Facilitate August 2020

August 2020 / FacilitateMagazine.com

Taster edition

Empathy, emotional intelligence, resilience – how the sector is adopting a wider skills spectrum

FAC I LITATE

AUGUST 2020

CONTENTS AN A LYS I S

6 M ARRI AGE OF CON VE N IE N CE Sector specialists examine the merger of Mitie and Interserve’s FM arms 7 B O O STI NG DIVE RS ITY More transparent discussions are needed to create real diversity in FM 8 SECURITY RIS K Reports show security guards are more prone to Covid-19 for ‘complex’ reasons

COVER: GETTY

9 SU P ERM ARK E T SWE E P Supermarket chain Tesco is to stop contracting out cleaning in about 1,000 of its UK stores 11 NEWS MAK E RS Ten top stories from Facilitate online

WHAT WE DO

Facilitate – the magazine and online news content resource of the Institute of Workplace and Facilities Management (IWFM) – keeps IWFM members and others up-to-date on all workplace and facilities management issues, ensuring you are informed of the latest developments and thinking.

COM M UNI TY

KNOW LE DGE

13 IWF M POLICY PIPE LINE New guidance to help IWFM members make the business case for fair pay

34 ARE YOU ‘READY’ Learn how to build resilience to face an uncertain future

26 PE R SPE C TIV E S The four most interesting and insightful opinions on FM this month

35 SECURE KNOWLEDGE The five key competencies security professionals must demonstrate

29 A BIT A BOU T YOU Marketa Urubova, facilities manager at Bellerbys College Brighton

36 HUDDLE TIME Huddle rooms provide the ultimate collaboration space

3 0 AU GU ST @ IWF M The people and projects currently informing IWFM activity

37 UNIVERSITY CHALLENGE How do facilities and estates managers prepare to reopen a complex site?

3 1 C A LL S TO AC T ION The events and training options that deserve your attention

40 BIOMETRIC MYTHBUSTING Dispelling the misconceptions surrounding biometrics

LONG FORM

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A BROADER SPECTRUM Sector specialists explain what skills are now needed to ensure truly empathetic facilities service management.

KEEPING CALM TO CARRY ON Empathy and other soft skills have become increasingly important tools during the ongoing Covid-19 crisis

– your award winning magazine

Facilitate is the current holder of the Best Magazine (10-32,000 members) award, as voted for by judges at the Association Excellence Awards, a body which assesses the media brands of trade bodies, professional membership organisations and associations.

We have an ambitious programme for 2020 and look

forward to continuing to produce content that meets your needs.

We always work ahead, so please contact us if you have an angle or format we should be pursuing.

Got a story? email editorial @facilitatemagazine.com

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LE A D E R

COMMENTS

MA RTI N R E A D

L INDA HAUSM ANIS

We must listen When I think of the term ‘soft skills’ it feels like a misnomer and yet also appropriate.

I say a misnomer because ‘soft’ as opposed to ‘hard’ makes powerful human qualities like empathy seem less important than more practical skills – a manifestly false proposition.

But ‘soft’ also evokes comfort and flexibility, and it’s so important that we, as leaders of teams, do our best to ensure both are fostered and maintained.

Our people need to be emotionally and physically comfortable to do their best work; equally, we must be flexible and accommodating to individual circumstances and personalities.

Our YouGov-powered research into workers’ experiences of remote working during lockdown was very illuminating in many ways, but something that jumped out at me is who is looking forward to returning to the corporate workplace and who isn’t.

Compared with other age groups, 18 to 24-year-olds have fared less well in working remotely: they’re less likely to have a suitable home office, and more likely to feel isolated and distracted. It’s no wonder they’re also more likely to want to return.

At the same time, we also found that most workers overall want to work remotely more often in future. There is no one solution that fits all. We must listen, with compassion, to our employees’ needs and be willing to be flexible to support them as best we can.

Organisations must have seen the need to recalibrate their modus operandi, not just during Covid-19, but also for the foreseeable future. Employee wellbeing is the key to organisational performance and that requires the right workplace, wherever that might be.

