Mikk Sillamaa, CEO of Stell Eesti: “We have been witnesses to major changes.”

“While five years ago an average company employed a facilities manager, a facilities management specialist and maintenance personnel, by now the facilities management team will have shrunk to one or two people,” Mikk Sillamaa, the CEO of Stell Eesti, says in his interview published in the quarterly property management report. He adds that clients would like to see trained and certified managers as partners.

 

In the summer, ISS Eesti was acquired by new owners, and it has had the new name, Stell, since the beginning of the year. Is there a story behind the name?

We were looking for a name which would be simple, catchy and also usable on the international arena. At the same time, we wanted the meaning of the name to convey our values and principles of operation.

The name “Stell” implies the values we consider important as it draws inspiration from Stella Polaris, the North Star. For millennia, the North Star has been an irreplaceable assistant in navigation, helping travellers find the right direction and the right way. Similarly, so does Stell help find the right way and move on.

Stell’s archetype is a creator and inventor, who is also endowed with the qualities of a caretaker.  The underlying motivation for both the inventor and the caretaker is to create a better world by doing something good for others. The quality that is common for these two is the love of order and creating order. The inventor is driven by innovation and creativity and wants to create new things in a thoughtful, purposeful and determined way, not by hopping haphazardly.  The caretaker wants to help others like a parent or caring older sibling.

 

What was the Estonian real estate management market like last year?

Last year, interesting changes occurred on the Estonian real estate management market. The international corporation ISS Group declared in late 2018 that it would be withdrawing from 13 countries including Estonia. The process culminated with us bringing the Stell trademark to the market this January.

ISS also certainly signalled investors to pay attention to the Estonian real estate management market. Two major transaction are known to have been completed, which received broad media coverage. Looking at the background of both those transactions one cannot but notice that companies whose operation was to a great extent associated with real estate were interested in purchasing real estate management firms, so the M&A transactions of 2019 on the Estonian real estate management market can be characterised as indirect vertical integration.

On the other hand, this is not surprising if we look at the giants in the sector in Europe and America. Corporations do tend to operate on both markets as real estate developers and providers of property management and administration services, which is due to the fact that companies rather would rather have narrower specialisation and invest in their main line of business.

Recruiting or replacing employees is expensive. This is why it is more reasonable for a production company to invest in the training and development of an engineer, for example, than to hire and train a facilities management specialist. Clients expect the real estate management company as their partner to offer economical, convenient and integrated real estate management services.

As far as the market broken down by specific services is concerned, what catches the eye is that all sectors are experiencing labour shortage, which has decreased companies’ profits. This, in its turn, forces them to thoroughly review fixed costs in the fields that do not directly add value, and the costs associated with real estate management are definitely one such group.

We have been witnesses to major changes. While five years ago an average company employed a facilities manager, a facilities management specialist and maintenance personnel, 5–6 workers in total, by now the facilities management team will have shrunk to one or two people who rather position themselves as the link between the internal client and suppliers.

As internal human resources of companies have been cut down in the meantime, and the corresponding costs have largely been transferred to suppliers, the number of suppliers has increased. What companies are looking for now though is the suppliers that are capable of covering several fields of work associated with real estate management. At the same time, they hope to negotiate better conditions if they purchase a larger amount of services.

Better conditions are not limited to prices alone. Our experience shows that a number of companies have authorised their purchases departments to purchase real estate management services, which has contributed to more expert decision-making. The main current trend is the total cost of ownership, i.e., viewing real estate management in a long-term perspective.

In the end, the lowest price might not guarantee the lowest costs. Imagine the facilities manager of an office building does not provide adequate service and fails to point out that the ventilation installation might soon stop working. As a result, the owner of the property will face rather large unforeseen expenses, let alone tenants’ dissatisfaction.

As the resources of the facilities management departments in companies have been minimised, the latter take more and more interest in whether and how the managers of their real estate have been trained and certified. This is a highly positive development which instils confidence about the clients valuing knowledge and the managers’ competence.

