2007/05/cover
The best time to plant a tree was 20 years ago, The second best time is today.
– Chinese proverb
THE
BULLETIN
Volume 75 | Issue 3
May 2007

Contract vs. In-House Staff: Finding the right source for custodial and maintenance operations

Alan S. Bigger & Linda B. Bigger

The concept of outsourcing services at university and college campuses is not new. However, what services were once perceived as sacred and immune to being outsourced, are now being outsourced with increasing frequency. Among them are custodial and maintenance services.
Between 2005 and 2006, “Both two-year and four-year colleges increased their practice of outsourcing [maintenance and operations] services. Twenty-seven percent of two-year colleges and 26 percent of four-year colleges use privatized services” (Argon, 2006, ¶ 9). This is an increase from 20 and 22 percent respectively for 2005 (Argon, 2006). For college unions in particular, this number is much less, with only 5.1 percent using contract staff to provide maintenance services (ACUInfo, 2007). Most seem to be using in-house staff for custodial and maintenance services; the median numbers of custodial full-time staff for college unions is six and one permanent part-time (ACUInfo, 2007).
Professional and well-trained in-house custodians who know the institution and its expectations can provide the service that an institution expects on a consistent basis. However, outsourcing of any in-house entity may be a viable business option. With the custodial and janitorial services industry exceeding $50 billion annually (Salmirs, 2004), clearly some organizations are choosing outsourcing as a preferable option.

Deciding to outsource

There are numerous reasons that organizations may opt to outsource their custodial services and other operations. The college union might be facing some challenges or liabilities to operating its services in house, such as:

Cost:

This is not necessarily as crass as saying an operation will be outsourced just because in doing so a few cents will be saved. The bottom line symptom is that the in-house operation may have become too costly for the college union to fund. Cost control is a serious issue for most institutions and a primary reason for outsourcing. A survey of facilities managers indicated that the primary areas outsourced were custodial and housekeeping operations (72 percent), and the primary functional area that respondents claimed savings from was custodial and housekeeping (52 percent) (FMLink & Encompass Global Technologies, 2002). The same survey indicated that one of the primary reasons for outsourcing was savings.

According to IFMA, “in-house cleaning costs an average of 23 percent more that contract cleaning services” (McCagg, 2001). Costs can be measured in varied ways such as cost per square foot cleaned, labor costs, supply costs, costs of benefits, and overhead costs. If an in-house operation is too expensive, “Contracting may allow a university to enjoy the cost advantage of the economies of scale that can be exploited by large contractors and specialization of labor,” said Matthew Kennedy, a subcontractor of Adams Consulting Group (in Rivard, 2003, ¶ 3). Maechling and Bredeson (2005) report that: “Life science businesses are turning to outsourcing as a way to drive down costs and support critical process quality” (¶ 1); many academic institutions are doing so for the same reason.
Significant savings may also be generated because the costs of benefits can be avoided through outsourcing. The issue of benefits is an expensive proposition for in-house operations and it requires that administrators develop strategies that offset or minimize the impact of benefit costs. In addition, salary bases are in most cases higher for in-house operations, and this, along with high benefit costs, contributes to significantly higher costs per square foot for an in-house cleaning operation versus a contract cleaning operation.

Efficiency:

Productivity of the in-house custodial workforce is often an issue, and in-house custodian productivity may fall significantly below industry norms. A recent study of custodial staffing on the K–12 level illustrates some of the challenges facing many in-house operations. The study of New York school districts found that the average “for the 15 districts was about 19,000 square feet cleaned per custodial staff, which is less than the [American School & University] standard” (McCall, 2002, p. 8). This might not seem to be too important until one reads later in the report that if the below-average schools in the districts were to increase the efficiency of their custodians to the average indicated by American School & University, “we estimate that these districts could save about $640,000 annually” (p. 11).
Increasing the efficiency of in-house custodians can decrease operational overhead; however, union managers may not have the will or the time to fight labor actions to increase the productivity and efficiency of the in-house staff. According to American School and University standards, “At two-year colleges, the number of square feet maintained per custodian is 35,326; at four-year institutions, it is 36,354” (Argon, 2006, ¶ 8). 
According to some industry sources, outsourced service contractors may present a case for real or perceived efficiencies by using their services. “John Walker, president of ManageMen Inc., a Salt Lake City-based cleaning consulting company, says comprehensive service providers are creating great pressure on in-house operations, claiming they can provide more services more efficiently and at a lower cost than in-house managers” (Wood, 1999, ¶ 3). The advent of widespread team cleaning and even the popularity of backpack vacuums can in part be attributed to contract cleaners’ innovations.