LINDA HAUSMANIS is CEO of the IWFM

FROM THE EDITOR

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ioneering mockumentary series The Office turns two decades old next year. Ricky Gervais and Stephen Merchant’s original idea proved so successful that a slew of TV awards was soon followed by 10 global variants of the show, any number of copycat sitcoms and the mass adoption of the mockumentary format.

In hindsight, what’s amazing is the universality of both setting and humour. An immediately familiar sales floor staffed by office worker caricatures so well observed that they proved instantly recognisable to viewers in the UK, the USA, France, Germany, Israel, Finland, Spain, India and beyond. The Office highlighted uncomfortable truths about office life, and office workers lapped it up.

Recently I listened to comedians on a podcast (‘Rule of Three’) spend an hour dissecting the root causes of the show’s success. Most obvious were the squirm-inducing interactions between Gervais’ David Brent character and his staff. But what struck me was how the hosts tore into the office setting itself, establishing it as a breeding ground for the exaggerated personalities we get to see. And boy, they did not hold back: “It’s a world of artificiality. We behave in this artificial way when we’re around each other under these stupid social rules”; “Everyone is trapped in this world where this is meant to be normal”; “it’s about people’s natural human interactions being choked”; “it’s about thwarted humanity.”

Now, sure, The Office was caricature, No one is as David Brent as David Brent in real life. But the office setting as culpable in such misery? It had me wondering: Have offices changed substantially since The Office was first broadcast?

Has the wellbeing agenda and open-plan design dealt with the apparent choking of natural human interactions? Is there opportunity in 2020’s forced displacement of workers to tackle the supposed artificiality of office life?

Since 2001, little about how we use offices had changed – until the pandemic hit. Now, firms are accepting a new knowledge work paradigm in which offices act as just one form of workspace, not all of it. Perhaps the new ways in which we all now interact will change more than we think the experience and appreciation of time spent with each other at work.

“WHAT’S AMAZING IS THE UNIVERSALITY OF BOTH THE SETTING AND THE HUMOUR”

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MARTIN READ is the editor of Facilitate magazine

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INSIDE

Diversity in facilities management Security guards more prone to Covid-19 for ‘complex’ reasons Tesco takes cleaning in-house due to Covid-19 Newsmakers: The top stories from Facilitate online last month Policy Pipeline: Key workers, the Living Wage and new guidance

Cofely (now Engie) it was not an easy marriage, and when Balfour Beatty Workplace came into the fold it took a long time for that team to integrate too,” she said. “Mitie in its old manifestation acquired Dalkia, which took a while to meld, but if there is anyone left in Mitie from those days, they may remember and apply some of the lessons they learned.

“Interserve is lacking really smart technology tools. Mitie has been innovating and investing heavily in this area, so this ought to bring benefit very quickly to Interserve clients in some of those anchor contracts such as BBC, UCLH and their joint venture with the University of Sussex.”

M E RG E R

MITIE AND INTERSERVE MERGER IS ‘SENSIBLE BUT WILL REDUCE COMPETITION’ WORDS: HERPREET K AU R G R E WA L

Management, said: “It’s a bold and fascinating development for the sector, creating an FM contracting powerhouse of…

78,000 staff and £3 billion turnover. Mitie appears to be inheriting a strong customerbase, particularly within the public sector and one of the profitable areas of the Interserve business. Clientside perception will also be interesting, as I regularly get a sense from some that they don’t necessarily feel ‘big is beautiful’ and the larger the company, the more impersonal the service delivery can become… it’s certainly an ambitious statement of intent from Mitie.”

The deal, subject to shareholder approval and ratification by the Competition and Markets Authority, is likely to be completed later this year

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he merger of Mitie and Interserve’s facilities service arms is seen as a ‘bold’ and ’sensible’ move that ‘will be welcomed’, say sector specialists.

Mitie signed a conditional sale and purchase agreement to buy Interserve Facilities Management for £271 million.

FM consultant John Bowen told Facilitate: “There should be economies of scale that can be exploited and I see this

as a sensible merger for the two companies. From a client perspective, it reduces the competition, but it does mean that the combined company should be one that can service a client’s need from a strong resource base.”

