Rics Raising the Bar Report

7/27/2019 Rics Raising the Bar Report

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Re

portforRoyalInstitutionofC

harteredSurve

yors

rics.org/research

RICS Research team

Dr. Clare Eriksson FRICSDirector o Global Research & Policy

[email protected]

James RowlandsGlobal Research & Policy Project Manager

[email protected]

Amanprit JohalGlobal Research & Policy Project Ocer

[email protected]

Auriel FielderGlobal Research Co-ordinator

[email protected]

Published by:

RICS, Parliament Square, London SW1P 3ADUnited Kingdom

A report or Royal Institution o Chartered Surveyors

Occupiers Journal Limited

Report written by:

James P. Ware, PhDGlobal Research Director

[email protected]

Paul CarderManaging Director

[email protected]

(With assistance rom the Directors and Partners oOccupiers Journal Limited)

The views expressed by the author(s) are not necessarilythose o RICS nor any body connected with RICS. Neitherthe authors, nor RICS accept any liability arising rom theuse o this publication.

The RICS Research Trust, a registered charity established

by RICS in 1955 to support research and education in theeld o surveying.

Copyright RICS 2012


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Contents Executive Summary............................................................................................................................................06

What stands in the way o raising the bar? .....................................................................................................................06

What has brought about this unortunate reality? .............................................................................................................06

Recommendations or action ............................................................................................................................................10

1.0 Background...........................................................................................................................................121.1 Balancing strategic and operational management priorities ............................................................................12

1.2 FM operates within a complex web o relationships .........................................................................................14

1.3 Is Operational Strategy an oxymoron? ..........................................................................................................15

1.4 The IT example: rom back room to board room .............................................................................................16

1.5 The web o FM relationships the six gaps model ........................................................................................18

2.0 The Study................................................................................................................................................222.1 Study Scope And Objectives ...........................................................................................................................22

2.2 Executive Interviews ........................................................................................................................................23

2.3 The Survey ......................................................................................................................................................24

3.0 Emerging Themes ............................................................................................................................273.1 Facilities is increasingly being recognised as a strategic resource ...................................................................27

3.2 FM has had mixed success achieving strategic alignment with other components o the business ................28

3.3 Large, global organisations ace dramatically dierent challenges than smaller, more local businesses and they manage their acilities very di erently. ............................................................................................30

3.4 Financial metrics and cost control dominate the management o acilities.......................................................31

3.5 Heads o acilities are still buried in day-to-day operations ...............................................................................32

3.6 FM career paths are undergoing signicant change, and the FM proession aces a potentially seriousuture talent shortage ......................................................................................................................................33

4.0 Discussion o Findings ..................................................................................................................344.1 The FM unction within the larger organisation ................................................................................................35

4.2 FM perormance measures .............................................................................................................................38

4.3 Strategic alignment and activity .......................................................................................................................40

4.4 Insourcing/outsourcing strategies ....................................................................................................................45

4.5 Top issues acing FM .......................................................................................................................................484.6 Summary o executive interviews .....................................................................................................................49

5.0 Recommendations...........................................................................................................................505.1 Think strategically ............................................................................................................................................50

5.2 Act strategically ...............................................................................................................................................50

5.3 Rebuild the FM organisation and its role in the business .................................................................................50

5.4 Outsource operational activities .......................................................................................................................51

5.5 Teach the business how to ask or FM support ...............................................................................................51

RICS Research Raising the Bar: Enhancing the Strategic Role o Facilities Management


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6.0 Useul Publications...........................................................................................................................52

7.0 Acknowledgements.........................................................................................................................53

8.0 About RICS............................................................................................................................................54

9.0 About Occupiers Journal Limited .........................................................................................55

Appendix A: FM Activities and Outsourcing.....................................................................................56


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There have been many assertions, over the years by manycommentators, that Facilities Management (FM) should bemore strategic. We now have robust evidence that it

canand more importantly, or a high-perorming

organisation,should be a strategic managementdiscipline.

This report considers what being strategic really

means; and it also takes a hard look at the current

state o the practice o FM. The research behind thereport draws on a survey completed by almost 400 FM

proessionals across six continents. Our insights andunderstanding were enriched by direct personalconversations with almost three dozen senior FM andCorporate Real Estate (CRE) executives, as well as a smallnumber o thought leaders rom academia and several othe major international proessional associations ocusedon CRE and FM.

It is also clear to us that, to be eective and to serve

an organisations real estate and business needs, FM

leaders must work on a number o multi-disciplinary

relationships within their organisation. They must ocuson gaining the buy-in needed to provide coordinatedworkorce support rom all the inrastructure unctions.The overarching goal must be achieve a deep common

understanding o the strategic imperatives o theorganisation as a whole.

Some FM leaders may Raise the Bar by managing multipleinrastructure unctions, in shared enterprise support teams(or similar). In doing so, their role becomes more strategicand their career paths will see new doors opening i theycan more clearly articulate and communicate thisbroadened scope across their organisation.

This study was designed to review the

state o the practice o the acilities

proession in 2012, to identiy critical

FM challenges, and to ocus in particular

on the relationships between FM and

other key unctional areas such as

corporate strategy, business unitleadership, CRE, Finance, HR, and IT.

E

xecutiveSummary What stands in the way o

Raising The Bar?Firstly, the Head o FM is oten poorly led rom above.

Nowhere nearly enough thought goes into considering anorganisations business strategy and how it translates intotangible targets and actions or FM.

We rarely ever see organisations map out a cause-and-eect chain to guide FM strategy, which is why heads oFM are so oten told to cut (or reeze) their budgets withoutreerence to the causal chain o consequences to theworkorce, to work processes and productivity, and to the

bottom line itsel.

Without understanding the consequences o these budgetcuts, FM has become a commodity rather than aproessional skill in many organisations, to be procured atlowest cost. Worse still, the FM industry does not yet havethe sophistication to be able to analyse and report on theconsequences o lowered standards and reduced (orlower-cost) resources.

It could be said that the FM industry

knows the cost o everything, but the

business value o little. This is a recipe

or continuously lowering the bar rather

than raising it.

What has brought about thisunortunate reality?Executives and Heads o FM, together, are not asking theright questions. They should be asking how the acilitiesunction can strengthen the companys strategicpositioning with customers, with employees (and

prospective employees), and with the communities wherethey are located or want to do business.

Operational strategy is not an oxymoron: operations,including acilities, can clearly help an organisation to becompetitive in the marketplace. However, the key idea

is dierentiation. In desperate times, cost-cutting, withminimal refection o the consequences, may be

necessary. However, in most cases, an eectiveoperational strategy must be act-based and supportdierentiation it is rarely enough just to have lower-costacilities than your competition.


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Facilities is increasingly being recognized as astrategic resource

There are dramatic dierences across organisations inhow the FM unction is operated, where it reports, how its

eorts are measured and rewarded, and which unctionsare outsourced. However, many organisations today arebeginning to treat acilities as a strategic resource, and FMas a strategic unction in some instances even elevating

FM to a senior executive role, reporting to the ChieOperating Ocer (or equivalent).

Many o the organisations we know include acilities andworkplace issues in their executive committee andbusiness planning discussions; some address those issueat the Board level as well. Most o them measure theimpact o acilities on workorce productivity and business

perormance; and some view the quality o their acilities

as an important contributor to the corporate brand, and inattracting and retaining talent.

It is very clear that a majority o acilities proessionalsagree with our opening position, being that the FMunction should have a signicant strategic impact. Over75% o the survey respondents believe Facilities is

strategic, today.

However, our interviews and survey data also suggestthat there is a serious gap between belies and actions inthis area. Organisations that actually manage theiracilities as a strategic resource are still in a distinct

minority. Most Heads o FM still spend well over hal

their time on day-to-day operational activities. That istrue acrossall geographies and industries, and or

both large and small enterprises.