One topic which has been constantly popping up in discussions with new clients is Stell’s recruiting policy and training objectives, which is another proof of companies wanting partners that can guarantee top-notch quality of the property managers’ performance. Of course, the real estate management companies which have always considered the training of their employees essential have advantage here. Today, Stell has 23 certified real estate managers, which apparently puts us in the forefront in Estonia in this respect. Our policy is clear: property managers at Stell must be certified. If we have an applicant for a manager’s position who does not hold a professional certificate, before signing the contract, we need to be sure that the person is willing to take and prepared to pass the certification exam.

 

One of the problems in the sector is labour shortage. What are the solutions that companies could use to address it?

That depends on the specific position. There are not too many specialists with existing expertise of the field, but there is a number of those who are interested in it and have studied real estate management for whom we can find use and provide further training. We are pretty confident in this respect. Stell employs 1500 people, all of whom want to work for us and provide services to our clients.

Filling the positions that require more staff is proving to be more difficult. In our sector, this challenge is primarily characteristic of the vacancies for cleaning service providers. We choose them with utmost care.

People are more and more often looking for work that involves intellectual effort while less-paid jobs that require physical effort tend to recede into the background. The cleaning service sector does use a variety of high-technology equipment, including floor scrubbers and robot vacuums, but people are still irreplaceable in a variety of tasks.

Flexibility yields the best results in recruiting: we try to find the best solution for every job applicant. We believe it is important to find out what job the person would like to do, where the workplace should be located, and what their requirements for the working conditions, schedule and remuneration are. Regardless of the position, the attitude towards the employee is very important. All of these aspects should be considered for finding the right people.

Our company employs people from all walks of life: those with limited capability for work, parents of young children, seniors, school students, exchange students of universities. We have also been hiring people who came to live in and work Estonia from other countries. One needs to see the broad picture and look everywhere for potential employees.

The remuneration is, naturally, an important factor which increases competition among all the companies of the sector. Our enterprise is known as an employer who provides workers with official employment and social guarantees while the salary is always paid on time. We also issue high-quality work clothing and equipment.

What I believe is a disadvantage is the Estonian tax system which does not encourage people to take on a second job because guaranteed tax exemption does not apply to it, and the income tax must be paid on the entire amount of the money earned. Old-age pensioners among our employees face the same problem and are forced to carefully calculate how many hours of work to do so that their hard-earned retirement benefit would not be reduced because of taxes.

I see room for improvement in increasing flexibility and increasing awareness among our clients because their expectations for the service usually involve a certain number of hours. But applicants these days are looking for jobs in which the result is more important than clocking in and clocking out at the specified time.

Success currently favours companies that can easily adapt and keep abreast with the modern work culture. Employees have become more mobile and choosier than ever because the number of vacancies exceeds the demand. This forces companies to make more effort and look for potential employees everywhere.

 

What are Stell’s plans for the upcoming years?

Stell is a real estate management company, which is the only player in Estonian market to provide clients with integrated real estate management solutions that cover a number of support services in addition to standard property management and administration.

Changing the name of the company did not merely mean getting a new logo: it stands for setting new goals in the business strategy. One of the primary goals is securing a strong leading position in the domestic market of real estate management, by which we mean the Baltic market. The “leading position” in this case is not as much about increasing sales or the number of employees as it is about aspiring to become the most valuable enterprise in the real estate management segment. No changes in the company management are to be expected in relation to the rebranding, and the staff will continue employment as before.

In recent years, we have focused on business management and management service development, and we are going to continue in this direction. While today our portfolio includes more than 300 apartment owners’ associations, we intend to triple this number by 2025.

We want to be innovation pioneers in the sector, which means that we want to implement innovative solutions within the company and on our clients’ sites alike. First steps have already been taken in this direction: today, we support the Estonian start-up Lumebot, which develops and produces snow removal robots; we have also created new jobs to increase the energy efficiency of buildings and will soon be offering new support services.

Our key principles to be followed in the upcoming years are definitely innovation and environmentally sustainable thinking.

 

Articels that have been published on this, Kinnisvarauudised:

https://www.kinnisvarauudised.ee/uudised/2020/02/10/stell-eesti-tegevjuht-mikk-sillamaa-oleme-olnud-tunnistajaks-muutustele