation that I do want to quote: 80% of LW employers have noticed around a 25% reduction in absenteeism. Let's talk about that for a second shall we?  It is generally agreed that high rates of absenteeism are indicative of poor workforce motivation and loyalty. They're not the only indicator, but they are more quantifiable than others like productivity, dedication and time-keeping and are therefore considered good leading indicators.

The FM industry is full of low-paid service jobs; no pun intended, but you might say they are ten-a-penny, particularly in services like cleaning, catering and porterage. At the low-end of the wage scale, loyalty and motivation are low, churn is high and as a result there is poor consistency in productivity and quality.  How many times, have you found yourself telling someone or being told by someone that quality issues are the result of changes in personnel or difficulty attracting and retaining the right people?  This is the reality of a low-pay workforce: managing them to ensure good standards of quality and productivity isn't at all easy.  It takes a lot of time, it takes a lot of effort and (most importantly to my case) it takes a lot of money.

It's not controversial to say that absenteeism costs money – it's a foundation stone of Health & Safety principles. When staff are absent, there are overtime costs, temp labour, lost productivity, time and effort wasted on ringing around to sort things out, etc. It's also agreed that employee churn costs money too: there are recruitment costs, training cost and supervisory time amongst others. Finally, managing poor performance can really drain resources too: It's not just the money credited back to customers or the time spent dealing with complaints, it's the supervision, the retraining, the formal meetings, the letters from HR, etc. Basically, choosing to pay low wages, is also choosing to incur a lot of additional costs. Now some will argue that; wages are direct costs and the costs I've descibed are indirect and therefore difficult to quantify in any meaningful way. In one sense they're right, but in another they're wrong. They are hard to quantify, but the total cost information can usually be found in the service tender proposal: Its the line item on the breakdown identified as “management costs”. 

In low-wage service contracts, management costs are often one of the largest cost areas (after wages). Depending on whether things like training & recruitment (and sometimes profit) are included in them or listed separately, they could account for a significant proportion of the total contract cost. I've even once or twice seen proposals with combined management costs that almost equal the wages costs! The point here is that management cost are built into the contract delivery cost at the commercial tender stage.

Let's talk about commercial tendering for low-wage contracts. Most tenders are calculated using pre-defined formulae. If we over simplify it: some basic volume data (such as square footage) is entered to give an idea of hours required. This figure is multiplied by a wage rate and other costs are calculated as percentages of that resulting figure and added together to generate a total contract cost. There's a little “commercial” wiggle room of course, to give the sales-person something to play with, but in a nutshell, that's how it works. So here's the issue I have with that: Surely the management costs should be calculated using a sliding scale which significantly decreases as the wage rate increases?  We've just established that if wages are increased 20% absenteeism reduces by 25%. We also accept that recruitment & training costs will decrease. We accept that less time will be required to supervise and manage both performance and customer dissatisfaction. There will be higher quality, less refunds and fewer complaints. Yes, many of these things are difficult to quantify, but let's not mistake difficult to quantify for unquantifiable or non-existent.

In fact, a move to higher wages creates a lot of potential for cost-saving, especially when combined with good people management practices. So surely the correct way of considering LW commercial viability is to (at least partially) fund increased wages, using management cost savings? Should customers pay extra to support the Living Wage? I don't believe customers should accept a pass-through uplift on wages, but I do believe that there are alternative solutions which are not just palatable for customers, but commercially viable or even, commercially advantageous, for suppliers too.

And here's one final point to consider. In the fiercely competitive world of FM Services contracts, real commercial viability comes not from undercutting to win volume, but through retention of business. During a re-tender process motivated,loyal staff and happy customers, are worth their weight in sales-people and corporate hospitality.

The FM's Party Survival Guide

Traditionally, the beginning of December heralds the onset of the work's-Christmas-party season. Whilst there are many who look forward to the prospect of getting a little tipsy and having a boogie with colleagues, for many in the FM  industry the very thought of sitting down to a turkey dinner with work's-people fills them with dread.  In this blog I explore the reasons why and give some of my party survival tips.

So what exactly do Facilities Managers have against the work's-Christmas-party anyway?  Well for a start it's not just the Christmas party.  In fact, it's not even just work's-parties:  A lot of us have a beef with parties in general.  And it's not because we're cantankerous, Victor Meldrew types either:  It's because in almost any party situation it's virtually inevitable that someone will ask you what you do for a living and if you work in FM, 99% of the time that conversational thread will lead to the point where you end up having to say “Well no, actually! Not like a janitor at all!”  This will be followed by about an hour of explanation as to why being an FM is not like being a janitor.  Not that there's anything wrong with being one, but it's just that the effort of having to spend all that time at parties explaining what you do (when you should be having fun) can really grind you down.

