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dave.wilson@effectivefacilities.com

First published in Workplace Futures 2013 White Paper

 

One of the many interesting points Jared Diamond makes in his seminal book “Collapse” [1] is that humankind’s decision making is constrained by our perspective and our horizons of knowledge: current generations make assumptions that the world is as it always was and always will be because they lack a real sense of historical change. Now, while he may be talking about the environment, we can see the same behaviour in our economic assumptions, and especially those around how organisations work. Our collective shock at the loss of major High Street brands for example – Woolworth, HMV, and others –  that had “always” been present illustrates the phenomenon quite well, because none of those institutions had a life of more than 100 years,  and most much shorter. But they had become ubiquitous, and had been around longer than most of their customers, so the intrinsic assumption was that their presence was the norm. But in fact not only was their presence not the norm in any historic sense, neither is the existence of the High Street as a concept, since it didn’t exist as we see it until the early 20th century.

More pertinently for Facility Management the same point might also apply to offices, which really didn’t exist as stand alone functional structures until the late 19th century, when Taylorism, together with universal education, led to the combination of a demand for a specialised bureaucracy with a supply of literate and numerate workers. But we might learn some lessons from the crumbling High Street and wonder whether offices and the organisational structures they embody will really continue ad infinitum – and perhaps therefore whether FM as we know it has a long term future.

While I think that we can say that ossification is not one of our problems – the industry has changed and flexed remarkably over the last 25 years – being responsive is not the same as being durable, and one risk that flows from that is a potential want of clarity of purpose, both in the industry’s (collective) minds and in our customers’. I believe that lack of clarity is one of our biggest threats as an industry, and I want to look at four ways that it is manifest, and consider some possible solutions.

To begin with, let’s consider five issues of FM mythology – those things which we take for granted that might not actually be supported by the evidence:

Corporate Social responsibility and Sustainability. Despite plentiful high profile evidence of aberrant corporate behaviour – and not just Starbucks and Google and Amazon and their issues with tax, but also lots of other employers taking the recession as an opportunity to attack employment rights, contracts, pensions, or to short cut on environmental improvements – we continue to act as if CSR was critical for organisations. While I fully support the idea that it ought to be, and while I continue to believe that FM is uniquely placed to deliver on these issues like no other discipline, it seems plain to me that most commercial organisations are not seriously committed to this agenda – by which I mean that they are happy to do it if it costs nothing, but not to invest in creating sustainable outcomes. We can find exceptions, I am sure, but I’d suggest that they are just that, exceptions.

Next, the FM industry keeps claiming to offer something unique, but never seems quite sure what that is. Given that FM is a “portfolio” industry, drawing together numbers of pre-existing specialisms, viewed from outside the confines of the world of FM it’s hard to see how what we do can possibly be unique. I suspect that our customers don’t see FM in at all the same light we do, which ought to be of concern to all of us.

Part of that problem, I think, is that the industry is too inward looking and inadequately customer focused. That’s shown by two common and related behaviours which I see in both internal FM teams and the outsource supply chain: we treat achieving compliance as if that was adding value, when it does nothing of the sort – indeed most risk mitigation doesn’t directly add value. And we report what we do as if maintaining Process integrity equated to some kind of achievement, when I would argue that actually it’s the de minimis outcome a buyer of FM might expect from their provider.

Another bug-bear is our insistence that “people are our most important asset”. You might hope that a service industry like ours didn’t feel the need to state this obvious fact with such pride. But then you might also hope that the statement would be backed up by real actions. Yet across the industry our training record is abysmal, in terms of outcomes and spending; our staff turnover is too high at all levels; and there is almost no consistent  progression and development of staff through the ranks to managerial positions.

But there is something fundamental, indeed structural, underlying all this which I think does not excuse it but makes our problem more intractable: tendering.  For now, let me simply say that the “mythology” involved here is that Buyers act as if Tendering is an objective process which delivers the best result for them. That it is isn’t objective and rarely delivers the best results is something I’ll come on to shortly.

The second major issue afflicting the industry is, in my view, quite simply a lack of Brand confidence. That applies both to the customers’ view of the industry – “Facilities Management” is a confused, confusing tag that doesn’t carry a single sense of values, concepts, product or outcomes to our clients and customers – and within the industry across the supply chain. Put bluntly, the Companies we are all familiar with don’t have brands, they have logo’s. It’s hard to think of a single FM service provider whose brand carries any meaning or values to customers. And while some might argue that this is a result of us being a B-2-B industry, I’d counter that PwC has a brand; JLL has a brand; Steelcase has a brand …

Of course, to go back to our staff and teams, again tendering is part of the problem because regular TUPE transfers of teams inevitably work against the transmission of and belief in a company’s brand values. Staff inevitably become disengaged from their nominal employer and cynical about “brand” values, so its hard to really build genuine brand commitment under those circumstances.

Related to that point, the service providers also make their own brands more dilute by agreeing to bid for parts of the FM service package – how can either FM or your brand be conveyed effectively if you only sell parts of it? Surely FM is about integration of all the key service lines? What buyers do is a bit like buying an engine from Audi, wheels from BMW and a car body from Nissan and then complaining that it doesn’t all fit together – but the supply chain  collude in that by bidding for these incoherent packages, or even single services, which makes one wonder what the “management” element of FM actually stands for.

