Choosing National, Regional Contractors
Pressure to focus on organizational core competencies can place facility executives in an awkward position. Those that have already hired contractors to provide all but the most central of services to facilities might feel there is nothing left to do to eke out additional efficiency aimed at improving bottom-line results. And those that are in the early stages of hiring contract service providers can be paralyzed by the number of available options.
There are, of course, dangers in the extremes. Hiring only one contractor can leave an organization vulnerable to the failures of any single contract service provider. A catastrophic failure by the service provider would almost certainly have an impact on the organizations with which it has contracts.
Identifying Goals
On the other hand, contracting with too many providers can lessen some of the gains that led to the decision to hire an outside provider in the first place. With each provider comes the additional work of finding a suitable contractor, negotiating a contract, managing and maintaining the relationship, and reviewing performance.
One of the first challenges facility executives face when deciding which company to hire for facility services is whether to hire a national service provider capable of handling all buildings in a portfolio or hire local and regional contractors to handle portions of a portfolio.
“There are very strong local and regional providers out there, and there are some strong national providers, too,” says Steve Clark, vice president of service for Siemens Building Technologies. Selecting one starts with research and making sure each has a good reputation.”
While regional and national providers both have advantages, facility executives should thoroughly review the size of the organization’s facility portfolio, establish objectives to be achieved by hiring contract service providers and carefully match organizational needs to providers’ capabilities to aid the decision process.
If, for example, centralized billing, communication and contract management are priorities for a company with a geographically diverse portfolio, then hiring a national provider to take care of all or most of those facilities can prove advantageous, says Doug Laurie, senior manager for national sales with ServiceMaster Clean.
“If things go wrong, there is only one throat to choke,” he says.
Facility executives can take multiple approaches when deciding what type of firm to hire. One option is to select a national provider capable of hiring subcontractors to handle various functions, including cleaning, landscaping services and building system repair and maintenance.
That approach consolidates communication, billing and other facets of the relationship while allowing facility executives to work with a provider who might have an established reputation in a given locale, says Matt Glover, vice president of business development for Symbiot.
Another option is to hire several national providers, each supplying a specific area of expertise, such as HVAC services, elevator services or parking management services. Yet another approach is to use national providers for some services and regional firms for others.
One factor that shouldn’t necessarily influence the decision on the best approach is the number of buildings in an organization’s facility portfolio. Many national providers have contracts with organizations that have just a few buildings.
Walt Phillips, director of service sales and marketing in North America for York International, says facility executives with hundreds of facilities scattered across the country can gain from the efficiencies brought by a national provider, but a majority of his company’s contracts are with customers that have one or two facilities in a single city.
“What the managers of those facilities like to see is the same face when there is a service call,” Phillips says. “They know the technician’s work ethic. They know the technician knows the system and how the building operates.”
Facility executives, particularly those at publicly traded corporations, have come under more pressure to review and monitor their contract service providers as a result of the Sarbanes-Oxley Act. Compliance with the law not only requires corporations to make sure its internal controls are adequate, but also that those of its service providers and contractors are up to speed.
In addition, facility executives should be sure that service providers are adequately insured and that employees of the contractor are legal citizens or have approved work permits.
“As a property owner, I don’t think I want U.S. Citizenship and Immigration Services showing up and telling my cleaning crew to get out,” Laurie says.
Survey: Experience, knowledge leaving with retirees
Many U.S. organizations are failing to capture critical workforce knowledge and experience from older employees facing retirement, and few organizations are transferring that knowledge to newer employees, according to the results of a survey released by a global consulting and technology services company.
The survey of more than 500 full-time workers between 40 and 50 years of age found that 45 percent of respondents’ organizations do not have formal workforce planning processes or tools in place to capture their knowledge.
Additionally, 26 percent of respondents indicated that their organizations will let them retire without any transfer of knowledge. Just 20 percent said they anticipate an intensive, months-long process of knowledge transfer prior to their leaving.
“If they don’t act soon, organizations will face a major exodus of institutional knowledge, as their most experienced employees leave the workforce,” said Kathy Battistoni, a partner in Accenture’s human performance practice. “With more than 25 percent of the current working U.S. population reaching retirement by 2010, companies must undertake workforce development and training initiatives to capture knowledge and minimize its loss.”
Despite the potential loss of workforce knowledge and experience, workers remain committed to their employers. According to the survey, 70 percent of respondents indicated they expect to retire from the organizations at which they’re currently employed. |
Avoiding The Blame Game
Focusing on short-term results, failing to communicate and not providing performance goals are among the mistakes organizations make when hiring contract service providers.
Those are part of the findings of a report developed by Gartner, an international business and technology consulting firm. The report, Six Mistakes for Enterprises to Avoid, summarizes missteps organizations make when managing service providers.
Among the most common mistakes are:
• Short-term focus: Executive management sees outsourcing primarily as a way of cutting costs in the short term and does not consider the long-term implications.
• Poor communication: Failing to keep staff members informed about outsourcing plans causes morale to plummet and leads to an exodus of the most valuable staff members.
• Inadequate service levels: Enterprises fail to set service-level agreements from a business perspective and do not communicate results to the right people or business units.
• No benchmarks: Without benchmarks, an enterprise cannot analyze an external service provider’s performance, a problem that is exacerbated because most outsourcing contracts are not designed to cope with the inevitable changes in business requirements.
• Failure to recognize risk: Enterprises consistently enter into outsourcing deals without considering their own risks or thoseof the service provider and how those risks can be mitigated.
• Insufficient resources: Enterprises do not make plans or budget for sufficient resources to manage their outsourcing deals, assuming that once the contract is signed, internal resource needs go away. |
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