Maintenance in Banks: Are contract strictures undermining quality?

The nature of contract services has changed over the years. What began as a deal on a single page signed between the housekeeping contractor and the client company has turned into a more structured partnership agreement between the service provider and the principal employer. SLAs, SOPs, janitorial count, cleaning schedule, equipment & chemicals to be deployed, the wages, etc., are all put down on paper and any kind of deviation involves penalty.

At a time when the world has moved on to KPI models (Key Performance Indicators) with quantifiable measurements, performance evaluation, balance scoreboard and benchmarking, Indian contractors are still getting into budget-based or headcount-based contracts. Quality service forms the base in either of the cases.

 

” Poor quality workers performing poor cleaning may create reputation issues for the client and definitely destabilise the confidence on the servicing industry.”– Sanjay Khanvilkar

It’s universal that cost controls not only the purchasing decision but also the decision of hiring competent maintenance services. Are client companies paying enough to hire quality manpower and quality cleaning aids? “If the criterion of selecting the service contractor is based on L1, as in the case of nationalised banks, the quality of cleaning will certainly not be good leading to loss of time and costs in re-work,” says Sanjay Khanvilkar, MD-Sanjay Maintenance Services, who is servicing the private sector HDFC Bank Ltd. Such contracts could harm the entire social system. Poor quality workers performing poor cleaning may create reputation issues for the client and definitely destabilise the confidence on the servicing industry.

The repercussions down the line could create a vicious cycle where the victim of low bid contract, ‘the worker’, reliant on minimum wages and statutory benefits gets deprived of a support system and is forced to jump jobs. In the bargain, probably, his children would have to rely on free-school meals and other kinds of benefits. This is unending… But, where does all this begin?

There are probably two beginnings to this issue – one at the client end and another at the service provider’s end. Contractors are very well aware that getting into such low-budget deals would entail low margins or even a zero-profit, yet they go for such contracts. “If you look at the housekeeping companies taking up such contracts, you will not find big names in it. It is mostly the small time players from the unorganised sector who bid for low-budget contracts,” says Sanjay Khanvilkar. Can there be a radical approach to this where collectively all contractors can agree to boycott such tenders? “If not collectively, at least companies who believe in standard performance should not get into such tenders.”

Such contracts entail cheaper quotes and complaints when something doesn’t work properly or the standard isn’t up to the prices being paid, which is supposed to cover costs. At the end of the day, ‘most economical tenders’, ‘low-budget contracts’, ‘zero-profit quotes’, ‘limited margin contract’… Whatever name you give it, are just that. Then why take up such contracts?

” Being the principal employer, the client company will be penalised by the government for non-compliance and not the service provider who has engaged illegal means to withhold statutory benefits to workers.” –Pradeep Mehra

Another grave concern with such contracts is that are the workers getting paid minimum wages and the statutory benefits? Banks have claimed to ensure that salary proofs are collected from the service provider before releasing the next payment. “There is large scale malpractice, especially where statutory benefits are concerned,” laments Pradeep Mehra, CEO & Managing Director of Walsons HR Solutions Pvt. Ltd and a staunch advocate of statutory compliances. “Even though the principal employer is getting the proof of salary, he could be oblivious of the fact that the worker is actually not getting the benefits at all.

Having said so, I would also like to bring to light that being the principal employer the client company will be penalized by the government for non-compliance and not the service provider who has engaged illegal means to withhold statutory benefits to workers. The reason for the service provider to engage in such practices is because he has to see that both ends meet and in low budget cases he is simply not able to do so,” explains Mehra.

The other issue originating from the client end is the demand for international standards at Indian rates! Well-groomed and trained workforce for housekeeping services are always in demand not just in the banking sector but in all sectors. Services engaged on the minimum wage basis limits the service provider to engage workers from within the vicinity of the contract site. Such workers do not either perform on site due to lack of proper training or quit the job in search for better jobs. No wonder this industry has a high worker turnover. Besides, while the clients demand for trained workers, are they ready to pay for “such professional services”?