Lastly on the issue of brands, I think there is some evidence that when tender opportunities are declined by vendors, it is more often because of either the value of the package, or their lack of capacity to deal with more bids than because the opportunity doesn’t match their core sector or market targets – in other words we don’t decline bids because the work  or client doesn’t match our Brand’s value set or strength.

Taken together, I think that all this shows our mutual lack of confidence in the FM brand and our own brands.

My third point is that there is fundamental inconsistency across the industry. Indeed, we can’t even agree whether it is a profession or an industry or a discipline. Internationally, we can’t agree whether it is called “Facility” or “Facilities” Management. These things matter to prospective buyers who aren’t steeped in our world. But it gets worse. We don’t agree on terminology – there’s no consensus on the difference between TFM, Integrated FM, Principal Contractor, Managing Agent … the terms get used differently by different people at different times depending on their agenda. We don’t agree on basic structures around our services: everyone uses different contract costing models, different service levels, different packages … there’s no meaningful benchmarking or performance measurement system, and no agreement internationally on core management  competences or on qualifications. Worse still, everyone talks about “best practice” without anyone being able to show what it is or how they can demonstrate it – even assuming that Buyers actually need it or can afford it in the first place. Overall, this is shambolic. But is not the worst thing, in my view, because we can work to change this. The final of my four problem is much more difficult for us to resolve.

That problem: Competitive Tendering.

There are two benefits that Tendering is supposed to deliver: probity of process and value for money. These are both important and I don’t want to suggest that there is no place for tendering in the market. But I do feel that its routine use as the sole method for procuring FM services is futile, expensive, time consuming and destructive, and that nine times out of ten it results in a decision that the Buyer team reached regardless of price and prior to final presentations. I’d also suggest that the nominal savings, especially on second generation contacts onwards, are far outweighed for the Buyer organisation by the cost of the tendering exercise itself; that the supply side are saddled with massive costs in the bidding process which they then have to  recover from the contracts they do manage to win; and that because contracts are generally too short in duration tendering destroys the supplier/buyer relationship by creating mistrust throughout the contract. And finally, there are no guarantees of benefits for the Buyer organisation because contracts are based on unenforceable SLA’s lacking meaningful performance measurement or reporting and with a lack of clarity on either (or both) the original base costs or the resulting contract costs, exacerbated by constant changes in client budget, portfolio, service scope and so on. In short, competitive tendering is a counter-productive means of procuring support services, whose only beneficiaries are client procurement professionals and sales teams (and occasionally, consultants like me!).

Taken together, my four problem areas add up to one simple statement: the FM industry as a whole currently has no meaningful value proposition for its clients or customers. That is a serious and shocking position, 25 years or more into our existence.

So what can we do about that? Let me posit four broad solutions which I think the industry as a whole needs to debate and develop.

Firstly, we need to “Be Brave with Brands”. Primarily, we need to stop mis-using the term Facility Management itself and get some consistency to how it is presented and described. Service providers need to better understand where they really add value and focus on that as a USP, portray it consistently, and build genuine capability to deliver on that brand promise. They may need to be more focused on pursuing only those opportunities that  match their brand values. It could be that there may be a need to develop “sub-brands” just like the Hotel or Food service sectors have done. And Buyers need to accept that there are not hundreds of options in the market which suit their needs – the genuine options are usually relatively few in number. They therefore need to articulate those needs more clearly and select vendors on their ability to deliver outcomes to meet their needs cost effectively.

Allied to that, we need to adopt Standards, most especially for the routine work-a-day activities across the industry. There isn’t scope for brand differentiation on compliance, nor is there any justification for constantly re-inventing the calculation and presentation of costs or service levels – in fact those are counter productive for all sides because they cost time and money to adapt to and the differences obscure actual performance. So we should work on common industry standards – agreed by both buyers and vendors – for costing models, presentation of specifications of service, service levels, contract terms, management information, performance measurement and reporting.  All these things are expensive to create and completely avoidable if we use Standards, and the vehicle to do that exists through the CEN and ISO bodies.

Doing that would allow us to go further, and  create a platform from which we could replace Tendering with Competitive Dialogue or Benchmarking as the means of demonstrating value for money. Collaboration across the industry and from major organisational occupiers of space would allow us to build and publish cost data balanced against service quality levels to show the “market” benchmark without the need for Tendering. Procurement can then focus on the best fit between Buyer and Vendor while ensuring that decisions are still based on sound objective criteria. Formal Competitive Tendering would thus be limited to specific scenarios – for example, a new building, or new acquisition, or entry into a new territory, or a new configuration of services – rather than being a one-size-fits-all solution deployed for all procurement.

From that position I believe that we could confidently restate the industry value proposition. We can:

  • Reduce costs (buy economically)
  • Improve efficiency (aka “do more with less”)
  • Improve productivity (that is, create effective facilities)
  • Deliver the CSR agenda
  • Reduce organisational risk
  • Support agile solutions for the changing world
  • Be the source of expertise in all these areas

To do all this, we must change the way we behave. In-house FM teams, Buyers and Service providers alike all need to collaborate and trust each other much more than at present. We must begin to produce commonly understood outcomes, demonstrably and objectively measured, which relate to the needs of the organisations we serve. Our staff must become better trained and motivated. And we must focus on the Value Add from our activities, not on commonplace compliance.

If we can’t manage all this, we run the risk of going the way of the High Street chains which failed to adapt. Let’s not go down that path.

 

© Dave Wilson, 2013



[1] Penguin, 2006