How creative should a facilities manager be?
There is a fine line between creativity and excessive risk-taking behaviour in the facility management profession, writes RODNEY TIMM.
Too often facilities managers within an organisation are seen as a necessary evil. Often they are perceived as a bunch of administrators keeping control of the facilities budget as the executive management gatekeepers. And their value is measured in their ability to somehow manage to accommodate changes to meet the ongoing dynamics of business unit needs – without asking for more money!
As a result, the tendency is for the facilities managers to morph into ‘order takers’ waiting to serve their masters – the key business unit leaders that generate the business revenues. The challenge is focused on the reactive response to meet the ever-changing need for more or less workspaces. Business units appear to either have too much space (and need to hand it back to reduce operating costs), or too little space, resulting from aggressive growth patterns and leading to fears that a lack of workspace will curtail business growth opportunities. It is believed that facilities will prevent the business unit from accommodating new talent just employed or the take-over of ‘start-up’ companies with the latest and greatest new ideas.
Alternatively in more stable organisations facilities managers often tend to become the de facto executive management gate-keepers, perceived as the accommodation ‘order givers’ focused on cost containment and cost cutting. Always being the bearers of bad news, the facilities managers’ mantras are perceived as: ‘No more space – make do with what you have.’ Or ‘No corner offices – choose one of two standard open plan workstation designs – regardless of function or hierarchy.’ Not great positioning within the organisation to win friends and influence key stakeholders.
But do these conflicting roles within the business need to prevail? Should facilities managers take more pro-active and creative roles, with facilities strategies focused on the future that support business needs no matter what the stage of the life cycle or the business cycle? What are the risks and advantages to facilities managers of doing things differently?
Creativity is a risky game. By the very nature of creativity, mistakes will and should be made. As a result, personal reputations and careers may suffer. But the up-side is the positive outcomes and accommodation solutions that make a real difference to business units and enhances their competitive advantage. These outcomes will boost reputations and careers.
The creativity challenge is to ensure that within the focused operational environment of facilities management, a creativity platform is established. The team should know that creative solutions are encouraged. And, also, that mistakes are allowed provided these are managed through the creative process that has been set up – so that no ‘stupid’ mistakes occur.
The creativity process should be focused on understanding the business objectives stated without the normal constraints. Creativity is usually best in collaborative arrangements with participants drawn from a cross-section of disciplines, personality types and cultures. Possibilities should be generated without bounds, pre-judgements and criticisms: the rule is ‘anything goes’ and non-traditional accommodation solutions should be encouraged without limitation. The process should be structured to eliminate the traditional prejudices and nay-sayers. And to support the generation of ideas all participants – including the quiet retiring types – should be encouraged to participate in a non-confrontational environment. This may even require using anonymous written ideas to liberate the hidden gems.
During the filter stage, the ideas and possibilities are evaluated against the pre-determined operating objectives and priorities. The success is often dependent on how the objectives are framed. Language used that reflects old facilities industry paradigms rather than the needs of the business will restrict possibilities and creative outcomes.
In proposing creative accommodation solutions, it is important for facilities managers to have the appropriate executive sponsorship to support the vision and the possibilities. Corporate reality dictates that creativity risk needs to be shared at a senior level. And the more creative the planned outcomes and associated risks, the higher up the organisational hierarchy, the support should be sought.
CHANGING THE CORE BUSINESS
In being creative it is possible that by taking too much property industry risk the nature of the core business may have to be changed. There have been many examples where over-enthusiastic facilities managers, supported by an over-zealous executive team enticed by false perceptions of the development profits, have become de facto property developers. This usually happens when risks related to property development are neither properly understood nor priced correctly.
The uninitiated tend to treat property and facility risks as normal business risks and uncertain future cashflow projections are discounted using the company’s relatively low ‘weighted average cost of capital’. The nature of property cycles and the development bets require that these risks be priced at higher rates related to the future uncertainties of property outcomes. This may relate to future vacancies, cost over-runs, price of finance and – most challenging of all – the residual development values.
An example of excessive property risk exposure is a head-lease arrangement over an entire building for significantly more space than actually required, with the hope of leasing the excess space at a profit and thus reducing the overall cost of occupancy. Great if the strategy works but if the space is not leased out, or leased at a discount, because of the market cycle change, the occupancy cost is suddenly significantly above the budget. Suddenly the creative facilities manager’s reputation is in tatters. And in extreme cases the company may even find itself in financial jeopardy.
Another example may be driving a bulky goods retail development and carrying all the associated risks with the primary objective of being the anchor tenant. But in the process not accurately allowing for all the required capital, or having persistent vacancies that cannot be leased, or not being able to on-sell the development at the projected end value.
Some businesses – particularly national retailers and supermarkets – have good track records in developments creating competitive advantage and growing their market share. But for years they have been focused on up-skilling with development experience, and driving market share through development has become a component of their core business. But it needs to be recognised that getting involved in significant (and repetitive) development risks, the nature of the business has changed. The core business should be redefined to include development risk and the core competencies should be up-skilled appropriately.
When over-ambitious creative facilities solutions go wrong, it is not a good look for the facilities management group. Suddenly the burdensome financial commitments have the group becoming the core focus for the executive management for the wrong reasons.
FACILITIES MANAGEMENT MISSION
In positioning the facilities management team within the organisation it is important to create a presence and perception that supports the real value that can be delivered. A positioning statement that the facilities management team believes in and adheres to may include words similar to the following:
‘We are neither order takers nor order givers. Our services are designed to support the business units in their operational needs within corporate standards. If our processes prevent the business units from achieving their strategic goals we need to change to meet their needs. We work pro-actively and creatively with the business units to understand their future business needs and assist in co-creating strategies that provide competitive advantage.’
The key message to facilities managers is to be creative but beware of enthusiasm and over-commitment – supported by complicated executive management – that inadvertently change the core focus of the business. Perceived lucrative profits in development can be intoxicating, but for the uninitiated and inexperienced it is fraught with dangers and risks. Unless there is explicit strategic intent to change the nature of the core business and the commitment to up-skill, do not by default become a distressed developer requiring financial commitments and executive energy that detracts from the core business functions that were the foundation for the original success of the business.