Cleaning Company – a Masterclass in Management
SOL Baltics, the largest real estate maintenance company in the region, managed to become the market leader in the Baltics by primarily focusing on people and its corporate culture. Now that the number of employees exceeded 2,000, it was high time to replace Excel spreadsheets with the modern business software application Business Central.
“When I read the book No Rules Rules written about Netflix, I felt like they had copied their entire management style off SOL,” claims Rinel Pius, CEO of SOL Baltics. “Both companies have a very similar corporate culture – a culture of freedom and responsibility!
SOL Baltics grew out of one of the oldest companies in Finland, the Lindström family business. In 1991, Liisa Joronen, the granddaughter of the company’s founder, took over the cleaning service. In 1993, she wrote down the management principles she considered important in her doctoral thesis.
These and several other so-called permissiveness principles have helped the company, which started in Finland, to expand to both Scandinavia and the Baltics. They have also helped to cope with Covid-19 times: last year’s profit figures were the best of all time for SOL’s Baltics unit. But it would be wrong to say that the Covid-19 did not deal a painful blow to the company: The ships of Viking Line and Eckerö, where the cleaning service was offered, have been moored for almost a year, and hotels are closed or half-empty. Many smaller customers never reopened their businesses. Around 500 people in SOL were directly affected by the reorganisation caused by Covid-19. Some had to be laid off.
Good economic results are the first fruits of five years of targeted labour. It may sound obvious, but it all started with hiring capable managers. “SOL’s management philosophy states that a person must be independent, make their own decisions, and assume responsibility. On the other hand, they get a wealth of freedom. There is no obligation to stay in the office, you can even work from Sweden if everything is on order.” When the office had to be closed overnight due to the pandemic last spring, nothing really happened – the company was already used to working this way.
The manager of SOL Baltics illustrates the corporate culture with a simple example: “If the coffee machine is broken in the office, we don’t expect someone to fix it. In SOL, the person who notices it first takes care of it.”
Angry and grumpy people cannot work in the company. “We spend a third of our lives at work, so you have to have fun with your colleagues!” considers Pius.
SINGLE STANDARD THROUGHOUT THE BALTICS
The level of costs and the quality of service are very important. Every month, the company has to spend 1.5 million euros in wages, which must be earned. So, another important area of focus in SOL is service level and cost cutting.
By now, the merger of three separate Baltic units, or in other words, bringing them under a single management, is complete. The last stage in this process took place in February this year, when YPV, one of the leading maintenance companies in Lithuania, started working under the name and brand colours of SOL. Before that, they got to know each other for several years.
The merger of SOL’s Baltic units was expedient due to economies of scale. In the past, everything was acquired separately in each country (from toilet paper to cars), but now collective procurement ensures much cheaper prices. But above all, it is more convenient to operate in this way, because the market is small, even when considering all the Baltic States, and there is no need to struggle on three separate fronts.
Second, a single management ensures a consistent level of service. “The cleaning service in Estonia is the best in the world! If world championships were held in this field, we would definitely be in the top three!” says Pius. One must agree with this, because here, SOL’s cleaning service has even become an indisputable competitive advantage for one hotel! The new Bob W hotel located in Tallinn’s Telliskivi quarter uses the “Ridiculously clean” standard, which means an impressive 63 steps of cleaning and disinfection, after which the room is sealed until the guest arrives.
A single company means that, just like in Estonia, the exact same requirements and processes and the same employee training can be applied in Latvia and Lithuania.
CLEANING COMPANY – A MASTERCLASS IN MANAGEMENT
A distinct feature of the cleaning service industry is the extremely high staff turnover. “We have been programmed for this, because no one says in kindergarten that they want to become a cleaner!” Many people come to work temporarily or quickly realise that it does not suit them. On the toughest days in Estonia, SOL employs an average of three people a day, and at least a couple of dozen job interviews must be held each day. Professional recruiters are used for this. The pandemic has not had a positive impact on the availability of labour.
“Our middle managers are better than the senior managers of most Estonian companies,” states Pius. “Each supervisor has an average of 45 cleaners in their team, which is three times the number of employees in an average Estonian company. On average, a supervisor oversees 20 sites or clients! Supervisors plan the team’s budget, control quality, and communicate with the customer in all situations. “You have to be a very good leader if you can manage such a large team, where people’s income is only 39% of the average salary here!”
The supervisors, in turn, belong to the teams of service managers, about a dozen in one team. So, a service manager with a portfolio of 3–4 million in SOL is like the head of a large company in the Estonian sense.
Considering the number of employees – SOL has 2,300 employees in the Baltics – it is not possible for the senior manager to sit down with each employee individually for an hour or two during the year. Therefore, it has become a tradition to set larger goals in workshops – for example, 10 goals are set that must be met in the next year. The reasons how and why some things should be done are discussed. As always, life comes with changes and some goals are removed and others added.
FIX THE PROCESSES!
