BSCs Discuss Hiring, Inflation, and Market Competition

While the days of facility shutdowns are firmly in the rearview mirror, building service contractors (BSCs) are keenly aware of the obstacles that will never fade away when it comes to succeeding in the commercial cleaning industry. What is also omnipresent, however, is the willingness for BSCs to lend a helping hand when it comes to hiring strategies, combatting inflation, and embracing new technologies for gaining a foothold in the market.  
 
To accurately gauge industry challenges and how to overcome them, Contracting Profits reached out to experts for unique, yet actionable takeaways on a broad range of topics.

Is staffing — not finding enough employees or having too many employees for the size of your client base — an issue? 
 
Murch: Yes, it always has been and is one of the biggest reasons why we are such an amazing prospering industry with expertise in recruiting, hiring, and retaining outstanding team members. Our frontline team is the most important team in the company — they are not considered “associates” or “employees” with us. Some markets throughout the country are tougher than others based upon unemployment rates and local competitive industries.  

When it comes to having adequate staffing based on market size, each geographic market varies. I don't think many contractors have the benefit of having too many team members, but occasionally that is ideal. Unfortunately, when there is a recession, there is an abundance of extremely qualified labor that goes with high unemployment. 
 
Sewell: Staffing is indeed a challenge and I think will continue to grow for all BSCs given the low unemployment rate and the projected deficit of nearly 4.5 million workers from the labor force in the next decade. The primary issue lies in finding and retaining qualified employees who are a good fit for the demands of our clients. While the labor market is tight, our approach focuses on strategic recruitment and maintaining a balanced workforce to meet our clients' needs effectively. We will continue to invest in our talent acquisition team to ensure we do this. 
 
Greenland: I am not a current BSC, but I can tell you from coaching a dozen contractors that the answer is yes. We all struggle with finding the right employees and keeping them engaged. In many markets, there is a discrepancy between the market wage and the amount of money some people want to go to work.  
 
The cost of replacing employees is steep. What are you doing to retain staff? 
 
Sewell: To retain our staff, we emphasize creating a supportive work environment that values employee well-being and professional growth. We are also working on creating career pathways for our team members. We invest in ongoing training programs to help employees feel more connected and valued within the organization.  
 
Murch: We have myriad incentives, benefits, recognition programs, and most importantly, an amazing culture of putting our service team members first in everything we do from the top down. We also want to pay leading-edge wages that are above all our local competition. This all results in a turnover and retention rate that is 3-4 times better than the industry average. 
 
Greenland: Money usually isn’t the reason people stay. Future opportunities perceived is one of the top reasons employees stick around. Employees don’t leave companies, they leave managers. 
 
A focus on mental health in the workplace is a growing discussion. What strategies have you implemented for improving the workplace environment and overall morale of employees? 
 
Sewell: We are fortunate that one of our owners is a certified marriage and family therapist (MFT) who presents quarterly mental health education spots during our town halls. Additionally, we have contracted with an employee assistance program (EAP) provider for services that include six free mental health visits for every employee and anyone living in their household. We are currently piloting a mindfulness and meditation program for our frontline workers at one of our large sites. After tooling and feedback, we will be rolling it out to other locations. 
 
Murch: With as hard as everyone works in our company and industry, we go out of our way to show our appreciation recognizing what each team member does. We foster open, frank, and constructive communication to support each other with our corporate value of 360-degree teamwork supporting each other. We are always trying to be aware of what others are going through and genuinely asking how they are doing is pivotal. We also offer a free Team Member Assistance Program, providing the opportunity for confidential counseling. 
 
Greenland: When I was a BSC, we always made sure that our health insurance had a mental health component — some type of counseling or therapy. Making managers take paid time off (PTO) also helps with mental health in the workplace. 
 
The cost of supplies and labor can often be tough for BSCs to stomach, especially with inflation. How are you absorbing these price increases? 
 
Greenland: Most of my clients must negotiate with their current customers for increases. Everyone knows that inflation has been an issue, but our customers are struggling with cost increases just like we are in the BSC world. We as an industry need to either pass these additional costs along to our customers or figure out ways to cut our overall expenses to help mitigate these increases for our customers. We’ve had many discussions regarding the frequency of services to lower the total amount of labor. 
 
Sewell: We cannot absorb all the costs at the current rate of change. We need to pass some on to our clients. To do that, we maintain transparent communication to keep them informed of possible increases and work together to mitigate increasing costs through utilizing different products, scope changes and efficiencies. 
 
Murch: We work very closely with all our major supply partners. Our suppliers aren't considered "vendors" but are true partners who support our overall success. We hold them accountable for Bi-Annual Supply Partner Reviews to bring us the leading-edge innovative solutions, as well as hold them accountable as a partner for the most competitive pricing. In addition, as a member and co-founder of the National Service Alliance, (NSA) — the only cleaning industry group purchasing organization (GPO) — we can benefit from the best pricing along with rebate programs for all leading supplies, equipment, and services. This provides a significant cost and profitability advantage. 
 
What are the top three challenges you plan to face this year? 
 
Murch: It always seems to be the same challenges over the past 46 years, which is 1. Labor — recruiting, hiring and retention; 2. Irresponsible bidding and low-balling, which unfortunately results in poor quality and a blemish on our industry reputation; and 3. Procurement/purchasing that by design makes it hard to establish and earn a true partnership relationship with customers. This is especially true when they are new in their position and or change in positions and they can't appreciate the value of what we have provided for their account prior to them being there. 
 
