Danny Marsden, Peopletoo – How councils can generate social value from facilities management

• 5th Sep 2018
• Social Outcomes

Often, a Council’s Facilities Management (FM) function can be seen as a means to an end; necessary to the continued functioning of the Council’s property portfolio but providing limited wider benefits.

The focus has been on reducing Facilities Management costs with little consideration of social value. Given the nature of Facilities Management and it being people-based services, on-going cost reductions have been achieved through traditional outsourcing, eroding terms and conditions, reducing service quality or reducing maintenance in the short term with longer term implications.

The Facilities Management market is starting to show the impact of a pure cost focus: the outsourcing model becoming less viable and services going back in-house as the contract margins are not sustainable; Cleaning services cost model impacted by the Voluntary Living Wage and non-delivery being a way of balancing costs; building maintenance moving to a reactive model with longer term cost implications, rising backlog maintenance levels and compliance risks.

A sustainable model needs to be developed for Facilities Management services. Innovation should drive cost improvements but linked to the next generation of asset rationalisation, enablement of future strategies for Council services, for example, in areas such as social care, digital technology, improved procurement, better understanding of cost and activity, and balancing financial, performance and social outcomes.

However, Facilities Management has the proven potential to deliver significant social value benefits through; the employment and development of staff with a robust workforce development strategy; payment of the Voluntary Living Wage; providing added value to services such as social care; supporting local communities; improving environmental performance and sustainability; and offering opportunities for vulnerable groups.

In the modern workplace, the provision of career development pathways is becoming an increasingly important factor in both the retention and recruitment of staff. One report recently claimed that 74% of UK workers believed they were not reaching their potential because of insufficient support and training. Similarly, a further report highlighted that circa 40% of employees who believe they do not receive the required support and training will leave their job within a year.

These statistics demonstrate how critical it is for Councils to provide development and training to their employees in order to foster an environment of support, and opportunities for advancement. This is often especially difficult for Councils who, due to their improved packages of employee benefits and support and/or the local employment market, benefit from above average retention rates, which conversely results in limited positions becoming available for growth. Fortunately, however, there are several opportunities which are available to services operating within Facilities Management including:

• Graduate Schemes across a range of Service areas
• Work Experience
• Apprenticeships
• Rewarding service through putting experience on the same level as education
• Training and invest to save opportunities.

Further employment opportunities can be created through trading Facilities Management services and generating income or Councils bringing work back in-house where value can be demonstrated.

Generating Social Value

Social outcomes are embedded in corporate plans and priorities but need to be developed into a focused strategy and plans with clear targets and outcomes for each area within a Council. A further example is the Public Services (Social Value) Act, requiring those who deliver Public Services to demonstrate how wider benefits are achieved, including social, economic and environmental. However, in Facilities Management, there is often less transparency and measurable social outcomes with delivery commitments in the supply chain, which then also creates an inequitable comparison with the true value of in-house services. Similarly, in Wales, social outcomes are embedded in the Future Generations Act.

Facilities Management operations are almost uniquely positioned within a Council to benefit from promoting these opportunities to employees due to the wide variety of job roles across an array of distinct services, such as skilled tradespeople, operational delivery staff, unskilled staff, and management. Embedding these opportunities within a Facilities Management function can establish a clear path of advancement as skills and experiences are acquired.

Due to the scope of operations within Facilities Management, there are numerous entry points and several distinct qualifications and competencies that must be held to do so, including chartered surveyors, engineers and tradesmen.  Whilst these roles require and develop unique skills, they do not necessarily foster any relating to leadership and the management of people.

Therefore, Council’s Facilities Management operations should look to provide opportunities and training to foster and develop skills within their current employees – by both looking longer term at leadership and providing clear development pathways. For many Councils, this is now a key facet of their role as ‘Corporate Parent’ and ‘One Council’ approach, developing their role as an ethical employer and supporting employees throughout their working life to progress through the Council.

A further component of a Council’s ‘Corporate Parent’ approach, can be maximising opportunities for vulnerable groups and individuals, which the Council is already in contact with – an objective that Facilities Management is well placed to facilitate. For example, a key element of the Council’s responsibilities to young people who are supported by Social Care services, for instance, Looked After Children (LAC) and young people with learning disabilities, is to support them into meaningful occupation, such as employment. By working with Adults, Childrens and Education Services, Facilities Management can offer critical experiences to these young people whether that be through entry to work programmes, part time roles or Apprenticeships. This will ensure tangible benefits are provided to both individuals and local communities alike. However, whilst this approach can provide significant benefits for both the young people and the Council as a whole, appropriate resources, time and support is required to ensure opportunities are maximised.

