In episode 373, host Mike Petrusky speaks with Larry Allen Morgan, CFM, SFP, FMP, senior facilities manager and environmental management system SME at SAP, where he’s focused on results driven leadership within the corporate and commercial real estate facility management industry. Larry explains why he believes facility management (FM) is “not what we do, but why and how we deliver the value.” The two then explore historical industry shifts, post-COVID impacts, and the transformation of the built environment. Larry says that FM professionals must move beyond surface-level discussions and align with the broader strategic goals of the organization, focused on having a horizontal impact, not a vertical one, to better align with cross-functional needs. Traditional financial metrics are necessary but insufficient, he explains, so facility managers need to measure the success of their efforts in terms of impactful outcomes and employee experience.
Agenda
- New value proposition of facility management
- Historical context of the overall industry
- Lasting impact of the post-COVID return to office
- Effective strategies for aligning with organizational goals
What you need to know: Workplace takeaways
Takeaway 1: Facility management is shifting from a cost-driven to a value-driven approach, with an emphasis on strategic thinking and impactful outcomes
“Traditionally and historically up until the Industrial Revolution, what facility management did, whether they called it that or not, was about value,” Larry explains.
However, this shifted toward a more transactional, cost-focused model over time, and he argues that the post-COVID return to the office has reignited the need to focus on value.
“So, people, when we came back to the office or during COVID, people were saying, well, we got to get away from a cost into how do we bring people back into the office? What’s the value of me going back to the office when I can traditionally work from home and still get my job done,” he says.
So, he stresses the need to focus on transformational outcomes rather than just transactions.
“But if we start thinking about the value proposition, how do we help an organization transform? What’s a transformational look like? And to me, that has to be based on what we call impactful outcomes,” he says.
He also talks about the importance of measuring success in a way that captures the true value of facility management. “How do we measure things? Again, we can measure some of our success based on the budget. Are we 5% variance above and below and all the other financial terms, return on investment, internal rates return, that present value, all that stuff?”
Larry also encourages facility managers to prioritize risk compliance, then the needs of the organization, and to ensure that contracts and service level agreements are aligned with current goals. “Go back through your contracts and look at the scope of work and the service level agreements. Are they current to what your outcome is right now? If not, you need to adjust.”
Takeaway 2: Horizontal alignment and cross-functional impact are crucial for facility managers to effectively communicate and deliver value
“Traditionally, facilities has been a vertical organization, right? Senior people, then the chief engineer, property manager or whatever that looks like. But the new way to think about this is if we look horizontally, at what’s our impact, cross-functional,” he says.
For example, when discussing facility management with the finance department, the conversation tends to be transactional and cost focused. However, aligning with HR or IT can shift the focus to people and security. “If it’s HR, it’s going to be people based. So, we need to get out of this frame of mind — thinking of facilities as a vertical organization. It is not. It’s a horizontal impact organization,” Larry says.
He then emphasizes that understanding the big picture and the organization’s mission is essential for delivering value. “What does the big picture look like? What do we do, why do we exist in the eyes of the company? So, we need to get past that surface speak,” he says.
Workplace management insights
- The shift from a value-driven approach to a cost-driven approach in facility management occurred around the time of the Industrial Revolution.
- Post-COVID, there is a renewed focus on the value of the built environment and the strategic role of facility management in attracting and retaining employees.
- Facility management must move beyond traditional vertical organizational structures to a horizontal impact approach, considering cross-functional impacts and aligning with various departments’ goals.
- The true value proposition of facility management lies in driving impactful outcomes, not just in managing costs.
- There is a significant gap between the transactional nature of facility management and the transformational needs of organizations, especially post-COVID.
- Measuring the success of facility management should include both financial metrics and non-financial metrics, such as employee experience and engagement.
- Prioritizing mandatory compliance and organizational needs is crucial in understanding and delivering value.
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