FM has had mixed success achieving strategicalignment with other elements o the business

In general, acilities organisations believe they are relativelywell-aligned with nance, with business units, and with theoverall corporate strategy and vision. They are also, as wewould expect, reasonably close to corporate real estategroups. However, only about hal consider themselves

well-aligned with their peers in IT, and just over 40%

believe they are in alignment with HR and other

central services. With the continued increase o mobileor agile working, better alignment with peers in IT and HRis becoming vital to delivering integrated support or anorganisations workers on the move. FM cannot deliveran agile workplace without supportive and aligned ITand HR policy and operations.

Large, global organisations ace dramaticallydierent challenges than smaller, more localbusinesses and they manage their acilitiesvery dierently

While some o these dierences relate simply to scale ooperations, it is worth remembering that ultimately theservicing o acilities is a very local business; each building

is located in a specic community within a specicgeographic region. It may be possible to oversee themanagement o a acility rom a distance, but it isimpossible to clean or maintain a building remotely.

More importantly, when an organisation operates in manydierent countries it has to cope with the varying realestate, construction, and operational practices including

dierent legal, regulatory, and cultural contexts. Thisobservation may seem obvious and unsurprising, yet it is

important to recognise that the dierence between smallerone-country businesses and global operations is notsimply related to scale; there are major increases incomplexity as a business expands internationally.

Financial metrics and cost control continue todominate FM

Misalignment among corporate inrastructure groups isoten caused by the imposition o a narrow set operormance metrics. Almost 80% o acilities groups aremeasured rst on perormance against budget. Financialresults clearly dominate management thinking.

It appears that in many organisations it almost does notmatter i the FM group is helping the workorce be moreproductive, or helping attract and retain sta, or reducing

environmental costs. I costs have not been driven to anabsolute minimum, nothing else really appears to matter.

The challenges o reducing costs and budgets were byar the most important strategic challenge identied by(and most requently mentioned by) both the surveyrespondents and the FM executives interviewed. Far romRaising The Bar, this almost exclusive ocus on expenses

has relegated acilities to commodity status, to bepurchased at lowest cost.


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Heads o acilities are still buried in day-to-dayoperational concerns

In spite o the widespread belie that acilities is alreadystrategic, the act is that the average head o acilitiesspends over 50% o his/her workday dealing with

day-to-day operations issues. Less than one day a

week is devoted to strategy and planning.

There is no simple way or the Head o Facilities to avoiddealing with day-to-day operations. Building operationsare highly visible to everyone who is on-site, including theCEO and other senior executives. When something goeswrong the issue has to be resolved beore he or she can

get back to being strategic.

We oer some broad guidelines or getting out o thisoperational trap, but we also know it is ar easier to talkabout it than to achieve it.

FM career paths are undergoing signicantchange, and the FM proession aces apotentially serious uture talent shortage

FM is clearly becoming a more recognized proession,with a more strategic role to play in business andworkorce strategy. However, a core component o FMsevolving maturity is the need or senior FM proessionalsto develop multi-disciplinary skills that go well beyondbuilding engineering and maintenance, lease negotiations,

space planning, and building saety/security.

It is clear rom our research that the critical skills neededor uture FM leaders ocus primarily around collaboration,interpersonal relationships, delegation, strategy ormulationand implementation, and managing service providers.

Yet in 2012 there are unortunately ew FM-orientedacademic programs at either the university or the

executive education level that even recognise thesechanging skill requirements, let alone prepare theirstudents or the much more complex world they acemoving orward.1

To compound the issue, as more and more organisationsoutsource core FM unctions, the career paths or FM

proessionals within end-user occupiers are becomingincreasingly scarce, and more dicult to navigate.

However, we believe the uture or FM is bright, as theproession becomes more critical to organisational strategy

and eectiveness. However, this changing uture is alsocreating a near-term shortage o the talent needed to moveFM towards its legitimate role as a strategic resource.

1 A brie review o several academic programs validates this claim: or example, one Masters in Facilities Management program requires prociency

in the ollowing basic areas, but makes absolutely no mention o the strategic and interpersonal skills we have identied: Energy Management or

Buildings; Facilities Contract Management; Facilities Maintenance and Operation; Facilities Planning and Management; Financial Aspects o

Facilities Management; Introduction to Facilities Engineering Systems; Management o Telecommunications Inrastructure; Project Management;

Quality and Productivity in Industry and Technology; Supply Chain Logistics Operations in Facilities and Industry; Greening Organizations


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Recommendations or Action

Think strategically

It may sound simplistic to suggest that people just thinkstrategically. However, thinking strategically meansocusing on competitive advantage, as outlined at thebeginning o this report. And when heads o acilities ocuson helping their companies establish competitive

advantage, they are paying attention to and even helpingshape business strategy.

Thus, our rst recommendation or action is that headso acilities learn how to think strategically. That meansdeveloping a deep understanding o the business they aresupporting, its customers, and its competitors. In addition,strategic thinking includes understanding how to developnancial models, how build and analyse alternative uture

scenarios, how to see over the horizon, and how to linkcauses and consequences in areas as diverse as HR, IT,Finance, Operations, and even Marketing and Procurement.

However, the most important strategic mindset isunderstanding how and why customers make

purchasing decisions. Do they select the organisationsproducts and services because o cost, quality, or

service? And how are those customer choices infuencedby real estate and acilities strategies and day-to-dayexperiences? When heads o FM can answer thesequestions, and translate them into action priorities

or their sta, then they are thinking and even

acting strategically.

Act strategically

Strategic action begins with strategic thinking, but thinkingis only the rst step. When Heads o FM behavestrategically they are spending more time on the uturethan on the present and they are ocusing their stasattention on business issues.

A head o FM develops and applies measures o FMsimpact not only on the bottom line (which o course can bevery strategic), but also on perormance outcomes liketalent attraction and retention, sta productivity, the Triple

Bottom Line,2

community recognition, and even broadermetrics like brand recognition, market share, and net prot.

It may be dicult or some managers to visualize thelinkages between FM and ultimate business perormance

because there are so many indirect infuencing actors.Nevertheless, when FM takes actions with businessstrategy in mind, it can indeed have a measurable

business impact.

Rebuild the FM organisation and its role inthe business

The Head o FM must also take several basic, short-termactions that serve to ree up his or her time to ocus onthe core strategic issues.

First among these is to develop a strong layer ooperational management within the existing corporate FM

organization. Recruit subordinates with strong FM andmanagement experience; be willing to bring in strongmanagers even i their FM-specic experience is weak ornon-existent. The in-house (occupier) team in anoutsourced FM model requires business and

management competencies more than technical skills.

Look or individuals with strong nancial and measurementbackgrounds; build management control and planningsystems that monitor service levels, costs, and end-usersatisaction on a requent and recurring basis. Above all,insist that measurement systems ocus on outcomes,

not on FM processes as ends in themselves. An

excellent process that delivers the wrong outcomes

is still o no use to the organisation.

Second, ocus the FM team on dening (and enorcing)policies and practices that dene the role o FM insupporting the business. Make dening those policies anearly priority, and socialize them actively with businessclients and peers.

While we believe in outsourcing and making extensive useo service providers (see the next section), outsourcing isnot a way to overcome or replace a weak FM management

team. Indeed, it is important to strengthen the FMoperational capability beore turning the activities over toa service provider.

However, the competencies needed or managing anoutsourced service are dierent rom those needed to

manage FM operations. Strategy, policy and

perormance management become more important

than operations management or FM technical skills.

Finally, Heads o FM (and their direct reports) should striveto spend at least 50% o their time working with theirpeers in ront-line business units, and in the otherinrastructure unctions. Focus rst on FMs customers,understanding their needs, their current work patterns,and their rustrations, even beore attempting to anticipate

their uture requirements.

