Those looking to achieve further efficiencies may have to explore more fundamental change and, increasingly, this means the way in which organisations themselves are structured and managed.
“Organisational design covers the culture, the skills and the structure of an organisation,” says Dr Connel Bottom, assistant director, corporate finance and real estate advisory, at PWC. “It’s fundamentally about going right back to first principles and building up a target operating model, which is nothing more than a diagram to keep people aligned.”
Typically, this will start with a customer-focused approach, he says, before evaluating customer interfaces, such as helpdesk or contact centres, and then the organisation’s core activities, part of which will be facilities management. Bottom says such initiatives generally tend to be led by senior management, but there are obvious implications — and opportunities — within this for facilities management functions.
The starting point for any kind of programme from the FM side is likely to be estates [real estate], he says. “There’s no use undertaking change in facilities management if your square meters are going to alter next week,” he says.
“You need a strategy that includes square meters of workspace or whatever it is you need and then your facilities management can be worked out. If you don’t work that out then it’s full of risk. A good bidder would sniff that an organisation hasn’t really thought through its portfolio and it could use that to its advantage. But they might also just walk away from it.”
Andrew Campbell, director of Ashridge Business School, says in the current climate such initiatives are likely to involve physically moving teams into larger buildings, both to reduce cost on office space and also as a possible prelude to the centralisation of key services.
“Clearly the fewer buildings you have, the lower the costs are,” he says. “You might want to put teams X, Y and Z together, but not have a building that’s big enough to hold them all and therefore decide to change your buildings. But often having multiple offices is a way of getting at the question of whether an organisation is too decentralised or incurring too much duplicate cost.”
The issue of estates is also closely linked to that of sustainability and it is perhaps in this area that FM may generate more interest from the wider business in implementing more fundamental change. Jeffrey VanderLinden, a principal at Capgemini Consulting, argues that as the more traditional parts of FM’s remit — such as building management and security — become automated and, effectively, transactional roles, this is increasingly an area in which FM needs to focus.
“Companies’ estates and facilities strategies are creating more flexible and mobile working arrangements, and reducing the need for bricks-and-mortar property,” he says. “At the same time, the sustainability agenda, which before really used to be part of a broader corporate social responsibility agenda, is now becoming increasingly important. That is where FM should be putting more of its high-value work and reducing costs on the transactional side.”
Inevitably, any wider reorganisation will also have implications for how the FM function itself is structured. Bottom says a common issue in many businesses is for the FM management structure to be broken up across estates, capital projects and hard versus soft services. This can result in fragmentation, or differences across geographical areas.
“A lot of problems are down to legacy change issues, maybe organisations coming together and bolting on bits and pieces,” he says. “If you had a portfolio separated geographically, you might find that there are two capital projects teams and two facilities management teams. This is about removing duplication and streamlining efficiency, so processes will be optimised. There will be one information system integrated with one set of data and people will be attentive to the data quality.”
The way in which FM is structured in KPMG is different to many organisations, says Guy Stallard, head of facilities. It comprises real estate, workplace services and aspects of health and safety, as well as a small technology team, plus responsibility for the organisation’s environmental policy. Stallard himself forms part of a central services management team, along with his counterparts from IT and HR, which comes together on a monthly basis to discuss any issues relating to the running of the organisation.
“At the extreme end, you have elements that are purely yours,” he says. “So as long as the cleaning is done, no other functions are very interested in that. But if you get to something like the workplace environment — the desk — then you hit on technology and how you create the right environment from HR’s perspective, so it all comes together.”
This collegiate, cross-functional approach was used when designing the organisation’s new London headquarters. “The whole concept was that you start thinking about how people work, not who has control of the cost,” says Stallard.
Structural integrity
Damon Dermody is director and head of operational strategy and transformation at Serco Consulting and advises on the most effective structures both internally within Serco and with external clients.
He estimates that a comprehensive review of FM can typically result in savings of 15-25 per cent on total cost and maintenance; around 4-5 per cent of this can be down to moving towards a more efficient structure.
“This would come from putting in place larger spans of control for cross-maintenance teams down to frontline level and reducing the number of tiers between the FM or building department lead and frontline maintenance technician level,” he says.
Yet any FM restructure will need to line up with wider organisational set-ups, particularly when it comes to budgetary processes, warns Guy Stallard, head of facilities at KPMG. He says particular problems can arise when organisations consist of various subsidiaries, where individual managing directors have responsibility for their own business units.
“If you think of any group, you often wonder whether it is the head of FM across the country who runs that profit-and-loss line or the managing director,” he says. “Often the facilities costs sit with the function that resides in the building and, therefore, there isn’t a person who controls all of those costs.”
KPMG is not divided into subsidiaries in this way, says Stallard, and has a structure in place where the managing directors are effectively responsible for their own business lines, but this does not extend to overhead management. “We want them to concentrate on other things,” he says.
A greater trend towards centralising FM, perhaps in shared service divisions, can not only drive efficiencies across the business, but also generate a more productive culture around FM, suggests Campbell. “People are discovering that if you have leaders who have operational management skills, they have the time and interest to count the number of loo rolls that are being used and measure cost-per-employee, which their previous functional bosses had rather less interest in,” he says. Ultimately, this can create a momentum towards outsourcing of particular FM services, as these individuals will be assessed on cost-performance metrics, he adds.
Organisational upheaval can actually be the catalyst for a detailed assessment of the role of an in-house FM team, suggests Dermody. “They might want to just manage performance and service-level agreements, and leave the service delivery to a prime contractor sitting across a series of sub-contractors”, he says.
“Now, we’re seeing outsourcers moving into that consolidated service provision role; then you have a much reduced, smaller-scale, intelligent client function acting as the purchaser and commissioner of services, rather than overseeing the delivery.”
How organisations approach this will depend partly on the type of the business and just how important the delivery of core FM services is, suggests Stallard. He distinguishes between three models: the total FM approach where everything is outsourced to an external organisation; the integrated FM model where a provider effectively acts as an in-house FM team, and a “hybrid” model, which combines some single-service outsourcing with bundling, with other services managed in-house, which is his own preferred model.
“The bundling is where economies of scale can be found by putting services together because it removes downtime,” he says. “But I also have to keep some services in-house. For example, some of my regional offices don’t have as many visitors as my London office, so a receptionist might do some secretarial duties, which they would obviously not do if they were with a third party.”
For now, FM practitioners need to put themselves in a position where they can wrestle with such wider organisational change issues and ensure they are invited into any such discussions, says VanderLinden. “The task is to go from being back-of-mind or ‘necessary evil’ or ‘investment’, to being at the forefront of the thinking — that’s not easy,” he says.
How well-placed a function is to do this is likely to depend on how pivotal FM is to the business — those in the retail sector will be seen as more strategic.New issues, such as sustainability, offer opportunities for FM to demonstrate its capacity to take on more challenging and strategic matters, he adds.
Driving from the top
Bottom, though, warns that it is difficult for FM functions to take on this kind of initiative on their own. “The big driver here is the corporate and financial performance of organisations, in the private and public sector,” he says. “When a facilities manager has an FD or chief executive to push this agenda, suddenly, things start to move.”
