Creating Resilience in an Informal Sector: How Hogaru is Transforming Colombia’s Cleaning Industry Hogaru is a digital platform that offers Colombian households and small businesses cleaning services. Its workers have formal, permanent contracts and access to vital benefits. This contrasts with the informal employment and limited workplace protections that are the norm for both the cleaning sector and digital platforms in Colombia and globally. The Challenge Inclusive Employment Solutions Hogaru’s mission is to ‘formalize and dignify domestic work in Colombia’. The cleaning services sector generates 2 percent of the country’s gross domestic product and employs over 750,000 people.1 Participation However, these workers are among the country’s lowest paid, and a lack of education limits earnings and advancement potential. While Targeted recruitment using face-to- Colombian law requires formal employment for domestic workers, face outreach, megaphones, and fliers in in practice most cleaners work on a casual basis with no access to low-income communities. Flexible work social security or workplace protections. Data collected by Hogaru arrangements. Support and hiring bonuses indicates only 25 percent of cleaners have access to healthcare, for victims of conflict. Support to enroll only 30 percent get annual leave, only 18 percent have insurance in government healthcare and pension for workplace accidents, and just 1 percent are paid overtime. In schemes. Mentors to help workers access addition, 88 percent of contracts are verbal, and over 30 percent of transportation, childcare, and other services. cleaners have been dismissed from a job with no compensation.2 Benefits for Business Advancement Staff turnover fell from 16 percent in 2015 to 9 Training in cleaning, customer service, percent in 2022. personal development, with incentives and cash rewards for meeting milestones. Human Capital Performance Stronger customer service Resilience and loyalty, with 92 percent of clients repeat customers. Access Formal contracts with regular wages, to markets paid leave, a pension, and healthcare. Small interest-free loans and support Demonstrates to open bank accounts. Distinguishes Hogaru’s brand among Corporate Values socially-conscious consumers. Empowerment Benefits for Workers Communications and grievance channels While informal work and limited protections are common in through mentors, meetings with management, the cleaning sector, Hogaru employs its 598 cleaners on formal, and surveys, or via phone or app. permanent contracts. All are women, and for 90 percent this is the first time they have secured regular wages, paid leave, a pension, and healthcare. Hogaru also launched a second unit, Apporta, to facilitate formal employment, including benefits, directly between cleaners and Colombian households and small businesses. 1 Creating Resilience in an Informal Sector: How Hogaru is Transforming Colombia’s Cleaning Industry Industry: Cleaning services Size: 7,800+ clients, 239,000+ client visits, and $3.3mn in revenues in 2021. Base of the Pyramid Workforce: Employs 598 women from low-income backgrounds as cleaning professionals. Most are the sole income earner for their household, and roughly 70% support children and dependents. Many are victims of armed conflict or gender-based violence and harassment (GBVH). Hogaru’s second unit, Apporta, facilitated the formal employment of 420 cleaners by mid-2022. How Hogaru Puts Inclusive Employment Solutions into Practice Participation: Target recruitment Participation: Reduce entry barriers Many of Hogaru’s cleaning professionals are Hogaru mentors—known as ‘madrinas’ and victims of armed conflict, in particular Colombia’s decades-long ‘padrinos’, or godmothers and godfathers—help their cleaning civil conflict which officially ended in 2016. These individuals professionals to access vital services such as childcare, housing, are often unable to provide formal employment records and transportation so they can attend work. Mentors, who are or a permanent address, so Hogaru helps them to access company supervisors, also help workers to enroll in government certification of their status as victims of armed conflict and related healthcare and pension schemes, and access company benefits government support. The company also pays certified victims of such as leave and healthcare. Mentors also help workers to conflict a hiring bonus, funded via a government tax incentive. communicate grievances at work or discuss personal issues, a support many of these women previously lacked. Recognizing that low-income women may lack access to digital recruiting platforms, the company maximizes its outreach by using face-to-face recruiting methods such as announcing vacancies Advancement: Offer fair pay in low-income communities and inner cities with a megaphone, distributing fliers, and interviewing candidates who walk into the Hogaru supports workers with a package of benefits company’s central office. that maximizes their earnings. All workers are offered a loan of roughly $20 when they start their probation period, and if their probation is completed successfully, repayment is not required. “We call our employees ‘cleaning professionals’ to Workers can also earn points called ‘kibos’ when they complete give them the dignity they deserve. Without them, company training or reach other milestones. These points can be the company cannot function.” exchanged for perks, such as time off. Workers can also earn cash rewards of roughly $10-$20 on top of their salary by meeting all Darcy Barrera, Human Resources Manager, Hogaru work requirements, maintaining a successful relationship with a customer, or meeting certain periods of continuous employment. 2 Creating Resilience in an Informal Sector: How Hogaru is Transforming Colombia’s Cleaning Industry Advancement: Upskill Resilience: Access to benefits Workers can access the Hogaru Academy through Flexible leave arrangements help Hogaru’s cleaning the company’s app or website. The academy offers courses. in professionals balance work with their care responsibilities cleaning, customer service, personal development, occupational and personal needs. In addition to their standard annual leave health and safety, and technology skills, as well as legal and allowance, workers can request one paid day off every 90 days for administrative topics such as labor law. The aim is to help cleaning a medical appointment, and two paid days off per year to cover professionals develop additional skills that will serve them both at other needs. work and in their personal lives. Over 90 percent of Hogaru’s cleaning professionals are in their first formal job, and for the first time, Resilience: Enhance job and income stability they have regular wages, paid leave, and access to Cleaners employed on a casual basis in Colombia pensions, healthcare and other benefits. usually earn less than $15 per day, are not covered by social security, and receive no payment if they are sick