‘Interserve is lacking smart technology tools’

Lucy Jeynes, managing director of Larch Consulting, said the move would be welcomed by Interserve’s clients and staff.

“Will it be a good marriage?

Some industry acquisitions run more smoothly than others. When Cofathec and Elyo came together to form

Deal ‘buys some more time’

Guy Hewett, research director (support services) at advisory and brokerage firm finnCap, said: “While the inevitable cost savings will provide some short-term relief the deal does not address the fundamental issues the FM industry faces.

There has been too much focus on scale and cost-cutting by both service providers and customers to the detriment of innovation and change. ” He stressed the need for asset and property owners to adapt in the aftermath of the pandemic and suggested client and service provider cultures “need to change to embed technology, innovation and flexibility into the industry”.

“Maybe the Interserve deal buys some more time, but it must be to the detriment of focus and once the acquisition has been fully integrated Mitie might find that clients are now receiving that focus W Wsmaller W. I W Ftechnology-first M .O RG .U K from rivals.”

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‘Bold and fascinating’

Mark Whittaker, FM solutions consultant and non-executive director of the Institute of Workplace & Facilities

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PHOTOGRAPHY: ISTOCK

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F RO NT D E S K A N A LY S I S

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ender, ethnicity, and the nature of the job of a security officer increase the risks that the profession has in exposure to the coronavirus.

The Office for National Statistics (ONS) published data in May revealing that security officers have one of the highest death rates from Covid-19 – 45.7 deaths per 100,000 people.

A report commissioned by Corps Security from Perpetuity Research and Consultancy International analysed the ONS data and found a number of reasons that accounted for this vulnerability.

One reason that makes security personnel more susceptible to the virus is ethnicity. The report states that not all groups in the UK have been affected by Covid-19 equally and ethnicity appears to be a significant risk factor.

Nearly a third of security officers are from Black, Asian, and minority ethnic (BAME) backgrounds and vulnerability is linked to genetic, social and economic factors. Within this group, Black Africans, Pakistanis and Bangladeshis appear to be particularly vulnerable and they are overrepresented among security officers.

Older people also appear to be more prone to Covid-19 compared with their younger counterparts and experience less favourable outcomes, says the report.

Analysis of licences issued by the Security Industry Association (SIA) in 2019 suggests that 21 per cent were obtained by those over 55 years of age, compared with the UK average for all occupations of 19 per cent of the workforce in that age group. Yet 42 per cent of those with a manned guarding licence, were issued to those over 55.

More men than women have been affected by Covid-19 and as about 90 per cent of security personnel are men, the risk factor for the sector overall is higher than occupations with a lower proportion of males.

Low-paid jobs were found to have the highest rates of death involving Covid-19 – and frontline security is typically low-paid.

Security officers generally face proximity and frequent interactions with others, and this was found to be a significant risk factor in contracting Covid-19, although it is not known whether security officers generally worked in a similar way in the crisis.

MANNED GUA R DI N G

SECURITY GUARDS MORE PRONE TO COVID-19 FOR ‘COMPLEX’ REASONS W O R D S : H ER P R EE T K AU R G R E WA L

However, their risk factor relating to exposure was not rated as high as for healthcare personnel. The level of virus found in healthcare settings is far greater than among the general public yet death rates for healthcare staff are lower than for security officers.

Danger in the role

The very nature of the role of security officers influences their risk to Covid-19, states the report. Being a frontline key worker may mean encountering conflict when trying to enforce Covid-19 guidelines and this makes social distancing harder.

Personnel also regularly have to touch

equipment and technology others have handled and may find it difficult to ensure that they carry out frequent handwashing.

Many security roles are in big cities and some of these, particularly in London, the Midlands and South East have been hit particularly hard by Covid-19.

Martin Gill, director of Perpetuity Research and one of the report authors, said: “The true picture is complex, with some risk factors almost certainly interrelated, may still be emerging, or even not yet identified. What does seem clear, though, from this preliminary research is that gender, ethnicity, the nature of the job have all been seen to increase risks.”

