Bradford Keen Investigates why social value has become so important a topic in the FM industry.
04 March 2019 | Bradford Keen
Five years ago, talk surrounding sustainability was of carbon emissions and energy-efficiency. These days, sustainability's focus is increasingly social. Indeed, the facilities management sector's newly introduced ISO standards talk of sustainability's 'triple bottom line' with its environmental, economic and, yes, social components.
"Social value is the people lens of sustainability," argues Munish Datta, consultant at UK Green Buildings Council (UKGBC). Datta points to social value's three components, as set out in the Public Services (Social Value) Act 2012: economic, environmental - and social. The first is about providing decent jobs for local people - including hard-to-reach and socially excluded groups - to help them build skills for long-term employment.
The second addresses issues of accessibility: sustainable transportation, resilient and adaptable buildings, good-quality public and green spaces, and spaces that promote better health through improved air quality.
The third refers to local ownership of businesses with reliable social networks using buildings that cater to diverse uses and contribute to a community's distinctive character.
Charlotte Österman, social sustainability manager at Vinci Facilities, also focuses on these three principal pillars. Österman believes that social value can be embedded through its connection to an organisation's employees who can provide additional value to traditionally CSR-related activities such as fundraising and volunteering - "those extra things on top of what you do as a business", and inherent to an organisation's business operations, such as maintaining schools or hospitals.
Rise in prominence
With definitions and categorisations out the way, let's address why so many in the sector are discussing social value. After all, the Public Services (Social Value) Act was written into law in March 2012 and went live in January 2013. Since then, as Heather Carey, deputy director at the Work Foundation, notes: "We've seen a really light-touch approach to implementing social values in contracts."
In a statement last month, Minister for the Cabinet Office David Lidington reiterated the government's plan to extend the requirements of the act. Currently, government departments are to "consider" social value when commissioning services but in the future they need to "evaluate" social value. A subtle but significant shift adding a greater burden of proof to show that social value has been given sufficient attention in the contracting process.
Regardless of this shift, Carey says the act's original purpose is to elevate the social value narrative from individual actions, such as providing a certain quota of apprenticeships or painting community centres, to determining how procurement decisions can support better work opportunities and conditions and positively affect wider communities.
"We are seeing a shift in the way that businesses are viewed," Carey says. "That's partly to do with the journey we've been on through the financial crisis and the defaulting of major contractors. We're starting to see a much greater discussion about the absolute imperative of responsible business and responsible leadership."
The upshot is that there is more pressure on businesses to act ethically. Failure to do so could result in lost customers, shareholders and suppliers. Emma Scott, representation manager at the Chartered Institute of Purchasing and Supply (CIPS) says that "the line between making money and doing the right or responsible thing has become very blurred. News travels fast and bad news travels at lightning speed - so this makes responsible business too difficult to ignore".
Theme: UK Industry Perspective
Speaker: Heather Carey, deputy director of the Work Foundation
Location: Premium Suite, Etc Venues, St Paul's London
Topic: UK industry is changing, which means the skills we need and the way we work are changing too.
Carey will refer to her research centred on improving UK productivity and management practices, developing diverse and highly skilled talent pipelines, exploring the consequences of technological innovation and the future of work, promoting responsible business and inclusive growth, and supporting good working practices that ensure a healthy and productive workforce.
The FM sector's role
The scale of the FM sector empowers it with potential to deliver significant social value. Most readers will be familiar with the statistics about FM sector comprising a sizeable element of the 8 per cent of UK GDP attributed to outsourced services as a whole, and providing for 10 per cent of the British workforce.
"We've got a huge economic impact that we can steer into local procurement and how we pay people," says Österman. "We've got a huge influence on how people are being employed and what value their employment brings to them."
Datta is also optimistic about facilities management's role. He thinks the sector can unlock up to 60 per cent of the total social value that can be created by the built environment, especially through the provision of local employment and skills development during the lifetime of a building.
The FM sector's services portfolio, from catering to cleaning as well as hard services, makes its social 'footprint' disproportionately wide, for example, through employment of people from disadvantaged parts of local communities who might otherwise struggle to find work.
Associated examples of standard FM activity that can be attributed social value status in this regard are obvious, such as the provision of apprenticeships, training and local employment.
Whether you are an FM service provider or any other type of organisation, social value can be achieved by making the right procurement decisions. "Are you buying up and down your supply chain from ethical businesses, social enterprises, local pools of suppliers that are giving local people jobs?" asks Sarah Fraser, head of the Willmott Dixon Foundation. "We can all think and challenge ourselves no matter our business or who we are individually."
Other areas in which to provide social value include: improving employee engagement and satisfaction scores; ensuring employee health and well-being; and committing both to fair pay and labour conditions for staff as well as prompt and fair payment back along the supply chain. It also includes volunteering, fundraising, charitable giving and charitable partnerships.
Taking a holistic approach
The point of social value is that it should be part of a business's wider responsible and ethical business strategy. How an organisation starts down this road is key; decisions that affect social value then follow as a matter of course.
