Familiar questions, no doubt, to anyone who has attended recent debates on the industry. But underlying the more familiar at the Facilities Futures forum, held at London's Tower 42 before Christmas, were new questions and issues that will influence the shape of the industry this year.
These include spiralling staff costs that threaten to exacerbate the mismatch between customer expectations and supplier delivery, the challenge to both in-house teams and 'old economy' facilities suppliers from online service providers, and the growing demand for hotel-style service skills. Then there's the 'Trillium factor', the idea that facilities management is a place where, as organiser of the forum and MD of Facilities Recruitment John Davis put it, 'you can make money – and make it quick'.
After highlighting the paucity of many attempts to define and measure the facilities sector, the forum's first speaker, Michael Mainelli, director of risk consultancy Z/Yen, raised one of the critical issues of the debate – to what extent customers of facilities services remain wholly cost driven. 'Every time I've been involved on the client side – mainly with government – I've found it astonishing how value for money always means least cost. I've never seen an exception,' said Mainelli. 'Where the heck are the quality/best value arguments?'
On the commercial side, he said, outsourcing among global companies was being driven by executive panic. 'Companies are always seeking cost reductions, but what we are looking at today is a radical change triggered by fear.' Chief executives 'absolutely scared out of their wits' were seeking 40% cost savings.
Meanwhile, the move towards long-term contracts was slowing and customer disloyalty growing. 'I am aware there are customers who are not wholly cost driven, but is this the thrust? Are we just cheap body shopping?' he asked.
The new twist to all this, as FRL's Davis went on to describe, is the current skills crisis which is driving salaries up by 13% per annum. 'Pay pressure has been with us for ten years,' he said. 'But it will become more and more acute.' Latest figures from the online FRL salary survey show bonus levels are also increasing dramatically. 'Does that get built into contracts?' asked Davis.
Human resources director at Planned Maintenance Engineering Group David Woollcott said studies showed staff turnover across business sectors had increased for the third year, with one in three part-timers and one in five full-timers looking to change jobs once a year. The view among delegates was that contractors were being hit harder than in-house teams, some of whom seemed unaware of the severity of pay pressures. One senior in-house manager, referring to the large cost cuts behind many contracts, said: 'We have to be careful about the margins we give our contractors.'
Another urged contractors to discuss their staff pressures. 'As a facilities management company, you need to be up front and tell us "Do you realise that our staff costs have gone up by 15% this year?",' he said.
Sales director of Johnson Controls and BIFM chair Ian Fielder said a better dialogue between both sides was needed. 'OK, maybe we have to cut 40% in costs [for a particular contract], but we won't do it by prostituting our staff,' he said.
Mainelli urged both in-house managers and contractors to tackle head on the threat from application service providers (ASPs), who offer cheap access to all kinds of applications online.
One facilities management department had a web site that offered staff no services at all, he said. Meanwhile, staff at the company were buying travel over the internet. 'ASPs are getting right in there. We're letting the wolf in the door.'
However, there is plenty of opportunity for facilities managers to take control of online developments. 'If facilities management is really going to be this thing that sits across the organisation and adds value to procurement, it has to sit there as an information and services function more than ever before,' said Mainelli.
But intranet familiarity wasn't the forum's only concern. As FRL's Davis pointed out, customer service skills are in big demand – and staff with experience in customer-facing industries are at a premium. 'Our clients want anyone with soft services management experience – anyone who has gone through the "McDonald's University" or worked for the airlines.'
It was left to Terry Welsh, general manager of London's Tower 42, to show why such skills are sought after. Welsh, with 16 years' experience in hotel management, has brought to the former NatWest tower a standard of service associated with top hotels – top restaurant facilities, concierge and chauffeur services and service level agreements with contractors that even specify polished shoes for engineers on site. What's more, Welsh's team provides training for subcontractors working in the building to ensure they meet customer care standards. As a result, Tower 42, a multi-tenanted building, now boasts a rent of £85 per sq ft.
But, asked delegates, who can actually afford to replicate these kinds of service levels? Welsh's answer was that it was necessary to look for services that generate revenues. Catering outlets at Tower 42 are run on a shared profit basis, while a new bar generates £16,000 a week from what was once dead space. Even the chauffeur service generates additional revenue. 'Once you have loyalty to your brand,' said Welsh, 'there's no limit to what you can do.'
Facilities Futures was organised by Facilities Recruitment with the support of Greycoat Estates and The Facilities Business. The forum leader was Catalyst Management: www.catalystmd.co.uk
Source
The Facilities Business
