Life after Carillion

PROCUREMENT CULTURE

Q: Carillion has been censured for displaying “utter contempt for its suppliers, many of them small businesses”, while it was also condemned for using its suppliers as “a line of credit to shore up its fragile balance sheet”. How can FM clients reduce risk to their organisation and supply chain when choosing a contractor?

Said Nick Platt: “We get frustrated because [during the tendering process] we’re often asked questions such as how many engineers do you have, how many cleaners? That’s great but ask us ‘how much debt do we have? What is our pension liability? What is our dividend policy?’ Some large companies chase a number and say to their current customers, ‘I’m going to take resourcing money from you to discount another customer’. That means they will do that in the future and the whole process becomes just chasing a number. We are doing things differently and we don’t pursue tenders where we feel the tender process doesn’t fit with our culture.

“There is some really good procurement in FM but unfortunately there are some really bad habits as well. Finding a way of achieving transparency requires determining what you want to achieve.” Delegates concurred that choosing the right supplier is often less about going for a big brand name than looking at the quality of the people who manage the account.

“We insist on the operational teams coming in to do the presentation, not just the sales people,” commented one head of FM, while another reported they “asked one supplier ‘who is your longest serving account director, why is that the case and can we have a chat with them?’ When you go to take on a service provider you want to ensure they’ve got people who are actually going to be there.”

Q: How can you ensure the people who are TUPE-ed over as a result of a change of service provider will be sufficiently competent and motivated?

Most participants agreed that whether staff are competent or not, clients will expect their new service provider to performance manage them.

Said Charlotte Bovill, Operations Director, Salisbury Group: “There is a misunderstanding with clients that on changing service provider the service will instantly improve. In reality, the existing employees TUPE transfer to the new provider. It is crucial for the new provider to ensure that employees are inducted in the correct way and made to feel motivated to the new ways of working and the new management as soon as possible. However, there has got to be an understanding by the client too that the new contract won’t be perfect from day one.”

Facilities is about people, agreed another contributor, “so if [the previous supplier] lost the contract due to poor performance it’s probably the people that have brought them down. On the good side you’ll keep the knowledge, but on the bad side you might still keep bad practices. That said, you might not inherit bad workers – just a bad contract.”

It was also suggested it would be better to aim for five- or seven-year contracts rather than three, where there is more opportunity to create partnerships. “Dealing with staff performance takes a lot of time, particularly within the public sector where it takes time to manage change – and with a longer contract you’ve got more time to establish a true partnership.”

Q: What can be done to support SMEs who deliver specialist services?

It was argued that following Carillion, we have to be careful we don’t take a knee-jerk approach to bringing specialist services back in house. However, clients need to pay closer attention to how the supply chain is treated and should insist on knowing what the payment terms are – and confirm that’s how their supplier operates.

Said an FM and property manager: “A few years ago, we’d have said, ‘it’s your responsibility’, but now we have an obligation to say to SMEs ‘we’ll watch your back now.’ The way we order our procurement is as much moral as cost-based. We have a three-stage audit, where the facility manager on site will instruct the contractor. They’ll then facilitate an internal audit, and then we go and do a head office tender. We will look at whether they have a modern slavery policy, health and safety policy, we check their systems and audit their sites. This is as much based on protecting our reputation because a negative impact on their business is one on ours.”

IT’S ALL ABOUT PEOPLE

Stuart Bonner, Senior Director at recruitment research firm Investigo, commented on the next generation of facilities managers. “Today’s CFOs are not so much interested in a percentage reduction in the cost of FM but rather in moving from a building into a smaller space, and saving millions by introducing agile working. Are FMs networking with CFOs to check that they understand what your world is all about? To be a good FM you care about the people around you, but aren’t there different skill sets required within the C suite? And are the skills at the top different from what you need to get there?

“Yes, people often fall into FM and when they get to top they find it hard to influence. [The] only time FM gets discussed at the board is when it goes wrong; that’s why FM has to be good at PR and sell what it’s doing all the time.”

He also noted that if clients are doing more and more outsourcing they can’t bring in new people and train them up. This means career progression tends to come through the service provider and then move into client side. Yet how often will a CFO go out to market and take on people from the client side or from the service provider route for a role?

It was agreed that more cross-fertilisation is needed between client- and supplier-side FM, and the discussion concluded that fundamentally, in-house facilities managers and those from the service providers require very similar qualities in their people: to look holistically at an organisation and help create an environment that helps it achieve its aims.