When security is an issue within a business organization, the question will arise as to the balancing of cost to productivity. Productivity within the security framework is providing cost effective protection of assets to aid in achieving corporate goals. To arrive at the appropriate decision, numerous factors must be evaluated. The basic question is whether to have a proprietary in-house security unit or utilize a security vendor service. The cost versus value factor includes the consideration of many issues for arriving at the appropriate decision.
Training
Regardless of whether security is provided by proprietary or contract security officers, quality of training is a significant issue. With the proprietary service, the client can devise and implement a security-training program specifically designed to meet unique site requirements. The client is also aware of the qualifications of the trainer and the adequacy of the training presented. As new or altered training matters are identified, the client can immediately conduct necessary training.
Contract services normally conduct training at their facility without oversight by the client. The training may range from “read this” for 20 minutes and claim eight hours of training. Other firms use commercially produced videos that at best are very generic in nature. Few contract firms have a testing program to determine material comprehension by the potential officer. Site-specific training is frequently on-the-job training with another officer of undetermined professional qualifications and on-site experience. Follow-on and periodic training is frequently ignored or of little value.
Hiring Practices
When considering the use of contract security officers, the questions arises–What am I getting for my security dollar? Many states regulate the contact security industry and mandate minimum standards. Other states have adopted a “hands off” policy, resulting in job performance ranging from outstanding to very poor. The lack of mandated standards, especially in the area of minimum training requirements, leaves the client at the mercy of the vendor’s professionalism and integrity.
The State of Colorado, for example, has no minimum requirements for employment as a security officer. In reality, a convicted felon can be legally employed as a security officer. Security officer wages are price driven by the inability of security managers and vendors to adequately portray security as an investment and not solely as an expense item. The low wages paid to security officers severely reduces the quality of the hiring pool. As a result, potential candidates frequently are individuals of little work experience, young in age, lacking in maturity, and lack a professional work ethic. The other component of the hiring pool is the retiree. This individual may be highly qualified but lacking in physical ability due to aging.
Background investigations, when conducted, are normally rudimentary in nature. The inquiry normally covers only the jurisdiction in which the individual is residing on the date of application. Some states do not have a central repository for all criminal records. In some states, there is no requirement for the individual jurisdictions to report all crimes to a central repository. When the individual has recently located to an area, criminal records from other jurisdictions are not queried.
Employment applications are frequently incomplete or incorrect and partial information provided. Some omissions are deliberate because of apathy or intent to disguise problem areas. Failure to conduct an appropriate background investigation of all prospective employees could lead to allegations and litigation of negligent hiring and retention claims.
Personnel Qualifications
Inherent in low wages and resulting limited qualifications, limited formal education, English language capability, report writing skills, and personal interaction skills may influence the service quality.
Personal appearance standards are influenced by the age and maturity of the individual security officer. Without consistent supervision, prescribed appearance standards can be compromised.
A common practice among many security service vendors it to provide a “first-class” quality officer upon initiation of contract service. This individual will be paid at the agreed rate. At a later date, the “first-class” officer will be moved to another newly acquired contract and the substitute is frequently a lesser-experienced officer who is paid a lesser rate. The billing rate does not change to reflect the lower rate, resulting in a higher than agreed rate of profit. This process may be repeated until you are being provided with an entry-level officer while paying the rate for a “first-class” officer.
Supervision and Management
Even with a contract security service, vendor and client management supervision must be constant to ensure compliance with contract requirements. Reliance on the vendor for all supervision and management can easily result in unacceptable service and direction.
Contract security supervisors are frequently individuals with time-in-service as a sole qualification. Some vendors do not provide or encourage supervisory and management training for those individuals appointed as Site Supervisors or Managers.
Unless specifically precluded by contract provision, the Site Supervisor may routinely function as a security officer with an assigned duty post. While having the title of “supervisor”, in reality this person is an ordinary security officer.
Security Service Contracts
Security vendors routinely provide a generic contract designed to meet the needs of the vendor, to the detriment of the client. Satisfactory security service requires that the expectations of the client be outlined in great detail. The detail must include personal qualifications and conduct, training requirements, activity and incident reporting, working conditions and officer compensation.
Care must be taken when developing the contract to ensure potential liability is assigned to the appropriate party. The vendor should be held accountable for the actions of his employees and not expect to be held harmless in all matters arising from the business relationship.
The acceptance of the lowest bid may result in inferior and unacceptable service. The use of incentive clauses will increase service levels when proper goals are defined. The failure to meet minimum requirements must also be subject to penalties.
Security officer compensation is a key contract issue. Wages and benefits specified by the client will increase cost but will decrease turnover and increase performance. Security officers should be paid based on a tiered structure connected to overall experience and time on the specific contract.
Specific provisions must be included to ensure that replacement officers, either on short notice or for scheduled vacations, have the necessary training and qualifications to perform required duties.
Security Officer Compensation
Identifying the salary scale for security officers is always a problem. The pay scale is an indicator of management’s perceived value of the security officer to the organization. What message is sent when the security officer is paid less than any other employee?
