Preparing for the Impact of Rising Janitorial Costs

According to the National Conference of State Legislatures, 14 states began 2016 with a minimum wage increase.  The subject is under debate in nearly every statehouse in the country as the US Congress remains divided on the issue as a national decision. As the minimum wage continues to increase, the cost of janitorial services will likely escalate as a direct result.

Hourly employee wages are a significant cost driver for janitorial service companies, accounting for as much as 75-80% of the total monthly invoice. The cost of the actual hourly wage is only one factor; payroll taxes, insurance, and benefits add a minimum of 25% to that increase. A $1.00 change in the minimum wage translates to a $1.25 increase in cost to the service provider. This increase, multiplied by the thousands of man-hours used annually, can create havoc for already established budgets.

While this cost increase is out of an executive’s control, there are steps that can be taken to minimize the impact to their company’s bottom line.  

Offset Rising Costs by Uniting With Your Service Provider to Find Solutions

Cost increases may be inevitable, but strategic executives can position this as an opportunity to review their service provider’s Scope of Work (SOW). Conducting a formal review of specific tasks and frequencies is a good starting point. This is because the SOW—often set in place years ago—is seldom reviewed for compliance and can be adjusted to fit an office’s current needs. Working with the current service provider to identify potential work savings could result in fewer hours required.  Can daily tasks become weekly tasks? 

Considering capital investments?  Discussing options for flooring and other surfaces with your service provider could result in faster cleaning times.  As an example, hard-surface flooring costs more to maintain than carpet.  If a hard surface is a must, selecting low-maintenance flooring can save thousands over the life of the flooring surface. There also may be new equipment that the service provider could implement that would reduce weekly man-hours.  Such an investment could lower long-term cleaning costs.

Such increases also can be a chance to conduct a market assessment to consider options from competitive companies that offer contemporary solutions. Forward-looking providers that embrace new technology in their processes have a productivity advantage due to the evolution of cleaning processes and equipment in recent years.

Executives also should understand that there is some room to negotiate the price of an increase. If a service provider says that wage-related costs are increasing by 10 percent and tries to increase billable services by 10 percent, decision makers should understand that the cost of supplies, overhead and profit—which are unaffected by the wage increase—should keep the total increase lower than 10 percent.

If a company opts to remain in their current contract, it’s a wise move for executives to view their service provider as an ally and work together to streamline responsibilities.  Examples would be opting to have employees’ offices vacuumed once per week or asking the service provider to use more efficient equipment, like backpack vacuums. Asking company employees to make small behavioral changes also can increase efficiency. One of the most time-consuming tasks for janitorial workers is locating waste baskets and emptying them every day. If employees place their waste basket in the hallway each night, this will speed up the waste removal process. Changes like this would increase productivity and reduce the number of billable hours.

Companies also should collaborate with their service provider to determine which supplies are most cost effective.  Replenishing restroom supplies can be a time-consuming practice. Changing to high-capacity toilet tissue, converting from folded towels to roll towels, and switching from gel soap to foam soap will reduce the actual time required to replenish the dispensers.  A daily replenishment task will become a twice-weekly task and the related hours can be eliminated. These products are also more cost effective, which reduces the actual cost of supplies and in turn reduces overall cleaning costs. Analyzing the cost per use of various product options will help decision makers in determining the correct balance of quality and cost per use.

Minimum wage requirements will continue to increase and companies would do well to get ahead of the curve. Supply cost initiatives introduced today will remain low over time and will help lower the overall cost basis for an extended number of years. 

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