Social procurement: FM with a conscience

by FM Media
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A number of ‘social enterprise’ property maintenance companies – which employ or raise funds for underprivileged, marginalised or mentally ill people – are offering high-quality services at competitive rates. And, as JOHN POWER discovers, this way of doing business is making quite an impact!

Imagine the fulfilment of knowing that your building is being cleaned, equipped, landscaped or repaired to the highest standards… WHILE providing resources or life-changing employment opportunities to disadvantaged people.
It’s a ‘win-win’ concept that strikes a positive chord with facility managers, landlords and business managers who wish to enact social principles as part of their corporate charter, or who simply appreciate the commonsense of achieving dual (practical and social) outcomes from their routine FM procedures and procurements.
In Australia there are hundreds of mostly small social enterprise businesses catering to the needs of facility managers and building/business owners – but their services remain either unknown or underutilised at corporate and government levels. Offering everything from full landscaping, handyman and cleaning services to basic products like coffee, stationery and detergent, these businesses are typically run as not-for-profit enterprises, competing successfully in mainstream commercial markets while also creating positive outcomes for people in need.
In this article we speak to three people who are intimately involved with social enterprise facility management activities – Mark Daniels from Social Traders, Matthew Lambelle from WISE Employment, and Warren Smith from National Australia Bank (NAB) – all of whom share a passion for a healthy and efficient built environment based on practical social goals.

THE RISE OF SOCIAL SUPPLIERS
Mark Daniels, from Social Traders – a non-profit social enterprise advocacy and support organisation – estimates that there are approximately 20,000 social enterprise businesses in Australia, many of which have direct applications to facility management.
“The FM sector has known about social enterprise for some time,” Daniels, explains, “but they’ve not had access to information about sourcing products and services.
“There are many very sound enterprises out there, but most have not been of a scale to service some of the larger customers. But these enterprises are growing now and in the last 10 years we have seen social enterprise companies come into the mainstream, moving from servicing small customers to being able to service larger clients.”
According to Daniels, social enterprise companies now have a growing presence in FM-related industries such as cleaning, general maintenance, grounds and gardens maintenance, concierge services and security, as well as graffiti removal, building demolition and construction.
How widespread are these services throughout Australia? Daniels estimates that grounds and garden maintenance firms are probably the most prolific social enterprise employers in the FM domain, with over 100 businesses operating nationally and directly engaging large numbers of disabled or disadvantaged people. Cleaning services also have a high profile in the social enterprise sector, with approximately 20 to 40 cleaning companies now up and running in major capital cities. As for general maintenance, Daniels says there are up to four or five reliable options in each State capital. Smaller services exist throughout regional Australia.