2 The Triple Bottom Line was rst dened in 1994 by John Elkington, a British consultant. It reers to measuring organizational perormance along

three complementa ry dimensions: people, prot, and planet. See Triple Bottom Line, The Economist, November 17, 2009, or a more complete

discussion o this important concept.


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Outsource operational activities

As will become clear in the body o this report, webelieve that the pathway to making FM more strategic isto outsource as much o the operational, routine work tothird-party service providers as possible. Doing so willree up in-house resources who can then spend lesstime re-ghting and more time planning and thinkinglonger term.

Outsourcing many FM operational activities rees

Heads o FM and their immediate sta to ocus

much more on long-term planning and strategic

challenges (both FM-related and business-

ocused). Among the organisations we interviewed,those that were clearly operating more strategically

(and were recognized as a strategic resource by theirsenior business executives) had outsourced ar more o

their operational activities than the organisations in whichFM was struggling to get resources and recognition.

We cannot stress this recommendation enough.The FM service provider industry has maturedextensively in the last several years, and there are manyworld-class FM proessionals now building their careerswithin those service providers. Because o the absolute

necessity o dening perormance commitments andpricing them into outsourcing contracts, the serviceproviders have learned to measure and manage their

services, and to deliver on their commitments oten ata level o competence in excess o what is normallyound inside end-user occupier organisations

.

Teach the business how to ask or FM support

We also believe one o the most critical activities ora head o FM is to educate his/her senior businessexecutives and unctional colleagues about how to workwith FM. That is, FM is most successul when businessleaders know how to dene their FM requirements, how toestablish FM perormance goals beyond simple nancialmeasures, how to assess FM outcomes, and how to planahead to ensure that their acilities do in act help create

strategic advantage.

Eective heads o FM do not buer their business

counterparts rom the details o FM; they actually

do just the opposite. They take every opportunity

to help their clients understand the strategic role

o acilities, and they ensure that acilities and

workplace design issues are part o every

strategic conversation.

This is also where true strategic benchmarking is oimmense value, in helping the Head o FM to understandwhere other organisations are in their FM development,and to be able to communicate this understanding tohis/her customers in the business.

Clearly this is not the how much does your FM cost?discussion that we have seen over the past couple o

decades. Rather, it includes a more mature understandingo strategy, policy, CRM, organisation structure, workplace

standards and service expectations across a range opeer group organisations. This orm o benchmarkinghas also been termed a act-based strategic positionassessment3, which more accurately describes whatit actually accomplishes in practice.

3 McTaggart et al., The Value Imperative: managing or superior shareholder returns, The Free Press, 1994. pp. 112-113


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1.0Backgro

und

The subtitle o this report, Enhancing the Strategic Role oFacilities Management, calls or an explanation,particularly the termstrategic. Strategic is certainly anover-used word, and we know that no one can makesomething strategic simply by inserting the adjective.

1.1 Balancing strategic andoperational managementprioritiesIn the current climate o business, every part o anorganisation must think and act strategically to squeeze

out every possible competitive advantage. It is not goodenough to be operationally ecient. Every part o theorganisationmust be eective in contributing, whereverpossible, to the leadership strategies. We believe thatimperative applies just as much to acilities managementas it does to other unctional responsibilities.

Facilities Management: operational eciencyis expected strategic advantage is needed

This analysis leads to a conclusion, ormed by numerousdiscussions with senior acilities and business executives,that FM could and should be more strategic.

Strategicmeans helping the business achieve

competitive advantage by aligning real estate (space)

and acilities services more closely with business

imperatives, operational capabilities, and

organisational perormance.

In many organisations, FM has not been seen as makinga meaningul dierence to operational eectiveness or thebottom line o the business, unless the business is lookingto cut costs, in which case FM (and, we believe, the entirebusiness) oten suers.

For example,

The administrative back-oce o a nancial services

company was situated in a modern business park. It held

around 3,000 people, split across three buildings. One o

the buildings had an air-conditioning system that had been

repaired regularly, but needed large-scale overhaul or

replacement. The repair was expected to cost 200,000(USD $300k), but did not make it through the planned

maintenance budget cycle. The on-site acility manager

warned the business unit that it was almost inevitable that

the system would break down again i run at ull capacity.

Some months later, in a particularly hot period during the

summer, the south-acing central building overheated. The

air-conditioning ailed, and the blinds (where they worked

at all) did little to shield the workers in the energy-trading

call-centre.

On day one the employees struggled through. On day

two, they had less patience. A ew walked out, and a ew

more ollowed, until the foor was at skeleton-stanglevels at best. Call waiting times rose dramatically,

complaints began coming in, and the company lost

business as a result.

On the positive side, the business unit manager and the

Head o FM were able to show the business data about

the aected days, demonstrate lost productivity, and

estimate the reduction in earnings as a result (not to

mention reputational damage). The 200,000 replacement

would have paid or itsel several times over, in just the 2-3

days aected by the ailure.


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1.2 FM operates within acomplex web o relationshipsIn the course o this study, we have examined not only the

mission and charter o the FM unction, but also the criticalrelationships with other unctions and with outside serviceproviders that every acilities group must develop andnurture (Figure One):

These relationships and the challenges they create or

acilities managers are discussed in more detail on thenext page.

Figure 1 FMs Critical Relationships

CRE Dir.

CFO

Strategic Business Units ... ...SBU2, ...SBU3, ....SBU4 ....

CRM

Shared Services / Enterprise SupportSourcing

Dir.

Transactions

Workplace Delivery

CapEx Projects

RE Supply ChainConstruction

Supply Chain

FM Operations

Strategy

FM Supply

Chain

Workplace Strategy

IT Operations Support

IT Supply ChainOutsourced

Serviceseg. Payroll services

Real Estates / Projects IT / HR / SourcingFacilitiesManagement

CIO CHRO

CEO

COO


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1.4The IT example: From backroom to board roomStrategic business success is measured in many dierent

ways: market share; customer satisaction; revenue andprot growth; employee attraction and retention; andpublic, or brand, reputation.

To understand how these actors can aect a unctionalarea, it is worth recalling briefy how the IT unction (andtechnology itsel) in many organisations exploded out othe back room and landed in the board room betweenabout 1975 and 2000. Lets consider how IT impacted

just three o these strategic business metrics, and howthose changes dragged senior IT executives into theexecutive suite.

Once upon a time inormation technology was essentiallyan accounting resource; its early use in business was tokeep track o nancial expenditures and, occasionally,to record product inventories and sales. Those wereclearly back oce bookkeeping activities. It wasnt until

technology was applied to core business processes likeorder entry, production scheduling, graphic design, andnancial asset management that it began to have a trulysignicant impact on cost and capability.

Now, in 2012, technology is the primary interace betweenmany businesses and their customers; the worldwide webhas become the storeront and the brand, the checkout

line, the cash register, and the customer service arm o

most retail businesses. And the cost o those activitiesand processes is just a raction o what it used to be.

But the impact o technology on operating costs isnt justsignicant; it has been revolutionary. Just look at howcompanies like Amazon, Intuit, eBay, Visa International,Google, Facebook, Ford, and Apple have completely

re-invented business models in industries as diverse aspublishing, banking, music, home-based businesses,retail sales, and even manuacturing.

Three ways that ITs role has been transormed arenoteworthy:

1. attracting and retaining talent;

2. enabling innovation and creativity; and

3. becoming strategic

Attracting and Retaining Talent

Technology also has a deep and proound impact on talentattraction/retention. While basics like competitive salaries,benets, and an organizations brand do make a dierence

in recruiting, they have become little more than table stakes.What most job seekers are looking or today is a companythat will equip them with modern, ecient mobile devices,

hook them up the Internet and the internal corporatedatabases, and enable them to get their work done anytime, any place.

