Good Work for All: KPMG, rethinking facilities management to pay the real Living Wage

KPMG in the UK is part of KPMG Europe LLP - the largest integrated accounting firm in Europe, and a leading provider of professional services. KPMG in the UK has over 11,000 partners and staff working in 23 offices and is part of a strong global network of member firms. Its vision is to turn knowledge into value for the benefit of its clients, people and capital markets. KPMG is a principal partner of the Living Wage Foundation and was one of the first organisations to become an Accredited Living Wage Employer; pushing the strategic facilities management message into the heart of its own organisation and the wider business community.

In 2006, when Deputy Director of Finance at KPMG, Guy Stallard, took over as Head of Facilities, staff turnover amongst the services staff was high. Those in low paid jobs such as cleaning, and catering were unmotivated and not loyal to the company. Stallard proposed that KPMG start to pay its services staff the Living Wage.

This was agreed with a caveat - the company did not want to increase its costs. He was requested 'as an accountant and Head of Facilities', to 'go away and work out how you can change the nature of how we deliver our services'.

The process
It was not feasible to expect the contractor to take a financial hit, so in terms of their margins, they were protected. Because the contract would operate for the same cost, it was KPMG as the client that needed to change the parameters on how they wanted that contract to be structured.

There were a number of challenges to meet so KPMG -  with the buy-in and support of its key suppliers -   set out to:

  • re-evaluate the service provided and the models used for delivery;
  • identify opportunities for service refinement;
  • motivate staff by developing skills and increasing responsibility in line with increased salaries; and
  • gain commitment from contractors, KPMG's FM department and senior board members.

The process began with a re-evaluation of cleaning services. In March 2006, it was decided to pay the cleaners in the London offices the Living Wage. By October 2006 this was extended to all KPMG's cleaning staff across the country.

During that six-month period, KPMG, along with its then cleaning contractor, ISS, looked closely at the costs of running the cleaning services, to ensure wages could rise without impacting the services' budget. It soon became apparent that one effective cost-saving exercise would be to reduce the amount of night-time cleaning and bring in cleaners who worked during the day.

This also, explains Stallard, gave the cleaning staff a 'double win', as it meant that instead of having to work short shifts at unsocial times they actually had a more regular day job. The challenge, however, was in convincing staff and clients that this approach could work, as the assumption was that cleaning had to be carried out at night because no one would be happy to have it done in the day.

Stallard says:

"When I started the conversation around daytime cleaning the first response from people was, 'How can I have a Hoover going under my desk when I'm in the office?'

"We assured them that vacuuming only accounts for a minor amount of cleaning time. We ensured that the stuff that shouldn't be done in the day (such as vacuuming) was carried out after 6pm, and with regards to the client areas, we actually found they were much happier seeing the toilets being cleaned regularly, throughout the day."

Along with changing the hours during which the offices were cleaned, the FM team took a strategic look at exactly where the cleaners' time was being taken up. One of the most time-consuming activities, it emerged, was emptying the staff's individual desk-side bins.

It was also one of the cleaners' least favoured jobs, involving food waste that would often spill on to the floor. Individual bins were also bad for the environment because they involved a lot of mixed waste.

It was decided to switch to a central recycling process, with desk-side bins removed, and staff told to use appropriate bins for particular types of waste. This also had the knock-on effect of being better for staff health as they had to walk away from their desks to deposit waste.

The change was also better for security because, despite confidential waste being designated for confidential waste bins, people had occasionally been tempted to drop these documents into their desk-side bin. One of the major financial benefits was then selling the recycled paper, of which KPMG then produced more than 10,000 tonnes per year.

Although in the early years, KPMG was, in the words of Stallard, 'very much on its own' in offering a Living Wage, the initiative was extended later in 2006 to cover other low paid service staff, such as catering and mailroom workers. A small number of other proactive organisations contacted KPMG to ask what they had done and what the benefits were of adopting the scheme.