THE BIG ISSUE
Should you be using social enterprise FM services and products? It sounds like a straightforward question, but in fact it encapsulates a range of (often unspoken) subsidiary queries in the minds of prospective customers about property security, adequate levels of training, safety, quality of service, as well as cost.
According to Matthew Lambelle, general manager – strategy & alliance at WISE Employment, which operates a range of companies that directly employ people with a mental illness or disadvantage, these are the kinds of questions that must be addressed candidly if the FM social procurement sector is to grow.
WISE Employment, a not-for-profit organisation, began in 1992 as a disability employment service, but over ensuing years it became an employer in its own right through the acquisition or establishment of several property maintenance businesses from 2001. Today, these scalable autonomous businesses (included in Table below) include a cleaning services company (Clean Force Property Services), general building maintenance and handyperson business (Incito Maintenance), electrical services contractor company (GBE) and landscaping and vegetation management operation (ELS, or Equity Labour Services) with an annual turnover of $5.5 Million.
These companies provide aggregate employment for more than 180 staff, servicing a core clientele of more than 100 corporate customers. While most operations are centred in Melbourne and state-wide Tasmania, depending on the specific business, Lambelle says WISE Employment plans an expanding presence in other major cities. Its professional approach, emblematic of many high-quality social enterprise firms, certainly goes a long way in assuaging queries of the kind listed above.
Security, Lambelle notes, is front of mind for many prospective customers, particularly those working in office environments handling sensitive information.
“We function like any other responsible company in the sector – social enterprise or otherwise,” Lambelle says. “That includes security and police checks and working with children [certification]. We also have different levels of security clearance: at low-risk sites you may not need personnel with high security clearance. Also, our staff wear uniforms and identification badges.”
Training is delivered in an equally formal fashion. Job-specific training is assured through professional in-house instruction; able-bodied personnel in management and executive positions oversee full compliance with Building Code of Australia mandates.
With regard to safety, there is no compromise as far as on-site dangers are concerned. Safety guidelines according to AS/NZS 4801:2001 Occupational health and safety management systems help to maintain strict behavioural protocols. And a realistic assessment of the capabilities of staff members reinforces safety as a priority. For example, all workers in WISE Employment’s electrical business (GBE) are A-grade electricians. In this circumstance, social enterprise goals are achieved not via the exclusive employment of people with disabilities, but through the blended employment of under-represented members of the trade, including new migrants, indigenous Australians and female staff.
Quality and cost are also matters of high priority. As we will discuss later, the vast majority of Australia’s social enterprise businesses are designed to compete favourably with all other providers in terms of quality and cost. In the case of WISE Employment’s businesses, Lambelle says a rigorous management structure allows each business unit to flourish while maintaining a flexible and tolerant approach to the needs of staff. There is no better case study of success than the gymnasium and boardroom at Richmond Football Club, which is maintained by WISE services to the highest standards as a prominent and sophisticated facility that enjoys significant national media exposure.

NOT A ‘CHARITY’
In recent years, companies that have gone to the trouble of investigating their procurement options have discovered that being ‘charitable’ by using social enterprise services is NOT the same as ‘giving to charity’. He cites the difference between a gift of $100,000 to deliver employability training and a cleaning contract with a social enterprise of the same value.
A one-off cash gift of $100,000 would fund a worker for 12 months to engage and create employment for 4-6 long-term unemployed people in commercial businesses; to assist more people would require additional funding. However, a contract of that magnitude would employ 4-6 people (PT) in tailored work environment with the potential for contract renewals into the future amounting to many times the original contract value. Contracting a social enterprise to deliver a service simply redirects an existing cost to a social provider – it has no net impact on the bottom line and delivers meaningful outcomes that far exceed the value of the contract. Whilst charity and philanthropy are essential for social services in Australia and are often instrumental in meeting the start-up costs of social enterprises, they represent an additional cost to the organisation.
Lambelle agrees, stating that WISE Employment’s overall staffing levels of 180 employees have the potential to grow to 500 or more people along the eastern seaboard alone; certainly, there are more than enough aspiring employees to satisfy such growth in a blended (half social enterprise, half mainstream) employee mix. In fact the organisation is considering expanded services to include plumbing and perhaps signage.

SOCIAL TENDERS: THE WAY FORWARD
Compared to the US and UK, Australia’s various government sectors are sadly lacking in their adoption of social enterprise contracts. Exceptions, as outlined in a recent research report entitled Social Procurement in Australia: A Compendium of Case Studies1, include Brisbane City Council, Queensland; City of Yarra, Victoria; and Parramatta City Council, NSW. In addition, Daniels notes, the Federal Government has the capacity to consider social procurement options for selected contracts.
However, by and large, our public sector is lacking in its adoption of formalised social enterprise policies and procedures. The way forward, according to Daniels, is for progressive governments to set an example for the corporate sector by embracing a more strategic, all-encompassing set of social contract criteria. Triple bottom line approaches should be applied to procurement and social outcomes ought to be mandatory in service contracts, in place of narrowly defined, mainly price-driven selection processes.
Both Daniels and Lambelle can quote many instances of social enterprise contracts that have not only delivered first-class services to the community, but also achieved ancillary outcomes such as providing employment to long-term unemployed people, relieving pressure on support services, and enhancing the links between government bodies and users of government assets (like public housing, where many employees live).