or their shift is cancelled. These poor conditions mean casual workers often resort to taking out high-interest loans, some of which are unregulated Resilience: Facilitate access to finance and financial literacy and illegal, so that they can cover basic expenses or pay for family emergencies.3 The company provides workers who qualify with small interest-free loans, as well as loans for unexpected medical In contrast, Hogaru provides direct, formal, permanent contracts or family emergencies. Repayments are deducted from wages for its cleaning professionals and they are paid every two weeks. and recorded on pay slips. Hogaru also helps workers to complete The company is responsible for finding and assigning clients, and applications and obtain documentation to open a savings account. cleaners receive their full salary regardless of whether they are The company is also developing a co-savings arrangement fully booked. Through this, Hogaru provides some of Colombia’s that will match worker contributions for housing or education. most vulnerable women workers with a stable source of income. Most cleaners work eight hours per day for six days from Monday to Saturday, divided into two four-hour shifts with a break for Empowerment: Provide communications lunch. If they prefer, cleaners can work 40 hours per week over five and grievance channels days. According to Hogaru’s cleaning professionals, these terms and conditions are significantly better than those of competing In addition to the madrino and padrino mentors, companies, which employ their cleaners on a fixed, one-year Hogaru uses several channels to empower workers and facilitate contract and do not guarantee a rest day on the weekend. communication. Recognizing its role as an entry point to formal employment, • Telephone calls and a dedicated app can be used to obtain Hogaru uses induction training and other communication channels information about working conditions and systems, make to raises workers’ awareness of the benefits of formal contracts. suggestions, raise concerns, or get advice on how to respond to mistreatment by a customer, for example. • A Facebook group for employees hosts virtual meetings with “We want to break down barriers to entry for senior management every two weeks, and also provides knowledge sharing and peer support. underserved groups. We know that our workers have many other responsibilities in their lives: the key • Periodic surveys collect information that can be used to improve to expanding employment opportunities for them is company operations and better tailor support for workers. providing flexibility without sacrificing formality.” “We feel heard and valued.” Juan Cadavid, General Director, Hogaru Isabel and Angela, Cleaning Professionals, Hogaru 3 Creating Resilience in an Informal Sector: How Hogaru is Transforming Colombia’s Cleaning Industry The Benefits for Business: Hogaru’s Experience In addition, quality service and trusted relationships between Human capital performance customers and cleaners made Hogaru more resilient during the Hogaru’s focus on creating a supportive working COVID-19 crisis. When lockdowns suspended all non-essential environment has improved employee satisfaction and reduced services, Hogaru launched a campaign called ‘Cuida a quien te cuida’ turnover. According to company data, almost 80 percent of Hogaru’s or ‘Take care of those who take care of you,’ which convinced 60 cleaning professionals have not considered leaving their job; over 60 percent of its clients to continue making payments, thereby enabling percent feel valued by the administrative team; and over 80 percent the company to stay in business and to continue paying its workers. are satisfied with the company. This is reflected in Hogaru’s annual worker turnover rate, which fell from 16 percent in 2015 to 9 percent in 2022. Turnover for those aged over 50 is only 5 percent per year. Demonstrates corporate values Reducing worker turnover reduces operating costs, as the company spends about $75 to find and train each new worker. Worker Hogaru’s commitment to providing secure retention also allows Hogaru to offer customers a regular cleaner, employment and good working conditions for women at the which is an important selling point in a sector where customers put base of the pyramid is a key factor in its brand identity and a high value on trust and reliability. marketing. Hogaru appeals to customers who want a cleaner who earns a fair salary, with fair benefits, and is employed with all the statutory requirements, but who do not want the administrative burden of directly hiring the cleaner themselves. “Reducing turnover and worker retention are the major challenges in the sector. If you want to build steady relationships between customers and cleaning professionals, you need to put workers and customers first.” Juan Cadavid, General Director, Hogaru Access to markets Hogaru’s investments in training enable it to offer high quality services, and this has been key in securing loyal customers, fostering a stable operating environment for the company, and helping the business to remain resilient during challenging times. From 2015 to 2022, the average duration of a business relationship between a cleaner and a specific customer rose 50 percent, from six months to nine months. In mid-2022, 92 percent of Hogaru’s services went to regular, repeat customers. This loyal customer base lowered Hogaru’s operating costs, time, and resources spent on marketing, setting up jobs with new customers, and answering the inevitable questions that arise with a new customer relationship. 4 Creating Resilience in an Informal Sector: How Hogaru is Transforming Colombia’s Cleaning Industry Endnotes & Sources Along with interviews with Hogaru management and worker focus group discussions conducted in February 2022, and information from the Hogaru website, the following sources were used: 1,2 Business Call to Action n.d, Hogaru workforce and company data, accessed February 2022, https://www.businesscalltoaction.org/member/hogaru 3 Valora Analitik. 2022. “200 mil trabajadores del aseo en Colombia podrán adelantar su pago (Two hundred thousand cleaning workers in Columbia will be able to advance their payment).” Valora Analitik (Evaluate Analytics), March 15, 2022. https://www.valoraanalitik.com/2022/02/15/200-mil-trabajadores-aseo-colombia- adelantar-pago/ Daniel Brown. 2021. “Qué son los estratos, el sistema “solidario” que terminó profundizando el clasismo y la desigualdad en Colombia (What are the strata? The “solidarity” system that ended up deepening classism and inequality in Colombia).” BBC Mundo, May 28, 2021. https://www.bbc.com/mundo/noticias-america-latina-57264176 World Bank. 2020. Databank: Poverty headcount ratio at national poverty lines (% of population) – Colombia. https://data.worldbank.org/indicator/SI.POV.NAHC?locations=CO IN PARTNERSHIP WITH 5 Creating Resilience in an Informal Sector: How Hogaru is Transforming Colombia’s Cleaning Industry