Hiring

Getting what you pay for with contract guards — contract security service

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SPRA Resources for Georgia Security Services

by Grayling D. Livingston [topic: outsource security] written for Security Info Watch |

GASQ Article - Getting what you pay for with contract guards -- contract security service
Photo credit: (Photo courtesy bigstockphoto.com/Yastremska)

Hiring a contract security service provider can be highly valuable, but it comes at a price. You must pay the firm for its services on top of paying for the cost of wages, training, projected overtime, vacation accrual, payroll taxes, uniforms, benefits, and other specified or mutually agreed upon services.

When end-users of security services clearly understand security companies’ pricing concepts and methods, only then can they identify excessive costs and effectively negotiate reasonable pay rates for the security officer and final billing rates while ensuring quality service. Hiring a contract security service provider can help your company save time, find the best solution, add value and reduce costs. The contract security service provider recruits, develops, trains and maintain a professional staff of employees and provides you with human capital options that match the qualifications, skills, and experience that an organization is seeking for any given security project.

Hiring a contract security service provider can be highly valuable, but it comes at a price. You must pay the firm for its services on top of paying for the cost of wages, training, projected overtime, vacation accrual, payroll taxes, uniforms, benefits, and other specified or mutually agreed upon services.

The cost of hiring a contract security vendor oftentimes will be more cost-effective than the cost of hiring in-house security staff. Though prices will vary depending on the industry, contract security firm and the professional talent/solution you’re looking for, the concept of how the prices are determined is the same across the industry. It consists of pay rate, overhead cost, and profit margin. Essentially, the pay rate plus the overhead cost plus the profit margin equals the total bill rate.

After learning what your security service cost would be if you performed the function in-house, here’s what you need to know about the three different pricing components – and often competing aspects – of outsourcing contract security services.

Security Officer Pay Rate

This rate is the labor hourly amount the security vendor is paying the security professional for the services he or she will be providing to your company. It’s the largest aspect of the bill rate. Normally 55 to 65 percent of the total bill rate is paid to the security officer. It also plays a significant role in the fair market value and quality of the talent you’ll ultimately receive to perform the safety and security functions. Generally, the higher this pay rate is, the more certified, qualified, educated, and experienced the security officer will be and the quicker the contract security service provider will be able to find a suitable candidate to hire. Changes to this rate will affect the talent absenteeism and turnover.

Overhead Cost

When you hire a contract security service provider, you not only spend money on the pay rate but also on the firm’s overhead cost. This is a percentage applied on top of the pay rate and it is being provided to the contract security service provider. It typically includes the pass-through costs that adjust over the contract, such as employment taxes, the fixed pass-through costs that are agreed upon ahead of time, such as equipment, uniforms, benefits, training, workers’ compensation and insurance, as well as the gross profit for the contract security service provider.

Here, you’ll see great variation, which is based on the contract security service provider’s true cost of service to client, service provider’s cost plus fixed overhead and profit, service provider’s percentage of return on sales, market demand, assignment duration, buyer’s knowledge, type of security officers and skill sets, weekly billable hours volume and more. You’ll usually see an overhead rate from as low as 10 percent, but it can go as high as 50 percent or more. Changes to this cost are commonplace but should only be based on current economics.

Bill Rate

Finally, the bill rate is the combination of the two above components to include the profit margin. This is the full amount that you’ll ultimately end up paying for the contract security services. Knowledge of this information should help you obtain the best possible security service without overpaying for the services and paying a fair and reasonable price for the quality of service received.

How to Reduce Outsourcing Security Services Expenses

Many buyers of security services don’t understand exactly what they’re paying for when they engage the services of a contract security service provider. However, contract security service providers billing rates don’t have to be a mystery. Due to price shopping for the lowest bill rate – which often leads to slave labor pay rates for the security officer and underbidding by industry competition – contract security service providers will always try to negotiate the lowest security officer pay rate (which is currently below poverty level wages) and the highest bill rate so they can make a higher profit with the markup. By understanding the three different components of this outsourcing labor expense, you can better control your costs for service and make an informed hiring decision.

Before contacting a contract security service provider, understand the cost of the type of security service you’re looking for (armed vs unarmed, foot patrol vs mobile patrol) and provide a proposed security officer pay rate and bill rate to the firm to ensure you’re spending an appropriate amount for the security professional and services you’ll be receiving. Shop around and take a closer look at security officer pay rates and company bill rates before you get into a relationship and sign a contract with a specific security service provider. Most importantly, know your cost for service if you performed the security function in-house before you buy.

*Note This article is presented for informational purposes only and is not intended to constitute legal advice.