In the private and international banking sector, “clients understand quality services and the SLAs are drawn accordingly”. In such banks, the workers not only receive training on site but also receive professional training on the right use of equipment, tools, chemicals and on etiquettes.

It is time that the banking sector which is increasingly looking at outsourcing cleaning services decides whether they want to play ignorant and go about with limited budget contract or do they actually want quality cleaning which involves performance based costs. On the other hand, if the housekeeping companies want to get better by taking up only best contracts where best practices are honoured, it’s time they refrain from low-budget contracts. L1, today is more a bane where both the service provider and the client stand to lose.

Clean India Journal speaks to a couple of private and nationalised banks to understand their approach towards cleaning, costs and contractors.

MW and statutory benefits

Minimum Wages
To prevent exploitation of workers, Minimum Wages Act provides for the fixation of minimum wages in scheduled industries. These rates are generally revised twice a year. In order to cut cost, the outsourcing company quotes wages which are not in keeping with the labour law. Many companies which outsource housekeeping do not know that it is they who are likely to come under the scanner of the labour department and not the housekeeping company offering services, because the outsourcing company becomes the principal employer of the housekeeping workers. The principal employer is accountable and end up committing a criminal offence for not following the labour Laws.

Provident Fund Provident Fund is the scheme whereby the employee contributes 12% of his salary and the employer makes matching contribution of 12%. In addition, the employer also contributes 1.61% as administrative charges to the PF account. The biggest advantages of PF is the saving on which a worker gets a substantial interest of 8.5%. Workers can also avail of loan against the PF. In India, to save on PF, many housekeeping companies are engaged in malpractices whereby their book show different numbers from what actually exists.

Employee’s Insurances
Under the ESIS or the Employee State Insurance Scheme the employer pays 4.75% and deducts 1.75% of the employee’s salary. It is mandatory for any company, including a housekeeping company, to provide ESI coverage to all employees having salary up to 15000/- per month. Every state has an ESIS body which issues the ESIS card and number. Except some remote areas, ESIS medical centres are available across the country. Some cities even have super specialty hospitals. This insurance scheme amounting to a total of 6.5% of the salary, covers the medical requirements of the employee and his family. The employee can use his ESI card and number to receive sickness, maternity and employment injury benefits. Any hospitalisation is paid by the ESIS. Even in case of fatal diseases or mishap or impairment, the employee is covered under this scheme. In case of fatality, the worker’s dependent survivors receive pension. This provides social security to the worker and his family.

The ESI scheme is not only mandatory but also works in the interest of the worker. By not providing for ESI, the company is not saving on money but committing a criminal offence by going against the health of the worker.

Gratuity
Gratuity is payable to an employee on the termination of his employment after he has rendered continuous services for at least five years. Termination of service may be due to retirement, resignation, death or disablement. Completion of five years of service is not necessary in case of death or disablement. Employer is required to pay gratuity to an employee at rate of 15 days wages (last drawn) for every completed year of service or past here of in excess of six months. As per the Income Tax Act the company has to maintain gratuity records of employees and the data has to be reflected in the books of accounts. Gratuity records have to be maintained for all employees irrespective of the number of years of services.

Bonus
Employees up to 10,000/- per month salary are entitled to bonus as per the provisions of Payment of Bonus Act.

Paid Leave
Employees are entitled to privilege leave, casual leave/sick leave as per the legal provisions of various states. Paid leave amounts to 9% of salary approximately. Weekly off is mandatory but some housekeeping companies deny this and make employees work for seven days a week.

These are some of the Acts which every housekeeping company should follow, as Labour Laws are stringent. By following all of the above, a housekeeping company abides by the law of the land and moves towards becoming an organised company.

