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.

Holding Out For A (Silent) Hero

Facilities Managers are heroes. Fact. When the chips are down and it’s all going wrong, you can rely on an FM to swoop in and save the day. But is this really something we want to be known for? In this blog post, I make the case for keeping your pants on under your trousers.

The idea for this blog started with a snatch of overheard conversation: an FM colleague was asked to describe their role in Facilities Management to which they responded: “we’re the people you turn to when it all goes wrong”.  It’s a description that many would agree with.  After all, Crisis Management is an important part of any Facilities professional’s role and most are justifiably proud of their problem solving abilities. It is these moments of extreme adversity that enable us to show people what we are really made of, prove our value and earn the respect that we truly deserve. These moments of converting mountains into glorified molehills become personal pinnacles of achievement, each one a badge of honour on our CV. Surely we should embrace these difficulties for presenting opportunities to bring our skills into the limelight?  Or should we? Before we get too carried away thinking about what a crisis means to us, maybe we should try to consider what it might mean to others.

No such thing as bad press?

It is said that there is no such thing as bad publicity, but I'm not sure I agree. Averting disaster and turning failure into success is undeniably personally rewarding, but whilst you are basking in the glory of being the man (or woman) of the hour, others may be looking around for opportunities to apportion blame and if you’re distracted by enjoying your moment in the sun, you could easily find yourself becoming a scapegoat. Now you may argue that this won’t happen to you because your organisation operates a "no blame" culture, but at the end of the day, human nature will almost certainly trump organisational policy and it is human nature to speculate about who got what wrong.

You see whilst we might be acutely aware that managing to get that aged chiller up and running in two days (even though the parts had to be shipped from Belgium) was nothing short of miraculous, there's a good chance your customers will just see it as one more failure that occurred on your watch.  Of course you and I know that that’s not really a fair assessment of the facts because………. you did try and replace it last year but the board wouldn’t release the funds. You may choose to tell customers this and shield yourself from the blame, but before you do that, maybe you should have a good think about whether this is a story that you really want to share.

The blame game

Blaming the boss may help build some common ground with your customers, but pointing the finger further up the chain isn't going to win you any friends there. These are the people who can directly influence your resources to do your job: unless you think you can use the situation to launch a full blown coup and win total control of your own budgets, sooner or later you'll be crawling cap in hand to them trying to get the money for something else.  These are people you need as friends not enemies.  Besides, there are those who will point the finger right back at you for not making the business case compelling enough.

Survival training

Ok, so I’ll admit the picture I’ve painted is pretty bleak, but there’s no need to despair just yet, for all is not lost. With the potential pitfalls I’ve described above, it’ll come as no surprise when I say that good Facilities people need to develop highly effective political skills to be successful in a corporate environment. Crisis is your opportunity to hone these skills.  Here are a few points to consider.

• Keep your cool.  At the end of the day, and even with the most meticulous planning, disasters will happen. They will still need to be managed and Facilities people will almost always play a vital role in doing this.  But be careful not to get too caught up in the drama. Do communicate your successes, but don't oversell them, you will build a far better reputation through calm efficiency in the face of adversity, than you will for rushing to the edge to pull the company back from the abyss.
• Be careful not to court disaster.  Career defining challenges might boost the adrenalin and raise your profile, but a Facilities Manager has a management responsibility to manage risk. When things go wrong make sure you take the opportunity to learn lessons and take action to prevent it from happening again.  If you ensure that any learning points form part of your communications strategy, you will be able to raise your profile by developing your reputation as a good risk manager.
• Think very carefully before pointing the finger - some people might think you're passing the buck and you could easily make powerful enemies. If the root cause sits further up the chain, a more strategic approach could involve outwardly shielding the responsible party and playing down the severity of their error, whilst speaking frankly to them about it directly. You may take a little more heat from your customers than you would if you just pass the blame onwards, but you can play this down by choosing your language carefully and in the longer run, you may well earn the gratitude of a powerful ally.

As I said, disasters do happen and as a Facilities Manager, you'll almost certainly have to be part of the solution, but I hope I've adequately demonstrated in this blog that there is much to gain by not always making too big a deal about being the hero.  Maybe next time you've got to save the day, rather than rush to the nearest phone box, like me, you'll take a more strategic view and keep your pants on under your trousers instead.

People ARE Facilities Management

Facilities are workplaces, buildings, installations........ premises. As Facilities Managers it can be tempting to think that our job is to look after these facilities. But is it? Some would say that our real job is to manage the people that look after them.