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Ten of the top stories from Facilitate online last month

NEWSMAKERS More fire inspectors needed

The Fire Brigades Union (FBU) has criticised the government’s plan in its fire safety bill to fund only 12 new fire inspectors to enforce fire safety in two million homes in England after the Grenfell fire. The government says that £700,000 more a year will cover the inspections but the FBU said this would pay for just 12 full-time fire inspectors. tinyurl.com/FacMag0820-fbu

29/06 29/06

F RO NT D E S K TOP STORIES

63% of firms ‘struggling to obtain RPE’

Six out of 10 engineering services businesses (63 per cent) are having “sustained difficulty” in obtaining suitable face masks for use on site, says the Building Engineering Services Association (BESA). In a joint survey of 230 firms by trade bodies BESA, ECA (Electrical Contractors’ Association), SELECT, SNIPEF, LEIA and the CICV Forum, of the businesses struggling to obtain FFP3 masks, 15 per cent said their situation was ‘impossible’, and 36 per cent said it was ‘highly challenging’. tinyurl.com/FacMag0820-ppe

95% want a flexible return to office

‘Prioritise FMs’ mental health’

Professional services company PwC has said that organisations providing FM services must address mental health among their employees. It believes that FM firms should identify leaders to speak out about mental health and share their experiences to encourage staff to do the same and provide employee assistance programmes. tinyurl.com/FacMag0820-pwc

30/06 30/06

Staff call for PPE in workplaces

Health and safety software-as-a-service (SAAS) company Protecting.co.uk suggests that four out of 10 workers would refuse to work if employers do not provide PPE as part of Covid-19 safety measures. Its poll indicates that 30 per cent would even be willing to resign over the issue. Spokesman Mark Hall said: “No one should work in an environment that hasn’t been made safe for them to work in.” tinyurl.com/FacMag0820-safe

50% of bosses plan a staged return

An appreciation of how flexible working can benefit organisations’ workflows is characterising the corporate response to the Covid-19 crisis. Mark Preece, head of communications services at Ricoh UK, told an IWFM ‘Turbulent Times’ webinar: “Over the last four to six weeks they’ve moved to accepting that this is the way things are going.” ti tinyurl.com/FacMag0820-priorities

01/07

03/07

GFSL cuts jail carbon emissions

FM fir firm Gov Facility Services (GFSL), which services prisons p in southern England, is leading an ini initiative to reduce carbon emissions in building buildings it maintains. A trial to identify poten potential energy savings by replacing old cell ligh lighting with high-efficiency LED fittings sho showed potential annualised verifiable ene energy savings of 50 per cent. tinyur tinyurl.com/FacMag0820-prison

Returning staff to the workplace based on individuals’ health risk is a strategy being pursued by just about half of businesses, with 46 per cent staggering employee returns based on the criticality of their roles. A survey by recruiter Robert Walters also suggests that 44 per cent of firms plan to reduce office space, and a third intend to change office layouts. tinyurl.com/FacMag0820-return

30/06

03/07

Flexible working is the way ahead

A survey by Office Space in Town shows that 95 per cent of workers would return to work if a Covid-19 vaccine were found. Health concerns remain a significant deterrent – two-thirds polled worried about contamination, but 60 per cent said stringent cleaning measures would help to allay fears. tinyurl.com/FacMag0820-flexible

09/07 09/07

l @Facilitate_Mag f FacilitateMagazine 11

Demand for offices outside cities June saw firms looking to out-of-town sites as they consider relocating to offices away from busier and less car-friendly city centres. “What we are seeing is a clear short-term spike in interest in office sites with car parking and smaller private office suites”, said Jonathan Ratcliffe of Offices. co.uk. “People are actively avoiding other people on public transport.” tinyurl.com/FacMag0820-spike

Chancellor pledgess £1bn to turn public sector buildings ngs greener

Rishi Sunak has put forward ard measures in ment bundle that a £3 billion green investment dings to cut carbon include upgrades to buildings emissions. The package could help support obs. A £1 billion about 140,000 green jobs. e public buildings, programme would make ospitals, including schools and hospitals, greener, said Sunak.

