echo interview with Karl Enzler, Chairman of the Board of Directors of Enzler Reinigungen AG

Mr Enzler, your product is cleanliness. And cleanliness is as Swiss as chocolate and watches. Are you in charge of a typically Swiss company?
Karl Enzler: We are indeed a typical Swiss SME. For us, sustainability is more important than growth. Moreover, we regard a clear positioning in the market as crucial. We're at home in the Swiss Market and our aim is to highlight the topic of cleanliness.

The public perception is of cleaning market characterized by small and very small companies. Is this an accurate impression or is the market dominated by large firms like yours?
There are very large numbers of small cleaning firms in Switzerland. These do not characterize the market however. On the contrary, it's the medium and large-sized companies that have the major market share. I would describe our firm – with around 2,700 employees – as a bigger fish among the medium-sized players. The large ones are the multinational companies that, compared to us, employ five times as many people.

What differentiates your company from the competition?

The way we've positioned ourselves in the market is the most important differentiating factor. As a cleaning company, we look for niche markets. This way we avoid trying to compete with the multinational cleaning companies. For example, we're very active in the pharmaceutical sector where we've specialized in cleaning the inner workings of pharmaceutical and bio-tech plants. In this sector, we've achieved a strong market position throughout Switzerland. We're not just about emptying wastepaper baskets and cleaning toilets. We also look for challenging niche markets.

Innovative niche strategies are a successful hallmark of Swiss SMEs…

Yes, being innovative is typical for successful Swiss companies. This is especially applicable to our industry. Look, a vacuum cleaner still basically works the same as it did 50 years ago and we still don't have cleaning robots. A lot of manual work is still necessary. In our industry, innovation doesn't happen via machines that carry out the work more quickly or to a higher quality, but rather through seeking out innovative and profitable niche markets.

Enzler Holding AG consists of four different companies, one of which is responsible for the hotel sector. What's the difference between cleaning hotels and other buildings?
Hotel cleaning is a specialized job, comparable with hospital cleaning. In contrast to an office building, which we normally clean when the workers have already gone home, hotel cleaning is carried out in the presence of the customers. For this kind of work, we need a different kind of person, someone who can engage with the customer. It's specifically in the hotel environment where the behaviour and appearance of our employees help shape our customer's reputation. For example, our employees who work in 4-star hotels need to dress and behave differently to those in 2-star establishments. This is what our clients and their guests expect. Also from an organisational viewpoint, a cleaning assignment in a hotel is more demanding than the classical cleaning job. Varying hotel occupancy rates mean we need to be more flexible in our planning. For an office building, we always need more or less the same number of employees. For a hotel, on the other hand, it could be 20 today, 30 tomorrow and only 15 next week, depending on occupancy.

Enzler Reinigung has been operating since 1935. How has the industry changed over the last 80 years?
I can only speak for the last 27 years, for the length of time I've been in the business. When I started, there was quite a different perception of what constituted quality. Back then, everything was cleaned just about on a daily basis. Later, the multinational companies above all began to compare their costs: What did a square metre of office cleaning cost in Zurich, in Frankfurt or in London? When they discovered that the cleaning costs in Zurich were higher, they drastically lowered the cleaning standard in their Zurich office buildings. From cleaning office space five times a week, we reduced to twice a week and, several years later, to only once a week. Today, there's a tendency to carry out certain cleaning jobs only once every two weeks. What's actually happened is that we've adjusted our Swiss cleaning standards to the general European level.

This development doesn't just apply to office cleaning, right?
Over the last 25 years, the cleaning standard in Switzerland has fallen across the board. Just take public transport: Switzerland's railway carriages used to be the cleanest in Europe, today they're nowhere near that standard. Another example: 25 years ago, we employed between 30 and 40 people for the maintenance cleaning of one office building, for the same building today, we need only 15. It's a similar picture when we calculate our quotes for work: we used to estimate that one employee would need one hour to clean 40 square metres of toilet space. Now we calculate 80 square metres.

Your company is a success story and you're the third generation of its leaders. What, in your view, does a successful entrepreneur need to bring to the table?

That depends on the industry. In the service sector we're in, it's undoubtedly social competence that's required. Our employees represent 65 different nations with strong variations in their levels of education. Now if you want to lead these people effectively – and this is a crucial determinant of success in our industry – you need empathy. If you fail at this, you won't be able to deliver quality work. We strive to establish long-term client relationships. And we've been working for many of our clients for over 30 years. This fact is more important than a big marketing department that works to bring in as much business as possible. However, we only manage to secure these long-term ties to clients by maintaining a high level of staff retention.

Like the hospitality sector, the cleaning industry generates lots of jobs. But it does count among the low-wage sectors. How important are occupational pension schemes in your industry?