A recent study identified the average salary ranges for security officers and investigators. “Respondents indicated that their unarmed proprietary security officers earn from $11 to $15 per hour. Armed proprietary officers earn between $13 and $18 an hour. Unarmed contract security officers earn $10 to $12 an hour, and armed contract security officers earn $16 to $23 an hour. In-house investigators earn between $23 and $32 an hour while contract investigators earn about double that amount–$45 to $65 an hour. In-house console operators earn more at $12 to $15 an hours than do their contract counterparts, who earn between $11 and $13 an hour.” (Putting Payday in Perspective, Security Management, September 2001, ASIS/Security Management Employment Survey)
Penny Wise, Pound Foolish
“There are two schools of thought concerning the security function’s impact on corporate profits. The “expense” school believes that all security expenditures should be kept to a minimum, concluding that such outlays will not immediately affect company operations. If something does occur, the security manager can always be assigned the blame for the problem. The “investment” school of thought believes that security is a long-term investment to corporate profits, and that security costs will yield a return through loss prevention and reduced expenses.” (Russell L. Bintliff, The Complete Manual of Corporate and Industrial Security)
Budgetary constraints can impact one’s potential liability in ways not normally considered. Frequently, security expenditures may take an inordinate cut during a budget reduction. But if the security expenditures are reduced at a greater rate than other expenditures, it can be construed as an indicator of management’s negative attitude toward safety and security.
A reduction in the security budget may be easier to “sell” to stockholders than the abstract attempt to quantify litigation expenses avoided through preventative measures, but taking the easy road can prove costly. In a case with serious implications for management, an individual was assaulted by four youths in an elevator. Among the acts of negligence alleged was a reduction in the facilities’ security patrols. The court took notice that the facility earned $14.1 million in profits during the first quarter of the year but spent little on security. As a result, the facility was ordered to pay $1 million in damages to the plaintiff. (Craig v Circus Circus Hotels, No. 86-4133 [Washoe County, District Court, NV])” (William F. Blake, Security Premises From Liability Risks, Risk Management, September 1994)
Proprietary Versus Contract Services
Contract services may have problems assimilating the corporate culture of the client. There must be a “cultural buy-in” by the vendor to have an effective security service. When there is an “us versus them” situation, employees are reluctant to report security related matters under the perception that “it is none of their business” or “they don’t understand the nature of our business.”
It has been said that contract security officers do not make an effort to know the company employees with whom they work or to even learn their names. An understanding of the client’s business process is necessary to critically analyze situations of potential security interest.
A government entity may have a greater degree of “governmental immunity” with a proprietary security force where there is more direct control of activities and personnel. Courts have held that because of the nature of security, it is a personal and non-delegable duty and that as a matter of law, security personnel may be employees of the client. (Rockwell v. Sun Harbor Budget Suites, 925 P.2d 1175, Nev. 1996)
“Even though the staffing problem moves from client to agency (vendor), the solution to scheduling conflicts, time-off and related concerns may not be any easier. Theoretically, the agency will rely on a broader personnel base from which they can draw additional officers when necessary. The additional officers typically come from other client assignments to fill vacancies caused by unscheduled absence of personnel at any one-client location. Contract agencies often also make use of odd shift hours and part-time personnel to meet unusual schedule demands. In practice, the replacement is often drawn from the available personnel who have never been assigned to the particular client location. This can result in the placement of an inexperienced officer whose performance, unless very closely supervised, may cause more harm than the absence would have.” (Protection of Assets Manual, page 9-32)
Contract security firm representatives usually use a reduction of cost as a major selling point for their services. This argument can be misleading, and on occasion an organization that accepted the organization’s contract service for this reason, selected a contractor on a low-bid basis. This can prove disappointing and misleading because the level of service may be reduced to compensate for the lower price.
“A rule-of-thumb is that most contract security companies pay their officers 70 percent of the contract price as direct wages and benefits, budget about 20 percent for general administrative expense, and plan on 10 percent or less as gross profit.” (Protection of Assets Manual, page 9-18)
Security officer turnover rates vary with the compensation paid and the working environment. Normal turnover rates average 130 percent annually and may be as high as 400 percent.
The traditional advantages of an in-house security officer force most often stated are: (1) there is an expectation of permanency, stability, quality, and loyalty; (2) training can be held to uniform standards consistent with organizational requirements; and (3) individual performance and evaluation in accordance with prescribed policies and discipline can be controlled and administered by company management. Another proposed benefit of an in-house security officer force was that in many states an industrial protective force could be commissioned with special police authority that gave them the power to detain and arrest persons engaged in criminal activity on company property.
“Whereas proponents of proprietary security officer forces may agree that the cost of a contract service is less than that of an in-house force, the question of performance and productivity remains a concern because of the old perception of the contract security industry, that is a “rent-a-cop” or “we versus them” mentality.” (John D. Stees, Outsourcing Security, Butterworth-Heinemann, Boston, MA)
A current trend among proprietary security services is reverse outsourcing to provide “valued-added” services to other elements of the organizations. A few examples include security consultations and audits, security awareness indoctrination, security training for non-security department employees, i.e., contract security officers employed at separate company locations, security systems integration assistance, and other services depending on the scope of skills or resources of the security staff.
Investigative services are a potential “outsource” product that could be provided to other departments and offices. The services could include acting as liaison with law enforcement agencies; providing security during potentially dangerous hearings or employee terminations; investigation of non-criminal matters within an office as a human resources representative, i.e., employee disputes; or personal protection of individuals at physical risk.
Another trend is cost sharing where security costs are invoiced back to the user, with an ultimate goal of zero-cost/expense security unit. Some security organizations sell security services to other entities, either on a part-time or full-time basis, i.e., monitoring social use of community facilities and recreation center security.
Summary
Successful security management is contingent upon senior executive involvement in identifying goals and monitoring results. Supervisory and management apathy will inevitably increase the potential for liability and negligent security litigation. A professionally staffed and managed security function will serve as a contributing factor in achieving corporate goals.
The key to successfully utilizing a security vendor is to remember that “my facility, my money, my standards” should be a key element in contract negotiations.