0-sunak tinyurl.com/FacMag0820-sunak

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F RO NT D E S K

POLICY PIPELINE

I W F M .O RG .U K / I N S I G H T/ P O L I C Y

KEY WORKERS, THE LIVING WAGE AND NEW GUIDANCE

KE Y CON TAC T S

SOFIE HOOPER Head of Policy PHIL JENKINS Policy executive policy@iwfm.org.uk CON S ULTATI ON S W I T H G OVE R N ME N T

“Our chance to reassess how we do things [and] acknowledge the longer-term benefits of better pay to build back better and help create a fairer society.” – Linda Hausmanis, IWFM CEO

PHOTOGRAPHY: ISTOCK

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n May, we wrote about key workers and the critical role they are playing during lockdown. This writer was heartened by the recognition that the wider facilities profession and its supply chains received, including from ministers. The official guidance stopped short of explicitly affording them frontline worker status, but they were applauded and that was something.

Fast forward a few months. Frontline workers have continued to deliver services to keep buildings and their occupants safe and healthy during the lockdown; they will carry on doing so as circumstances creep back to some sort of ‘normal’, keeping society and the economy in working order. That is what they do, after all.

All this recognition, however, is not necessarily reflected in fair pay; yet there is hope. One thing we saw during lockdown is an acknowledgement that workplace and facilities professionals make a difference in the workplace.

There was also a rising sense that wider sustainability issues – social, economic and environmental – are here to stay. Furthermore, there appears to be increasing awareness that ‘making a difference’ extends to those low-paid but critical key and frontline workers, who number more than five million in the UK. Many are in roles that have proved vital throughout the crisis, such as cleaning and security.

Many people and organisations are understandably fearful of what the economic future might bring, but nobody wants a race to the bottom. So what can FM do to provide more work security to those key and frontline

workers? The ‘easy’ answer is to pay them the real Living Wage. To support members in this, we have launched new guidance, in partnership with the Living Wage Foundation, which is designed to provide employers with the tools required to break down barriers and allow more people to be paid a fair wage.

New guidance – making the business case for fair pay

The guidance is designed to help IWFM members make the business case for fair wages by sharing evidence that shows the crucial link between higher pay and improved service delivery and performance. It outlines the vital work that Recognised Service Providers and Living Wage Employers are doing to tackle low pay, reinforced by the testimonies of workers who have benefited and evidence from organisations that are going further to champion the real Living Wage.

IWFM is an accredited Living Wage Employer and we participate in and support the work of the Recognised Service Providers Leadership Group. Because we know there are barriers in place, we want to make sure our members can demonstrate to their partners that it is more than simply paying higher rates; there are genuine returns on this investment in people, that can not only lead to reduced absence rates and better performance, but can positively impact the bottom line.

Why now? In these challenging times, many contracts are likely to be reviewed, or even renegotiated. If we want to build back better, there is no better time.

IWFM response to BEIS consultation on the Good Work Plan and one-sided flexibility. tinyurl.com/y8seko2w W H AT ' S N E X T

Low Pay Commission will recommend in October this year the National Minimum Wage and National Living Wage rates to apply from April 2021.

DOCUME N T L I N KS

Guidance: The Living Wage – Why pay it and what does it mean for our profession? tinyurl.com/yxgdhh2f WE BS I TE R E F E RE N C E

Building back better: new IWFM guidance makes the business case for the real Living Wage tinyurl.com/y2gt6zkl Low pay: IWFM puts the profession’s point of view to the UK Government tinyurl.com/y3fzwyjo More than five million workers in insecure, low-paid work: research by the Living Wage Foundation and New Economics Foundation tinyurl.com/y263hl8n COVI D- 19 R E S OU RC E S

We have created expert guidance and webinars to help guide the profession.

Visit: tinyurl.com/IWFMcoronavirus

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W W W.onI W FM .O RG .Uer K at any policy matt policy@iwfm.org.uk

LO N G FO R M SOFT SKILLS

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An understanding and appreciation of others’ perspectives, be they peers or subordinates, makes for the broadening gamut of skills required to be an effective workplace and facilities manager. Bradford Keen talks to sector specialists about the personal professional development and training necessary to ensure truly empathetic facilities service management echnical knowhow has always mattered in facilities management, but increasingly soft skills are make the best in the sector stand out from the crowd.

