Care Insurance Company (CIC) and ISS

You are a Key Account Manager working for ISS recently assigned to the Care Insurance Company (CIC).

CIC is a large insurance company with headquarter (HQ) in your country’s capital. The relationship between CIC
and ISS goes back more than ten years. Half a year ago, a renewed and redesigned two-year contract was
signed. As such, ISS was continual to provide CIC with a scope of services across 20 locations in four
countries.

Later today, you will have two evaluation meetings covering the first six months under the new agreement with
the responsible CIC vendor managers. CIC has chosen to split the responsibility for the different services
internally, which has created some complexity in the contract management.

The focus of the ISS team the past six months has been to put proper routines and systems (Service Level Agreements)
into place in accordance with the redesigned contract and to create more trust in the relationship with CIC.

However, CIC wants ISS to improve the number of innovations developed in the service operations, as they were
promised more innovation.

CIC – controlling risk

Today, CIC is the largest insurance group in the region with activities in home insurance, car insurance, accident
insurance and business insurance for small businesses. With branches in four countries, CIC has a vision of
becoming “The most reliable insurance company, acknowledged for secure and stable, high- quality peace of mind
delivery to private households and businesses.” Values such as professionalism, security, stability and accountability
are key factors in the handling of CIC´s 1.9 million customers.

CIC – strategic choices

To focus on its core businesses, CIC’s top management decided to outsource various non-core activities, such as
catering and cleaning. In three of CIC’s countries, the non-core activities were outsourced to ISS. The contract for
the fourth country was outsourced to an alliance between two single service providers, Kleen and Reinig.

This strategy is in alignment with CIC’s policy of not putting “all of its eggs in one basket”. As a CIC Manager
said: “Here you can see what CIC is about. We avoid risks; that is our business. It is better to do it step-by-step.”

In general, CIC follows an outsourcing process with a test in small-scale pilot projects. If successful, the
outsourcing is expanded to other locations. CIC has the aim of standardising processes across the region.
However, due to its history of mergers,

CIC has a lot of unaligned processes and systems internally. Also, as branch managers had the authority to negotiate
outsourcing contracts locally, a mixture of different service providers and hundreds of individual contracts emerged. To
address this issue, CIC introduced standardised contract designs, and CIC began to move towards an integrated facility
service (IFS) model.

In each CIC country, a number of CIC vendor managers handle the collaboration with service providers. Some of
these vendor managers also have the overall responsibility for one or more specific line(s) of service(s), such as
cleaning, for all countries. This setup allows CIC to benchmark supplier performance on a regional level.

In each CIC country, a number of CIC vendor managers handle the collaboration with service providers. Some of
these vendor managers also have the overall responsibility for one or more specific line(s) of service(s), such as
cleaning, for all countries. This setup allows CIC to benchmark supplier performance on a regional level.

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In each CIC country, a number of CIC vendor managers handle the collaboration with service providers. Some of
these vendor managers also have the overall responsibility for one or more specific line(s) of service(s), such as
cleaning, for all countries. This setup allows CIC to benchmark supplier performance on a regional level.

ISS – strategic choices

In response to requests from customers like CIC with multi-country contracts, ISS created an umbrella
organisation called a “Key Account Team” – which operates on the regional level. This Key Account Team
coordinates activities, aligns service delivery and promotes best practices.

ISS believes that the IFS model offers a better solution because of more consistent quality through training of own
employees, the sharing of best practise and cost advantages through the careful planning of work tasks to
optimise utilisation of staff. Also, the IFS model eliminates the Middle Management layer, so that all contacts occur
directly between the ISS Key Account Manager and the client. This removes complexity, which occurs when many
people from CIC communicate with different service responsible in ISS.

The current situation with CIC is a challenge as they have communicated: “….as long as we have not seen a steady
performance and have gained trust in ISS’s ability we are not going to have one-point-of-contact. For this reason we
will continue with the Vendor Manager setup split on service areas for as long as you have not completely earned
our trust”.

THE REGIONAL FACILITY SERVICES MARKET

Concerning CIC, ISS’s most important competitor is the strategic alliance between Kleen and Reinig. The alliance
won a part of the CIC contract for one country. The alliance is a competitive threat because they have started to
provide integrated solutions, and the alliance covers all of the regions countries. In contrast to ISS, the alliance uses
numerous subcontractors, which make it much more difficult to ensure contract compliance, valid labour
agreements and that no one is underpaid.