Still it could be worse: at least we're not Health & Safety Officers!  That might sound harsh, but honestly, those poor guys have it way tougher than Facilities people.  If, in a party situation, you ever find yourself foolishly happening to admit that your work involves being responsible for managing Safety, the best course of action to follow is to immediately get up from the table, step outside, hail a cab and go home...... because that's your night done!  If you're stubborn enough to stay, you'll spend the rest of the night having to justify or refute every safety measure or myth ever conceived to people with a chemically-diminished capacity for logical and reasoned discussion. It's a no-win situation.

But if parties in general are bad, in many ways the work's-party can be the pits. For a start everyone already knows that you're not a formula one driver and to make matters worse;  everyone, and yes I do mean everyone, will talk shop to an FM at a work's-party.  Now there are those who say that talking shop is par for the course and to a certain extent they're right. But....... there is a world of difference between gossiping about who is and isn't getting promoted and the relentless barrage of gripes and grumbles some FMs have to put up with. At the work's-party, an FM can find themselves facing a steady stream of people who, on account of the fact that they've just bumped into you, decide that it is surely the perfect opportunity for passing on that complaint about the air-conditioning that they haven't got round to emailing you about yet. I mean why not? It's not like you make it easy for them to catch up with you during the 'normal' working day by being at work, having a phone and an email account is it?  At Christmas parties past, whilst everyone else has been busy occupying themselves by eating mince pies and trying to work out who Sarah-from-Accounts has been disappearing into the stationary cupboard with,  I've had my evening wasted justifying the recycling policy, getting feedback about cleaning, explaining air-conditioning, hearing everyone's opinion of the vending coffee, etc, etc, ad infinitum. And it's not that I normally mind talking about that stuff, it's just that, well...........it's a party: I'm here to have fun like everyone else!

The list of minor groans and grievances you can face at a party can almost be enough to put you off going. Almost. But you shouldn't be deterred: FMs make a huge contribution to an organisation's success and they have every right to celebrate that success with colleagues.  Not only that, but it's a great way of engaging in the culture.  In fact, one of the reasons many FMs suffer from such a hard time at work's-parties, is that they fail to identify it as an engagement opportunity and therefore don't go adequately  prepared. 

So if all of this sounds a little too familiar, allow me to share with you my top tips for Christmas-party survival.

1:  If you're off the clock, be off the clock

Some people say that that listening to moans and groans goes with the job, but I say that it's just plain rude.  Between courses I might well spend time engaging in speculation with colleagues about the extent of Sarah-in-Account's extra-curricular activities, but if I was to collar her at the bar and give her a hard time about the speed and accuracy of her invoice coding, most people would say I was "bang out of order: It's a party for heavens sake!"   So be prepared to politely and firmly stand your ground:  There is absolutely nothing wrong in saying “I'd really like to talk to you about this on Monday, but it's a party so do you mind if we don't talk shop?”

2:  People love to hear themselves talk

Something that not all FMs realise is that......... it's not just FMs who feel like nobody understands what they do and how important it is.  Honestly: it's true! If you don't want to be caught with the what do you do? question, why don't you be the one who asks it instead?  Making people feel like they're important to you and that you want to understand them is a great way to forge new alliances and build trust.  And who knows: you might just find out something useful.....

3:  The best defence..........

If like me, you are one of those people mentioned in the tip above who really love do to hear themselves speak, you just might struggle a little with my second tip, but that's ok I have a third one for you:  try treating it as a public relations opportunity. Instead of waiting for people to approach you with a complaint, why not go in armed with your list of recent successes and exciting future plans and solicit feedback?  Try saying things like, “We're considering going fair-trade when we re-negotiate the vending next year..... do you think we should?“  Of course, everyone is going to say yes and you're going to do it regardless anyway, but.... they don't know that: Their perception could be that they are making a contribution to the decision making process and when you eventually  bring it in, they may even see it as a shared success. Result!

4: The three-hit-combo

As any boxing fan will tell you, victory rarely comes with a single blow, but through skilfully delivered combinations.  To make the best of these tips, use them all together: Ask about them, fend off the complaint then solicit some positive feedback.  It takes skill and practice but master it and they'll be putty in your hands.  And if all else fails, there's always tip number five.....