We are seeing the profession watch its pioneering building engineering base step back to make way for a new generation with broader social skills.

To what extent is employer demand leading this shift?

“The people that illustrate softer skills, emotional intelligence and empathetic leadership are more likely to rise up the ranks,” says Nikki Dallas, director of Talent FM Executive Search. “If people don’t have those kind of personality traits they may well be a little bit left behind in the FM of the future.”

“The move away from the ‘bogs and boilers’ perception of old has coincided with a similar evolution in

our understanding of the relationship between leadership and emotional intelligence,” says Chris Morris, director of Xenon Group. “FM is increasingly seen as “more of a management discipline rather than a purely technical one”.

Liz Kentish, managing director at Kentish and Co, prefers the term ‘people skills’ but in any case regards them as integral to the profession.

Indeed, personal traits or learned skills such as empathy with clients and team members are integral to quality service delivery, believes Claire Huish, colleague services manager Bennett Hay. New employees at the contract caterer undergo ‘transformation training’ and personality profiling to encourage the sentiment that “everyone’s views and values count” while senior personnel focus on being better role models and getting the best from your team.

Empa Em pa ath thy, y, res y, esil ilie il ienc ie nce nc e an and d self se lff-a lf-a -awa ware wa re ene ness ss

Any discussion of soft skills, particularly over recent months, quickly coalesces around what is perhaps the topic’s single guiding principle – empathy.

“Empathy was traditionally seen as a natural trait, but research has shown that it is a neurobiologically based competency that can be taught,” says Ann Clarke, deputy managing director at workplace interior design and fitout business Claremont.

As with any competency, some learn it quicker than others, or at different times of their lives. But today it is seen as a particularly desirable attribute for team leaders, helping to boost employee performance, job satisfaction and innovation. Empathy also enables the building of trust.

“Empathetic Leadership – as a scientifically studied leadership

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LO N G FO R M

SOFT SKILLS

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K N OW H OW EXPL AINER

KIRAN KACHELA is director of CI Projects Ltd

understood if they were receiving good value from service providers was to retender. But this knowledge doesn’t only come from market testing. If FMs work with the right consultancy, then benchmarking will also ascertain if value is being delivered.

We are not just talking about cost; benchmarking goes far

service provider to get to grips with the operation, systems and ways of working. This does not happen overnight and can disrupt the workflow.

An approach in which both parties work collaboratively over the long term is likely to bring richer results.

Market performance

Traditionally, the way FMs

BE N CH MA R KI N G

BENCHMARK, CONFER, MEASURE AND MONITOR Every facilities manager using outsourced suppliers should want to know whether they are getting the best possible service and value, says John Brownless

Loyalty talks

As we emerge from the pandemic, it is likely that there will be an even higher value placed on relationships and loyalty. For service providers who have helped steer an organisation through this difficult period, rewarding them by jumping ship is not going to be what many decide to do.

Cultivating lasting relationships with service providers brings far greater rewards than switching to a new provider.

Every time a re-tender takes place, FMs start afresh and have to wait for the new

deeper. Detailed benchmark analysis is proving to be critical to the successful management of broader transformational change, including cost management initiatives, re-engineering of business processes and implementing quality control measures.

Employee security

Going through a re-tender has a raft of implications for employees and, at best, will lead to the workforce being distracted with the upheaval rather than remaining focused on their roles. In other cases it could mean staff who are now insourced move to outsourced or even lose their jobs.

Going out to tender doesn’t guarantee that a better job will be done. In a re-tender, it could be that roles are streamlined and staff members are subsequently made redundant.

This might need to be revisited if the new structure doesn’t work as expected or if business demands fluctuate. All of this upheaval distracts from the day-to-day overarching focus on meeting business objectives.

It is not enough to introduce and implement new working methods alone. To ensure that new ways of working are successful and right for an organisation it is essential to understand what others are doing in the sector.

Benchmarking allows for that to happen.

