Questions on outsourcing are at the top of everyone’s minds right now as service needs ebb and flow due to COVID-19. For many, it is also a potential source of cost savings at a time when revenue is down and budgets are getting slashed.
We addressed this subject in a panel discussion at HEFFv led by Brian Reyes, Senior Vice President of Higher Education at C&W Services, as well as in two sessions of highly curated, intimate conversations that were part of our MasterMind series.
We also checked in with several facilities leaders around the country to find out how they evaluate outsourcing options, especially during times of increasing needs and decreasing budgets.
Here’s what they had to say.
When Dave Irvin first joined the University of Tennessee, Knoxville as Associate Vice Chancellor for Facilities Services in 2011, they hadn’t addressed deferred maintenance in 15 years. There were 200 leaking roofs and a chaotic mix of in-house and outsourcing. In his first hour on campus, the president of the university told him that one of his top priorities was determining whether to in-source or outsource. Within three weeks, he had made the decision to bring all outsourced services back in-house.
University of Tennessee, Knoxville.
“We felt we would better serve the mission and get the quality the university needed,” he said. When the university had bid their outsourcing, they went for the absolute lowest dollar and hired people for 20 hours per week with no paid leave and no benefits. “Well, you get what you pay for.”
He estimated bringing all services back in-house would cost an extra $1 million. In the end, it didn’t actually cost anything extra because they were able to train their staff and completely reorganize how they approached facilities, deferred maintenance, and capital renewal.
“Because we were showing a commitment to the employees with training and benefits, that built loyalty and our employees were actually more productive. It ended up not costing us any more,” Irvin explained.
Irvin, who is now AVC for Facilities at Florida State University and the President-Elect at APPA, added that outsourcing isn't inherently bad.
“It can be good if you clearly define your expectations,” he said. “I don't think it's best just to look at cost, but maybe if it's a remote site or maybe if it's outside your core mission, I believe outsourcing situations can be very good.”
Flexing up and down without the hiring and firing
Every facilities leader on campuses across the country has their own unique experience with outsourcing. For some, outsourcing creates more challenges than it solves. For others, it’s a godsend.
For Mark Helms, AVP of Facilities Services at the University of Florida, outsourcing is an extraordinary solution to a complicated problem – the need to ramp up and ramp down services, particularly for enhanced cleaning measures in response to the coronavirus.
“I want that flexibility,” Helms said. “We can take advantage of that ramping up and down without having to go through the whole hiring process and background checks, or having to hire temporary workers and lay people off. We can increase services as needed without impacting the campus community.”
And that flexibility doesn’t just apply to housekeeping and custodial services during these COVID times; it is also useful for construction work as well as seasonal landscaping. Another Florida school, the Florida International University, has been outsourcing landscaping for 25 years.
“The biggest advantage is the ramping up and ramping down,” said AVP of Facilities Management John Cal. “We need a different size workforce in the winter than in the summer. and it would be tough to manage in-house.”
FSU cleaning and disinfecting procedures in classrooms.
Many facilities leaders have been adding outsourced third shifts to cleaning services as cleaning and sanitization demands have increased due to COVID. There are multiple advantages to outsourcing that third shift: the labor costs less because contracted workers don’t come with expensive state benefits, it eliminates the lengthy hiring process and the organization’s risk, classified staff aren’t asked to shift their schedules to evenings (which many resist), and the necessary work still gets done.
But again, every campus is different. At the University of Southern Mississippi, staff members were more than willing to change their schedules and work extra hours as needed.
“It's a real tribute to our people – our leadership and the people on the ground floor doing the cleaning, changing their schedules and coming in at 5 a.m. or 4 a.m. or coming back in at night and cleaning a COVID-positive classroom,” said Chris Crenshaw, Sr. AVP for Facilities Planning and Management and Chief Facilities Officer. “It's about the employees and staff that have bought into how valuable the service is that they are providing and working hard and being willing to adapt.”
Crenshaw was reluctant to outsource additional services in response to COVID because, he said, the virus came on quickly and we don’t yet know where it’s going from here. With vaccines promising renewed hope for a return to something like “normal” in the coming months, he is confident in his staff’s ability and willingness to continue to be adaptable and is very happy with how they are managing this situation.