It's exactly in the low-wage sector where occupational pension schemes play a major role. And the reason is simple: The pension differential in the state social security system of the first pillar is not really relevant and the third pillar doesn't provide low-wage employees any real opportunity to build savings. So the focus is on the second pillar. For many of our employees, it's the second pillar that makes the big difference.

Does the topic of old-age provisioning come up during the recruitment process?

It is mentioned, but only by people who've reached a certain age. This is unfortunate because the young people are the very group that should be interested in the second pillar. Up to retirement age, the second pillar gives them an opportunity to save up substantial capital.

Switzerland has a well-developed old-age provisioning system whose 3 pillars combine state and private benefits. Is the 3-pillar system sustainable in your view?

I certainly hope the 3-pillar principle remains in operation and there's no attempt to weaken the second pillar in favour of the first. That said, if companies and employees do want to strengthen the second pillar, they need to put in the commensurate effort. The Swiss Federal Law on Occupational Retirement (BVG) has become a giant, evermore regulated industry. It is in this very area that we need a greater degree of individual responsibility. Pension funds are trusts or foundations, which can be compared to clubs. And clubs rely on the engagement of their members.

How does Enzler Reinigungen manage its pension fund?

We're no longer in a collective foundation but run two foundations of our own. Nowadays, we're once again doing a lot ourselves. We want our employees to get to grips with the topic and we want to take on responsibility ourselves for the performance of our foundations. We place the focus squarely on costs because you can't achieve large returns without exposing yourself to excessive risks. However, to keep a lid on costs you have to be willing to do a lot yourself. Regulation has a negative impact here unfortunately. The BVG industry is subject to ever stronger regulation, and this generates costs. The necessary expert reports are a case in point: For a company, the only important thing is that it works well and properly. The often page-long reports produced by the experts are not relevant and do not justify at all the thousands of Franks in costs. But in the current environment, it’s crucial to keep costs as low as possible.

What do you mean by "doing it yourselves"?

It begins with our regulations, which we've formulated ourselves. We also have our own investment committee and our own investment strategy. Moreover, we discuss our investments ourselves. On top of this, we carry out numerous administrative tasks on our own. The employee representatives on the foundation board need to be familiar with the system so they can make informed decisions about the strategy. This means that everybody taking part has to show initiative and engagement. I attribute our success to this commitment and to the fact that we keep a close eye on costs. We regularly beat the interest earnings index for collective foundations – not because we know more about investing but because we have lower costs.

Parliament has approved the reform of the old-age pension system, which we will vote on in September. Is this a topic for discussion in your company?

Absolutely. Because of the high number of non-Swiss nationals on our payroll, many of our employees won't be able to vote of course. But the topic is important and we want our people to be informed. The upcoming vote affects all of us.

Should retirees also be expected to play their part in recapitalising the pension system? Or are already acquired pension rights a taboo topic?

In my view, nothing should be taboo. The second pillar is a topic for company leaders and their employees. We can't have a situation where the government decides whether such a question is taboo or not. The state can do that with the AHV but not when it comes to the second pillar. The second pillar pensions need to be adjusted to the prevailing economic circumstances. There's the expression "pension theft" – which may be a snappy buzzword, but it's being used in the wrong context. Pension theft doesn't mean that projected pension levels made in the past have to be adjusted to changed economic circumstances. It's rather a reference to what's happening right now – that is that today's retirees are depriving all future pensioners of their old-age benefits. This is not right.

In your opinion, what are the major challenges confronting the second pillar today?

Growing regulation that is seriously driving up the costs incurred by the foundations. Instead of excessive regulations, we need framework conditions that people can understand.

Our ageing society and low interest rates are putting pressure on the pension funds. Are you – and indeed all of us – going to fall victim to benefits promises we can't keep?

Demographic development has become extremely acute. Eighty-five and 90 year-olds are no longer the exception. The consequences of this development place our company in a special situation. We have, namely, many employees who do not want to draw a pension but rather opt for a lump-sum payment. We encourage this. When they reach retirement age, many of our people want to return to their home countries with their capital and use it to purchase property. This makes it easier for a foundation, since the fewer pensions that are drawn, in other words the greater the capital outflows are via lump-sum payments, the simpler it becomes for the foundation to keep an overview. Compared to the total number of participants in our pension fund, we have relatively actual few pension recipients. This reduces complexity and consequently costs.

If you could give the pension funds some advice, what would it be?

