I recently conducted a benchmarking exercise using my Intelligent Benchmarking principles. The study clearly demonstrated why implementing change is how leaders in Facility Management beat their peers and deliver results for their organization.
Since intelligent benchmarking is about identifying practices you can use to improve, not just comparing your results to an average, the intent of this exercise was to see what others are doing to deliver a specific service, what practices they use, what issues they faced, how they overcame them and more.
The key issue was in-house vs. subcontracted services for this particular Facilities organization. In fact, the numbers showed that a savings of over 40% was achieved by subcontracting. The problem was implementing the changes.
A comparison of the costs was actually a small part of the exercise, since we expected there would be a savings with subcontracted services. Even with this type of benchmarking, however, the numbers are important to build a business case by demonstrating results. The difference is that since it’s a focused exercise, the comparisons were not anonymous averages, they were from specific organizations who were closely comparable, and therefore easily applicable to my client.
The real benefit of the study was to reveal how the other Facility Managers with lower costs and subcontracted services achieved their results. How did they do it? They made the right strategic decision early on and made it happen over time instead of expecting immediate results. A key problem with switching from in-house services to a subcontractor is your current personnel. Nobody wants to impact the lives of employees. It’s particularly challenging with a unionized workforce, which was the reason for the study.
So how did the leading organizations do it? They did it over time. They used attrition. They worked with the clauses in the union agreement that allowed them to contract out new facilities as they expanded. They worked with the employees and the union to make it happen.
Some of the organizations in the study started the process 20 years ago and the service is now fully subcontracted, with little or no negative impact to their in-house employees but with a 40% or more savings in costs each and every year. Many of their original employees retired, some moved to better jobs, others moved to different jobs within the organization.
These organizations now enjoy a large cost benefit over other organizations because their Facility Managers started this process many years ago. That’s leadership. Others maintained the status quo. Why? Because change was hard and it wouldn’t give them immediate benefits. They failed to act because they couldn’t see past today.
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