Return on Investment (ROI) is the holy grail for facility services.
For managers of in-house departments or contract facility services, showing an ROI would help justify your spend upstairs. Getting budget approval would then be gravity fed. Include the expected ROI with your budget and its all downhill. What senior exec would not invest some to make even more?
For facility service salespeople, ROI would be the frosting on your pitch and presentation. In addition to all the non-financial benefits and fuzzy soft cost savings, an ROI would be a quantifiable differentiator. The contractor with the greatest ROI would more often win the bid, rather than the lowest price alone.
However, ROI for facility services, like the holy grail, may not exist.
It may just be semantics defining ROI as quantitative, financial return on investment, but producing it is not a straightforward case. Here are several considerations.
Operating Expenses – Not True Investments
Facility services are not intended to produce a financial return. They’re operating expenses.
The purpose of facility services are to enable customers, visitors, employees, even other contractors to perform their business function within company facilities. As a result, company facilities serve the business purpose. This is seen in:
- A clean mall encouraging shoppers to buy more
- A secure distribution center minimizing shrinkage
- A well maintained production line producing higher yields & throughput
Investments in facility services keep businesses operating, but they don’t generate revenue, they don’t drive a company’s success. Facility services have the same limited impact as other support services, as other operating expenses.
An Ounce of Prevention
A major benefit of facility services is their prevention or mitigation of a costly event from occurring. For example:
- Security services protecting life safety against injury or death
- HVAC services maintaining equipment to minimize breakdowns & extend its lifecycle
- Janitorial cleaning for health that helps reduce the spread of virulent diseases
Redefining ROI
For facility services it might be more helpful to redefine ROI differently from the financial definition. In this alternative facility service ROI terms and their product are repurposed.
While the term “investment” remains the spend on facility services, “return” might include additional value received above compliance to contract specifications.
A facility service ROI may include:
- Cost savings from reducing budgeted expenses
- Cost avoidance of un-budgeted expenses
- Soft cost savings from non-productive customer time spent on service
- Non-financial benefits:
- Customer satisfaction
- Customer loyalty as measured by net promoter score
- Customer freedom from distractions, free to focus on self-selected priorities
- Minimal time needed for oversight/governance
- Customer confidence in service delivery & quality
Facility Service ROI Where Are You?
The search for a practical and usable facility service ROI continues. If anyone knows its whereabouts, please let me know. There are a few other, hard to find valuables I’d like you to look into.
How are you calculating facility service ROI?
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Chris Arlen
President, Service Performance
Technorati: ROI, customer satisfaction, customer loyalty, net promoter score
January 21st, 2009
Fear is neither bad, nor good, it just is. Today it’s everywhere.
Fear is in increasing job losses, vanishing pensions, frozen credit markets, and the worst recession since The Great Depression.
Fear is something, even though FDR tried to spin it in 1933 with “The only thing we have to fear is fear itself.”
Fear is part of the human animal.
Fear is a source of energy and focus to act, a much needed stimulus when greater effort is needed, and a welcome challenge after we’ve stepped on stage or kicked a presentation into high gear.
Fear is always with us, always will be.
Fear is used by some; it’s promoted by news media to gain eyeballs and sell ads, and shaped by politicians to achieve their agendas and keep positions of power.
Fear can effect societies when one member of the herd takes off running and stampedes the rest.
Fear can effect individuals if it’s allowed to stress health over time.
But fear by itself is neither good nor bad.
The only important thing about fear is our response to it.
Do we overcome imagined monsters, or freeze with inaction?
Do we look for opportunities and invest (Warren Buffet invested $3B in GE and $5B in Goldman Sachs this past fall), or hunker down and wish for a tide that raises all boats (like many banks who are squeezing lending after getting TARP millions from the US Treasury)?
Do we accept fear’s presence, minimize it where possible, and mitigate it’s effects?
Warren Buffet’s quote “When people are greedy, be fearful – when people are fearful, be greedy” speaks to taking action in fearful times.
How are you responding to your fears?
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Chris Arlen
President, Service Performance
Technorati: fear, investment, TARP, Warren Buffett
January 15th, 2009
Rodney Dangerfield’s “I don’t get no respect” setup his punchlines.
The service role can say the same thing that it doesn’t get respect either, but it’s not funny.
Janitors, security guards, landscapers, drivers, food servers, care givers, carry America’s service economy on their backs.
Someone has to do this work. Imagine the chaos of daily life if its not done. Remember the inconvenience and disruption when services are done carelessly, haphazardly, or incompletely.
It’s clear the service role is not respected for its importance.
Why is Respect to the Service Role Important?
If you manage or contract a service you’re continually looking for great service people. These individuals help make or, in their absence, break your service.
And the best people have a strong sense of self-respect, which leads to…
- Taking pride in one’s work, which leads to…
- Better performance & job satisfaction, which leads to…
- Increased loyalty & tenure, which leads to…
- Happier customers receiving greater value.
This self-propagating wheel of good fortune secures the respect of others.
However, the reverse of the above is also true. If the service role isn’t respected by the department, business, or those performing the service, bad things occur, such as:
- High employee turnover
- Poor quality & inconsistent service
- Little value received from the service investment
Funny, the Service is Respected, but not the Role
Service departments and business enterprises get some degree of respect. They’re fulfilling a business or support function. They’re employing people, and/or making profits, and/or paying taxes.
Yes, some services are more respected than others (high-tech is sexier than long-term nursing), but all in all, the service itself is respected for its contributions to businesses, the economy, and society.
So if the service itself gets some degree of respect, why not the service role?
In today’s world, the individual role of the person providing service is looked down upon.
There are exceptions. They’re the highly paid business professionals, such as lawyers, doctors, programmers, architects, etc.
But there are far fewer professionals compared to the millions of people in lower paid service roles.
So why the lack of respect? Is it because some service roles aren’t valued, therefore low paid?
Valued vs. Respected
Valued and respected aren’t the same.
When a service role is valued, it’s paid very well. But respect isn’t guaranteed by high pay alone. Think about professional athletes behaving badly off the field.
Someone Who Serves is Not a Servant
The reason the service role isn’t respected is a result of a limiting mindset, a false belief that “someone who serves” is a “servant”.
In the egalitarian-minded U.S. today “servant” is a pejorative term, not a respected professional role.
Changing Direction from the Inside Out
Obviously there’s a business rationale for raising the respect of the service role in both the minds of the individuals providing service and society at large.
Some sage said that “to change the world you must first start by changing yourself”. And so it is with respect for the service role.
There appear two routes towards increasing that respect, though I’m certain there are many more.
1) Implement business practices that help employees build self-respect
2) Hire self-respecting employees
1) Implement business practices that help employees build self-respect
Here’s a great example of a motto created for hotel workers by the former Ritz-Cartlon President, Horst Schulze.
“Ladies and Gentlemen serving Ladies and Gentlemen”
From this motto training programs, practices and procedures were crafted to support the motto. Yet this simple statement communicates the worthiness of the service role.
It makes the server equal to those being served. As a result, it enables the server to retain their self-respect while serving others. It’s incredibly powerful for employees who may not have started out with a lot of inherent self-respect.
And this worthiness is in direct contrast with the mindset of a “servant” that implies being lesser than those served.
2) Hire self-respecting employees
Hiring practices typically look for skills, experience and a few desirable personality traits, such as honesty, reliability, etc.
By adding self-respect to the hiring profile, service departments and contractors will be further along to realizing the business benefits from those who respect their service role.
How are you raising the respect for your service role?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: service role, employee productivity, service performance, customer loyalty
January 8th, 2009
