In-House or Outsource?

When making decisions about the best way to staff, facility executives should keep the focus on finding the right skills, not achieving short-term cost savings

By Ed Sullivan  

One of the occupational hazards of a facility career is having so many important matters outside one’s control. Funding, information about business plans, the life of a specific piece of equipment, the price of everything from concrete to leased space, even the weather — the list is so long that facility executives may give up hope of doing anything more than putting out fires.

But one area where the facility executive does have direct influence is the department staff. Making time to develop a personnel plan will have a far-reaching and long-lasting effect.

One place to start is determining the best source for the expertise that is required to accomplish facility functions that range from engineering to leasing, from space planning to maintenance. For some facility executives, the answer is outsourcing. “They do a better job because that’s their core business,” said a facility executive voicing a widely held opinion. Said another facility executive: “It was difficult for us to look down the line and say that we could continue to provide training and career opportunities for people who wanted to work in facility operations positions.”

Competence, quality and cost

It comes down to the question of core competency, say outsourcing supporters. One company started by contracting out operations, but retained management in-house. Now it has taken the next step. “All of our facility managers are employed by the outsource provider,” said the facility executive. “We finally just took a look at ourselves and asked, ‘Is facility management a core competency?’”

But many other facility executives are equally convinced that in-house staff provides better service to the organization at lower cost.

“We know our people can provide quicker response,” said one facility executive. “In most cases we’ve found that we can do it at a lower cost.” His strategy has been called in-sourcing: He tries to eliminate outside service contracts, sometimes hiring new staff to handle the work if he can show savings.

A second facility executive said “the worst mistake I ever made” was outsourcing the mail room. With outsourcing, he said, customer service slips and the credibility of the facility organization suffers. “I consider facility management to be a core competency,” he said. “If it’s a core competency, you keep it in house.”

“We try to develop people who have ownership,” said a third facility executive. “It’s hard to do that with outsourcing.”

None of those obstacles is insurmountable, said one facility executive who has outsourced almost all facility functions. “If you are correctly partnered with the right company, you do end up getting what you’re looking for, which is somebody who is current with technology and takes ownership.”

Different viewpoints

In general outsourcing wins more support among corporate facility executives, while an in-house staff has more adherents in education and health care. That’s not surprising. In part it’s due to the age and complexity of the buildings involved. In part it’s a reflection of the cultures of the different types of organizations. But the gap also reflects the simple fact that corporations, which can shrink or grow rapidly and have a good deal of latitude about where to locate, place a far higher value on flexibility than schools and hospitals, which generally have more stable employee populations and aren’t going anywhere.

That said, it’s not unusual to find corporate facility executives who champion their in-house staff or institutional peers who have outsourced many functions.

In many organizations, of course, there is a mix of outsourced and in-house staff. What’s more, it isn’t uncommon for outsourced functions to be brought back in-house. Service quality is one reason; another is the sense that the facility executive has lost control. “I don’t understand the people who say they’ve outsourced everything and they’re the only ones left,” said one facility executive. “I need someone in each of the areas we outsource to manage the providers.”

For all the disagreement — sometimes heated — about whether the skills needed in facility functions are best obtained by developing an in-house staff or by outsourcing, there’s consensus that the skills themselves are changing.

Technical knowledge, long the mainstay of the profession, is still important. In some cases — when mission critical space is involved, for example — those skills are more vital than ever. But increasingly it’s soft skills that facility executives focus on.

At the top of many lists is the ability to communicate. That skill is essential as facility executives increasingly see their mission as one of customer service. “We’re serving everyone from clerks to the CEO,” said one facility executive. “Our department needs to be able to communicate at every level.”

For management positions, financial and other quantitative skills and strong management abilities in areas like team-building and decision making are high on many lists. “Nothing we do is rocket science,” said one facility executive. “It’s all about managing our people effectively.”

Fresh Thinking

The skills needed by an organization depend on the organization’s strategy for staffing. An in-house staff clearly needs to maintain a higher level of technical competence. Organizations that outsource technical expertise put more emphasis on new areas. Some stress vendor management. Others hire employees from other parts of the company even though they have no real estate or facility background; the idea is to embed knowledge of the business into facility functions.

Approaches like that are likely to become more common. Outsourcing is being looked at seriously in a growing number of organizations of all types — even ones that had rejected the option in the past. One facility executive has built an expert in-house staff that includes a construction crew and electricians. The advantage, he said, is speed: response times are far shorter in his hospital than in one across town that has outsourced many facility positions. Nevertheless, he’s putting together a staffing cost analysis to present to management; the result could be outsourcing some functions. “I like the way we have it,” he said. “But we’re in the process of chewing through every bit of this.”

When it comes to outsourcing, of course, money is a major consideration. Facility executives are frequently asked to compare the cost of in-house staff against the going rate for contract services. And in some cases the decision is made purely on the basis of the bottom line. Given the importance of staff in any effort to add value to an organization, however, facility executives should try to keep the focus on long-term impact, not short-term costs.

Material for this article was drawn from “Tomorrow’s Facility Executive — Today,” a research project conducted by the editors of Building Operating Management. “Adding Value”appeared in the April issue and “Adding Value: Action Plan” appeared in the May issue.

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  posted on 8/1/2005   Article Use Policy

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