However, proactive in-house cleaning operations also are using many of these methods. Efficiencies in custodial operations can be misleading. A contract cleaner’s indication that its average custodian can clean 40,000 square feet and an in-house custodian can only clean 20,000 square feet is not the whole story. Housekeeping quality and cost of service is based on multiple factors such as tasks, frequencies, time allocated, and quality expected. This is a complex formula, and one needs to track the relationships of these variables to determine the real facts.

Inflexible staffing:

Some in-house operations have limited control of their staffing levels. Employees may be hired to work during fixed times, be restricted to certain areas, or have a division of labor that makes it difficult to realize efficiencies. Even though the workload may ebb and flow throughout the year, the operation labor costs stay static. A contractor can increase or decrease the labor pool based on the workflow and respond to situations that need a rapid increase in staffing for a short time.

Core mission:

Some college unions may decide to outsource because they want to concentrate on their core mission and no longer wish to digress from their business to deal with such issues as housekeeping, landscaping, or security. A UNICCO (2002) report indicated that the ability of a college or university to concentrate on its core mission is a significant driver for outsourcing, as “48 percent cited outsourcing as very important to help them focus on core competencies” (¶ 4). One janitorial and building services contractor even uses this as a sales pitch: “Outsourcing your business’ cleaning needs to janitorial contractors allows you and your team to concentrate on your core competencies and mission-critical objectives, not cleaning your facility” (OneSource, 2007, ¶ 2).

Personnel issues:

In most cases when one completely outsources a function such as custodial services, personnel actions and issues are taken care of by the company awarded the contract. Issues such as payroll, time keeping, labor relations, benefits, disciplinary actions, etc., are handled by the contractor, alleviating the administrative burden on a college union.

Quality:

At times there may be a disparity between the quality of cleaning as perceived by the in-house management and the way the customer views the facility’s cleanliness. A disappointing rating on a customer satisfaction survey might be impetus to explore outsourcing. Findings from the College and University Outsourcing Survey indicated that: “A majority of 58 percent considered improving quality to be very important in driving their desire to outsource” (UNICCO, 2002, ¶ 4). Even though in-house services may pride themselves on the quality of their cleaning operation, an International Facility Management Association (2006) study indicated: “More than one-half of companies have also saved money through outsourcing/out-tasking, and one-third have seen a quality improvement. These results are consistent regardless of whether the company is outsourcing or out-tasking” (¶ 7).

While it could be argued that poor quality is the reason some outsourced services are brought back in-house, this tends to be the exception rather than the rule. According to a International Facility Management Association (2006) study of North American facility managers, “Two in five companies have brought services back in-house” (¶ 8). Respondents said reasons functions were brought back in-house “are to regain control of the service, either in terms of costs, quality, or response time” (IFMA, 2006, ¶ 8).

Specialty services:

Often in-house cleaning operations may only focus on general cleaning, and special cleaning may receive minimal attention. Similarly, limited access to technology within some housekeeping departments may have hampered the ability of the department to increase efficiencies and decrease costs. Some operations might not purchase modern automated equipment because of the capital costs involved. An example may be the cleaning of venetian blinds, which an in-house operation may only dust on a periodic basis. Today, better methods are available such as ultrasonic blind cleaning that enables workers to clean 50 to 100 sets of blinds in a shift (Zenith Ultrasonics, 2006).

Contract cleaners may be able to provide additional specialty services that make the whole package of cleaning services more attractive. A large contract cleaner may have carpet cleaning trucks and equipment, heavy-duty floor equipment, and access to flood and fire restoration services in addition to window cleaning and other services. Such packages may make outsourcing all custodial services more desirable, rather than a mixed approach of employing in-house staff for routine cleaning and outsourcing only emergency and specialty cleaning. A liability is that local contract cleaning operations may not be able to offer the emergency and specialty services when they are needed.

