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Buying FM in Europe: A guide for non-Europeans

(Adapted from a piece first published in the McMorrow report, 2006)

For multi-national organisations faced with the prospect of managing or procuring Facility Management services in Europe for the first time, there is a terrible risk of assuming that the EU, or indeed the whole continent, is a homogeneous entity. The truth is very different, and thus the risks of trying to apply a single FM (or indeed any) solution across different territories is considerable.

In this article I am going to try to briefly summarise the ways in which Europe can be a challenging operational environment for multinational corporations, and at the same time be a fulfilling arena for facility managers, provided the strategy is correct.

To begin with, everyone comes to a new situation with preconceptions. A risk for everyone is that these can come from unreliable sources: although we know about other countries and their people in general terms from TV, movies, books and music, these are usually no more than stereotypes, and as we should know those are a dangerous foundation for decision making and relationships.  Consider, for example two different views of Europe:

Firstly the negative view: Europe is old, bound by tradition. It’s complex and difficult to navigate the structures, it’s divided, with too many currency and countries. Europe’s expensive, over-regulated, and poor at service. The continent is densely populated – although it’s about the same size as the USA, there are over 700 million Europeans, and it’s polluted, especially in the east and the industrial west.

On the other hand, Europe is new and exciting: there is fantastic innovation taking place. Europe’s united with a large integrated single market, and it’s full of skilled, multi-lingual staff who are highly educated.  Europeans are environmentally aware, positive and forward looking.

So the question to answer is which Europe you want to work with – the good or the bad?  Because your attitude and approach can be critical – negative expectations can be self-fulfilling, and so can positive ones.

It is important to understand what we mean when we say Europe, because there are two common uses.  Continental Europe is the area from Iceland in the west to the Ural mountains (deep in Russia) in the east, and from the Mediterranean to the tip of Norway. It covers  roughly 10.4 million square kilometres (4.01 mn square miles) compared to the USA’s  9.6 mn square kilometres (3.72 mn square miles). This Europe has a population of around 705 million people, and 40 countries.(not States!)

The second sense of “Europe” is the European Union (EU), the political and economic collaboration of 27 countries. The EU is not a federal entity like the USA, which may be a major misconception many American’s have. The EU’s population is around 460 million and it is the world’s second largest economy after the USA.

Europe is an extremely complex market to be involved in, despite the existence of the EU and its attempts to create a single market for goods and services. There are many different multi-national organisations which involve countries inside and outside the EU in often bewildering combinations. Take currency as an example: although the EU has a “single” currency (the Euro, € ) only 17 of the EU states (the Eurozone) have adopted it at this stage, and (confusingly) another 5 use it as their currency. The UK, Denmark and Sweden all kept their own currencies, and 5 of the 10 countries which joined the EU in 2004 all have their own, so that there are 9 currencies in the EU. In total there are 27 currencies across Europe.  Add to this complexity the issues of language, trade and border controls agreements and national and regional cultures, 5 time zones …. you can begin to see why Europe may not be so simple to work in. Yet globally responsible  executives seem to have consistent and repeated  problems understanding this. I’ve actually heard one senior US  manager say:

If we can have one approach from Seattle to Washington, why the hell can’t we get one approach from Dublin to Warsaw?”

This attitude does both Americans and Europeans a disservice, since it makes one group appear insensitive and the other obstructive. Our expectations can get in the way of our success if we are not careful.

I believe that this issue is crucial, in the final analysis. A single homogeneous solution to facilities issues is not desirable, let alone achievable, in my view. If that surprises you, then consider your main corporate aim: is it conformity, or performance? While these may not be wholly incompatible, surely enhanced productivity is what we most want? So why do we allow an obsession with creating a single consistent approach interfere with that aim, especially in an environment where consistency is very difficult to achieve.

