Measure, Improve, Repeat
There’s the number, and then there’s what’s behind the number. To Bob Gross, the former is important, but the latter is critical.
The idea of drilling down to the root causes of a metric isn’t new, but it’s one that Gross, principal of facilities for The Vanguard Group, an investment management firm headquartered in Valley Forge, Pa., has down to a science. And it’s the cornerstone of a sophisticated, yet elegant, method of managing with data.
The lifeblood of the Vanguard facilities organization is a system of more than 30 metrics covering everything from restroom ratings to building and security system availability. The metrics system is based on the philosophy that improving processes and trimming fat is only possible if Gross and his team know all the components that influence a measurement and also whether that measurement is trending up or down.
“To continuously improve, you need to truly understand how you’re performing,” says Gross. And to Gross, the only way to do that is with data.
Gross and his team manage 33 buildings comprising 4 million square feet. Two million of that is at the corporate headquarters campus in Valley Forge, Pa. The rest is spread out between spots in Scottsdale, Ariz., Charlotte, N.C., Washington, D.C., and a few international facilities. Of the total 4 million square feet occupied by Vanguard, about 60 percent is owned and about 40 percent is leased.
The reason for leasing space is flexibility, says Susan Montgomery, manager, facilities and real estate planning. “If the market changes, with leased space, we have greater opportunity to change.”
Bringing In Experts
Gross’ facilities team comprises about 450 people, but only about 32 are actually Vanguard employees. Vanguard’s corporate philosophy is to outsource the tactical, but keep decision-making in-house, says Gross.
The motivation is simple: “Maintenance and operations is what these companies do for a living,” he says. “We’re taking advantage of their corporate knowledge. We’re hiring experts.”
That’s not to say outsourcing providers are off the hook when it comes to adhering to Vanguard’s metrics system. They’re held to the same standard as if they were Vanguard employees. Gross and his team work with the outsourcing providers to ensure they know not only what they’re supposed to be measuring, but also what their performance targets will be. As a result, the outsourcing providers are committed to the goals and strategies instituted by Gross and his team.
Gross and his team divide their metrics into four areas, which they call “Voices.” (See “Hearing the Voices” on this page.) The data are displayed in a dashboard — a relatively simple Word document that illustrates the measurement, the goal for that measurement and whether the goal was met (colored green if yes, red if no). They review this dashboard monthly with their providers to determine whether targets have been met and to identify trends.
The process by which energy management metrics were added to Gross’s dashboard — initially, in July 2005 — is a good illustration of how Gross and his team develop metrics and establish baselines.
“We recognized in 2005 we weren’t where we wanted to be,” says Gross. “So we called everything red.” Gross and his team followed a pretty standard process, beginning with simple procedural strategies, like checking the accuracy of the bill and the meter and making sure lights were turned off at night. But the team also really began to try to understand exactly how buildings were using energy. This meant tearing apart data from each energy-consuming component in each building.
“We looked at all the components of electricity,” says Gross. They examined the condition of lighting systems, maintenance practices, the lamps being used and the process for buying those lamps.
By grouping the company’s portfolio by building type — office, data center or other administrative space — Gross was able to compare Vanguard’s buildings against each other. The ENERGY STAR benchmarking tool enabled him to compare his own portfolio against other similar buildings.
Over time, capital projects began making their way into the budget. “Once we started feeling comfortable, we got involved with lighting upgrades, more efficient mechanicals, and other projects,” says Gross.
Gross would be the first to admit that there’s nothing spectacular or overly complicated about the drill-down as it relates to energy. But it’s a classic example of how just getting started, establishing goals, and learning as much about a metric as possible leads to discovering ways to use that metric to cut costs. Today, more than 20 of the company’s 33 buildings hit the ENERGY STAR benchmark of being in the top 75th percentile of all buildings for energy efficiency.
While having more than 60 percent of buildings classified as ENERGY STAR is a pretty high level of success, Gross says it’s important to keep at it. His favorite quote — “The biggest obstacle to greatness is satisfaction at being good” — is much more than the tagline for a motivational poster. It truly is the way Vanguard operates. In the Vanguard facilities group, an all-green dashboard is as much of a problem as one that’s all red. It’s an indication that the team isn’t challenging itself.
“Show me a measurement, and let’s be satisfied with it for about 15 minutes,” says Gross. “And then let’s improve it.”
An all-green dashboard is pretty rare, though, because goals are aggressive. If a goal is in the red, the team tries to find out why and what it will take to make it green. The goal for building availability, which Gross considers one of the most important metrics, is 99.99967 percent. But building availability can be reduced by either mechanical problems or human error, says Gross. So if that goal isn’t met, the team drills down to figure out which it was and how to avoid the problem in the future.
“Our average uptime in 2007 was 99.9879 percent,” says Gross. “We look at that number and even though we didn’t hit our goal, we’re reasonably happy. But we still need to do a drill down. We look at every event that took a building down, find the cause and classify it as preventable or not preventable.”
If the cause was human error, it’s important to figure out how not let it happen again. In one case, a contractor went into a room without authorization and started drilling a hole.
“The smoke from the drilling set off the fire alarm,” says Gross. “We had to dump the building, and that killed our metric for the month.” Errors like that are frustrating, but they are also readily correctable — in this case, with a change in security credentials. If the problem cannot be prevented — a power failure, for instance — Gross and his team look at what they can do to limit the disruption. They explore backups and make sure that everyone understands the continuity plan.