It is also essential that once benchmarking is complete and operations are streamlined they continue to be measured and monitored on a continuing basis so there is confidence that they are delivering. The mantra when benchmarking should be:Wbenchmark, W W. I W F Mnegotiate, .O RG .U K measure and monitor.

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ILLUSTRATION: ISTOCK

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acilities management service providers can play a decisive and positive role by suggesting, implementing and encouraging clients to adopt best practices, technological improvements and alternative ways of working.

However, it is difficult for some FMs to understand if they are receiving value for money with their current providers. Even topperforming establishments can benefit from new savings and performance opportunities.

Through the normal supplier life cycle there comes a point when a decision is made between re-tendering and benchmarking services.

Which route is the best to take?

If the relationship between the FM and service provider is weak then re-tendering may well be the right way to go.

But increasingly – and certainly in cases where there is a good relationship in place –benchmarking offers a triedand-true approach to homing in on the effectiveness, cost and quality of FM services.

INSIDE 44 44 45 45 46

ISS Group announces management reshuffle Amey joins Ethical Stationery in Covid-19 protection scheme Commentary: Partners in adversity look to the future Weeks to view: A month of lockdown fallout Contracts, deals and indicators

FINANC IAL RE SULTS

SODEXO REPORTS LOSS OF A THIRD IN REVENUES OVER Q3

SUPPLY SIDE O U TS O U RC E D S E RV I CE MA RK E T N E WS

W O R D S : H ER P R EE T K AU R G R E WA L

PHOTOGRAPHY: ISTOCK

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odexo has lost almost a third of its third-quarter revenues relative to last year because of the coronavirus pandemic, according to the company’s latest financial results.

Its figures show organic growth down by -29.9 per cent, better than the group’s early-April forecast. Revenue was €3,910 million, down -31.2 per cent.

The education division’s work was down -53.9 per cent – slightly better than the -60 per cent hypothesis. As most schools and universities were closed from mid-March, sales were limited to meals provided by local authorities to families in need.

Essential cleaning, maintenance and security continued, resulting in more resilience of the FM services than food services, sports and leisure sites closed down, whereas energy and resources, and government and agencies were more protected from the lockdown by the nature of their business.

Sodexo expects Q4 revenues to be down by about -27 per cent on its projections in April of -15 per cent. The second semester’s decline is

now expected to be -28 per cent, or €3 billion and -13.7 per cent for the full year.

Sodexo CEO Denis Machuel said: “We have lost nearly one-third of our Q3 revenues relative to last year due to Covid-19. Nevertheless, our on-site business broad geographic mix, strong facilities management and large integrated accounts combined with benefits and rewards have given us resilience.

“At the start of the crisis, our focus was on protecting the health and safety of our people, consumers and clients. With a significant number of sites fully or partially closed, we immediately identified all means to protect our cash and reduce our costs.”

In brief COMPASS GROUP SIGNS UP TO RACE AT WORK CHARTER

Food service business Compass Group UK & Ireland has signed up to the Race at Work Charter in partnership with Business in the Community (BITC).

The initiative is designed to improve outcomes for black, Asian and minority ethnic (BAME) employees in the UK. The Race at Work Charter fosters a commitment to improving the employees’ working lives, and consists of five principles to make sure that organisations address the barriers to BAME recruitment and progression.

Organisations that sign up to the charter must agree to appoint an executive sponsor for race; capture data and publicise progress; ensure zero tolerance of harassment and bullying; make equality in the workplace the responsibility of all leaders and managers; and take action that supports ethnic minority career progression.

Compass joins about 200 public, private and charitable bodies that have also signed up to the charter. It builds on the work of the 2017 report, Race in the Workplace, by Ruby McGregor-Smith, which found that people from BAME backgrounds were still underemployed, under-promoted and W W W. I W F M .O RG .Uat K under-represented senior levels.

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FacilitateMagazine.com / August 2020

S U P P LY S I D E

BUSINESS NEWS

GRAEME DAVIES writes for Investors Chronicle

Weeks to view

CO M M E NTARY

PARTNERS IN ADVERSITY LOOK TO THE FUTURE

T

imes of crisis are also times of opportunity for those who can see beyond the short term and spot longer-term opportunities and position themselves to take advantage while others are distracted by simply staying afloat in stormy waters.

