· 6 min read · Features

Richard Sykes: the man with a business ethics mission

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ISS CEO Richard Sykes on the living wage, facilities management's reputation, and senior leaders' visibility

Richard Sykes a man on a mission – a mission to encourage organisations large and small, public and private, to pay their staff the living wage. As UK and Ireland CEO of facilities giant ISS, his case for wanting to be able to pay his own staff the living wage (set at £9.15 an hour in London and £7.85 elsewhere) is pretty simple: “We are being asked to employ people to clean other people’s toilets. It’s only right we pay them the living wage. Morally and ethically, it’s the right way to do business.”

With about 550,000 employees globally, ISS is one of the world’s largest services providers. Sykes sees his own role as ambassadorial, demonstrating the good that business can do in a sector that often suffers from poor reputation and a consistent squeeze on profits. He chairs the Living Wage Foundation’s Service Providers Leadership Group and is an outspoken and passionate advocate of paying more than the minimum.

“Some people say there needs to be a slight difference [between the national minimum wage and the living wage], but I don’t fully subscribe to that,” he tells HR magazine. “I think the minimum wage should be raised and we should call it the living wage and just get on with it. We should calculate it the way the living wage is calculated, which is the cost of being able to live in society.”

However, while Sykes can certainly talk the talk on the living wage, walking the walk is more difficult. His company remains at the behest of the organisations it services, so while Sykes has a vision to have everyone on ISS’s contracts paid a living wage, the current figure is about 45% with a “route map to a further 15%”.

Internally, the issue of only having 45% of employees on living wage contracts while publicly championing the living wage can cause tension, he admits. While ISS pays all internal staff the living wage, it can only pay it on contracts where the customers are willing to be charged more. “It does cause some anxiety among our workforce when they are on a contract that isn’t being paid it,” he says.

But he’s got the stats to help him make the business case. “On our living wage contracts, our employee net promoter score is 18% higher,” he says. “We have better employee engagement – about eight percentage points higher – and our churn rate is 37% lower than on our minimum wage contracts.”

It has been “tough” to educate customers, he admits, although part of the Living Wage Service Provider Commitment is to put in two bids, one at living wage and one at minimum wage. “In the early days [ISS has been signed up to paying the living wage since January 2012] it was difficult for us to put the benefits on the table,” Sykes says. “Some people just didn’t take that leap of faith. They wanted to see the tangible benefits. Now it’s easier for us to sell the proposition. Where it could sound like a cost increase, now we can talk to them about the value driver. That’s the lightbulb moment: productivity is up, churn is down. It can be a zero sum game.”

That “lightbulb moment” comes a lot quicker to some sectors than others, however. Sykes cites the hotel industry as reluctant, due to the sector’s business model being based around the minimum wage. But he points out that the ISS-operated Sunborn Yacht Hotel pays the living wage and that “engagement and customer satisfaction are up because of it”.

The other major sticking point is parts of the public sector. The failure of government departments to pay the living wage doesn’t sit well with Sykes. “It frustrates me that one of the largest [contracts] we could convert is HMRC,” he says. “A lot of our private sector customers pay the living wage, it’s the public sector ones that tend not to. And that’s not the answer... Pay the living wage and you’ll see the benefit, and get more productivity to help austerity measures.”

He continues, warming to his theme: “It’s odd how you get the political parties saying they do support the living wage, but then they have their own national statistics producing the minimum wage number. Their own statistics people are publishing a minimum wage amount that doesn’t include the cost of living.”

Beyond the living wage Sykes believes facilities management hasn’t, as an industry, “pushed [itself] forward as much as [it] should have done”, particularly in terms of promoting itself as an attractive place to build a career. And he is a case in point of what that career could look like, having moved into facilities management via construction and worked his way up the ranks at Carillion and ISS. With facilities management accounting for about 9% of UK GDP, Sykes is keen to encourage more young talent to see the industry as a viable option.

Sykes is “passionate” about helping young people into work, partnering with organisations such as Business in the Community and The Prince’s Trust. Much of it is around boosting young people’s confidence and giving them the opportunity to experience an office environment. Like many other business leaders, he believes there are major gaps in the work experience options offered at schools. “[Policymakers] should make it mandatory that people do work experience. We need to create some space in the curriculum to enable us to have that work experience, and probably from an earlier age, so you are moving through and getting more confident in what business life is about. That way when you leave education you absolutely know what you are walking into.”

Helping the next generation is part of connecting people to a wider purpose, something Sykes views as central to his job. “My role is making sure people understand the need to have a purpose when they come to work,” he explains. “If they don’t understand the purpose then they are just doing a task. I want a porter to feel he is making someone get better quicker, rather than just pushing them around a hospital. We need people to understand what their wider purpose is. When they get purpose, then they get pride. When they get pride I have happy customers, happy people, and I can move our business forward. My role is to make sure they understand that message.”

To get the message across, communication and training and development are key, based around the theme ‘service with a human touch’. “It’s about employees understanding that it’s how you interact with people that makes a difference in a service environment,” Sykes says. For senior leaders it’s about “never getting too far from our frontline staff”, with regular ‘back to the floor’ days. It’s critical that senior leaders can interact with the frontline, he adds. “There can be a gap between the top and the bottom of an organisation. To jump that gap you need great people skills.”

To encourage the sharing of ideas from bottom to top a staff self-service app with a ‘My Ideas’ section was recently launched, and the ideas go straight to Sykes. Fittingly the app itself was an employee idea. “A young guy said he could design an app, so we said ‘go on then’. A week later he came back with one and we invested in it and built on it, and it’s grown globally.”

Beyond the boundaries of ISS, Sykes feels he has a responsibility to move the facilities management industry as a whole forwards.

A couple of years ago ISS led a ‘big conversation’, inviting its competitors to discuss how to “put our industry on the map a bit more”. On the day, business leaders from across the sector pledged 10,000 apprenticeships and 11,000 ‘work inspiration’ placements over three years.

Sykes admits that getting his competitors to come together in a room was “quite difficult”, but says that “maturity is starting to come”. “Once we got together we could achieve a lot more than we could individually,” he points out. In the wider supply chain he sees a “waking up to the innovation suppliers can provide”. “Rather than just using them as a supplier, use them as a supplier that provides innovation and new ideas,” he says. “I see a lot more of that collaboration, rather than [traditional] procurement. Now it’s more about the value-add, not just the price. It’s come from a need for business to innovate a lot more. And companies have to search out different areas to find that innovation, rather than just in their own organisation, so it’s pushing into the supply chain.”

This increasing external focus relates to HR too. Sykes wants his HR leaders to be networking externally. “[HR shouldn’t] just network with HRDs elsewhere,” he believes. “We need HRDs to be networking with the wider business and the C-suite. And I like my HRD to go and meet customers, and not just their HRD equivalent but the FD or the CEO too. Then they will learn something else to bring back to the business, which will move our HR department forward.”

ISS’s vision is to be the “world’s greatest service organisation”, not just the top facilities management firm, so Sykes is keen to send his HR team out to see what’s happening at businesses such as Disney and Four Seasons. “We just sent a couple of HR people to Disney to see if there’s anything there we can adapt for our business. There might not be, but at least we’re trying. If we don’t try we become too insular.”

But with his embracing of industry-wide issues such as the living wage, education and collaboration, you get the sense that being too insular is not something Sykes will ever be accused of.