I would suggest that they don't just accept everything that's prescribed. Rather they should seek to protect their autonomy. Additionally, they should reach out more to their members and to the pensioners of the future. We can only prevent abuses and ever-increasing, cost-driving regulation provided lots of people in a company take an active interest in the pension fund and take control of the finances themselves.

echo interview with Karl Enzler, Chairman of the Board of Directors of Enzler Reinigungen AG

Mr Enzler, your product is cleanliness. And cleanliness is as Swiss as chocolate and watches. Are you in charge of a typically Swiss company?
Karl Enzler: We are indeed a typical Swiss SME. For us, sustainability is more important than growth. Moreover, we regard a clear positioning in the market as crucial. We're at home in the Swiss Market and our aim is to highlight the topic of cleanliness.

The public perception is of cleaning market characterized by small and very small companies. Is this an accurate impression or is the market dominated by large firms like yours?
There are very large numbers of small cleaning firms in Switzerland. These do not characterize the market however. On the contrary, it's the medium and large-sized companies that have the major market share. I would describe our firm – with around 2,700 employees – as a bigger fish among the medium-sized players. The large ones are the multinational companies that, compared to us, employ five times as many people.

What differentiates your company from the competition?

The way we've positioned ourselves in the market is the most important differentiating factor. As a cleaning company, we look for niche markets. This way we avoid trying to compete with the multinational cleaning companies. For example, we're very active in the pharmaceutical sector where we've specialized in cleaning the inner workings of pharmaceutical and bio-tech plants. In this sector, we've achieved a strong market position throughout Switzerland. We're not just about emptying wastepaper baskets and cleaning toilets. We also look for challenging niche markets.

Innovative niche strategies are a successful hallmark of Swiss SMEs…

Yes, being innovative is typical for successful Swiss companies. This is especially applicable to our industry. Look, a vacuum cleaner still basically works the same as it did 50 years ago and we still don't have cleaning robots. A lot of manual work is still necessary. In our industry, innovation doesn't happen via machines that carry out the work more quickly or to a higher quality, but rather through seeking out innovative and profitable niche markets.

Enzler Holding AG consists of four different companies, one of which is responsible for the hotel sector. What's the difference between cleaning hotels and other buildings?
Hotel cleaning is a specialized job, comparable with hospital cleaning. In contrast to an office building, which we normally clean when the workers have already gone home, hotel cleaning is carried out in the presence of the customers. For this kind of work, we need a different kind of person, someone who can engage with the customer. It's specifically in the hotel environment where the behaviour and appearance of our employees help shape our customer's reputation. For example, our employees who work in 4-star hotels need to dress and behave differently to those in 2-star establishments. This is what our clients and their guests expect. Also from an organisational viewpoint, a cleaning assignment in a hotel is more demanding than the classical cleaning job. Varying hotel occupancy rates mean we need to be more flexible in our planning. For an office building, we always need more or less the same number of employees. For a hotel, on the other hand, it could be 20 today, 30 tomorrow and only 15 next week, depending on occupancy.

Enzler Reinigung has been operating since 1935. How has the industry changed over the last 80 years?
I can only speak for the last 27 years, for the length of time I've been in the business. When I started, there was quite a different perception of what constituted quality. Back then, everything was cleaned just about on a daily basis. Later, the multinational companies above all began to compare their costs: What did a square metre of office cleaning cost in Zurich, in Frankfurt or in London? When they discovered that the cleaning costs in Zurich were higher, they drastically lowered the cleaning standard in their Zurich office buildings. From cleaning office space five times a week, we reduced to twice a week and, several years later, to only once a week. Today, there's a tendency to carry out certain cleaning jobs only once every two weeks. What's actually happened is that we've adjusted our Swiss cleaning standards to the general European level.

This development doesn't just apply to office cleaning, right?
Over the last 25 years, the cleaning standard in Switzerland has fallen across the board. Just take public transport: Switzerland's railway carriages used to be the cleanest in Europe, today they're nowhere near that standard. Another example: 25 years ago, we employed between 30 and 40 people for the maintenance cleaning of one office building, for the same building today, we need only 15. It's a similar picture when we calculate our quotes for work: we used to estimate that one employee would need one hour to clean 40 square metres of toilet space. Now we calculate 80 square metres.

Your company is a success story and you're the third generation of its leaders. What, in your view, does a successful entrepreneur need to bring to the table?

That depends on the industry. In the service sector we're in, it's undoubtedly social competence that's required. Our employees represent 65 different nations with strong variations in their levels of education. Now if you want to lead these people effectively – and this is a crucial determinant of success in our industry – you need empathy. If you fail at this, you won't be able to deliver quality work. We strive to establish long-term client relationships. And we've been working for many of our clients for over 30 years. This fact is more important than a big marketing department that works to bring in as much business as possible. However, we only manage to secure these long-term ties to clients by maintaining a high level of staff retention.

Like the hospitality sector, the cleaning industry generates lots of jobs. But it does count among the low-wage sectors. How important are occupational pension schemes in your industry?

