ISS & NORDEA: FACILITY MANAGEMENT IN THE NORDIC

REGION

CREATED BY: Group-1

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ISS & Nordea Intro & Strategic choicesOsho Kharbanda

Flow of presentationGroup 1:-Anmol, Anurag, Ayush, Barnaa, Osho

Competitors, Market scenario & NegotiationBarnaa L. Dekaa

Implementation of Output based modelAnurag Chaturvedi

Quality Measures & ControlAyush Gupta

Governance and BaselineAnmol Gupta

Introduction6 month Evaluation Meeting

March 2011: Facility Manager at Nordea Bank AB optimistic about six-month evaluation meeting for Nordea’s service provider ISS.Account Manager at ISS: Nordea’s One of biggest client in Nordic region. Reflect on last Six-Month effort of implementing proper

routine, Facilitate more trust in company’s relationship. Concern over Nordea’s request for further increase in service levels.

Scope for improvements Right Tools & methods to measure quality

Increase number of innovation in service operation

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1. Established as a result of mergers between Danish Unibank, Swedish N o r d b a n k e n , t h e N o r w e g i a n Kreditkassen, and Finnish Merita Bank.

2. Largest financial group in the Nordic region, with activities in corporate banking, retail banking and private banking.

3. 1,400 branches in 19 countries.4. Values such as professionalism, value

creation and accountability were key factors in handling the business of the company’s 11 million customers.

Nordea Bank ABControlling Risk

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OutsourcingFocus more on the company’s primary activities — banking — Nordea’s top management made a strategic decision to outsource various peripheral activities such as catering, security and cleaning.

Integrated facility management (IFM)Pan-Nordic approach, to create standardised processes across the region. Individual branch managers were given the authority to negotiate their own contracts. Company was moving towards an integrated facility management (IFM) model.

At Nordea’s-We Avoid RiskIn Denmark, Finland and Sweden-ISS. However, within Norway, Coor Service Management (Coor). Nordea’s policy of reducing risks by not putting all of its activities, efforts and investments towards only a few opportunities.

Optimal Solution for allNordea was gradually moving away from a country-based structure and towards a line organisation. In the past, Nordea had worked to find the best solution in each country; now the company wanted to find the optimal solution for all Nordic countries. In line with strategy of focusing on its core activities, expand its outsourcing scope from only “soft” facility services, such as cleaning and catering, towards including “harder” services, such as space management and repair and renovation services.

Strategic ChoicesNordea’s Bank

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1. ISS started in Copenhagen in 1901 as a security company with only 20 employees.

2. By 2011, ISS was the world’s largest commercial provider of facility services, employing 520,000 people in more than 50 countries.

3. ISS provided single, multiple and integrated facility services within five areas: cleaning, catering, office support, property services, and security.

4. One of ISS’s main competences was “people management” — namely, managing low- and semi-skilled labour.

5. Unlike most competitors in the industry, ISS used very few sub-contractors. Instead, ISS focused on using its own employees to conduct all services, from cleaning to security.

ISS: Facility ServicesA Global Service Provider

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Multi-LocalISS had always followed a “multi-local” strategy in which each country’s organisation maintained local control in order to develop business according to local market needs.

Umbrella Organisationcoordinate the company’s activities in the four Nordic countries, promote best practices and accommodate the demand for Nordic solutions.

IFM ModelISS delivered many services that were either provided individually or integrated through the IFM model. The company trusted that the IFM model offered clients a more cost-effective solution due to the synergies derived from the integration.

Smoother CommunicationSynergies were obtained through the company’s intensive training of its employees, the sharing of knowledge across services and the careful planning of work tasks. Furthermore, the IFM model eliminated the “middleman” layer so that all contact was directly between ISS account managers and clients. This made communication smoother in terms of knowledge sharing and accountability.

Strategic ChoicesISS

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01.In 2011, Nordic Region was most mature market for Facility Management.

02.Entry barriers low No. of

Competitors high

03.ISS had attained Market

Leader position in 4 Nordic countries

Market ShareISS: Across nordic’s countries

0%

800%

1,600%

2,400%

3,200%

MARKETSHARE

23

32

2223

DENMARK FINLAND NORWAY SWEDEN

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1.Demand for FM solutions had grown steadily.2.Cost-reduction and outsourcing of non-core activities3.After Global Economic Crisis (2008) demand rose for

multi-services and integrated service solutions4.Yet in 2011, IFM services was still small part (20%) of

ISS’s total FM revenue5.However market trend pointed to higher demand for

IFM solutions

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01.The Compass Group (British)

02.Sodexo (French)

03.Johnson Controls (American)

04.Aramark (American)

Competitors: ISSIFM Market dominated by few large players, Including ISS

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1. 2010-11 ISS appointed as Nordea’s FM partner for 20+ locations in Denmark, Sweden and Finland

2. Scope of services were both “Soft Services” (Receptionist Serv ices, In terna l Mai l , Cater ing etc . ) and “Hard Services” (Repair, Moving, Space Management etc.)