Furthermore, having your own well-educated people allows flexibility in the delivery of services. This is a strong
value proposition allowing customers to fully transfer the complexity and risk to ISS.

CIC has communicated that ISS and the Kleen-Reinig solutions have been put in place for CIC to benchmark
performance, and eventually choose one partner. By experience, you know that integrating services if you do not
have your own staff is very difficult, e.g., it is hard letting cleaning employees also exchange light bulbs or having
security employees fill up the coffee machines when subcontractors employ them.

IMPLEMENTING THE OUTPUT-BASED MODEL

The shift towards an output-based contract was viewed as a new beginning for the collaboration, requiring
significant changes on both sides regarding mentality, work organisation, governance structures and, not least,
expectations. The transformation period, agreed as the first six months, focused on putting these changes in
place. However, even though ISS has delivered on most of the agreed KPIs CIC seems reluctant to move from the
rigid control toward a more flexible model. “It seems easier to handle the frequency based model as here we do
not have to discuss if an area needs cleaning or not – it runs by schedules…easier!” says one CIC Manager.

One of the challenging aspects of the output-based model is that it was agreed with broad objectives regarding the
delivered quality levels. One CIC manager states: “..we all have opinions of what is ‘good quality’ concerning food
and cleaning. Therefore, it is a major task to align expectations not just with ISS, but also with our own employees in
CIC”.

Another challenge is that ISS still delivers frequency-based cleaning and, therefore, the end-users at CIC expect
cleaning at fixed times. The output-based model is in opposition to this habit, as in the output-based model ISS
staff determine which areas need cleaning when. A change would allow the areas that are more visible to get the
most attention. For example, the main entrances of the buildings – which are signalling the vision of CIC as a
“reliable Insurance Company, acknowledged for security, stability and quality” – requires different levels of cleaning
effort depending on the weather and the number of customers coming in.

Case – Only for use in ISS Global Management Trainee Assessment Centre – Case
An ISS manager, highlighted the importance of communication with the end-users when adopting the output-
based model: “If we do explain together, we will get a large number of complaints because CIC staff expect cleaning
on specific days.”

Using the output-based model ISS can save time when not cleaning areas that have not been used, and can vary the
number of courses in the canteen reflecting the season, etc. It demands more of ISS staff, but also allows us to
create better job development and variation.

THE GOVERNANCE ISSUE

A challenge presented itself in the initial phase of the new collaboration. CIC’s management envisioned a mirror
organisation within ISS. A CIC manager expressed the vision like this: “With so many buildings and end-users, it is
important that ISS and CIC build parallel organisations. For example, we need to have a responsible person on the
kitchen level on both sides”.

In contrast, ISS viewed the ideal solution as a structure in which work positions complemented, rather than
overlapped, each other. An ISS manager highlighted that: “A parallel organisation can be waste of money. We
would prefer that ISS handle the services and that CIC has only one overall Vendor Manager we can report to –
not one per service line, and not one per country.”

The issue has not been resolved yet, six months after entering the contract. CIC has still split their areas of
responsibilities into the service areas.

REBUILDING TRUST
The historical baggage in the collaboration is a concern, mainly in two respects: 1) the catering contract in CIC’s
headquarter; and 2) the contract on cleaning in the country, which ISS lost to the alliance between Kleen and
Reinig.

Catering in CIC headquarter

In the past, ISS catering services at CIC headquarter had a high employee turnover resulting in loss of knowledge
about working routines. This resulted in poor performance and, consequently, ISS lost the catering contract at CIC
Headquarter.

Nevertheless, under the renewed contract, ISS again took over the HQ catering service from the competitor, Clenada, but
changing the views of CIC employees about the problems in the past has proven difficult. The image problem comes both
from the catering employees taken over from the previous supplier (Clenada) and also from the end-users in CIC HQ who
are reluctant to use the canteen.

Losing cleaning to Kleen-Reinig in one country

Poor quality levels were the primary topic of discussion when ISS lost the cleaning contract in one of the four
countries. Difficulties agreeing on standards and delivering the required quality had resulted in a poor
reputation for ISS, and the cleaning contract for this particular country was given to Kleen-Reinig. The
removal of one country from the ISS-CIC contract created a breach of trust in the collaboration. It became
evident that trust would have to be rebuilt before CIC’s sites in the lost country could potentially be returned
to the ISS portfolio. The aspiration of getting all four countries back in the portfolio is right now threatened
by the service performance in the other three CIC countries – there are simply too many variations in the
performance agreed.

Case – Only for use in ISS Global Management Trainee Assessment Centre – Case