It's exactly in the low-wage sector where occupational pension schemes play a major role. And the reason is simple: The pension differential in the state social security system of the first pillar is not really relevant and the third pillar doesn't provide low-wage employees any real opportunity to build savings. So the focus is on the second pillar. For many of our employees, it's the second pillar that makes the big difference.

Does the topic of old-age provisioning come up during the recruitment process?

It is mentioned, but only by people who've reached a certain age. This is unfortunate because the young people are the very group that should be interested in the second pillar. Up to retirement age, the second pillar gives them an opportunity to save up substantial capital.

Switzerland has a well-developed old-age provisioning system whose 3 pillars combine state and private benefits. Is the 3-pillar system sustainable in your view?

I certainly hope the 3-pillar principle remains in operation and there's no attempt to weaken the second pillar in favour of the first. That said, if companies and employees do want to strengthen the second pillar, they need to put in the commensurate effort. The Swiss Federal Law on Occupational Retirement (BVG) has become a giant, evermore regulated industry. It is in this very area that we need a greater degree of individual responsibility. Pension funds are trusts or foundations, which can be compared to clubs. And clubs rely on the engagement of their members.

How does Enzler Reinigungen manage its pension fund?

We're no longer in a collective foundation but run two foundations of our own. Nowadays, we're once again doing a lot ourselves. We want our employees to get to grips with the topic and we want to take on responsibility ourselves for the performance of our foundations. We place the focus squarely on costs because you can't achieve large returns without exposing yourself to excessive risks. However, to keep a lid on costs you have to be willing to do a lot yourself. Regulation has a negative impact here unfortunately. The BVG industry is subject to ever stronger regulation, and this generates costs. The necessary expert reports are a case in point: For a company, the only important thing is that it works well and properly. The often page-long reports produced by the experts are not relevant and do not justify at all the thousands of Franks in costs. But in the current environment, it’s crucial to keep costs as low as possible.

What do you mean by "doing it yourselves"?

It begins with our regulations, which we've formulated ourselves. We also have our own investment committee and our own investment strategy. Moreover, we discuss our investments ourselves. On top of this, we carry out numerous administrative tasks on our own. The employee representatives on the foundation board need to be familiar with the system so they can make informed decisions about the strategy. This means that everybody taking part has to show initiative and engagement. I attribute our success to this commitment and to the fact that we keep a close eye on costs. We regularly beat the interest earnings index for collective foundations – not because we know more about investing but because we have lower costs.

Parliament has approved the reform of the old-age pension system, which we will vote on in September. Is this a topic for discussion in your company?

Absolutely. Because of the high number of non-Swiss nationals on our payroll, many of our employees won't be able to vote of course. But the topic is important and we want our people to be informed. The upcoming vote affects all of us.

Should retirees also be expected to play their part in recapitalising the pension system? Or are already acquired pension rights a taboo topic?

In my view, nothing should be taboo. The second pillar is a topic for company leaders and their employees. We can't have a situation where the government decides whether such a question is taboo or not. The state can do that with the AHV but not when it comes to the second pillar. The second pillar pensions need to be adjusted to the prevailing economic circumstances. There's the expression "pension theft" – which may be a snappy buzzword, but it's being used in the wrong context. Pension theft doesn't mean that projected pension levels made in the past have to be adjusted to changed economic circumstances. It's rather a reference to what's happening right now – that is that today's retirees are depriving all future pensioners of their old-age benefits. This is not right.

In your opinion, what are the major challenges confronting the second pillar today?

Growing regulation that is seriously driving up the costs incurred by the foundations. Instead of excessive regulations, we need framework conditions that people can understand.

Our ageing society and low interest rates are putting pressure on the pension funds. Are you – and indeed all of us – going to fall victim to benefits promises we can't keep?

Demographic development has become extremely acute. Eighty-five and 90 year-olds are no longer the exception. The consequences of this development place our company in a special situation. We have, namely, many employees who do not want to draw a pension but rather opt for a lump-sum payment. We encourage this. When they reach retirement age, many of our people want to return to their home countries with their capital and use it to purchase property. This makes it easier for a foundation, since the fewer pensions that are drawn, in other words the greater the capital outflows are via lump-sum payments, the simpler it becomes for the foundation to keep an overview. Compared to the total number of participants in our pension fund, we have relatively actual few pension recipients. This reduces complexity and consequently costs.

If you could give the pension funds some advice, what would it be?

I would suggest that they don't just accept everything that's prescribed. Rather they should seek to protect their autonomy. Additionally, they should reach out more to their members and to the pensioners of the future. We can only prevent abuses and ever-increasing, cost-driving regulation provided lots of people in a company take an active interest in the pension fund and take control of the finances themselves.