The issue: How to grow as a service provider while avoiding client churn
The interviewee: Noel Clancy, chief executive, Shepherd FM
10 March 2014
The relationship between an FM provider and its client is routinely debated. But where 'intelligent client' is a phrase close to many lips, 'intelligent supplier' is a less frequently deployed term.
Surely, though, suppliers ensuring that their chosen clients are a cultural and technical match for them is as important as the client making a similar determination? And it's clients who want just such a relationship that are the target for Noel Clancy, managing director of Shepherd FM.
Part of the £750 million turnover Shepherd Construction Group. Shepherd FM saw revenues grow 30 per cent last year. Similar growth was recorded the year before, and Clancy expects the firm's 2014/15 budget to project 30 per cent growth once again. And there's something else that sets the firm apart - a client retention rate of 98 per cent.
What's driving this growth and astonishing retention record? Clancy puts it down to how he and his team focus their efforts on clients most likely to appreciate the value of Shepherd's facilities service. The company's client base has a hard FM bent, the result of its roots as part of Shepherd's construction and engineering arms. But today's full service mix includes major corporate clients and an expanded variety of service that includes an interiors arm set up in 2011.
The key is that Shepherd vets potential clients in a similar way to the client vetting them. The aim is to get to the root of the service requirement and how it affects the client's business, and achieves mutual respect. In particular, Shepherd's work is with clients whose facilities service requirement is mission-critical to their business; clients with perhaps a built-in incentive to fully appreciate how their facilities service provider operates. Compliance issues are a big factor, and Clancy points to Shepherd's banking and legal services clients.
"Reputation protection is key in financial and legal services, so compliance is key," he says. "Talk to any banking head of corporate real estate and he'll say keeping the lights and power on is his number one priority."
Clancy points to the many "technically gifted" compliance-focused individuals on his staff who have come to Shepherd having previously been employed at larger service providers.
So taking on more clients means a strong selection process, but it also needs the right people. Clancy and his senior management are focused not just on matching their existing staff to new clients, but in bringing in the right people in the first place.
"Many larger operators have grown by acquisition and inherited issues around subcultures, TUPE and churn. But we started from scratch and have been very selective about who works for us and who we work for."
Getting the right people and deploying them properly is the big challenge, says Clancy, and one critical to his goal of continuing Shepherd's robust organic growth.
"The less I get the team wrong here, the less our managers get their own teams wrong, and so on down the chain. If we can manage our staff recruitment at all levels, then why should our levels of service be diluted?
"It's also a question of how you grow. If our 30 per cent growth had come from 20 new accounts and we couldn't resource that, or we didn't do our TUPE well or didn't mobilise the contract as well as said we could, we'd have trouble sooner or later. Growth needs to be carefully managed.
"How we handle TUPE transfers is important. We're not scared to tackle non-performance. TUPE is not just pass through for us. We give the people we inherit a clean slate, but tell them plainly what we expect. We can't afford not to."
The company also provides the same employment terms and conditions to its cleaners as it does to its chartered engineers. "I don't see that elsewhere in the market place," says Clancy, who admits that operators running large, public sector soft FM contracts with thousands of cleaning staff may not be able to offer the same. Yet when Shepherd chooses its employees of the year "we say to them, it's not what you do, it's how you do it that makes you stand out".
"For me it's not what the work is, it's who the client is, and where we might go with them. It's not the size of the contract, it's where it might lead. This is one of the few industries in which you can't say that getting bigger is necessarily a strength. Indeed, the opposite can be true if you're not careful," he says.
Next on the agenda is a new software product designed to help managing compliance. It's software that will put more onus on frontline staff to collect data on mobile devices to allow Shepherd and its clients to look at their properties' compliance performance from the desktop. "It's a major investment for us. We hope to launch it in the next couple of months," says Clancy.