Any executive team concerned about attracting andretaining the best talent (no matter where that talent islocated) has to include its technology capabilities in itsstrategic thinking.

Enabling Creativity and Innovation

Certainly creativity and innovation have become strategicimperatives or any business competing on the global stagein 2012. Success today is driven by new products that are

designed and produced more quickly than the competition,and marketed with distinctive global campaigns (think oApple, Cisco Systems, Nike, Facebook, and Google,among many other success stories).

Once again IT makes that possible. Technology tools givethe workorce the power to nd and create inormation and to collaborate with peers all over the world ar more

cheaply, more eectively, and more quickly than ever beore.


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Becoming Strategic

As organizations have learned to apply technology tothese (and other) strategic imperatives, IT organisationsand their senior leaders (the CIO, or Chie Inormation

Ocer, and his/her sta) have become central toconversations about strategy in the C-Suite and at theBoard o Directors level.

Did CIOs have to push their way into the Board

Room? Not really. In most instances they were

invited in because senior business executives

realized what a strategic resource technology was.

But it wasnt just a matter o opening the Boardroomdoor and walking in. IT executives, and their vendors/service providers, spent many years, and many nancialresources, educating business executivesnot only

about what IT could do or the business, but about what

kind o organizational resources and skills it takes tocreate reliable, high-quality technology platorms.

And remember that, while IT had been contributing toimproved business perormance all along, or many yearsthe productivity gains were relatively minor andincremental. It wasnt until Michael Hammers classic

1990 Harvard Business Reviewarticle ReengineeringWork: Dont Automate, Obliterate6 that organizationsnally began using technology not just to improve the

way they did things, but to revolutionize their businessprocesses and actually to do completely dierent things.

We once worked with a lie insurance company to reinvent

the way it sold policies and processed policy applications.

When we started examining the steps in a policy application

we uncovered a paper-intensive process that typically took

about 34 days rom application to approval.When the team was nished with its obliteration o

current practice, the entire process took less than 48 hours.

That kind o order-o-magnitude reinvention wasnt simple

perormance improvement; it revolutionized the companys

standing in its industry.

Without belabouring the point, IT did not become strategicby at, or by simply claiming that it could make a dierenceto the business. IT leaders earned their place at the table bydeveloping high-quality enterprise systems, by innovatingbeyond their competitors, by understanding how to use ITto create strategic advantage, and by ultimately making a

dierence in the businesss bottom-line perormance andcompetitive positioning.

That, we believe, is exactly the challenge acing FM. Its

not enough to believe in your strategic value. Heads o

FM build credibility and infuence by educating their

peers and senior business executives, and then by

demonstrating how FM can directly impact the

activities, processes, and people in the organisation to

create new strategic value or customers.

Admittedly, FM may never have the incredible impact thatIT has had on the economy, but it can play a much greaterrole in achieving competitive advantage than most senior

business executives understand today.

6 Michael Hammer, Reengineering Work: Dont Automate, Obliterate. Harvard Business Review, July 1990.


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1.5The Web o FM Relationships the six gaps modelAs suggested above, no matter where FM is situated within

the larger organisation, we see it as being embeddedwithin a complex web o relationships, each o which hasthe potential or strategic signicance, and each o whichpresents particular challenges to FM proessionals.

Gap#1 Understanding the vision and strategyo the enterprise

Gap#1 is the relationship between FM and theleadership team (i.e. CEO and/or COO). It is concerned

with understanding the corporate strategy, and withaligning the workplace provisioning with that strategy.

Our research and combined experience gives us avery clear view that the most important gap is inunderstanding the broad vision and strategy o theorganisation. For a Head o Workplace, understandinghow a particular industry sector works, and how a

specic organisation in that sector operates is oundamental importance.

But how can this task be accomplished? How doesthe Head o FM get to understand the corporate visionand strategy? And how is that vision translated intothe context o the workplace?

It seems that there is a major knowledge gap here.How do Heads o Facilities and new FM proessionals

go about acquiring this knowledge? Gap#1 isabout developing the tools to translate corporate

strategy into workplace strategy.

Strategy

CEO

1

Figure 2 Six Gaps or FM

Gap#1 Understanding the vision and strategyo the enterprise

Gap#2 Understanding and translating thestrategy o each SBU (Strategic Business Unit)

Gap#3 Understanding and translating theCFOs nancial strategy or the organisation

Gap#4 Developing and implementing aworkplace strategy, aligned with IT and HR

Gap#5 Bridging the relationship betweenworkplace strategy and delivery o projects

Gap#6 Developing and implementing aworkplace strategy, aligned with IT and HR

There are six critical gaps that we addressed as wedesigned the study and prepared this report. We ocused

on the Head o Facilities as a generic label or the seniorexecutive who leads the acilities or workplace unctionwithin the organisation and on the organisation asexperienced rom that position.

We now examine each o these gaps in detail.


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Gap#6 Aligning the FM supply chain withFM strategy, and with the organisation as a whole

Gap#6 receives a lot o attention in 2012, but in ourview it is actually dependent on most o the Gaps

#1-#5 described above. In a world increasinglydependent on service providers, the eectivemanagement o the FM supply chain is core or aworkplace/acilities managers position.

But the role o FM is clearly changing, or the reasonsdiscussed above, as the working environmentbecomes less about the workplace and more about

a variety o work settings to support knowledgeworkers, both within and outside the traditionalcorporate-owned workplace. In the uture, due tothese changes, the FM supply chain will also change.

So, Gap#6 is ocused on alignment o the supply chainwith corporate and the SBU strategies.

The Head o FM will already have a view on what isneeded rom the FM supply chain to provide services

to the organisation. But the question remains: are wegoing to see more undamental changes in theoutsourced supply chain? How will those changesthen aect the in-house FM unction?

In the uture we can envisage the FM supply chainmerging with other outsourced activities. Constructionand FM are common; combining corporate real estate

(CRE) and FM is also becoming more common. Fullreal estate outsourcing, in which a single serviceprovider company takes ownership o the propertyportolio and delivers it back to the organisation on aunit charge basis, is already practiced extensively bythe UK public sector. It will be interesting to see the

rst integrated real estate, FM, and IT servicesoutsourcing provider.

FM Supply

Chain

CEO

6

Bringing the model back together

When one breaks down a complex structure into itsconstituent parts, understands each relationship, andthen brings the model back together, it does not seem

so complex.

What is clear is that the in-house or end-user Head

o Facilities is at the centre o a web o relationships,

between the senior executives, SBUs, IT, HR, RE and,

usually today, service providers as well.

It is this collection o critical gaps, within this highly

interpersonal/inter-unctional web o relationships,

that has infuenced and guided the design o this study.


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2.0TheS

tudy The purpose o this study was threeold: to review the

state o the practice o the acilities proession in 2012; toidentiy critical FM challenges; and to ocus in particular on

the relationships between FM and other key unctional

areas such as corporate strategy, business unitleadership, CRE, Finance, HR, and IT.

Our research ocused on the ollowing broad questions:

How is FM currently organised and governed?

What are the most common organisational structuresand reporting relationships?

How well are FM and workplace strategies aligned withthe business, with nancial strategies, with CRE, andwith unctional peers?

How is the FM unction measured and managed?

What issues and challenges are FM managers acing

in 2012? How strategic is the FM unction in 2012? What are

the barriers, i any, that prevent FM rom operating at a

more strategic level?

The study was conducted by reviewing existing literature,interviewing senior acilities practitioners and thoughtleaders, and carrying out a wider survey that capturedbasic data about perormance measurement andmanagement, the FM supply chain, and perceptions o FMrom both inside and outside the proession. We set out to

conduct the study on a global basis, and indeed almosthal o the survey respondents were based outside the

United States and the United Kingdom.