What makes homogeneity a challenging target is not especially surprising, although the complexity of the issues may be worse than anticipated. These issues include:

  • Language barriers
  • National cultural differences
  • National pride, leading to anti-globalisation
  • Workplace legislation and enforcement
  • Labour market and social legislation variations
  • Tax and currency variations
  • Variable local labour markets and salary levels
  • Variable supply markets

But we can find some common ground on which to build : North Americans and Europeans are generally highly educated (by global standards), we work in capitalist economies, we live in democracies, we believe in freedom of speech. That’s quite important commonality to start with. But one of the main problems is that our awareness of difference can lead us to concentrate on the wrong priorities. We should avoid the trap of “ironing out” differences becoming our main objective – focussing on getting common processes or input standards in FM can be entirely the wrong thing to do, because it assumes that delivering commonality is more important than delivering performance improvements. So, to repeat: I believe that consistency is less important than creativity or productivity in our workplaces, and we should focus on that first.

To compound the problems we all face, there isn’t a unified facilities management market in Europe. Every country is in a different state of preparedness, with different..

  • economic conditions
  • legislation
  • supplier capabilities
  • training programmes and education
  • standards of education
  • experiences
  • customer and client expectations

The problems that Facility Managers may face at site level, however, will quite often be very similar. Although we may find that major premises in main cities may be well managed, that can’t be taken for granted. In many cases what we see happening within FM operations will seem like stepping back 10 years. The sorts of problems we commonly encounter include :

  • Very large numbers of suppliers being used (I found up to 78 at one small site in Switzerland), with almost no concept of bundling services together to reduce supplier numbers
  • Contracts made on standard supplier terms, rather than customers terms
  • Automatic annual price  increases
  • Contracts with automatic annual renewals
  • Very little in the way of challenge to the supply chain on service standards
  • Very long term supplier relationships
  • No concept of risk sharing with the supply chain
  • No service specifications or SLAs
  • No service measurement or reporting
  • No clear internal budgets
  • No sharing of systems and experiences between locations
  • No team working
  • Little or no formal management training
  • No professional procurement processes

Of course there will be exceptions, but the overall effect of combinations of the above failings will be that costs can be far too high. I’ve encountered situations where costs are over 25% above the norm without any real reason other than poor management.

Although the larger centres may not be like this, many will be, as will almost all smaller locations. This means that the challenge we face is about educating people in what FM can deliver, before we can begin a programme of change. And because the supply chain contract position may be so inflexible, change could easily take over 18 months to even begin taking effect because of the inability to terminate contracts.

So how can we succeed in change managing FM operations? Key is accepting that we need to find appropriate local solutions, rather than applying a single FM solution – we have to apply different models to the different markets which occur, and  the varying expectations and abilities which exist from country to country.  Fortunately, the FM supply chain has become more adept at providing the requisite flexibility within their operating models, which does at least create an option which did not exist 5 or 6 years ago. But some serious constraints still exist:  For example:

  • In many of the eastern European markets, there is rarely even a national cleaning supplier, let alone a management company. Outside major cities (sometimes only the capital city) there is aften no effective means of delivering facility management because of the lack of client understanding and the absence of a supply chain that understands the concepts we take for granted
  • In France, there is a strong cultural preference for internal management combining administrative functions with FM – they don’t call it FM, it’s “services generaux”. Although there are some “multi-service” suppliers and good understanding among project managers, there isn’t a generally accepted conception of FM as we understand it
  • In the Nordics, the good understanding of the options is mitigated by the limitations of geography and economic scale, with many facility managers “in-house” simply because it is the only viable solution.

In my view, even the larger global suppliers don’t have a real Facility Management capability in every territory, even where they have some sort of service delivery capability. They do tend to follow their customers into new territories, developing FM capability on the back of existing service capacity, which is risky for their clients. Especially if an organisation has operations outside the mainstream economic areas it may find that the multi-national FM providers cannot support it effectively. If that‘s the case, we have to adjust our strategy accordingly rather than try to force the market to fit.

In other words, we have take time to understand the strengths of each option and combination in each location.  So, although a pan-national route looks attractive and manageable, it won’t deliver service and cost improvements unless there is a strong foundation, good data, and realism about the time to achieve improvement.  Attempting to force a single solution may look and feel neat, and it might look nice for your boss, but it is unlikely to deliver the savings and performance improvements required.

(c) Dave Wilson, 2006: 2013