MANAGERS ON MANAGEMENT:ENVIRONMENTAL management used to be a box large companies liked to tick because it was politically correct. But the recession has concentrated minds – and now companies are finding that helping the planet can help their bottom line as well.
“Most companies should be able to save at least 20 per cent on their energy costs alone, even before they look at how they deal with their water and waste,” says hotelier-turned-environmentalist Maurice Bergin.
Bergin is the main mover behind the Green Hospitality Awards, a step-by-step environmental management programme for the hotel and hospitality industry, launched recently by Minister for the Environment John Gormley.
Hotels are a business he knows well – but even so he’s constantly shocked by the extent of the savings going a-begging.
“Surveys show that, for most hotels, the combined cost of energy, waste and water is equivalent to around 4.5 per cent of turnover. In some, that can be higher, perhaps between 5 and 10 per cent.
“I would take the view that if you’re at 10 per cent of your turnover, you should be able to reduce that cost by 50 per cent through better management and perhaps some investment in new plant – a bit of not-very-expensive re-engineering.
“Believe it or not, that 50 per cent saving should be equivalent to an increase of around 5 per cent in your overall profitability. Everything you save on utility costs goes straight to the bottom line.”
And yet inertia rules. Hotels have been inexplicably slow to take action, even when they realise how much they can save.
“One study back in 2005-2006 estimated that the Irish hotels industry was literally throwing away as much as €100 million a year in excess waste, water and energy costs,” says Bergin.
“The simple fact is that virtually every business in this country can make significant improvements to its profitability by changing its habits. Waste and water, for instance, can be incredibly easy to fix, with savings of anywhere between 50 and 80 per cent.”
According to Bergin, the key is good cost management, attention to detail and taking steps to be prudent. “For instance, if a company decides to change its water boiler, it can buy a new one for between, say, €150 and €400. The €150 model will probably cost €2,000 to run for a year, whereas the €400 model is more efficient and will cost €600 to run.”
Bergin believes that in the current economic climate there is a danger that managers will take “more short-term, short-sighted and downright imprudent decisions”. When times were good, Bergin acknowledges, most senior managers would probably have curled a derisive lip at the idea of getting down and dirty with environmental costs.
“This is an education process. If I’d been here eight or 10 years ago promoting good environmental management, I’d have been laughed out of it by most managers . . . But now it’s mainstream. When the likes of the ESB declares that by 2035 it will be carbon neutral, that’s a very strong corporate statement – and a sign of the times.”
A sign of the times too is the extraordinary speed with which the recession is engulfing previously healthy companies – before managers can look at their cost base and take even the most obvious remedial measures.
“That is the greatest challenge,” says Bergin. “Have we the skills to react quickly enough? The answer is that, yes, some managers have the skills, and they will engage, focus and survive.
“Others will have the bank manager on the phone giving them a hard time, or they’ll be facing the prospect of the receiver coming in. They won’t manage to engage with the detail in the way that they need to – and they’ll be utterly overwhelmed.”
Next week: Dr Bettina Von Stamm, author of The Innovation Wave, on why managers find it difficult to adapt to the maverick mindset necessary for innovation.
petercluskey@yahoo.fr
Name:Maurice Bergin
Company:Hospitality Solutions Consulting
www.hsc.ie; www.ghaward.ie
Job:Founder of the Green Hospitality Awards
Management advice:Placing environmental management at the core of your business will help you prosper in these challenging times.
