The facilities management business in Dubai was facing severe cashflow and cash burn issues even before COVID-19. The virus only added to the problems. Image Credit: Shutterstock

Dubai: Cut costs by letting go…

Businesses everywhere were fixated on trying to get their cost of operations down once the impact of the pandemic became amply clear by March last year. If that meant cutting down on the workforce, then they had to take those decisions.

But they were those businesses that did not see job cuts as being the easiest solution open to them. The Dubai-based regional operations of French facilities management (FM) company Sodexo managed just that.

An ‘Employee Relief Programme’ was set up in April with the intention of helping the workforce see through the final six months of 2020. This was essentially a fund generated from within the company, to help those most at risk after project sites got shut down.

Least number of jobs at risk
The Top 3 sectors that saw the least retrenchments during COVID-19 were education, as teaching continued virtually, healthcare, as demand for beds, care, tests and now vaccines made it critical, and digital/e-commerce as the mode of delivery and customer interface made consumers shift their buying patterns," said Vijay Gandhi, Regional Director at Korn Ferry, the employment consultancy.

It worked

The fund has in its six months met its goals, at least most of it. Sodexo managed to retain 85 per cent of its pre-COVID-19 workforce – a sizeable number for a manpower heavy business such as FM. The company employs 420,000 across its network, while in the Middle East its headcount is 7,500.

In Dubai, it also meant handling an already difficult situation the facilities management industry was finding itself in. Cashflow issues had become common well before COVID-19 arrived and disrupted it further.

“Today’s economic situation coupled with COVID-19 and an already competitive FM market is certainly affecting cashflows,” said Rachid Noujeim, CEO of the Middle East operations, which is based at Dubai Silicon Oasis.

“Unlike past crises that affected a particular industry, the pandemic affected all alike, some more than the others. There is no doubt that in these situations all clients tend to minimize spending, reduce budgets and delay payments.”

Yet to stabilise in full
Things are yet to stabilise in the wider UAE job marketplace. January provided some relief in terms of new jobs being created in the private sector, according to IHS Markit, which tracks spend patterns through its monthly Purchasing Managers Index data.

But some industries remain particularly vulnerable, and this is where more jobs could be at risk.

No precedents

The fund was set up in early April. “There were definitely no similar situations in the past 50 years - so we cannot say we went by any precedence,” the CEO added. “It was managed at a regional level based on specific criteria set by the group.”

Raising the fund

[A plan] had to be prepared in terms of resources to mobilize the sites that were temporarily suspended if the situation improved

- Rachid Noujeim, Sodexo CEO

The bulk of the collections were brought in through partial waivers of salary and other remuneration by top and middle management. This alone helped provide 30 million euros during the six months, with the chairperson and Group CEO waiving 50 per cent of their remunerations. Group-wide executive committee members gave up 10 per cent of their fixed remuneration over the last six months as well as their annual variable remuneration.

Plus, 200 senior executives from all operations waived their annual variable remuneration.

“From the very first signs of the COVID-19 outbreak in China, Sodexo Middle East began mobilizing resources to ensure employees and consumers stay safe and healthy,” said Noujeim. “While some of our colleagues continued to deliver services during these challenging times, others were facing the impact of partial or complete site closures and temporary suspension of services.

“[A plan] had to be prepared in terms of resources to mobilize the sites that were temporarily suspended if the situation improved. In line with the Middle East’s focus on health and safety initiatives, such as the vaccination drive, businesses are picking up pace and most of our colleagues are back to work.”

And making sure the bulk of the jobs were saved...