Training:

Due to the restrictive budgets of many in-house operations, training might be minimized and in some cases have nearly disappeared. Just like any other field, quality can suffer if employees are not given professional development opportunities to learn about industry trends and how succeed in new departmental roles. For example, a hospital chose to outsource cleaning management after a steady decline in service quality:

The source of the problem was a supervisory staff that had risen through the ranks from entry-level positions. … In this case, the people in management positions didn’t have much experience supervising staff and tracking processes. Managers also didn’t have a strong training program in place to further develop themselves or workers. Progress was stymied and service levels began to suffer. (Bisswurm, 2002, ¶ 19)

This anecdote could just as easily have come from a college union. As responsibilities and cleaning equipment change, staff need training to effectively maximize those changes.

Benefits of in-house operations

College unions must balance the benefits and liabilities of in-house operations with those of outsourcing an operation. College union operations and maintenance managers tend to stay in their positions for several years. According to the 2006–07 ACUI Salary Survey, the average building/operations manager has been in his or her position for 5.3 years and the average maintenance manager for 9.0 years (ACUI, 2007). This can be a source of many benefits when operating services in house. Among these benefits are:

Ownership:

When one has a vested interest in a building and reports to work there day after day, it becomes increasingly important to maintain it at the best level of appearance, because the state of the building reflects our work. The liability of ownership is that a person can start treating the building as their own and their ownership may eventually come into conflict with organizational goals.

Pride:

Coupled with ownership is the feeling of pride that one has because one has maintained a facility in top shape during their tenure. Custodians are by definition caretakers, guards, and protectors; cleaning and maintenance professionals can take pride in serving that role, ensuring that even after years of use, fixtures and floors are bright and clean.

Security:

If the same people work in the building, day in and day out, and they work for the university that owns the buildings and the items in the building, the custodians have a vested interest in making sure things are secure and safe. Many times custodians have prevented thefts because they knew things seemed “out of place” and contacted security.

Corporate culture:

When individuals are employed in a facility regularly, the culture of the organization becomes part of their personal work style. Corporate culture and brand identity are important in making any organization stand out for the right reasons. A custodian who reflects that culture to guests and customers goes a long way to building relationships that could eventually translate into future business.

Flexibility:

In-house cleaning crews can be flexible in responding to issues within a facility such as floods, spills, stains, special events, etc. Instead of contacting a service provider, the organization can respond with its in-house staff or those who can be called in for emergencies at any time.

Stability:

Having the same people working in a reliable manner builds up a sense of continuity and order. Constant change causes mistakes, confusion, and concern, and in-house custodians provide a reassurance that the work will occur as “normal.”

Turnover:

In-house employees tend to have more years of service in a facility than employees of contract cleaners. Bisswurm (2001) reported that in the contract cleaning profession: “The average turnover rate most often used in industry conversation is around 300 percent, but [a Contracting Profits] survey found a much lower industry average of 73 percent” (¶ 4). Even so, a turnover rate of 73 percent is still high. The stability offered by in-house cleaners is a benefit to customers as they know who to contact, when, and where.

Institutional knowledge:

If employees have been in a building for numerous years, they tend to get to know the building, its quirks, and departmental needs. This is an incredible service to plumbers, electricians, or any trades professionals when they are called to respond to a problem. A well-trained and knowledgeable custodian is valuable in guiding the trade worker to the problem, and in many cases, the custodian may even know the cause of the problem. In-house custodians with longevity also can assist in anticipating maintenance needs and special event needs.

Finding the right source

To many people, outsourcing is seen as an all-or-nothing option. Either custodial and maintenance services are performed in-house or they are contracted out to a cleaning services company. However, often administrators can find a better solution for their organization by considering other options on a continuum from partial outsourcing to complete outsourcing, such as:

  • Outsourcing annual maintenance needs such as painting, pest control, and equipment moves, while retaining in-house staff for all other custodial services.
  • Outsourcing the management component of an operation while retaining all nonexempt employees.
  • Outsourcing some functions of the operation while retaining the key core competencies. For example, the general cleaning function may be retained in-house, while functions such as carpet cleaning, window cleaning, or floor maintenance may be outsourced. This affords the cleaning manager the option to concentrate on enhanced performance in the area of general cleaning.
  • Outsourcing the entire operation, replacing management and nonexempt employees with a team of managers and cleaners from a contract cleaning company.