This study has produced a state-o-the-art

understanding o FM in 2012. More importantly,

however, it oers senior executives as well as acilities

and workplace leaders practical guidelines or taking

charge o their own, and their unctions uture.

We conducted ocused interviews with close to three dozensenior acilities executives based in North America, the UK,Southeast Asia, and Australia. The online survey resultsdescribed below draw on responses rom well over 350end-user acilities proessionals based on six continents.

2.1 Study Scope and ObjectivesThe ocus o this study is on the acilities unction as awhole and its place within the larger business organisation.

Particular attention was paid to how end-user occupiersare working with external service providers, and whateect the use o service providers is having on the strategic

role and capabilities o FM.

Because o the unique global working-group structure oOccupiers Journal Limited and our Regional Partners, andthe broad reach o RICS, the study collected and compareddata rom several o the key economic regions around theworld, including (but not limited to) the ollowing:

Hong Kong

Australia

India

Europe

Arica and the Middle East

Latin America

United States


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Research Questions

The survey and executive interviews addressed theollowing specic questions:

How is FM currently organised and governed? Does it matter where FM reports into in the

organisation structure?

Are CRE and FM actually dierent? Or should theybe managed as one unction?

Is the FM Director more eective when not under theshadow o CRE?

What are the most common organisational structuresand reporting relationships?

Is one global FM team a reality?

Should the relationships among Head o FM,Operations Manager, and Supplier (AccountManager) vary in dierent parts o the world?

How can the Head o FM get away rom day-to-dayoperations to attend to strategic business planning?

What can be done to ensure that FM and workplacestrategies are better aligned with the business, with

nancial strategies, with CRE, and with unctional peerssuch as HR and IT?

How is the FM unction measured and perormance-managed?

Is there, as is oten perceived, an over-reliance onnancial measurements?

How much clarity exists across denitions o client,key customers, and service users?

Is the Service Level Agreement (SLA) with eachbusiness unit actually a ormal contract? What kindo governance is typically placed around the SLA?

What other key issues and challenges are Heads o FMacing in 2012?

How strategic is the FM unction in 2012? What are thebarriers, i any, that prevent FM rom operating ata more strategic level?

2.2 Executive InterviewsThe questions listed above were put to about two dozensenior acilities executives and proessionals in North

America, the UK, and Australia in telephone interviews heldbetween early March and late May, 2012.

Our interviews with senior CRE and acilities executives

typically addressed all o these questions. The interviewseach generally lasted about an hour; most o the interviewsactually evolved into broad-ranging conversations aboutthe current state o FM and the challenges that FM leadersare acing in 2012.

The executive interviews included heads o corporatereal estate and/or acilities executives rom a wide variety

o industries:

Financial services

High-technology

Sotware development

Insurance

The U.S. Federal Government

Health care

Pharmaceutical

Public-sector utility (power, water, gas)

The interviews were conducted in condence, and allinterviewees were assured that they would not be quoteddirectly without their explicit permission. We believe their

comments were candid, comprehensive, and oered reely.We deeply appreciate their interest and willingness tocontribute their time and their insights to this project.

The detailed discussion o our ndings below draws onthose interviews, as well as our analysis o the survey data,our limited review o existing literature, and the 100+ yearso combined experience across our global team. We are

grateul or the interest and support expressed not only bythe interviewees we spoke with ormally, but by observationsand comments rom many prominent acilities and realestate executive who shared their views more inormallyvia telephone conversations, email correspondence, andin-person conversations at national events like IFMAs FacilityFusion Conerence (Chicago, April 2012) and the most

recent Corenet Global Summits (San Diego, May 2012,and London, September 2012).


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2.3 The SurveyWe also conducted an online survey that was promoted toacilities proessionals on six continents. By the end o July

2012, over 375 individual end-user acilities proessionalshad completed the survey (an additional 120+ acilitiesconsultants and service providers began the survey;

however we eliminated their responses rom most o theitems because our goal was to ocus on end-useroccupier FM proessionals).

However, we are also conducting extended conversationswith service providers, and we ully intend to refect theirexperience and perspectives in uture reports on this topic.

Survey Demographics

The survey respondents included relatively senior FM andCRE proessionals rom over 40 di erent countries.

As Figure Three (below) indicates, over one-third o the FMproessionals who completed the survey (36.5%) describedthemselves as the Head o Facilities and/or Corporate RealEstate in their organisations. An additional 29.2% identied

their positions as Senior Director o Facilities, SeniorDirector o Real Estate, or Senior Workplace Strategist. Theremaining 32.7% o the respondents described themselvesas FM proessionals with varying titles and roles.

However, as Figure Four indicates, approximately 38% othe people who voluntarily began the survey identiedthemselves as acilities consultants or acilitiesproessionals employed by service providers in the FM/

CRE industry. As noted above, we removed those

responses rom the rest o the analysis in order to includeonly the perspectives and experiences o end-user acilitiesleaders and proessionals.

Figure 4What type o organisation

do you work or?

An end-user occupierorganization

61.1%

A servicebusiness

supporting theacilities industry

18.3%

A consultingorganization servingthe acilities/acilities

managementindustry

20.7%

Figure 3Which o these titles best

describes your job?

Senior Directoro Real Estate

4.4%

Other

1.5%Senior WorkplaceStrategist/Designer

9.3%

Head o FacilitiesManagement

27.7%

FM Proessional

32.7%

Senior Directoro Facilities

15.5%

Head o CRE/PropertyManagement

8.8%


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Perc

entofRespondents(%)

0

15.0

10.0

5.0

Figure 5

Figure 7

How many people work inyour organisation?

Top Five Industries Represented in the Survey

Figure 6Respondents Headquarters byEconomic Region

500110,000

9.5%

111009.8%

5011000

12.2%

United States

38.5%

Latin America

1.5%

Middle East/North Arica

3.6%

China/SouthEast Asia

3.6%Canada

3.6%

Sub-Saharan Arica

4.7%Australia/New Zealand

4.7%

India

10%

Europe/UK

29.7%

101500

17.9%

10015000

25.3%

More than

10,00023.3%

110

2.0%

Industry Sector

Financial

Services

Proessional

Services

Government/

Public Sector

Education Manuacturing

20.0


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We received survey responses rom organisations o allsizes and rom all over the world.

As shown in Figure Five, almost a quarter o the

organisations represented in the sample employed over

10,000 people worldwide. Over 58% o the respondentswork in organisations employing over 1,000 people. At theother end o the spectrum, 12% o the respondents workedin organisations with less than 100 employees. This range inorganisational size provided us with several importantinsights into the evolution o the acilities management

unction and its challenges.

About 39% o the survey participants are based in theUnited States; another 30% were in Europe including theUK; but 28% were rom other economic regions. See FigureSix or a breakout o responses by region.

About 39% o the companies represented in the survey are

headquartered in the United States; another 30% are basedin Europe (including the UK). However, there was also solid

representation rom India, Arica, the Middle East, andAustralia. In total the survey included responses romorganisations headquartered in over a dozen dierentcountries/regions.

Perhaps more importantly, the survey respondents in totalown or lease acilities in more than twenty dierentcountries and in every major economic region around the

world.

However, only about 13% o the respondents work ororganisations that own or lease acilities in more than tendierent countries, while over 27% o the respondentsoperate in only one country. Single-country organisationsare expected to manage FM very dierently rom large,global organisations that must deal with many dierent

local laws, regulations, and building design codes.

The survey drew responses rom over teen dierentindustries; Figure Seven shows the top ve industries asidentied by the respondents (percentages reer toproportion o the entire sample). Note that no one industrymade up more than about 13% o the total, and the other

ten each represented less than 5% o the total sample.Note that with the possible exception o manuacturing,

these industries are all heavily inormation-based, with mosto their employees working in oces (in contrast toactories and retail stores).