Cleaning Partnership

In a major initiative to formally outsource housekeeping services in adherence to all the statutory norms that go along, HDFC Bank took the lead four years back. With more than 2000 branches, 4000 ATMs and 200 odd offices, HDFC bank has 10,000 cleaning staff in housekeeping and about 100 contractors offering cleaning services. “Budgets are no constraints where salaries to cleaning employees are concerned. In adherence to the Minimum Wages Act, we pay on the basis of what is laid down by the Government, whichever is higher, Central or State. We have been following the norms for the last four years.It’s only a year or two back that other banks have standardised payments,” says Ravi Valecha, Head-Hospitality, HDFC Bank Ltd.

Emphasising his point, Ravi Valecha says that at HDFC Bank, the approach is neither on a budgetary constraint nor on uncompetitive rates of payment. “In fact, the amount that we are paying to the staff is the highest in the country. The payment again is made directly to the staff through the vendor. In the sense, we ensure that each and every worker employed with HDFC bank gets his/her due salary without fail before the seventh of each month. Either the bank statement of the employee or whatever the mode of payment, the vendor has to attach it along with the next bill. Only then the payment is released. Even the proof of bonus and other statutory benefits being paid to the workers has to be furnished by the vendor.”

The payment system at HDFC bank is centralised. The vendors submit their bills to the state heads which is sent to the regional heads. A team under the regional division collects the bills and verifies them before clearing it for payments. The bills are then forwarded to the central administration in Mumbai. “The hospitality department at the main office in Mumbai again verifies at random on whether the statutory benefits – ESI, bonus, etc., have been paid by the vendor and the salaries have been deposited into the respective accounts. Apart from this, we also take from the vendor, a confirmation from chartered accountant, who is a third party, to verify and confirm that the statutory payments have been made legally on whatever is due to the worker.

As the payments are based on government rules, it is a common standard followed across the board throughout the country, irrespective of the vendor. Hence, as far as empanelling the new vendor is concerned, the selection is hardly on a budget basis and “money is definitely not the criteria”. At the same time, if the vendor is unable to produce the attendance and proper bills as specified the payment is definitely delayed. “Even if there is a single discrepancy, the bills are sent back which will take about 15 days. After the bill is rectified at the vendor’s end and sent back, another week or 10 days go by. In short, instead of the bills reaching the central office on the 10th of each month, the bill reaches us only in the first week of the next month. Hence, the delay. There are also vendors who have a checklist and comply with the requirements of HDFC bank. In such cases they receive their payment within 30 days,” explains Valecha.

Speaking of the quality service rendered by the service providers, “at HDFC or for that matter in any bank, the use of equipment is not encouraged. Most of the cleaning is done manually. There is not much of automation but with cleaning chemicals we have laid standards. We do not enforce on the vendors to use a particular chemical but we give them a choice of three brands. Whichever brand they chose, HDFC negotiates on the costing of the product directly with the supplier. On the basis of per square feet cleaned, we finalise the payment to the vendor.”

But given the large area to be cleaned, banks should be encouraging mechanised cleaning. “Basically because we want to provide employment to more people and housekeeping is one industry which has a large scope of employing such workers,” says Valecha.

In order to ensure that quality cleaning is adhered to, HDFC bank also penalises when standards are not met. “If there is any lapse in cleaning standards, we do not hold the worker responsible. It is more to do with the supervision and hence, we penalise the vendor directly and not the worker.”

The consumption of cleaning material is on a large scale at HDFC bank given the expanse of area to be cleaned. Since the HDFC bank procures only 5% of the stocks required, the vendors are given the option to negotiate further with the supplier and procure the rest of the required chemicals directly from the supplier. Right from tissue paper to cleaning tools, HDFC bank procures good quality brands.