3. Contract served 4,300 workplaces, cleaning of more than 1,30,000 sq. meters and daily meals of 12,000+ employees

4. New innovation in the contract was the “Output-based Approach”

5. ISS was given greater managerial role within Nordea

Negotiation of Contract

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1. Relationship between ISS and Nordea can be divided into 3 phases:• The First Phase (1976-2004) Focus on clearly specifying how

to conduct services in each location• The Second Phase (2004-2010) Focus on standardizing

services across the locations• The Third Phase (2010 onwards) Focus on Output Based

Services (quality was more important than method)2. Annual turnover of contract was 30 million Euros3. Relationship kept evolving between ISS and Nordea

Negotiation of Contract

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Goal: To collaborate on specifying details of the output based contract, develop a proper governance structure to handle daily problems and to build interpersonal relationship.How it is achieved?• First 6 months of new contract• Weekly conference calls made between key people at Nordea and ISS• Agreement on specs and quality levels to be done• Clauses on penalties were suspendedNormal Phase: Meeting were held once in a month.Contractual agreement became valid in all respect along with penalty clause.

Transforming Period

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Challenges Faced

1.Clause not having service description leads to subjective interpretations. E.g. catering service contract includes food should be healthy ,varied and of high quality. How quality to be measured not given.

2.Price of the contract was difficult to be determined3.Experts were soon commissioned to determine a

precise and operational definition that would also make possible for ISS to deliver its service within price limits set by Nordea.

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Aligning Expectations

1.Alignment of expectation written as Service Level Agreements(SLAs)

2.SLAs= legal formulation of how the quality of a particular service should be.

3.SLAs useful in maintaining similar level of quality in services across different countries. For this adjustments were made in SLAs to accommodate specific local needs and demands.

4.Appropriate communication to Nordea Employee regarding the changes in implementation of services with respect to new contract.

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Quality Control and Measurement

1.Quality of the delivered service was the main performance indicator, measurement of quality was the key.

2.Emphasised by KPI(Key Performance Indicators) mentioned in the contract.

3.ISS conducted a monthly assessment among Nordea employees of their satisfaction level with the services delivered.

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Quality Control and Measurement

1.The responses to these (short questionaries, answerable in a few minutes) were then compiled into a satisfaction index.

2.These satisfaction scores were listed as traffic light colours( red-satisfactory, green-unsatisfactory).

3.Introduction of APPA to make the process less biased.4.Independent quality surveys in various departments of

Nordea and reports open to comments.5.Comments were directed to ISS Internal Support Unit.

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Control Measures

1.Informal user groups, consisting of departmental secretaries.

2.SoS.nordea.com, served as a formal help desk.3.In addition, Nordea’s Facility Unit conducted an

Annual End User survey and Customer Satisfaction Survey.

4.No third party was involved.5.Penalties, monetary fines, included in most serious

cases.

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Standardisation of Services

1.PAN Nordea level of Standardization.2.Streamlining of Services by SLAs

Rebuilding TrustLong relation: Advantage for ISS or matter of concern?

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Catering in Denmark

1.Issues to be handled at country level2.Notable rotation of employees in catering services3.Quality can be fixed overnight but not Image4.Special trained Chefs to gain confidence5.Lunch invitations to address more complaintsLosing Norway• Deficient quality levels• Contract given to another service provider

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Finding the Baseline

1.From Control Measure towards establishing IFM2.Situation of Denmark canteen stabilized3.Norway still a goalCall for Innovation• Innovation: Cost Reduction or Better and efficient quality?• How to tap ideas?Incentives to Change• From Bonus to sharing of Profits.• Focus on creating value added innovations.

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Conclusion

1.True Strategic Partnership2.Shared Vision3.Customer Vision on Nordea4.Easy to Deal with Solutions5.Seamless workday of Employees6.Increase in Productivity7.Innovate Partners always willing to try new things

“Service with Human Touch”

Thank YouAny Questions?