These are only a few of the most common options for outsourcing. Other options may include hiring persons through an external job training program or through temporary staffing agencies either to complement the in-house staff during shortages, when there is an increased demand during special events, or when the job training program can actually provide employees to fill some existing openings. Some organizations have hired employees through special social services programs who seem to work well. The options are many and varied. To determine the appropriate option for their college union, administrators can use the following questions as a guide:

  • Is there a formalized benchmarking process to evaluate cost effectiveness and best practices?
  • What performance indicators are measured on a regular basis?
  • What are the current continuous quality initiatives?
  • How is the company taking the operation to the next level?
  • What tools does the vendor use to measure performance?
  • How is employee satisfaction?
  • How happy are customers?
  • How is customer satisfaction measured?
    (Rivard, 2003)

These questions also can help assess in-house services when outsourcing is not an option, and the answers should be meaningful and measurable. Additionally, many of the factors discussed here and previously can be transferrable to debates about whether to outsource other services. Some administrators are passionately in favor of in-house operations and others are equally as supportive of outsourcing. Regardless, there are many more factors to consider than just the bottom line.

Luckily, specifically with custodial and maintenance services, no decision must be permanent and, as mentioned, various mixed scenarios can be adopted. Unlike other services that have tremendous associated capital expenses (bookstores, food service, etc.), cleaning services can more easily be outsourced or brought back in-house.

Even college unions that are not currently considering a change in how they provide services can learn much though assessing the benefits and liabilities of their current process. Analyzing the unique position of a college union in terms of its services’ benefits and liabilities can identify training needs, inform strategic planning, assist with annual budgeting, and impress upon the entire organization the critical role that cleaning and maintenance of college unions play.

References

2006–07 ACUI Salary Survey. (2007, March). Retrieved April 3, 2007, from http://www.acui.org/tools.
ACUInfo. (2007). Benchmarking data report retrieved March 15, 2007, from http://www.acui.org/ acuinfo.
Argon, J. (2006, April 1). A positive move: 12th annual college M&O cost study. American School & University. Retrieved April 3, 2007, from http://asumag.com/mag/university_positive_move.
Bisswurm, D. (2001, February). Word from the front: While some BSCs have waged a winning battle against high turnover, others need to head back to boot camp. Retrieved March 15, 2007, from http://www.cleanlink.com/CP/article.asp?id=70.
Bisswurm, D. (2002, September). Finding the right fit: Outsources or in-house? Piecing together the best cleaning strategy for you. Retrieved March 15, 2007, from http://www.cleanlink.com/hs/article.asp?id=332.
FMLink & Encompass Global Technologies. (2002, January 7). FMLink outsourcing survey. Retrieved March 15, 2007, from http://www.fmlink.com/Surveys/outsourcing.htm.
International Facility Management Association. (2006). An inside look at FM outsourcing, Research report #27. Retrieved March 15, 2007, from http://www.ifma.org/tools/research/rr_27.cfm.
Maechling, T., & Bredeson, J. (2005, May 1). Discovering value in outsourcing facilities management. Retrieved April 3, 2007, from http://www.biopharm-mag.com/biopharm/article/articleDetail.jsp?id=162440&pageID=4.
McCagg, M. (2001, June). In-house vs. outsourcing: Survey finds in-house cleaning costs more. Cleaning & Maintenance Management, 38(6).
McCall, H.C. (2002, December). A study of custodial staffing levels in school districts: Report published by the State of New York Comptroller’s Office. Retrieved April 3, 2007, from http://www.osc.state.ny.us/localgov/audits/swr/2002mr10.pdf.
OneSource. (2007). Why hire janitorial contractors, handyman, and other outsources facility service providers? Retrieved March 15, 2007, from http://www.one-source.com/en/janitorial-contractors.html.
Rivard, N. (2003, July). Clean sweep. University Business. Retrieved March 15, 1007, from http://www.universitybusiness.com/page.cfm?p=310.
Salmirs, S. (2004, October 6). Outsourcing janitorial services makes sense with ABM. Real Estate Weekly. Retrieved April 3, 2007, from http://www.findarticles.com/p/
articles/mi_m3601.
UNICCO. (2002, October 28). UNICCO releases College and University Outsourcing Survey results. Retrieved March 15, 2007, from http://www.unicco.com/news-and-events/press-releases.asp?display=detail&id=222.
Wood, R. (1999, August). Consolidation leads to integration for facility services providers: One-stop service providers challenge in-house managers. Cleaning & Maintenance Management, 36(8).
Zenith Ultrasonics. (2006, July 31). Ultrasonic cleaners for the manufacturing industry: Ultrasonic venetian blind cleaning systems. Retrieved March 15, 2007.