"It's very difficult to unknit all of these issues," says Scott. "For instance, supplier diversity and social value go hand in hand." Contracting with SMEs, start-ups, social enterprises, and women or minority-owned organisations helps tick the supplier diversity box but also adds social value.
Carey shares this sentiment. "It's imperative that social value is not seen as a totally separate entity. It needs to be seen as bigger discussion around how we run businesses and what good corporate governance looks like."
But there are also "massive business values" to be unlocked from implementing social value, says Scott - and this can still happen when the business imperative of cutting costs, boosting profits or gaining a competitive advantage are at play.
"No one is asking organisations to be philanthropic," says Scott. "We're asking them to make small adjustments about how they could give something back and have a win. That is the key for procurement to sell to the business, particularly for private organisations."
Scott gives the example of a telecoms company operating in Turkey that united its social value and business outcomes by having its suppliers recruit from the pool of 3.5 million Syrian refugees living in the country to work at its call centres. Syrian workers now account for 10 per cent of the company's Istanbul workforce. Not only did the company employ people in need of work, it made sure it had the staff to deal with a booming new Syrian customer base.
Another example of social value and business outcomes working in harmony comes from international property and infrastructure group Lendlease, which has created a 'Loneliness Lab' in partnership with the charity, Collectively. The two organisations, says Munish Datta, are aiming to "reimagine places and spaces and cities with loneliness and isolation in mind. They see a business opportunity to respond to the social issue that exists in many cities and become the provider of spaces that enable people to be more inclusive and reduce isolation."
A willingness to pay?
Much of social value's prominence can be ascribed to the Carillion collapse last year and a greater spotlight placed on government procurement of services. Nevertheless, to think that private sector clients would not be as interested in social value as their public sector counterparts "would be terribly naive", believes Fraser. Why? As much as anything else, because social value is important to clients' employees.
"There are many studies about the choices millennials and beyond make about who they work for and will continue to work for," adds Fraser. "To have a purpose beyond the profit is really important for people regardless of whether they work in the private or public sector."
Österman acknowledges that there may well be private sector clients unwilling to pay for the elevated contract costs required to deliver social value, but she says this is a short-sighted way of thinking about it.
"What's the cost in terms of productivity of not having an engaged workforce?" she asks. "This is not only about adding on those extra social value projects with additional social value. This is about being a responsible business and how you think about the benefits that you created for your stakeholders as part of how you're doing business. So that should ultimately make you more sustainable and successful."
Buzz terms tend to buzz for good reason, although some are more deserving of the buzz than others. In an age in which the general public is demanding businesses be more ethical and responsible, working more for the greater communal good, social value looks set to dominate the discourse for a long time yet.
A business case for low-earner fringe benefits
Heather Carey co-authored a report for the Joseph Rowntree Foundation titled Improving Fringe Benefit Schemes for Low Earners in which she set out the seven steps for building a business case to support their implementation.
Benefits for low earners, when properly developed and delivered, could provide a useful means of adding social value to an organisation's employees, while also helping businesses attract and retain staff.
The seven steps encourage those in charge of delivering benefits to understand the needs and preferences of the workforce and develop a business case to support investment in benefits and secure board-level support.
- The 'seven steps' include: Strategic prioritisation;
- Developing the business case;
- Understanding employee needs and preferences;
- Deciding which benefits to offer;
- Finding/commissioning suppliers;
- Design, implementation and promotion; and
- Measuring value and impact.
"Ultimately, not all benefits are equal through the eyes of low earners," Carey explains. "Some offer greater value than others, particularly those which mitigate the high costs of living, such as food, travel, housing, childcare or utility bills. For employers, the challenge is thinking about people; who are the people that make up your workforce?"
Low earners are not homogenous and could include second earners with an overall high household income or lone earners in a single-parent household working a few hours a week.
It's better for employers to develop a portfolio of benefits that meets a diverse range of needs and provides support, says Carey.
"The vital thing is being really clear on how investing in benefits for low earners supports wider goals, objectives and values of the business," she says. Highlight how benefits can support talent acquisition and retention; how it can improve the quality of products and customer service; how it can support innovation.
Show evidence of how a high-performing workforce comes from providing good pay and benefits, and, in turn, how satisfied workers, through greater productivity, can lead to businesses' increased profitability.
"A lot of the cases we came across highlighted how investment in benefits is often actually a consequence of wider shifts in the market," Carey explains, listing competitive pressures or a tight labour market as examples.
A business case depends on showing how the proposed benefits would link with the external pressures and organisational priorities.
"Then you've got the additional challenge of demonstrating tangible and intangible benefits," Carey says, which concerns quantitative and qualitative measures. It's a challenge to quantify how benefits could improve well-being, for example, but easier to quantify reduced absences.
It's necessary to provide a combination of tangibles and intangibles from evidence such as staff surveys, management information and impact-for-value calculations.
Workplace and facilities management professionals need to balance cost and value, says Carey, which requires pragmatism - particularly in sectors such as care and retail, which often have tight budgets.