These workers follow the standard operating procedures and checklist. “With a lot of absenteeism and high rate of attrition in the housekeeping sector, we directly train the vendors and they in turn train the housekeeping staff. Thus, there is no discrepancy. Here I would like to add that at HDFC bank, the attrition rate is almost non-existent. Since we ensure that workers get their salaries, bonuses and statutory benefits on time, they don’t want to leave HDFC bank. Yet for the safety and business continuity plan of the organization, we give them job cards, and even if one leaves there is always a substitute who could just read through and get on to the job.”

The hospitality department of HDFC bank is ISO certified. “As part of the ISO audit we have to maintain all the checklists, SOPs and cleaning schedules. For example, at an ATM, the attendant would have a checklist where he makes an entry of the activities finished – main signage board at 10am, door at 10.30am, cleaned the ATM machine at 11am, mopped the floor at 11.30am. In short, everything is meticulously entered in the checklist.” Similarly, the specialised cleaning jobs are outsourced to companies who have the expertise to do so. “In case of façade cleaning at any of the office premises, if the housekeeping company does not have the trained manpower, then we have another vendor to do the facades. This is important for the safety of the workers. We have Sanjay Maintenance Services, Property Solutions and Mazda Hospitality besides others doing the housekeeping at HDFC bank.

“Finally, be it the housekeeping staff, pantry workers or the security guards, we treat them not as vendors but partners. If every organisation looks at the outsourced agency as their partners, life would become easier. At HDFC bank, there are monthly, quarterly and half-yearly meets with all our partners. This also enables to resolve differences and issues amicably.”

Selection by tender

Clean India Journal spoke to a couple nationalised banks where particular attention is paid to the cleaning of the local head offices, as a “matter of prestige”.

Largely based on the tender process, the cleaning contracts are awarded on L1 basis. This explicitly means the contract is awarded to the lowest bidder. While, cleaning is carried out on a daily, monthly and yearly basis depending on the area to be cleaned, specialised cleaning is restricted largely to the head offices of most nationalised banks. Most of the head offices of PS banks are huge structures that need specialised maintenance. Right from plumbing to landscaping, all the work related to facilities maintenance is outsourced to various vendors on AMC or periodic contracts.

In the entire facility maintenance, “housekeeping is important”, according to a bank source. One of the leading nationalised banks has a committee in place which has drawn the SOPs to keep the local head offices across India clean and well maintained. Here again the payments are made to the workers on the basis of minimum wages as stipulated by the Central and State governments. The number of workers too has been specified and any absenteeism entails a deduction the payments. “It is but natural that if the housekeeping agency is not able to provide the specified number of workers on any given day, we have to penalise them,” said the source. “The payments are made in the presence of the Assistant Labour Commissioner who ensures that the wages are paid to the workers.” In a recent move to further ensure that workers receive their due salary, some of the nationalised banks are pushing on the payments to be credited directly to the worker’s account. Even in cases where the worker does not have a bank account, bearer cheques can be issued. This will make the transaction absolutely clear.”

Unlike private and international banks, rendering services to nationalised banks in adherence to all the statutory compliances becomes difficult to manage. “This is precisely because nationalised banks work on fixed budgets. To the extent that the service provider is at times forced to pay out of his pocket to make the statutory payments. In this case, rendering quality services on fixed budgets becomes difficult,” says Sanjay Khanvilkar.

Contracts are signed for a period of two to three years. Through out the tenure of the contract if the payments are on constant terms irrespective of changing prices then how can the vendor meet expenses? Fixed budget based contracts do not have provisions for changing costs. This is where malpractices originate, says Khanvilkar.

“The service provider is at times forced to pay out of his pocket to make the statutory payments. In this case, rendering quality services on fixed budgets becomes difficult.”

“There are various ways of manipulating a consolidated challan. The word consolidated by itself is misleading, as it represents the entire company’s challan and not a specific person’s challan.

“In fact, the government sector understands the need of facilities management, but at the same time is not giving it its due importance. The private bank and international banks are very strict with compliances. Even though margins are bit squeezed, comparatively it is better to work with them as they are good pay master,” adds Khanvilkar.

