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Chicago — Changing business requirements have made facilities management compliance a challenge for many companies around the world. With more than two-thirds of respondents to a recent survey ranking compliance as a high priority, it’s on the agenda of facility management professionals more than ever before.
New research recently released by JLL tackles the complex topic, revealing the expectations and need for potential risk to the business to be managed by facility management. The challenge is to ensure that critical global compliance goals across multiple dimensions are achieved.
“Every country, region, and city adds a layer of complexity to operational compliance for the facility manager,” said Maureen Ehrenberg, international director of JLL’s global integrated facilities management business. “The new Outsourcing 4.0 approach enables corporations and their service providers to rise to the occasion addressing operational, regulatory, contractual, and ethical compliance. The stakes are high, because non-compliance can have serious consequences for a company.”
As compliance mandates become more comprehensive, the risks are growing, too. JLL experts have identified seven primary areas to keep an eye on. A lack of awareness can result in penalties that may be severe as well as resulting in a negative impact on your brand and organization.
1. Ethics: Aside from being potentially illegal, unethical behavior can have negative consequences for both a company’s bottom line and reputation. For that reason, a facility management service provider should demonstrate a strong commitment to ethical behavior that includes, for instance, the obligation to refuse gifts of any kind from subcontractors.
2. Safety: From maintenance of fire extinguishers to safe handling of hazardous waste, physical security is not only a top priority, but also a highly visible area of compliance risk and legal liability. And, company environmental health and safety (EHS) policies and procedures can help reduce incident risk.
3. Vendor and financial management: For companies, particularly those that outsource facilities management, appropriate internal financial controls and management are essential for service providers and their subcontractors for Sarbanes-Oxley and ethics compliance. Strictly enforced procurement and vendor management policies and procedures can reduce the risk.
4. Labor management: Companies must ensure their facilities managers, whether in-house or outsourced providers, comply with anti-discrimination laws, other human resource-related regulations, and company policies not only in their own operations, but also with their subcontractors.
5. Information security: Many high-profile data breaches have occurred because of physical security weaknesses. The importance of these processes is elevated for companies using smart building management services or integrating corporate data into the provider’s data and analytics platforms. Companies should confirm that their service providers are equipped to protect both physical and virtual corporate data assets with best practices and access control.
6. Data governance: When a company is fully compliant, its data should reflect it. Even the most robust investments in compliance will not pay off if regulatory agencies can’t access the information they need, when they demand it. Facilities management teams must standardize the data related to compliance and ensure that it is accurate, consistent, timely, complete, and secured.
7. Contractual risks: Breach of contract is a financial and legal risk where even a minor infraction can have serious repercussions. If an FM provider fails to maintain building systems properly in accordance with its master service agreement, the resulting equipment breakdown could jeopardize operations.
“First and foremost, facilities managers must prevent threats to human health and safety that can arise from poorly maintained life safety equipment, improper handling of hazardous materials, and other workplace issues,” said Jim Whittaker, president and CEO, Facility Engineering Associates and contributing author to the JLL report. “Beyond physical risks, however, companies must also heed new financial, reputational, and contractual risks. The cost of non-compliance can be severe and even material.”
The challenge of maintaining current compliance knowledge is a major factor behind the emergence of the Outsourcing 4.0 facilities management model. In this new approach, a company relies upon a tight handful of outsourced service providers that share risks and rewards in pursuing the company’s business goals.
“Companies are seeking integrated facility management partners that have invested in a culture of safety, compliance, and infrastructure resilience,” Ehrenberg said. “These service provider partners are expected to assume much of the risk in the Outsourcing 4.0 model, and to offer a track record in creating and managing global operating standards for compliance.”
JLL is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying, and investing in real estate. For more information, visit www.jll.com.