From January 1 this year, the Business Central business management software application gradually went live in SOL Baltics, initially in Estonia, while Latvia and Lithuania are next in line. Until now, ERP had not really been a topic of discussion in the company. The focus had rather been on so-called real things. If something needed to be discussed with a customer, it was done in person.
“I agree that our entire electronic side was not really viable,” Pius observes. “We were using older accounting and HR software that was not integrated. There was no recruitment software and the salary software had been developed in-house. We used dozens of Excel spreadsheets for occupational health accounting! This meant that if a report was needed immediately, it meant the day after tomorrow at the earliest.”
However, the company has grown rapidly. When Rinel Pius took over seven years ago, the annual turnover was 16 million, while this year the planned turnover will be over 35 million euros.” Therefore, a few years ago it was decided that it is time to get serious about implementing business management software.
On February 1 last year, the choice was made in favour of Business Central and the BCS Itera that provides it. “We actually selected the partner, not so much the software. We needed a company that understands us, with whom we can communicate,” Pius believes. “In this regard, BCS Itera left everyone else in the dust. They really delved into our operations and also painted a very realistic picture of the difficulties of software implementation and the role of our people right from the start.”
However, Pius does not consider the new software itself to be the greatest innovation and progress, but rather the changes in many processes. “The processes themselves have developed over time, they have not been thoroughly analysed. Here is an example: the document we open for each employee, which we call the Day 1 page, used to be retyped three to four times and handled by three to four people! This is now all in the past – it is only done once and is constantly updated. We analysed the entire company’s processes, from accounting to service, payroll, invoicing and mail service,” claims the head of SOL Baltics.
NEW SOFTWARE CREATED A NEW PIPELINE
The goal in implementing Business Central was to use as many standard solutions as possible. But this was not always possible.
Salary was and is the most critical issue for SOL. “If we forget a customer, it results in financial loss. But if inaccurate information is entered into the payroll software and employees get paid incorrectly, it is a much bigger disaster. People’s income is small and every euro counts. Fair payment of salary on time or even a little earlier is sacred for SOL,” Pius believes. “Here we simply could not use a standard solution. And in the end, the result we came to is quite nice.”
During the implementation, we got a serious eureka moment in the payroll workshop. In the past, we had not realised what a huge task it was to calculate salaries for people – especially because we have thousands of employees working with different workloads from 10–100%. Everyone suddenly started to respect the payroll clerk a lot more.
But all in all, the new software covers the company’s activities from start to finish, all the processes are in one system.
Sales (contacts, offer, contract).
- Products sold (toilet and hand paper, soap, disinfectants, etc. by article).
- Invoicing (the customer receives one e-invoice at the right time with two amounts on it: monthly payment and consumed goods). The problem of multiple invoicing models has also been resolved. Even the various sites for one customer used to have very different invoicing models (e.g. monthly payment as one number for one site and on different lines for another site), and the SOL accountant had to prepare all these invoices manually, which was time-consuming and also caused mistakes. Now the format was agreed on with the customer’s financial and IT specialist and everything works automatically.
- Staff: a person comes to work (with any workload), gets an employment contract, after a month their first salary, and undergoes training. All this can be seen in the HR module.
- Management reports: the management receives reports efficiently and with visual content, using Power BI. These are already predefined and therefore do not have to be prepared again.
According to Rinel Pius, they have not had to regret their choice of IT partner. Although deadlines have been postponed, it was partly because of Covid-19 and also to make sure that everything was understood. “The consultant we got from our IT partner is a man with incredible experience!” he notes. “And we are also glad that the management of BCS Itera made a contribution. During the previous year, we communicated with them on quite a few levels and the managements of both companies were involved.”
PRACTICAL EXPERIENCE FROM SOL: WHAT IS IMPORTANT IN ERP IMPLEMENTATION?
- Motivational meetings for company employees should not only be held at the beginning of the IT development, but also throughout the process. Their purpose is to inform them which stage has been reached and to maintain a positive attitude that a solution will soon be reached. We did let our people know what day the new software will go live and when the training would begin, etc., but it is also important to remind them from time to time what the new software provides. You have to also motivate yourself as a manager in the same way: it is tough, but things will get better soon.
- One of the first workshops should have dealt with the rights in the new software, but we left it to the very end (who can view, change, and confirm things). Had this been in place, we would have been faster and smarter.
- Workshops should start with the most critical processes. We got to the most critical issues for us – payroll and HR management (where the standard solution was not enough) – last.
- We recommend everyone to hire an IT project manager in their company who is familiar with the processes. This is what we did. If all department heads and workshop participants describe their core processes to the IT partner, everyone only describes their own section. An IT project manager is a very good middleman who describes things comprehensively and keeps in mind the bigger picture.
BACKGROUND OF THE BUSINESS SOFTWARE
BCS Itera AS implemented the business software application Microsoft Dynamics 365 Business Central in SOL Baltic, covering the vast majority of the company’s business processes. The special module of the same solution, Payroll365-HRM365, is used for salary and human resources management. As a special solution, site management, execution and planning of jobs, preparation of instruments, and bulk invoicing (billing) were developed.