5: The master avoidance strategy

If you've tried all the above and you're still getting grief, it's time to beat a tactical retreat to the dance floor. Now let me tell you, many people claim they can multi-task, but it is quite literally impossible to have a serious discussion about car-parking whist doing the Macarena or the Cha-Cha-Slide. Frankly anyone who can manage it probably deserves their own parking space anyway! Now if you've seen me busting-my-moves, you'll understand that this high-risk strategy is not to be taken lightly, but it can be brutally effective in a sledgehammer-to-open-a-walnut kind of way. There is even a very slim possibility that if you manage to pull it off extremely well, then at next years party you might just discover yourself being the subject of speculation about what Sarah-in-Accounts has been up to! Now go! Get out there and have fun! 

Merry Christmas.

The Way We Do Things Around Here

In the search to find FM's value-add elements, Facilities Managers are often keen to talk about the extent to which FM can support the culture of an organisation. One frequently overlooked part of that discussion is the way that a skilled Facilities Manager can actually use the reach and influence of FM to drive cultural change.

For the uninitiated, the thing we refer to as “organisational culture” is a shared set of values and principles which tend to guide or influence the way in which the people within a particular organisation behave. You can think of it as being “the way we do things around here” and it varies a lot from one organisation to the next. 

 

 

Organisational culture is neither positive or negative though most organisations will have a culture that has some traits that they consider desirable and some that they do not. Some of these will be driven by the leadership style of the senior management (dynamic, hierarchical, by-the-book), others by the age, size and type of organisation (entrepreneurial, bureaucratic, risk-averse) and others still by the people within it (diverse, sociable, creative). There are numerous influencing factors and numerous possible combinations.

Aspiring to succeed

So why does everyone bang on about getting the right culture anyway? Quite simply; it's an economical way of getting more out of a finite resource. Or to put it another way; in tough economic times, it's far better to have a culture where people feel like work is a place they feel happy, a place they want to come to and something they want to do, rather than something they don't enjoy, somewhere they have to go and something they have to do.

But culture is more than just instilling a desire to work more productively: many organisations are switching on to the fact that they can achieve far greater success, by trying to develop their culture to contain more of the traits that make a positive contribution to their success and fewer of the ones with negative impact. For example, senior management might decide that the organisation might be more successful if staff felt more empowered in their work, or more connected to the success of the organisation; they might feel it is important that the organisation's customers see it as socially responsible or that potential new employees think of it as being cool. These are what we refer to as “cultural aspirations”.

The people who do things

Understanding that there is a difference between culture and cultural ambitions is key to understanding the way in which FM can influence cultural development. You see; the former is the way things are done around here, the latter is the way senior management would like things to be done. This is a really important distinction because “the way things get done around here” can be heavily influenced by the people that do those things and quite simply, FM generally does a lot of 'things'. The remit and influence of FM spans the entire organisation and it's activities touch on the working lives of every single person in the organisation: this gives a savvy Facilities Manager the opportunity to directly influence the way the culture develops through their choices and their team. Let me qualify that a little more: I'm not saying that the Facilities Manager has the power to make the organisation less bureaucratic, or more creative, but they do get to make simple choices such as shall I make more recycling facilities available, should we ask the catering team to hold some theme days or even, should I paint that wall orange instead of grey? These are little changes: they won't change the world overnight, but they will sow the seeds of an idea which has the potential to grow into a collectively shared principle or set of values. In other words: the culture.

 

 

At the heart of the matter

I’ve often argued that FM is the cultural heart of on organisation: and far more so than any other part. Organisational culture is something that develops around the water cooler. It develops in the tea-point, the break-out areas, around the reception desk and in the staff restaurant. These are the areas where the influence of FM is at its strongest.

In the organisational-family, it is the facilities people who are the matriarchs and patriarchs: they know everyone and everyone knows them. If there’s some kind of social or charitable event, you can bet they will be heavily involved.

Smart senior management, do understand the influence of FM and will try to gain the support of the Facilities Manger in propagating their cultural aspirations. Smart Facilities Managers, can use the influence of FM to gain credibility with senior management by supporting those cultural aspirations. Really smart Facilities Managers, can use the considerable influence of FM to align the direction of cultural development with their own values and vision: for example, increased sustainability, being socially responsible or providing a more service based approach.

The best things in life are free

It’s a commonly held assumption that changing an organisation’s culture is extremely difficult. In fact the reverse is true. Cultural changes are changes in attitudes, beliefs and behaviours. It costs nothing to change your beliefs, so in theory at least, cultural change is free. That's some very powerful added value.