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3.0

EmergingThe

mes We have identied several distinct patterns in the evolution

o FM, and in the issues conronting the proession today.While we do not quote individuals by name in this report,

we do highlight comments rom the executive interviews

when they represent general patterns or are particularlyinsightul or instructive.

Six broad themes emerged rom this study:

1. Facilities is increasingly being recognised as a strategicresource;

2. However, FM has had mixed success achieving strate-gic alignment with other elements o the business;

3. Large, global organisations ace dramatically dierentchallenges than smaller, more local businesses andthey manage their acilities very dierently;

4. Financial metrics and cost control continue to dominateacilities management;

5. Heads o acilities are still buried in day-to-day opera-tional concerns; and

6. FM career paths are undergoing signicant change,

and the FM proession aces a potentially serious uturetalent shortage.

3.1 Facilities is increasingly beingrecognised as a strategicresourceThe acilities management proession in 2012 is clearly in

transition. There are dramatic dierences amongorganisations in how the unction is operated, who itreports to, how its eorts are measured and rewarded, andwhich unctions are being outsourced to service providers.

We believe this diversity o practices is a direct refection othe evolution o the unction and its strategic role over thepast decade. FM remains by any standard a youngproession. Until the last decade or so there were very ewmeaningul choices in workplace design, or in how acilities

were used; most oces were basically one-color, one-usepartitioned areas (oten called cube arms, at least in theUS) designed to minimise space costs.

Corporate employees had to commute to those acilities toget their work done; that is where all their les and otherwork-related inormation was stored, that is where theircolleagues were located, and that is where they had to go

to use telephones, access ax machines, and holdmeetings.

Until recently there has been little understanding o how a

acilities or workplace design could enhance workorce

productivity, organisational perormance, or business

continuity and security. Yes, there have been many ormal

studies attempting to link various dimensions o workplace

design with workorce productivity satisaction, but ew o

them were denitive, and there is little evidence that theyhave had a serious impact on management practice.

Regrettably, business executives have been relatively

immune to these studies and the recommendations they

have made; or ar too long workplace metrics been

ocused almost exclusively on cost.

That is o course now changing, but only slowly and at adierent pace in dierent industries and dierent regions othe world. These changes are visible in the many dierent

ways that FM is being structured, governed, operated, andevaluated in 2012.

The good news is that more and more organisations

today are beginning to recognise, and to treat,

acilities as a strategic resource, and FM as a strategic

unction. In some instances the Head o acilities has beenelevated to a senior executive role reporting to a ChieOperating Ocer or equivalent.

Many organisations now include acilities and workplaceissues in their executive committee and business planningconversations; some o them measure the impact oacilities on workorce productivity and businessperormance; and some view the quality o their acilities asan important contributor to the corporate brand, and toattracting and retaining talent.

Most o the organisations that treat their acilities as astrategic resource have outsourced the major acilitiesoperational activities to service providers, thereby reeingup internal sta to ocus more time and attention onlonger-term planning and strategic issues. Outsourcingalso provides clear accountabilities or nancial and

operational perormance, and it oten results in loweracilities costs (due in large part to the proessionalpurchasing and contract management, and economieso scale, that ocused service providers bring to FM).

It is very clear that a majority o acilities proessionals

agree with our opening position, that the FM unction

has, or should have, a signicant strategic impact.

Over 75% o the survey respondents believe acilities

are a strategic resource today.

However, our interviews and survey data also suggest thatthere is a serious gap between belies and actions in

this area. Organisations that actually manage their acilities

as a strategic resource are still in a distinct minority. MostHeads o acilities still spend well over hal their time onday-to-day operational activities, even when they know thestrategic issues are more important. That is apparent

across all geographies and industries, be they large orsmall enterprises.

The most commonly used FM perormance measures areocused on nancial perormance and cost reduction; andover 50% o acilities unctional groups are either part o ashared services inrastructure organisation, or they reportto a head o CRE or to the CFO.

Those practices do not suggest that acilities are managed

as a strategic resource; in act, quite the opposite.


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3.2 FM has had mixed successachieving strategic alignmentwith other components othe businessIn general, acilities organisations believe they are relativelywell-aligned with nance, with business units, and with thecorporate strategy and vision. They are also, as we wouldexpect, reasonably close to corporate real estate groups.

However, only about hal o them consider themselveswell-aligned with their peers in IT, and just over 40%believe they are in alignment with HR and otherinrastructure groups.

Given our view that all o the inrastructure groups existonly to enable the workorce to produce value or the

organisation, this is a disturbing situation.

We are particularly concerned about the low levels

o alignment that FM experiences with HR and IT.We believe there are several actors contributing to thediculty that FM is having working with these otherunctional specialists:

a lack o appropriate early career education and proes-sional training (in all o these unctional areas)

poor proessional and/or managerial development(where it exists at all);

inadequate management systems and perormance

metrics; and poor executive leadership.

Early career education and training

There is no typical early career education and trainingamong proessionals who today nd themselves in the roleo Head o Facilities (or a similar role) in organisations oany size and type. Some come rom the building-relatedproessions (architecture, interior design, construction) into

FM. Some come rom the sot-service disciplines, suchas catering, or rom hotel management. Some have hadresponsibility or nancial management o real estate andacilities, and moved into an operational role. And some

Heads o Facilities have been recruited rom the corebusiness, usually because o their knowledge o how theorganisation and/or sector works.

It is much more likely that the Head o Facilities has had

some exposure to nance, and understands at least thebasic disciplines o annual budgeting and continuousnancial control and reporting, as nance is the commonglue across any business.

While senior HR and IT executives have usually had

more ocused proessional training early their

careers, it is just as likely that none o them has had

any signicant exposure to acilities management.

Thus, on both sides o the divide there is little

understanding o the other unctions, or even a

realisation that those other areas have anything

to oer or any common interests.

It is also less likely that Heads o Facilities who have comeup through one o the sub-sectors, such as buildingengineering, architecture, or some o the other acilitiesservices, have had early career education and training in

general business. So management development andcross-unctional education becomes critical or FM, as itis or other unctional specialties, but is too oten limited.

Thus one o the major reasons that there is such poor

alignment across these dierent inrastructure groups

is that each area has its own special ocus, its own

language system and conceptual rameworks, and its

own views o what the workorce needs to be eective.

Proessional and management development

To combat these silos, the best organisations put theirhigh-potential management prospects through anextensive rotation training program, so they can get

exposure to all areas o the business, in particular thosethat are ar removed rom an individuals primary areao expertise. When those who have been through suchtraining later need to align their unctional area with others,they understand why and how, and they have learned tospeak the language o their colleagues.

Many o the larger, older organisations, such as the UKCivil Service (government support), the military, and

mature corporations, have a sta college o somedescription. These kinds o programs were originally setup to teach leadership and strategic planning, and toprepare managers with operational experience to play a

more strategic, orward-planning role within the corporatesta area.

One o the best-known and most eective management

development programs o this kind was (and in many waysstill is), the General Electric (GE) Corporations Leadershipand Learning Program located at Crotonville, New York.

GEs up and coming managers spend weeks at a timedeeply engaged in ormal education programs anddevelopment projects that serve to hone their leadershipskills and expose middle managers to each other and to

GEs senior executives, all with the intention o building thecompanys uture leaders.

For an aspiring Head o Facilities, a sta college

experience would be a great route to achieve

understanding o the other disciplines, and to

establish riendships and relationships with unctional

peers rom HR, Finance, IT and other areas.

Programs like GEs have regrettably become ar less

common today, usually or cost-reduction reasons.Unortunately the costs o not providing uture leaderswith eective leadership training and cross-unctionallearning are hard to measure, and thus suer incomparison the easily measured costs o building andmaintaining such programs.