PUTTING THEORY INTO PRACTICE
National Australia Bank (NAB), one of Australia’s largest corporations with close to 30,000 employees in Australia), is capitalising on its diverse business portfolio and massive pool of talented staff to implement a range of progressive social procurement policies.
In October last year, NAB won the award for Socially Responsible Procurement at the 2010 CIPSA (Chartered Institute of Purchasing & Supply Australasia) awards.
There are two main forces at play in the company’s formulation and adoption of social procurement activities: (1) robust adherence to a set of ‘NAB Supplier Sustainability Principles’, which stipulate clear guidelines for suppliers, particularly those involved in responding to tenders; and (2) inventive staff-inspired practices to identify and support a range of social enterprises of all shapes and sizes.
Warren Smith, NAB’s commercial manager –
Commercial Network Services,
Group Business Services, says all suppliers are encouraged to adhere to NAB’s seven-part Supplier Sustainability Principles, which state minimum ethical and functional requirements for supplier firms. These guidelines relate to corporate governance, environmental management, OHS, workforce policies and human rights, risk management, supply chain management, and community.
The ‘community’ category, which promotes suppliers’ involvement in community activities, is of greatest relevance to social procurement practices. While no organisation can enforce community involvement from all of its specialist suppliers, Smith says, NAB’s Principles state that “community engagement or investment programs undertaken by a supplier will be looked upon favourably by NAB”. Savvy suppliers are heeding the advice.
One of the most enterprising social responsibility activities at NAB is its procurement of Fair Trade coffee, tea and hot chocolate for all NAB offices and branches nationally – in fact, NAB is Australia’s largest Fair Trade consumer. As an organisation that consumes more than 4.5 million hot beverages annually, this single policy is making a dramatic difference to the lives of farmers in Sri Lanka and Columbia. The program, implemented with the assistance of procurement firm Corporate Express, is an example of a common sense initiative involving huge social dividends with negligible disruptions to NAB’s day-to-day business – while generating very positive feedback from staff.
Another exciting project, currently under development, is an Intranet database of social enterprises for use by staff. This service, Smith says, will be a handy listing of social enterprises or charitable organisations that can offer services such as marquis and venue hire, in-house catering, florist services, stationery and wine provisions, etc. Staff can order these goods and services directly from the supplier. In this way, all tiers of the organisation can be exposed to socially responsible suppliers of common work-related items and services, with the potential for significant aggregate procurements and a worthwhile flow-on effect to needy people.
“And in the future we’re also looking at listing promotional and merchandising items like T-shirts,” Smith adds.

RETURN ON SOCIAL INVESTMENT
According to Smith, the benefits to NAB of maximising its social procurement activities are real and measurable.
Clearly, the returns to marginalised members of the public are self-evident, but NAB itself benefits in equally strong business terms.
“The world sees NAB,” Smith says. “We do this to aid our reputation; from a people point of view we invest in volunteering, for instance, and get staff survey feedback that our employees respect and want these activities.”
Smith says large corporations with healthy social procurement policies can expect stronger staff retention through higher job satisfaction, as well as a more socially aware employee base that is empathetic with the wider community’s needs. The younger generation, in particular, will often quiz an employer on their social and environmental policies when deciding where they want to work.

MAKE A START TODAY
Approximately 20 percent of all Australians will suffer from a mental illness at some time in their lives. The day-to-day reality is that such illnesses, even if episodic, can interrupt careers or even lead to family trauma or homelessness. By using social enterprise services, companies and government agencies can neatly align their procurement activities with socially responsible behaviour. Far from involving trade-offs or concessions, practising business with a conscience can actually enhance the ties between a firm and its local community, which can only be seen as desirable and reputation building.

Footnote
1. Social Procurement in Australia: A Compendium of Case Studies was written by Ingrid Burkett, Foresters Community Finance, following a commission by the Centre for Social Impact, University of New South Wales.

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