Greenland: Wage and benefit increases that customers won’t accept is the top challenge. Second to that is growing our leadership team at the same pace as sales. Lastly, cost of financing: We have been in an easy credit situation with very low interest rates for a decade. Contractors using their line of credit are facing interest expenses double last year. 
 
Sewell: The top three challenges we anticipate this year include adapting to evolving client needs in a hybrid environment, managing rising operational costs, and navigating the ongoing labor shortage. 
 
On a scale of 1-10, how competitive is your region of service with other BSCs when it comes to securing clients? 
 
Sewell: I would say 9 or 10. We operate in numerous states, however, much of the work is based in Southern California where the economy is incredibly competitive, comparable to entire countries. If it were a separate nation, its gross domestic product (GDP) would be the 13th largest globally. This economic strength highlights the intense competition in our region. 
 
Greenland: 10. The entire industry is highly competitive.

Murch: I would say that it is and always has been an 8-9, depending on accounts that may have a much higher barrier to entry. With over 75,000 janitorial competitors in the U.S., it is, has been and always will be extremely competitive. "The Market" is the market for price and value for each individual customer's specific needs, wants, and desires. It is not always about price. The best companies are as productive as possible utilizing innovative solutions, selling the best wages, and providing the highest level of consistent service and quality. Each account needs to be specific to the customer’s needs regardless of the region. There is always a market for low commoditized price, a race to the bottom, and pricing — but that isn't sustainable for a growing company focused on the bigger picture of consistency and working to provide a long-term partnership with each customer. 
 
What is your perception of robotics, AI, and other IoT-related technologies, and how receptive are clients and your staff to utilizing them? 
 
Greenland: These technologies are, in most cases, still too expensive for most contractors. In a case where the customer and the contractor are willing to work together, I find that the cost issue can be overcome easily. This is especially true when the customer is interested in the data that can be created. 
 
Murch: The trend toward technology is upon us. Each customer has their own specific needs and knows what is desirable and of value to them. It is up to us to be progressive and advise them of what we have in our arsenal that can be of mutual benefit to both of us. The key is being cost effective and what the payback time frame (ROI) is with the investment that must make sense. It will be very exciting to see how these applications continue to evolve and progress for our mutual benefit. 
  
Sewell: We view robotics, AI, and IoT technologies as transformative tools that can enhance service delivery and operational efficiency. Our clients seem to be very receptive to new technologies, providing it does not come at a significant cost. There is still some hesitation from frontline workers, but that is starting to change. While initial costs can be a barrier, the long-term benefits and cost savings outweigh these challenges. 
 
Are there are mandates — either state or country wide — that are forcing you to change protocols? They could be sustainability related, labor related, etc. 
 
Murch: Other than ongoing normal federal or state-mandated regulations that we have always experienced, there really isn't anything affecting us to change protocols. Most of these are human resource and safety related. Our good friends in California can probably answer that question much better as they deal with this in an extraordinary way. 
 
Sewell: We do a lot of work in California and are fortunate to have in-house counsel and organizations such as ISSA. These entities help us stay abreast of and in compliance with the numerous wages, hours, training, registration, mandates, etc.  
 
Greenland: The State of California is discussing a 2,000 square foot per hour production mandate for cleaning (they dropped the square footage requirement as of press time but are still discussing additional specifics of this mandate). If this passes, it will create a tremendous amount of uncertainty. This will not increase the amount of labor that we use; it will be the opposite. If this passes, the number of robots in the industry will skyrocket. 
 
What are the most notable innovations you’ve seen in the cleaning industry, and how do you see them impacting the BSC market? 
 
Murch: Anything that can impact labor saving and productivity with the leading-edge battery equipment technology, robotics that are applicable to accounts that lend themselves to that technology, applying Six Sigma applications to our job loading engineering and internal administrative functions, and utilizing AI.  
 
Sewell: Robotics are continuing to evolve but are not yet a solution to the most time-consuming cleaning tasks. The continued evolution of safer and more environmentally safe cleaning solutions. More technologies for disinfection — born out of the COVID-19 crisis. 
 
Greenland: Obviously robots. However, the end use cost still hasn’t made them economic in most cases. Although, with wages approaching $20 per hour in parts of the country, the economic proposition starts to make sense. Robots and internet of things (IoT) will continue to be a bigger part of the discussion in the BSC world. 
 
The most recent pandemic emphasized health and safety for employees and clients. What lessons were learned from that experience, and how has it impacted facility protocols? 
 
Murch: We worked hard when the pandemic shutdown started to be well out in front of everything for our team members’ safety. Being essential providers, the emphasis was on providing safety and peace of mind for customers every day and night. Customers have always valued and respected what we do for them, but the pandemic shed an entirely different light on our value and how much more we and our industry are respected by providing a safe, sanitized, clean workplace. It’s a huge part of our culture, putting our team members first. 
 
Greenland: Our customers now understand the value of cleaning and that “just because it smells clean, doesn’t mean it’s clean”. We are getting more questions about our processes and procedures, and information “proving” that we cleaned. I am seeing more requests for data related to cleaning. 
 
Sewell: The pandemic underscored the importance of rigorous health and safety protocols and, in general, the importance of our work and industry. We learned the value of agility, rapid response, and the need for comprehensive disinfection procedures in more than just healthcare environments. These lessons have led to the implementation of enhanced cleaning protocols, regular health and safety training, and a greater focus on the well-being of both employees and clients. 
 
James DeGraff, senior associate editor, has spent five years creating and overseeing content for Facility Cleaning Decisions, Contracting Profits and Sanitary Maintenance magazines, as well as CleanLink.com.