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Inadequate management systems andperormance metrics

As the research clearly shows, when the alignment amonginrastructure groups is working well it is most oten

attributable to good interpersonal skills on the part o oneor more o the unctional group heads. Only a smallpercentage o the survey respondents, and almost none othe executive interviewees placed any value on ormalcommittee structures or even common perormancemeasures (see Discussion o Findings below).

The reality o organisational lie, especially among

senior corporate sta, is that ormal mechanisms like

committees and perormance metrics more oten get

in the way o working together than they incentivise

collaboration or alignment.

Consider, or example, this comment rom the global Heado FM or a major international nancial organisation:

We are under extreme cost pressure. For us in FM, HR is

just a user o space they are very divorced rom the

workplace. IT is localized, involved in low-level discussions,

but not at a strategic level. We have no real mechanisms

or discussing the uture o the workplace and

management is very traditional in its views; they want

everyone in the oce most o the time. So we eel very

isolated and underappreciated.

Weak executive leadership

Due to some o the deciencies described above, theexecutive leadership o unctions such as real estate andFM, and others like HR and IT, must be that much stronger

to compensate or the requent absence o generalmanagement knowledge among these more technicalsubordinates.

By stronger, we mean that executives who oversee theseinrastructure/support unctions must become moreaggressive in demanding greater alignment and evenactive collaboration among them.

The boss o the Head o FM must set out very

explicitly why and even how she/he should build

relationships with other colleagues or example theHR Strategy Manager. What should they be working on

together? Where are their areas o mutual interest and

overlap? What common initiatives could be developedthrough a ormal program or project (such as agileworking, fexwork, or something similar)?

In our experience, this kind o leadership rarely occurs.Unortunately, it is dicult or FM heads to coach upwards.

The most eective FM leaders do not wait to be orced

into collaborative activity; they take it on themselves toreach out, to spend time with other groups, and to learnwhat is needed. One head o FM or a global nancialback oce service provider commented that:

We have to do demand planning to anticipate uture

workspace needs. Since there are no ormal processesor bringing everyone to the table, I initiate meetings with

each o our major Business Unit heads twice a year, and

I personally visit our country managers as oten as I can.

We also look directly at head counts in HR and IT (which

make up a high percentage o our total sta since we are

basically an IT service provider). Frankly, we have little

interaction with HR, but we do work closely with IT since

they, like us, have to provision all new employees (as well

as everyone else, o course).


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3.3 Large, global organisationsace dramatically dierentchallenges than smaller, morelocal businessesand theymanage their acilities verydierentlyWhile some o these dierences relate simply to scale ooperations, it is worth remembering that ultimately acilitiesis a very local business; each building is located in aspecic community within a specic geographic region. Itmay be possible to oversee the management o a acilityrom a distance, but it is currently impossible to clean a

building or trim the surrounding vegetation remotely.

More importantly, when an organisation operates in manydierent countries, it obviously has to cope with varyingreal estate, construction, and operational practices,including dierent legal, regulatory, and cultural contexts.Thus, while this observation may seem obvious andunsurprising, it is important to recognise that the

dierences between smaller one-country businesses andglobal operations is not simply a dierence o scale; thereare major increases in complexity as a business expandsinternationally.

Even in very large multinational organisations the actualFM operations are most oten in-country, perhaps with

a regional co-ordination role that covers activities like: standardisation o services;

best-practice initiatives;

negotiation with, and oversight o, local serviceproviders

compliance audits;

local representation o company-wide policies andchange initiatives;

upward reporting o perormance and progress; and

succession planning.

There are at least our ways that global organisations(Multi-National Corporations, or MNCs) seek to leveragetheir advantages o scale and overcome the complexitiesthey ace:

1. Command and Control.An ecient commandand control unction works to standardise the way itworks with the many dierent services and inputs/

outputs around the world. For example, The ServiceLevel Agreement (SLA) structure and managementinormation and reporting systems should ideally bethe same (or at least very similar) everywhere. Commonreporting rameworks, even in the ace o dierent localcustoms and regulations, simpliy communication anddecision-making up and down the hierarchy.

There is increasing evidence o a desire to industrialiseFM, which is arguably a code or making unctional

management a commodity across all business units.It is well worth noting that CRE and IT are just asaected by this trend as is FM.

2. Deeper Outsourcing. Having a regional or globalsourcing deal creates a huge opportunity to turnover some (or all?) o the day-to-day managementresponsibilities or FM to a service provider (and totranser at least some portion o the risk). Doing so

can ree up the remaining sta to ocus on strategicissues and spend much more time interacting with thebuyers o the acilities end users and in particularsenior business executives and SBU heads.

The global organisations that can a ord to do this

kind o outsourcing tend to have more dedicated FMsocused on the challenges and activities listed above.This phenomenon is discussed in more detail in latersections o this report.

3. Procurement. Most large MNCs have procurement

departments that have the level o infuence to makepoints 1 and 2 above a reality. While procurementprocess improvements can readily become bottom-linesavings, most procurement groups are actually tryingto restructure unctional elements (FM, CRE, IT, otherinrastructure groups) to be more SBU-ocused and(as noted above in #1) make unctional management

a commodity across all business units.4. Economies o Scale. MNCs can adopt technologies

that have high xed setup costs that smallerorganisations typically nd prohibitive, suchas enterprise-wide Computer-Aided FacilitiesManagement (CAFM).


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3.5 Heads o acilities are stillburied in day-to-day operationsIn spite o the widespread belie that FM is already

strategic, the act is that the typical Head o acilitiesspends on average almost 54% o his/her work timedealing with day-to-day operational issues, whether thatmeans responding to a service issue, reviewing dailyperormance reports, or approving current purchases.Less than 21% o the time, just one day a week, is devotedto strategy and planning.

We suspect (and several o the executives we

interviewed conrmed) that a big part o this problem

is the simple reality that making sure the acilities are

operating is Job One; it is simply not a responsibility

that can be ignored. Making sure the lights are on,

the HVAC is operating properly, the building security iseective, the restrooms are in working order, will alwaysbe more urgent than working on the ve-year plan, next

years budget, or investigating whether replacing theoverhead lights with LEDs will save $1 million over thebuildings lietime.

There is no obvious way to avoid dealing with day-to-dayoperations. When something goes wrong (as it all-too-requently does), the issue has to be resolved beore theHead o FM can get back to being strategic.

Certainly an eective head o FM will have sta who can

(and do) deal with 99% o the operational challenges. But

the act remains that building operations are highly visibleto everyone who is on-site, including the CEO and othersenior executives. When something is obviously o-kilterthose senior executives do not call the building engineeror the maintenance sta; they call the Head o Facilities.

When the Head o Facilities (and we actually include allthe senior FM sta in this comment) comes rom anengineering or operations background, the desire toestablish and maintain high service levels is an inbred

value. Historically, doing it right is a prevailing mindset inthe proession, and we must acknowledge that is basicallya good thing.

It is also probably true that people who like operations,and excel at managing details, tend to sel-select intoFM. It is a natural career path or individuals who enjoymanaging tangible, visible activities that can be measureddirectly. Thus, FM proessionals who appear to be buriedin day-to-day operations, to the detriment o playing amore strategic role, are oten doing it by choice.

Furthermore, excelling at daily operations is also good orjob security. The buildings always need attention; it is not

as obvious that strategic planning, which can eeldiscretionary on any given day, is not getting done.

Finally, the vast majority o business leaders have had littleor no exposure to FM. They do not consider it a strategicresource, or understand what a dierence a world-classacility can make to the business. Hence they do not

consider engaging the FM group in their strategicdeliberations, and they are not receptive to the concepteven when the Head o FM does think strategically.

Unortunately it all becomes a sel-ullling prophecy. Ittakes an aggressive, articulate, and orward-thinking Heado Facilities to break the cycle. More on how to do that in

the Recommendations section o this report.