With the challenging financial climate of Local Government and Facilities Management budgets now becoming the norm, one option available to Councils is to explore opportunities for collaboration, trading and insourcing work from the supply chain. To many Councils, the main blocker to this is a non-competitive final price, with Councils being hamstrung by inflated overheads and costs including: Corporate HR, ICT and various recharges. Furthermore, many Councils opt to pay the Voluntary Living Wage in comparison to the private sector competitors/providers.

However, whilst often being perceived as a significant barrier to competitiveness, payment of the Voluntary Living Wage can also be beneficial and be used as a differentiator when competing with external contractors. Studies have demonstrated that paying the Voluntary Living Wage actually benefits the business, the customer, and the wider local economy. Studies suggest that the benefits do not just stop with the individual but are passed on to the wider local community through increased spending at local shops for example. Likewise, the Voluntary Living Wage has been linked to improved employee satisfaction and retention including lower absenteeism, lower sickness, with some Councils also reporting a 25% decrease in staff turnover following the implementation of the Voluntary Living Wage. This can support the effective operation of Facilities Management services, ensuring smooth delivery, avoiding disruption caused by absence, sickness and turnover, fostering value and dedication in the workforce – and ultimately resulting in an enhanced service being offered to internal and external customers.

This does not necessarily mean that the cost of increased salaries is passed on to the end customer. Often, rewarding employees with a fair wage may mean they are more receptive to change and alterations to working practices – such as the use of technology or altered specifications, resulting in productivity improvements. Additionally, when awarding contracts, customers are become increasingly perceptive to value for money and wider social value benefits which propositions may deliver in addition to the actual product/service. Therefore, in implementing the above, Councils can deliver social value, whilst demonstrating the ethical nature of their operations to Customers.

A well-structured and balanced Facilities Management function may also assist the Council fulfil and benefit from the 2017 Apprenticeship Levy, which aims to facilitate the Government’s target of training an additional 3 million apprenticeships by 2020. Whilst this also has the potential to be viewed as an additional cost, it may be of real benefit to Councils. In an issue which is not just specific to Facilities Management, Councils are increasingly seen to suffer from a lack of succession planning, with a top-heavy workforce of skilled, long-serving employees, approaching the end of their careers without any obvious internal candidates lined up to replace them. However, through the provision of Apprenticeship this skills gap can be plugged, and can grant young people the ability to learn off experienced individuals and inspiring leaders. This process will deliver a sustainable Facilities Management function which has longevity and ensure a Council’s Facilities Management internal workforce, does not simply diminish and shrink as employees leave or retire.

Whilst not only developing workforce resilience, which the Council will benefit from in their future Facilities Management provision, Apprenticeships can also deliver short-term cashable benefits. For example, a key aspect of developing a diversely skilled and flexible workforce can be to increase a Council’s competitiveness, bringing global hourly rates down and the delivery costs of the Service as a whole. With a workforce not simply being composed of experienced, high-salaried tradespeople, the average hourly rate that the workforce needs to be charged out at to remain financially viable, will fall significantly.

However, what happens if a Council has out-sourced its Facilities Management operations? The evaluation of contractors on Social Value realised through service delivery, should not be over-stated, and evidence should be supplied to the Council on exactly how bidders will ensure wider value for money is delivered by their propositions and be secured through the contractual process. This value should not just relate to the Facilities Management function, but also in terms of its positive influence on other aspects of a Council’s operations, for example the hidden economic and social benefits to the community of providing an Apprenticeship, and then full-time employment, to a care leaver. One way to achieve this is through the design of specifications for external Facilities Management contracts, and the decision to utilise local SMEs wherever possible. SMEs can provide a Council with several benefits including increased flexibility and ability to react to local issues, knowledge of the local area and labour sector, and the ability to work more innovatively with the Council to design a bespoke service offering. However, one of the major benefits is to the local economy through both increased employment and ensuring that the money paid to the Contractor remans local. There are several ways a Local Authority can support SMEs for example through offering of favourable payment terms (e.g. payment in 14 days instead of 30) to local businesses.

Likewise, Facilities Management services, regardless as to whether they are delivered internally and externally, provide a Council with several opportunities to support its ‘green’ agenda. In its simplest form, an environmentally friendly approach may be achieved through specifying the materials which are used by Facilities Management services, for example using the Green Seal standard for Cleaning Products or refitting a building lighting to LEDs to conserve energy usage. In addition, many Councils are now involving their Facilities Management teams more heavily in the design and build of new offices/schools, ensuring that those who will maintain the site can feed in their operational knowledge early. This will only support a more affordable, environmentally sound and sustainable building.

A strong focus on social value will ensure significant benefits to a Council’s Facilities Management function, including both social and economic; whilst embedding it in operations will create a sustainable model which future-proofs the Facilities Management service.

Danny Marsden
Service Manager – Peopletoo

Email: Danny.Marsden@peopletoo.co.uk