Over the past few weeks, it’s seemed like almost everything I’ve been involved in has served to remind me about the importance of people in FM.  Finally I felt so inspired, I decided to post a blog on the subject.  As a colleague of mine recently put it; this is a people business.  They were right of course, but when I sent this statement out on Twitter, I got an even better response which I couldn’t help but steal for my blog post title: People ARE Facilities Management. 

Everybody’s human

So, what started me thinking about the role of people in FM? Well I’ll get to that in a minute. First I want to share an anecdote. 

We recently had a visit at work from one of our top VIPs.  It’s a pretty rare event – the last being about three years back.  I’m talking about someone so far removed from a mere FM that I’d stand a better chance of getting an audience with God. 

Naturally, we wanted to put on a good show, so I assembled the whole team for a hotel-style walkthrough of the schedule and locations that might be visited to ensure readiness.  They really enjoyed the process and went at the task with relish. I thought it was a great success.
Afterwards, my cleaning supervisor took me to one side; concerned that I might be worried about the impending VIP visit.  “Don’t worry”, she told me, “she’s actually a lovely person and is always really nice to me”.  Being somewhat taken aback I enquired further.  It turns out, that this god-like executive often chatted to her from across the globe whilst she popped in to clear the video conference room between meetings.  And in fact, she made a point of talking to her during the visit too.  I think it’s a wonderful story and one I absolutely love to share, because it shows that whoever or whatever we are in work, at the end of the day we are all still human beings.

Back to basics

So where did my recent interest start? Well it started with a contract renewal.  We felt that there was some room for improvement with the existing service and decided to speak to some alternative providers.  We got an interesting spread of responses.  Some talked about cost, some about management, some impressed us with gadgets, but the ones that really fired our imaginations were those who talked about people.  The arguments were compelling; they would guarantee a better delivery of service by using the tried-and-tested  technique of working with their people and treating them well. They would encourage them, train them, share the vision with them, respect them and above all, ensure that they understood that their roles were pivotal to achieving success. It got us thinking; could it really be that easy? And we realised yes, it could.

The smallest cog in the wheel is usually the most important

What these suppliers were hinting at, was that it’s those who actually provide the service who are fundamental to its successful delivery, not those of us who sit behind desks making decisions or attending meetings.  In fact, whilst we attend meetings to make decisions about how things get done – other people are out there getting on with getting them done.  An important step in becoming a manager is the realisation that, regardless of how it might appear on the org-chart, you are generally much less vital to the day-to-day running of the organisation than anyone further down the heirarchy than you.  If your receptionist phones in sick, it disrupts your entire business; visitors don’t get the right instructions, vital calls are missed or badly handled and someone gets dragged from what they should be doing to provide cover.  On the other hand, if you phone in sick, the meetings just get postponed.

The role of the manager

I don’t think of myself as a great manager of people;  I only have a couple of years experience at it, so this post is not a "how-to" guide to management, as much as it is my thoughts on how good management is about recognising the role of people. I would say that I do recognise the importance of great management and I try my best to provide this to my team. I'm fortunate enough to have had some excellent managers in my time and have some first hand experience of great managers at work. Also thanks to my employers and the BIFM, I've been exposed to some great training and met a number of inspirational management guru’s and thought-leaders, whose experiences I've tried to draw on as much as possible. 

I see the role of the manager as being to get the very best out of those who work for them: to motivate and inspire and to provide them with the tools and resources they need to do the job in the best way possible.  In short, it’s our job to do what our people need, not the other way around.

It‘s also the role of the manager, to help their staff understand why we do the job and what we are trying to achieve. It was only a year or so ago, that I first heard the phrase “Management By Walking Around”, but it’s a technique that I’ve grown to love.  Talking the time to regularly connect and talk with your staff and contractors even for very short durations, gives you the opportunity not only to let them know that your time is not more valuable to you than they are and that you respect them as people, but it also gives you the opportunity to share and reinforce your vision – reminding people why it is important that we do things a certain way and getting their buy-in is fundamental to getting them done successfully.

The full circle

So going back to where this blog started.  Our VIP visit came and went and it was a roaring success.  Afterwards people said to me that I’d done a good job, but the truth is: I didn’t really do much at all.  Having cleared my diary to be on hand to support any emergencies or disasters, I spent much of the day twiddling my thumbs (metaphorically).  The reason for the success was the way the team came together. They all worked extremely hard on the day and in the run-up to it, to be in the right place at the right time, to ensure preparations were made and details were taken care of. In fact, if I’d have phoned in sick, I’m positive it would have still gone well. 

And what was my role in this? Quite simply to bring them together in the first place. To share my vision and help them do what they needed to do. And finally at the end of the day, to let them know just how well they’d done it and how proud of them I felt. And now, I’m letting the world know too.