This is why, at times of extreme economic stress, we often see a spike in mergers and acquisitions. And the FM sector is no stranger to this, hence the planned deal between Mitie and Interserve, which will see the former emerge as a front runner in the UK’s outsourcing sector.

There are many reasons why such a deal makes sense for both parties.

Some commentators expressed surprise over the timing of the deal during the coronavirus crisis and also given both groups’ recent track record of financial difficulties. For Mitie, combining with Interserve’s FM arm will give it enhanced scale and a wider spread of business across both public and private sectors, creating what will effectively be the UK’s biggest FM company with combined revenues of about £3.5 billion. Combining areas of overlap such as back-office functions should also create economies of scale.

Mitie has already benefited from its diverse operations with more public sector work such as deals won at the Nightingale hospitals establish to battle the pandemic peak offsetting weaker private sector demand and its increased scale should enable it to benefit when the economy – and private sector demand – picks up.

For Interserve, which is effectively owned by its lenders after running into serious financial trouble last year, the deal brings a welcome injection of cash and leaves a company more focused on infrastructure and construction. Both these areas could see a significant boost in the years to come as a result of Boris Johnson’s bid to reinvent himself as a Roosevelt character who is going to rebuild the UK economy through a splurge on infrastructure.

So the deal, while coming at a somewhat surprising time, appears to be rooted in solid long-term thinking on Mitie’s part. It could also be the start of a trend of increased mergers and acquisitions activity across the sector as companies look to seize the mantle of depressed valuations and grab more market share before the economy, and valuations, pick up. Some FM companies, such as Rentokil, are already well versed in growth through acquisition to hoover up market share by picking off smaller operators and the current economic environment is likely to prove fertile ground for this sort of activity. Larger deals such as Mitie/Interserve are more rare, but don’t bet against some significant consolidation coming down the line.

“MITIE HAS ALREADY BENEFITED FROM ITS DIVERSE OPERATIONS WITH MORE PUBLIC SECTOR WORK”

GRAEME DAVIES newsdesk@facilitatemagazine.com

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FacilitateMagazine.com / August 2020

A month of lockdown fallout Week commencing 25 May

Building services specialist TClarke rewarded its investors by announcing its intention to pay its full dividend for the 2019 financial year after having suspended its payment at the height of the coronavirus lockdown.

Management reported on a quieter trading period in Q2 as many sites were closed, but said it would still break even for the period. Also, swift restructuring action and a restart on most sites in June means that the company is still expecting an operating profit for the full year. Its order book has grown from £403 million to £408 million.

Week commencing 1 June

Waste services business Biffa’s full-year results to 27 March reported on a period of normality apart from the final weeks of the financial year as the economy shifted into lockdown. Revenue growth of 7 per cent and underlying profit growth of 12 per cent were in line with expectations. The period since then has hit the industrial and commercial and landfill operations hardest, with revenues down by 40 to 50 per cent and group revenues slipping by 30 per cent. Lenders waived covenants to provide additional headroom in facilities to ride out the crisis and a week later raised £100 million to further cushion the blow.

Week commencing 8 June

Infrastructure solutions operator Costain won a £350 million strategic pipeline alliance for Anglian Water. Under the eight-year deal, Costain will use digital technology to aid the delivery of a 500km network of pipelines that Anglian Water is building in Lincolnshire to deliver water from the area to drier regions in East Anglia. This deal came a week after Costain won a place on Yorkshire Water’s Technical Services Framework.

Week commencing 15 June

A trading update from cash handling and security services group G4S for the first five months of the year illustrated why management is selling its cash-handling operations. Despite the Covid-19 hit to the global economy, G4S’s Secure Solutions business grew revenues slightly from the same period in 2019 and won deals worth £1.2 billion, matching the value of contracts won last year. Strong performance in the W Wwhere W. I Wrevenues F M .O RG .U K Americas, grew 6 per cent, offset weakness in Europe.

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