Matt Adams is president of The Adams Consulting Group, a management/engineering consulting firm located in Atlanta, Georgia, specializing in the facility maintenance and management within higher education, school districts, and other institutions.
Increasingly, institutional facilities managers are evaluating the option of outsourcing one or more of their service centers. However, "sourcing" of any one department (custodial, grounds, preventive maintenance) is still viewed as a difficult process. Both management and staff have concerns over the impact outsourcing may have on the college. In fact, many institutions evaluate the pros and cons of outsourcing only to defer the decision because of the fear and confusion associated with the employee issues. Additionally, recent press has heightened the greatest fears of any administrator (see "Universities Seek to Cut Costs by Outsourcing More Operations," Chronicle of Higher Education, November 21, 1997).
However, many of the issues that seem too unsavory to grapple with are continually being explored and delineated by the institutional and corporate community. To put it another way, we can now learn a great deal from the good and bad experiences of others, and concern over employees has been the focus of these experiences. As Doug Christensen (past APPA president) once said at an APPA Institute: "Successful facilities management is the effective utilization of material and labor resources." As such, the labor resource of a facilities service department is at least half of the concern in evaluating outsourcing.
My experience shows it to be much more. In fact, outsourcing of a service center has taken on three distinct formats in recent years. Each one deals with the labor resource differently. It is often assumed that when a service center is outsourced that all of the employees will change employers. For years this was the default decision. This option is most appropriate for those institutions that want to minimize their involvement in an operation. Often the contractor will provide a single point of contact for the institution's business office thereby reducing management responsibility. Additionally, the college may have an interest in reducing its human resource responsibility.
A custodial department is reviewed by the administration and the decision is made to check the "market" for contracted services. After a review of the existing physical inventory and operation, each contractor submits a proposal. Ideally included in this proposal is a cost, a management organization. and a transition plan to take over the service center. Each proposal is compared and contrasted with each other and the current operation and institutional goals. At this point, the process often stops. Even the most polished and professional proposal and associated firm is charged with transitioning the institution's staff onto its corporate roles. Regardless of the contractor, most colleges have a severe case of "buyers remorse" at this point. Nevertheless, the transition of an entire staff continues to occur in this industry. Ultimately, most are successful.
A reputable contractor understands the benefits of acquiring a happy workforce: It is in their best interest to offer a transition plan that creates the least uncertainty and maintains equity for the employees. Keith Reid, vice president of educational services for UNICCO, affirms that "ultimately it is our goal to add value through management. We will make decisions that best make this possible." Some of the considerations in transitioning the entire staff include conversion or transfer of benefit packages, conversion of seniority, continuation of tuition remission, adoption or negotiation of labor contracts, instituting revised human resource policies, and most importantly, accurate dissemination of information.
On the other end of the spectrum is the "management assistance contract." Many institutions have determined that it is necessary to acquire outside expertise to manage a service center. Sometimes one or more of the departmental managers retires or otherwise leaves, creating a technical service management need. In other situations, the institution simply can't afford to build the modern management infrastructure for the operation. Small and mid-size institutions see the opportunity to buy rather than recreate a functioning service management system.
These days, this decision may not have labor cost as an issue. Productive management of the labor may be the issue. In addition, the "economy of scale" benefits of a large integrated contractor may appeal to a smaller organization. According to Curtis Bragg, executive vice president of ServiceMaster Education Management Services: "In the past, the outsourcing industry was almost completely dependent on labor savings to reduce costs when in fact there are so many other expense areas." Often ServiceMaster prefers a management assistance contract. Under this arrangement, the institution follows a specification and competitive selection process. The cost associated with each proposal is often much further down the list of selection criteria. The technical competence, managerial experience, available systems and tools, and overall fit take precedence. In effect, the institution seeks to improve the service center with the assistance of the contractor. The college plans to stay in the loop and keep the employees on its roles. Naturally, the fears and concerns associated with outsourcing are far less under this scenario.
Typically, the successful firm will both assume and add managers to create an effective team. This team operates just as if they are employees of the institution with one exception. They are responsible to both the college as well as the service company. The service company makes its resources available to the team to leverage their efforts. From training to computer and management reporting systems, the management team operates as an extension of the corporate partner with a focused reporting line to the institution's administration. As more institutions showed hesitation in facing the "fear" of employees during the outsourcing process, the service contracting industry responded.
Within the last few years, a new format has taken shape in outsourcing. This format is best described as a hybrid of the previous two options. The goal is simple offer a way for the college to receive the benefits of outsourcing while still treating the employees fairly without traumatizing them. If the food service industry serves as a precursor to developments in other service centers, then the mixing of institutional and contractor employees is here to stay.
Initially, the idea of having a staff split between two employers seems overly complicated. However, the philosophy really is simple. All vested employees are given the option to stay on as college employees or switch over to the service contractor. All very recently hired and/or new hires are brought onto the contractors roles. All information related to benefits, promotion, labor contracts, etc., are shared in a concise and open forum. As Bill Dillon, vice president for facility services at ARAMARK, put it: "Once the open sharing of information regarding benefits comparisons occurs, the process moves swiftly and painlessly."
All issues that require two sets of delineation are completed in tandem. For example, the labor contracts for both employee groups are negotiated at the same time. As such, the work rules are identical or very similar. Grievances, for example are dealt with using the same policies regardless of who an employee might work for. Its Bill Dillon's experience that only rarely does an employee management dispute reach a level where the difference between employers has any effect. Overall this format seems to assuage the fears of the workforce. The employees are not forced to accept any major changes to their employment packages. However, the institution must stay involved in the service operation at least from a human resource standpoint. Depending on the average age of the existing workforce, the transition from institutional to contractor staff may take many years. In fact, it may not be worthwhile if the staff is simply too young on average.
Nevertheless, the process is very beneficial to some colleges. At the University of Delaware, David Hollowell, executive vice president, acknowledged: "Our success with the outsourcing experience, in particular the positive impact on employees achieved by our transition strategy, has created the comfort level in the University community and with our board of trustees that has allowed us to explore other sourcing opportunities." As illustrated in a report published by Maria Taylor of the Institute for the Study of Organizational Effectiveness at Pennsylvania State, employees at The University of Delaware have transitioned over time:
As the desire of institutions to engage in partnerships with service providers increases, so must the sophistication of the industry. Successful partnerships occur when the various options available are explored and ranked according to the unique situational needs of the institutions and the staff. Now there are three basic formats for outsourcing services, and as institutions express concerns or needs to the industry perhaps more will become available.