One-Stop Facilities Shop
Another set of metrics where drill-down is necessary for process improvement is customer service. To gauge the satisfaction of Vanguard employees, the facilities team does a monthly survey. The survey system is structured so that each employee will get a chance for input once every two years. The response rate for these surveys is usually 40 to 50 percent, says Kevin O’Toole, manager, facilities operations and maintenance, so the team trusts the data.
Additionally, Vanguard has a Facilities Service Desk, where employees can call to report problems, request conference room set-ups or ask for rides from the corporate shuttles. Gross describes the service desk as a “one-stop shop” for employee needs. The number of calls, as well as the speed and quality of the response, among several other metrics, are tracked as indications of employee satisfaction.
Between the surveys and the data from the service desk, Gross and his team have plenty to cull through to drill down into processes. When this data is condensed and analyzed, the team can get a good sense of how satisfied (or not) employees are with facility performance. That allows the team to figure out what parts of their processes are working and which aren’t.
“We try to develop a correlation between crew satisfaction and service levels,” says O’Toole. “Do we have the right staffing levels? And what’s the cost? There has to be a balance. If we keep failing, we start a ‘process excellence engagement’ to find out why.”
A “process excellence engagement,” says O’Toole, is Vanguard’s phrase for trying to locate the weak links in processes and identifying where steps can be combined or eliminated. It’s an important part of the drill-down process. And it’s one of the tenets of another of Vanguard’s adopted strategies: Six Sigma.
The Dual Nature of Six Sigma
Six Sigma is both a philosophy and a specific benchmark. “Six Sigma is a set of practices to systematically improve processes by eliminating defects,” says Andy Hunsicker, manager of administration and technology. “With facilities management, you can look at data, use that data to drill down to the root cause, and then pinpoint where to improve performance.”
Technically, Six Sigma means limiting defects to 3.4 per 1 million opportunities — or 99.99967 percent — which is the origin of the otherwise arbitrary-sounding goal Gross uses for building availability. In this case, a defect is any time the building is down. A building, therefore, can’t be down for more than .00034 percent of its available time in order to hit the lofty Six Sigma goal.
“We strive for Six Sigma in everything we do,” says Hunsicker, who is a Six Sigma Black Belt, and one of Vanguard’s in-house resources on Six Sigma. “Some perceive it as hard to apply to a non-manufacturing function. But for facility management, it’s a great fit.”
For most of Gross’ metrics, however, there simply aren’t enough “opportunities,” or the chances for a defect are just too great, to aim for the Six Sigma benchmark of 3.4 defects per million opportunities. Some would say that makes Six Sigma inapplicable to facility management. But Gross says no. That’s because the spirit of Six Sigma — using data for process improvement — is the only way to run a successful facilities department.
“The attributes of Six Sigma are certainly applicable to facility management,” says Gross. “The words ‘Six Sigma’ tend to scare people away, but all it really means is understanding the process and identifying what, if anything, is defective.”
For Gross, managing with data is the only answer because by trending and benchmarking, those defects in process rise to the surface. And then defects can be rooted out and processes optimized, which ultimately saves the company money. Many facility executives may think that getting the numbers themselves is the end goal. But, to Gross, nothing can happen unless the real meaning of the numbers is examined.
“The data doesn’t lie,” he says. “That’s the beauty of managing with data and finding out what it really means.”
Hearing the Voices
Flexibility For a Changing Business
Bob Gross certainly understands the importance of flexibility in terms of space needs: “The business keeps changing, so we need to adapt buildings to those changes. Change management is becoming a bigger part of facilities management,” Gross says.
Gross, principal of facilities management, says The Vanguard Group’s churn rate last year was upwards of 70 percent. To combat that relatively high rate, Gross employs a two-fold strategy: Carefully consider adjacencies based on departmental business plans, so that churn has the least impact possible, then employ technologies — like universal workstations, raised floors and partitions — to make space flexible.
In fact, Gross’ facilities organization operates a “facility laboratory” called the Center for Creative Evolution. The Center is basically a test center for new facility technology to decide whether portfolio-wide implementation of particular technologies makes sense.
In addition, to plan for adjacencies that optimize space, Gross and his team focus on understanding their customers.
“The facility planning group has to really know the clients’ business plans,” says Susan Montgomery, manager, facilities and real estate planning. “The facility planners work as a team with them to synthesize information. We overlay their goals onto the facility plan.”
Part of the way the facilities organization tries to align itself with its customers is by working carefully with them to regulate their space needs. Gross and his team handle all space requests and dispense space as needed.
“We’re controlling corporate expenses,” says Gross. “We don’t want clients managing their own space.” Gross and his team charge back facility space based on head count, not on square footage. The idea is to prevent client organizations that may otherwise have had control of their own space from hoarding space or getting charged for space they’re not using. This makes space much more flexible, says Gross. It also keeps things fair. All clients are judged on the same criteria when it comes to requests for space.
“Our policy takes away the unfairness,” he says. “In some companies, people that get the most money and space are those that make the most money. We want people in the mail room to be just as motivated and productive as everyone else.”
— Greg Zimmerman
Cover photo: Don Tracy, Philadelphia Photographer