Small time loans

As more and more small time housekeeping companies are aspiring to take up big contracts, the impediments caused by cash crunch could be one of the main factors leading to malpractices. Most small time housekeeping companies, largely in the unorganised sector, have expressed their inability to acquire loan from banks to meets their working capital requirements in any given contract. Many cooperative, private and SME banks are providing loan facilities to housekeeping companies. CIJ spoke to Bharat Cooperative Bank to understand the procedures involved in obtaining loan for housekeeping companies.

One of the major criteria for any housekeeping company to avail of loan facility is that the company should have an account in operating for at least more than six months. From the account behaviour, the bank will get a fair idea about the company’s growth and performance. Says Anilkumar R Amin, GM, Bharat Bank, housekeeping companies basically require business loan or working capital loan which can be considered based on the contract in hand, their previous turnover, three years balance sheet in case of older companies and banker’s calculation based on stock, contract, receivables, etc. In other words, bank can extend term loans based on the stocks and receivables. But as a safety precaution, the bank or any financial institution for that matter would require a collateral security for any kind of loan extended. Many private banks are even extending loans against the contract document from the client company with the assurance that the proceedings gets directly credited into the housekeeping company’s account with the bank.

Apart from business/term loans, for working capital requirement one can go for cash credit facilities. The bottom line is that if the borrower is good, no bank will hesitate to do business with them.

Façade maintenance at HSBC

Most of the multinational banks have structures with glass facades calling for specialised maintenance.CIJ spoke to Mano Ranjan Deb, Branch Manager, Technoclean India Pvt Ltd, which is maintaining the facade at HSBC branches in Andhra Pradesh.

Cradle Runways has installed facade access systems in various banks, including HSBC, Bank of India and Standard Chartered.

HSBC had made it clear that it did not want scaffolding for cleaning the façade. Moreover, the system is very cumbersome. Explains Deb, “You have to erect the scaffolding every time you want to maintain/clean the facades. These banks do not want to mess up with safety or any kind of statutory requirements. Technoclean provides façade cleaning services to all the branches of HSBC bank in Andhra Pradesh, especially in cities like Hyderabad and Vizag. There are various kinds of façade access systems. In the spiderman technique, the person hangs from the top with the help of flexible ropes. These ropes can take sudden jerks and even absorb shocks.”

Such kind of specialised cleaning jobs are undertaken by trained cleaners. The ordinary window cleaners do not take the security aspects with importance. “Our operator also undergo a set of medical tests and training for a period of two-three months before getting qualified as a façade cleaner. When we were awarded the work, HSBC bank was concerned as to how its facades are cleaned and who is cleaning them?

“Besides spiderman-technique, we have also installed gondola or cradle system in some of the HSBC buildings. Cradle system is an external elevator, where a person can stand and move in any direction. We have also installed aerial platform system. It is kept on the ground and can go up to heights of 36m or above. A trained worker can also climb into the bucket of the aerial platform and clean 52m high.”

Most of the façade cleaning system has been installed during the construction stage. Generally, the architect of the building has discussion with us and incorporates the façade access system in the building. “The system helps us reach and maintain every inch of the building façade. We do not go for scaffolding but go for customized system for a particular building where safety and longevity of our equipment are concerned.

“We only maintain the façade and do not involved in preventive maintenance of windows. Our staff cleans the old glass that has rainbow effect on it, do mastic work if there is a leakage/seepage and even change broken glass. We use glass cleaning chemicals of Scheravan Laboratories and Taski. These chemicals restore the aluminium and composite panels. We use Unger tools to clean the facades.

“In order to get maximum results, we sit with our clients and study the surrounding area thoroughly. If the building is located in the centre of the city, we ask them to clean once in a month. If the glasses are inclined, the possibilities of dust deposition on the glasses are even higher and so we have a schedule for cleaning these glasses once in 15 days.”