“Outsourcing is a big, expensive move. It's also a long-term commitment contractually,” he said. “Every campus is different in terms of the resources, manpower, and skills they have within their communities and what their workforce is like. I think there are probably some universities and institutions where outsourcing makes a lot of sense and can be very helpful.”
Valuing human capital
One of the biggest hesitancies with outsourcing is the disconnect – whether merely perceived or very much palpable – between university and contract staff, as well as the disconnect within the community.
"From the Ground Up," an original performance created by Forklift Danceworks in collaboration with Wake Forest facilities staff.
John Shenette, VP of Facilities and Campus Services at Wake Forest University, said that his primary motivation to not outsource is because he has always worked for institutions that are deeply entwined in the community and are the largest employers in the area.
That said, he has outsourced in situations where he couldn’t find enough people to do the custodial work needed. It was initially a seven-figure savings, but as the outsourcing relationship grew, so did the cost of it. In the trades – project management, HVAC, mechanical – he feels that owning that work internally has “tremendous value in human capital,” and creates a bond that is stronger than that in an outsourced relationship.
“Dollars are important but there's a valuable synergy in having those resources internally,” he stated.
But sometimes there are also challenges internally; sometimes legacy staff might not be productive, and that’s a difficult conversation to have. It’s also a necessary one if you want to fight to keep that human capital in-house; otherwise, outsourcing becomes a more attractive option to those making financial decisions.
“But if you pay an increased wage and get a commitment from employees to do more work, then that becomes more attractive,” Shenette said. “For faculty members with research labs, knowing they have someone in facilities they can build a bond with is very valuable to them, whereas with outsourcing the employees won't spend the extra time or do the extra work because it's not in their contract.”
Recently, however, Shenette has been working with an outsourcing partner to address the ebbs and flows of cleaning and sanitization needs related to COVID.
“We wanted to keep the lifestyle, environment, and anxiety level consistent for our employees. We did not furlough anyone,” he explained. “Our outside vendor has multiple contracts with multiple firms and is able to pull people to help us when we need it. I can't hire people for a six-month need and then tell them they're out of a job after six months. I personally just can't do it. So, depending on what your needs are, you may have to look at outsourcing to meet that need, especially if there's a way to minimize that anxiety for your staff.”
Off your payroll but not off your plate
Outsourcing can be a great solution for many reasons. It can be used to address fluctuations in service needs. It can be used for services or specialties that you simply do not have the bandwidth or expertise to handle in-house. It can be used to fill in gaps in the workforce where skills are lacking or when you’re not able to be competitive with the labor market rate or keep up with advancing technologies. It also eliminates the burden of hiring and firing, as well as liability risks and HR issues for your institution. It’s great for managing services at satellite facilities. And, finally, it’s usually cheaper.
But to have a successful outsourcing partnership – not one that becomes a nightmare story you tell to other facilities leaders at the next HEFF live event! – you need a detailed RFP and a contract manager.
“There are very good outsourcing companies that treat their people well and approach things in a way that is in keeping with your mission,” Irvin said. “The key is making sure you write that in the RFP so that those values are part of what you evaluate, not just dollars but the totality of what that will be for your university.”
The RFP can stipulate things like “APPA Level 3 service,” but also more cultural items, like how the employees are treated. Even when outsourcing is a matter of the bottom line and nothing more, those values can still be addressed in the RFP.
Mike Berthelsen, VP of University Services at the University of Minnesota, agreed. “Anyone can pick their own criteria for what is most important to them – is it the speed of response in an emergency, certain skill sets, lowest price? – but you have to know what your priorities are and judge against all of them because they all play a role.”
Berthelsen also said that just because you outsource something doesn’t mean you can stop paying attention to it. Any contract needs a contract manager – someone who measures the metrics and has direct access to the vendor’s management system to make sure you’re getting the value for what you’re paying for. And you have to routinely “check-in” on the contract to make sure it’s still the right choice for your organization.
He prefers to keep things in-house as much as possible but does outsource certain maintenance items that are outside his team’s area of expertise.
“If you're considering outsourcing, you have to know what you want out of it,” he said. “Know your priorities. Know your scope, your schedule, your budget, just like you would with capital projects. It works the same for outsourcing. What are your goals and values? Be clear about the outcomes you expect and whether or not you can document that. Do your homework ahead of time. It's not a ‘get off your plate’ issue; it's still on your plate. The service impact is still yours.”
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