Again, in order to help keep the costs down, other working methods were explored, such as offering catering staff more flexible hours and engaging them to take on additional responsibilities such as serving drinks and snacks to presentation rooms. Some innovative solutions were found for the mailroom staff. Stallard says:

"By paying our mailroom staff more we were able to increase their responsibilities. So, where previously the mailroom staff might only have sorted and delivered the mail before 9 am, lunchtime and at the end of the day­ which was neither an enjoyable job nor a sensible use of labour - instead we got them to take on a wider role.

"This meant that in the middle of the day they could start doing other things like filling up stationery cupboards and setting up materials for conference rooms - so they got a more varied job and were paid better."

When KPMG consolidated its five London buildings into two in 2010 the fact that the firm had 'the right people with the right attitude' meant it could rely on the flexibility of its outsourced staff to continue to deliver a seamless service.

Benefits

Although, as Stallard points out, KPMG believes that paying the Living Wage is the right thing to do, it is not just a moral matter but a very sensible business move. The main benefits to the firm have been:

The main benefits to the firm have been:

  • Better performance and motivation. KPMG's own experience and other studies have shown that employees in receipt of the LW feel more valued, no longer feel 'invisible' and demonstrate higher motivation and perform better.
  • Reduced turnover and absenteeism. Staff receiving the LW are more motivated to come to work and keep their jobs. At KPMG, turnover of contract staff has roughly halved since it began paying the LW.
  • Leading to cost neutrality. The savings made through lower recruitment churn, reduced absenteeism and better performance mean that the Living Wage can be cost-neutral or even lead to savings.
  • Responsible business. If a business is to restore trust, then it needs to look after the welfare of its staff. The minimum wage simply does not pay enough for families, in particular, to live on
  • Unlocking potential. KPMG's relationships with schools, colleges, charity partners and the KPMG Foundation have shown that the issues that prevent individuals from reaching their potential inter-lock. In-work poverty is one such issue. Enabling people to earn a little more can help them in their struggle to improve their standard of living, to meet their potential and develop a future.
  • Professionalise Facilities Management. Paying anything less than Living Wage in FM, currently the fastest growing industry, is unrealistic if the brightest and most engaged employees are to be retained.
  • Improvement in the quality of service. As illustrated by the KPMG facilities help desk reporting far fewer complaints.
  • Increase in positive feedback from clients. Clients notice the difference in the quality of customer service they receive when they come to the head office at 15 Canada Square. In the client areas of this and other KPMG buildings, the outsourced staff deal confidently directly with clients as they are enthusiastic about projecting the best image of KPMG

Aside from the initial challenge of getting his own team to believe in the feasibility of adopting a Living Wage it was important to re-evaluate the FM service delivery models to help finance the increased salaries. The successful implementation of the Living Wage has been achieved because he has been able to partner with "forward-thinking FM contractors who are positive about paying the Living Wage and who readily identified structural and service opportunities to make operating changes to finance the salary effect of the Living Wage".

He adds that working with suppliers and contractor staff to develop their skills and responsibilities should form a key aspect of Living Wage preparations for all organisations. Stallard warns that, without these considerations, it is likely that contract costs may initially rise during the move to a Living Wage, but argues that when changes are put into action, these costs can be mitigated in the medium- and long-term.

The KPMG Board tasked the FM team to keep the effect of implementing the  Living Wage at worst cost-neutral and, says Stallard, "thankfully I have succeeded and now actually have FM costs which are lower than in 2006". · He says: "I re-emphasise the support and expertise of my suppliers was an important part of our success in making the Living Wage a cost-effective change, whilst simultaneously providing a greater quality of service delivery."

Government support has also played a significant role in raising awareness of the Living wage and we may eventually find that politicians will show a strong preference for only working with Living Wage suppliers. Measures must be taken to rectify the fact that the majority of those living in poverty in the UK are actually in employment.

This case study has been provided by The Living Wage Foundation.
 Find out more about becoming a Living Wage Accredited Employer.