The facilities management (FM) industry is now in an era of rapid change — change that is required for sustainability and performance improvement. But what are the industry’s needs?
Do FM professionals understand and meet core customer requirements? What is the impact of technology on building management systems (BMS)?
TechSci Research has indicated that the FM market is to grow at a steady rate from 2016 to 2021 on account of the huge infrastructure spending. But in reality, FM companies face a lot of challenges in getting jobs and attracting the right talent.
Some of the emerging trends in the FM business remain unhealthy in terms of sustainability and governance:
• Many employers offer integrated services such as property management, cleaning, security, catering and support services; • Real estate market conditions and costs reduce profit margins; • Big business houses opt for cost-efficient independent services; • Multiple outsourcing based on labour supply contracts; • Unprofessional recruiting agents to hire a low quality workforce; • Increased labour turnover of as much as 20 per cent in a highly volatile market; and • High overhead costs and their impact on direct costs.
Let’s discuss each of these points.
In general, clients have specific needs dependent upon their business cycles — so companies must take these into account when designing and delivering an integrated solution. This integration adds value to a development throughout its life cycle — from the facilities management strategy during the design phase, project management from construction to handover, and post-handover facilities management and operations.
Companies must focus on understanding their clients’ requirements, tailoring solutions and integrating them to exceed set targets. The challenge is not in getting the best raw materials, technology and equipment but in employing the right manpower.
Building owners are becoming highly demanding due to inflationary pressures. Owners associations demand low prices. This increases the pressure on service providers who, in turn, will have to reduce costs to be at par with the competition.
As per industry norms, overhead costs should not exceed 5 per cent of the revenue budget, whereas some of the big FM companies here have created a corporate structure that eats away their earnings from sales. By having high management staff overheads, it becomes hard to achieve the goal of 10 per cent net profit.
* Major property developers usually prefer to either outsource FM work or have an independent entity with industry-suited policies. They have to ensure that their build-to-lease products remain cost-effective.
In the case of build-to-sale products, it is the responsibility of master-developers to ensure efficient FM services for end users as well as common infrastructure services. Operating costs of FM companies must be controlled and affordable.
* Even when it is the responsibility of companies to ensure they deal with credible worker providers, since labour contracts determine the price, the only way for them to increase profit will be to decrease expenses.
So they end up bringing in a low quality workforce to fill the headcount. Many service providers believe soft facility management does not require skills for it to work. However, cleaners and security workers also need to have essential personality traits and exhibit the right behaviour required of their employment.
* Ninety per cent of FM companies rely on external agencies to hire technicians and unskilled workmen. They do not pay recruiting service charges to the agents; rather, agents collect money from the individual workers themselves. This is not a healthy practice.
It is evident that employers do not assess them. They allow agents to “fix” everything, but is this the right practice?
* The industry’s focus on hiring employees at low salary offers lead to demoralisation among FM workers. They work without developing genuine loyalty. They will consider their stay in organisation as a form of exploitation until they find a better situation with better pay. So their loyalty will always be up in the air.
Blue-collar workers from emerging markets have already begun to demand reasonable pay and benefits compared with junior level white-collar jobs. With pay increases in their home markets in 2015, and again in 2016, they are weighing the benefits of staying home.
* Sometimes, jobs and positions are created even though there is no need. What FM companies can do to avoid such is to follow a simple grading structure. They do not require 15 to 20 layers in order to function.
There is a dire need to regulate employment practices in FM workforce management. Regulating authorities as well as FM associations must frame dynamic guidelines in terms of manpower, and follow governance models strictly to sustain this booming business to achieve a consistent level of development that will benefit all, including workers.
The writer is Principal HR Consultant and Executive Director at Stree Group.
For information on the real estate sector, within the UAE, please visit our sister site, getthat.com.