Organizational Structure for Facilities Services

Manage facilities, real estate and human resources under the same functional unit to improve communication between these interrelated areas.

organizational structure

Successful companies have established processes for communicating workforce changes between facilities, real estate and human resources functions.  To effectively allocate space and address telecommunications needs, facilities management employees need to be kept abreast of new hire arrivals and employee departures.  Benchmark partners have found that organizational structure plays a critical role in facilitating communication between the human resources, real estate and facilities management functions.

One benchmark partner, Company 6, has a vice president of employee services position that oversees the following functions:

• Facilities management
•  Real estate management
•  Human resources

Consolidating these functions under one leader has proven valuable, according to a Company 6 executive.  By overseeing human resources, the vice president of employee services is one of the first to know about plans for projects that will influence the company’s headcounts.  The vice president can then communicate those changes to the global facilities management director, who also reports directly to the vice president of employee services.  This arrangement has created a people-oriented culture within the facilities function, which in turn, improves internal customer relationships.

Company 6’s organizational structure (shown in the graphic above) places the global directors of facilities, real estate and human resources as equal counterparts that report directly to the same person.  This reporting relationship has helped encourage communication between these functions because they are required to attend employee services group meetings together.

Centralize facilities management organizational structure to save costs and aid in the sharing of cutting-edge facility trends and best practices.

organizational structure

Text Box: "People get in a vacuum and don't compare notes." –Corporate Facility Management Manager, Company 2 Some benchmark partners' organizational structures are centralized, while others' are quite decentralized.  Interviewed facilities executives report distinct advantages and disadvantages to each approach.  Several partners note that centralization can help cut costs, facilitate best practice sharing, and ensure that industry and functional trends are communicated to all facilities managers.

Company 2’s facilities organizational structure used to be much more centralized, but as the company grew, its offerings expanded and it acquired new business units.  During this growth period, facilities services has become slightly decentralized, as some business units have developed their own facilities organizations.  An interviewed corporate facilities manager indicates there is support for bringing all of the business units under the corporate umbrella.  When that happens, 99 percent of facilities services will be managed by one entity.

Currently, Company 2’s corporate facilities services manages all corporate properties and some business units’ properties. The directors of facility management and real estate report to a vice president of corporate services, who then reports to a chief administrative officer (see graphic above).  Company 2 gains several advantages from this organizational structure:

·         Cost-savings from running a leaner organization

·         Improved communication of industry and functional trends

·         Increased consistency

·         Enhanced best practices and lessons-learned sharing

Company 2’s manager of corporate facility management indicated decentralization causes communication and knowledge management problems.  He said, "People who are out there on their own don't hear what is going on in the industry.  Centralizing maintains consistency and helps us share best practices and lessons learned."

Company 2 believes it has management's buy-in for centralizing facility management once again.  But, as the company continues to grow at a torrid pace, this will be a challenging task.

Centralize facility management under a single corporate organization to standardize processes and achieve economies of scale.

organizational structure

All interviewed benchmark partners centralize at least some facility management responsibilities under a corporate facilities function.  Interviewed executives indicate a variety of advantages to centralization, the most common of which are standardization, cost savings, economies of scale and improved communication.

Company 4 has an extremely centralized facility management organization.  In fact, none of the business units have any facility personnel reporting within the business unit.  Corporate facilities management handles the design, construction, maintenance and operation of all of the company's facilities.  The company also outsources 99 percent of hands-on maintenance to enable it to run a relatively lean facilities management organization.

Company 4’s director of facilities management has several direct reports that oversee the department's key operations. These include core projects, engineered systems, regional facilities and corporate area facilities (see graphic to the right). The director of facilities management reports to a vice president of real estate development, who reports to a senior vice president (SVP) of administrative services.  The SVP then reports to an executive vice president of corporate relations and administrative services, who reports to the company president.  This organizational structure, which ties facilities management closely to the company’s senior executive level, reflects the CEO's vision of facilities management as a core strategic asset.

Company 4 believes it reaps the benefits of this organizational structure.  Not only is the facilities organization held in high esteem, but the company achieves economies of scale and strong standardization by managing all of the company's 600-800 facilities from a centralized perspective.

Manage facilities services centrally within a functional organizational structure to achieve efficiencies and facilitate best practice sharing.

organizational structure

Company 1 recently completed a horizontal merger with another large company in its industry.  During the merger, the new entity transitioned from a regionally managed organization to a centralized structure split into functional divisions (see graphic to the right).  Under the new structure, facility management is a shared service that provides facilities-related services to all business units.

Company 1’s director of facilities management, who has worked under both the decentralized and centralized structures, prefers the centralized structure.  He noted there are several benefits to operating facilities management as a shared service. First, communication is much improved and sharing benchmark data and best practices becomes easier because all facilities personnel report to a single vice president of general services.  Additionally, the director has found the structure leads to increased efficiency and economies of scale.  The company no longer has several employees performing the same functions for multiple business units.  Instead, employees can specialize within a leaner organization and provide a higher level of service to internal customers.