Incentives To Wean You Off Cheapsourcing

At the last management council meeting of the last year at my condo, we were presented with a request by the cleaning company for a 20% contract fee hike. The managing agent then presented us with three other quotes that hovered around the old fee mark. We opted to terminate the incumbent and go with the cheaper one. 20% was just too much.

The contractor gave the usual reasons – gahmen tightening supply of labour, and the mandated progressive wages about to hit the industry.

The Progressive Wage Model did indeed ‘hit’ last month, in a better way than I thought – in an incentive (basket, early nair say) worth a total of $5M for buyers of services – meaning we could’ve stayed with the old cleaning company, and NTUC’s Progressive Wage Incentive would’ve foot part of the bill.

That’s a nice cushion for buyers since it is now compulsory for cleaning companies to implement the Progressive Wage Model – Lim Swee Say’s betterer version of the minimum wage. Cleaners will now have better entry pays (at least above $1,000 per month), with clear pathways to higher pay based on work experience, skill upgrading and productivity improvements.

That, together with other grants (from the e2i) means that outsourcing industries like cleaning companies and security businesses can look at vendors of machines, systems and services that improve their productivity so they can provide the same level of service for clients without having to jack up prices 20% all of a sudden. (Which, in the words of a member our management council – “wah lao, one time so high, is too much”).

I also sat through a particularly dry presentation (sorry ah, presenter) by the Changi Airport Group during the Best Sourcing Symposium at the e2i, and managed to glean something – that with passenger number increases over the last five years, the adoption of best sourcing practices has somehow managed to keep the contract cost and number of cleaners relatively low while maintaining cleanliness standards.

There are ways for companies and buyers to bite the bullet and shift towards a more productive and innovative mindset, and seriously, you can get a discount via the Progressive Wage Incentive if you’re one of the first to do it. Apply now before it runs out!