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3.6 FM career paths areundergoing signicant change,and the FM proession aces apotentially serious uture talentshortageAs organisations turn to service providers and increase

the outsourcing o FM tasks, the career paths o FMspecialists are undergoing dramatic change. In 2012, agrowing percentage o FM employment is within the serviceprovider industry, which in turn is expanding and maturingat a rapid pace.

We believe this shit will produce a new generation oFM specialists who are skilled at both traditional FM

responsibilities as well as at project management and clientrelationship activities.

Furthermore, we believe the advancing proessionalismo the service providers will eventually also produceexperienced FM proessionals who understand how tomeasure FM perormance not only in traditional terms,but also in terms o business impact. A service provideralmost by denition has to be capable o tracking the

value-adding impact o its activitiesand to monitor its ownperormance, learning rom experience and doing orwardplanning to ensure continuing commercial success.

Yet in spite o these long-term improvements in the FM

proession, we believe that end-user occupiers will ndit dicult to recruit and train individuals capable o

leading FM rom the end-user side.

As more and more FM proessionals seekand ndemployment on the service provider side, the proessionwill mature, but only rom an operational perspective. As weunderstand the industry, service providers ocus veryeectively on what they are paid to do: design, construct,and operate acilities on a short-term, cost-eective basis.

From what we have learned, only a small number o seniormanagers within a service provider organisation spend any

signicant portion o their time in contact with senior

end-user executivesand those client representatives arealmost always the FM clients, not occupierbusiness leaders.

Thus, the shortcomings we have cited in the educationand training o FM proessionals will be exacerbated, notsolved, by the growth o outsourcers and other serviceproviders. The operating proessionals in the industry will

be even urther separated rom end-user business issues;even measures o FM value-add like enhanced workorce

productivity and engagement, and attraction/retention,will be seen primarily as measurements (with nancial andcontractual consequences) by service provider sta, notas strategic imperatives with intrinsic importance to theuture o the ultimate client organisation.

There is an ironic and largely unanticipated consequenceto the proessionalization o the FM industry; as the

proession becomes more mature and more valued, itrisks becoming more narrowly ocused on pure FMknowledge and skills, to the detriment o the most criticalgeneral management skills we highlighted earlier. This isnot unique to FM o course, and is a eature o many otherproessions when working in the wider world o generalbusiness and management (which is why RICS hasdeveloped general management training options or

post-experience Chartered Surveyors)


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4.0DiscussionofFind

ings This section o the report expands on the six themes

discussed above and addresses the state o the FMproession in more detail. Here we ollow the organisation

o the survey more directly. However, we have also

included direct quotations rom selected executiveinterviews when they are relevant and helpul in addinginsight.

We discuss in turn the ollowing major question areas thatwere included in the survey:

The FM unction within the larger organisation.

where does FM report? We also look at global versusbusiness-unit structures.

FM perormance measures. How is the FM unctionseectiveness and eciency measured? What impactdo these metrics have on FMs ocus and unctionalstrategy?

Strategic alignment and activity. How well alignedis FM with overall business strategy, and with otherunctional areas like Finance, HR, and IT? Just asimportantly, what organisational mechanisms do

FM leaders rely on to work with their peers in otherunctional areas?

Insourcing/outsourcing strategies. Which majorFM tasks/activities are being outsourced to third-party service providers in 2012? And what are theimplications o outsourcing or FM leadership and itsstrategic role? We also include a brie historical notethat outlines the experiences o IT organizations in the

1980s as they both outsourced operational activitiesand became widely recognized as a strategic resourcein most organisations.

Top issues acing FM. We also identiy the mostchallenging issues acing FM leaders, drawing onnarrative responses to the only open-ended itemin the survey.

Finally, this section concludes with a summary o theorganizational patterns that we identied during theindividual executive interviews that were conducted both

beore and ater the administration o the survey. Thesepatterns are similar to, but not identical with, the broader

insights we gained rom the survey itsel.


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4.1The FM unction within thelarger organisationAs we have already suggested, FM is in transition. As

oten happens in transitions, there are wide variations inthe role that FM plays in organisations around the world,ranging rom where it reports, to how its perormance ismeasured, to what impact it has on business strategy, tohow well it is aligned with other inrastructure unctions.

One particularly surprising nding was the act that almostone-third o the survey respondents reported that the FMunction in their organisation reported directly to the COO

(see Figure Eight).

However, 36% o acilities groups are embedded withineither corporate real estate or a shared servicesorganisation. Another 17.6% report directly to a seniornance executive. In other words, almost 54% o theacilities organisations do not have meaningul directexposure to a C-Suite executive other than the CFO(i that).

Figure 9 Reporting Relationships versus Organisational Size

Figure 8Where does the FMunction report?

Within the

Corporate Real

Estate

(CRE) unction

18.0%

Other

0.4%

Procurement/

Supply Chain

5.4%

Reports to Human

Resources Management

7.9%

Reports to a

CEO/COO

32.6%

Is part o a

shared services

organization

18.0%

Reports directly to

a senior fnance

executive

17.6%


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This nding took on new meaning when we sorted it byorganisational size. As shown in Figure Nine (below), in

very small organisations (ewer than 500 employees) over50% o FM groups report directly to the CEO or COO.

However, at the opposite end o the spectrum, in

organisations employing over 10,000 people, only about12% o FM groups report directly to the CEO or COO. Inlarge organisations FM reports most requently to thehead o Corporate Real Estate, or to Finance.

This analysis reveals an important issue: asorganisations grow in scale (and thereore in complexityand geographic dispersion) FM becomes both morecomplex and more essential. However these shits in

reporting relationships suggest that FM also appears to

receive less attention rom senior management in largerorganisations as its activities and accountabilities aresubsumed within other inrastructure organisations.

Figure 10 Organizing CRE/FM by Time Horizon

Real

Estate

Project

Management

Workplace

Resources

Facilities

Operations

Global

CRE/FM

CFO

Workplace

Planning

In this organisation workplace resources include groups like oce services, travel planning, copy and binding

services, reception, feet management (cars and vans), and security. Facilities operations include building

maintenance and engineering, landscaping, and other activities directly ocused on keeping the buildings

themselves in good working order.

That is a Good News/Bad News scenario. In largerorganisations (generally multinational corporations, or

MNCs), FM has larger budgets, is more sophisticated, andgenerally attracts more experienced proessional sta (onhigher salaries). Thus, it usually requires less direct attention

rom the highest levels o the organisation.

However, that downgrading within the corporate reportingstructure also means that FM is oten let out o long-termstrategic planning discussions, has less visibility into thethinking o senior business executives, and is less visible tothose same executives.

Example:

The global Head o CRE and acilities or a high-tech

sotware development rm reported to us that he manages

all o the core inrastructure groups through an

organisational structure that is based on time scales. He

has dened a range o responsibilities that goes rom

long-term and strategic at one end down to day-to-day

operational requirements at the other. His group structure is

depicted in Figure Ten, above.


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Figure 12 How is perormance o the FM unction measured?

4.2 FM Perormance MeasuresThe research also explored which metrics are used tomeasure and evaluate the management o acilities. In

other words, what business goals and success measuresdoes senior management rely on to assess theperormance o the FM team, and what measures are

used by the team itsel to manage its own perormance?

Although many businesses and even governmentagencies now make use o a Balanced Scorecard8 toocus management attention on areas o perormancebeyond the purely nancial, we ound very ew instanceswhere organisations are actually paying attention to

perormance measures other than purely nancial

ones.

Despite almost 60% o respondents claiming that they

measure employee satisaction with the workplace thereis little evidence that satisaction scores matter to seniormanagement.

It is not surprising to learn that the most commonmeasuremen

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Rics Raising the Bar Report