About the Author:

Grayling D. Livingston is the founder and president of Get A Security Quote (GASQ), a search for hire, lead generation, and sales support-type service that supports contract security firms, to include security consulting, sales and marketing activity. GASQ works with end-users of contract security services who don’t want to own a full-time security staff and are looking for the best value for their money and expect the services to match the fees or services. For more information, visit www.gasq.us.

 

hiring, contract guards, security guards, contract security service, service providers

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7 Questions Every Business Should Ask Before Hiring a Contract Security Company

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7 Questions Every Business Should Ask Before Hiring a Contract Security Company

by Grayling D. Livingston [topic: outsource security] | written for Security Info Watch |

7 questions every business should ask before hiring a contract security company
Photo credit: (Image courtesy bigstockphoto.com/Natali_Mis)

Choosing a professional security guard vendor is not an easy process. If a business fails to perform a due diligence inquiry on the prospective vendor, it may result in considerable personal and financial liability for their organization. There are numerous problems that can be encountered and there must be no assumption that advertising material is factual and will protect you from negligent security litigation.

Several factors need to be considered when choosing a security guard vendor. Most security guard vendors are honorable, ethical and perform their responsibilities in a professional manner. The problem arises when dealing with the less-professional vendors. A business owner or operator, by law, cannot relieve themselves of liability for the safety and security of his or her property or individuals on his or her property by hiring a guard services firm. The business owner may outsource the operation of the security program to a vendor, but the wise business owner makes a business decision that only a professional security vendor will be responsible for security operations.

Unfortunately, the security guard industry is price driven and may not always meet the necessary legal standards and training required to protect the business owner. Organizations must be wary of the claims of professionalism stated by some contractors that may be found on a website or other marketing material which may be exaggerations or outright falsehoods.

Key Considerations and Questions

The question every business owner must ask themselves is: how do I protect myself from unscrupulous security guard vendors? Companies should realize that the lowest bid may not always be the wisest bid. As in any business decision, return on your financial and personal investment must be the primary decision factor. As the old adage states— “you only get what you pay for.” Quality is not an inexpensive consideration.

There are several critical items that should be considered when selecting a security vendor, including:

  1. Does the company have the required professional and business licenses?
  2. Does the company have professional liability, workman’s compensation and automobile insurance?
  3. Are the individual security officers licensed as required by law?
  4. Are the individual security officers trained as required by law and your business requirements?
  5. Are the individual security officers properly equipped and do they present a professional appearance?
  6. How are the individual security officers and security operations supervised and managed?
  7. Has the security company or its individual staff members and officers been defendants in a security negligence litigation matter?

 

Does the security company have the required professional and business licenses?

Each state and local jurisdiction has a licensing requirement that normally mandates the minimum standards for a security company operation. In some jurisdictions, the mandate may require an accomplishment of minimum requirements for a security agency license and/or individual security officer licenses. Also, many jurisdictions require a business license for tax and revenue purposes.

Business owners should consult with the proper authorities to determine the license requirements and the vendor’s compliance with the requirements. The vendor may state that his business and employees are appropriately licensed but independent verification is necessary. The vendor should be required to provide the business owner with a certified copy of the necessary licenses.

Does the Vendor Have the Necessary Insurance Coverage?

Consultation with a qualified insurance provider by the business owner will enable him or her to decide what types of insurance are needed and if the security vendor is compliant. If the vendor does not have worker’s compensation insurance and one of the vendor’s employees is injured during the course of his employment, the business may be responsible for the injured security officer’s compensation and medical expenses. Automobile insurance should state that the coverage is related to business operations and not “pleasure”. While business automobile insurance may be costlier, the insurance company may be able to deny a claim for misrepresentation of vehicle usage, which could transfer the claim responsibility to the business owner. The organization should require copies of the necessary insurance policies, and when appropriate, proof that the policies are linked to the business being protected.

Are the Individual Security Officers Licensed as Required by Law?

Individual states have a variety of requirements mandating the licensing of security guards. Some states have minimal requirements, while other state’s requirements are extensive. The licensing laws may require specific experience, initial training, periodic retraining, and if the officer is armed, additional requirements may exist.

Are Security Officers Trained as Required by Law and Your Business Requirements?

Diverse training methods and philosophies may vary and can create issues, so it is important that training follow mandated topics and additional topics that meet minimum state requirements and conform to the client’s business. These might include situations specific to the client, such as handling of hazardous materials, blood borne pathogens, and specialized equipment operations, etc.

Some security guard vendors have professional training program, while others are basically “hit or miss” operations. The security vendor should be required to identify and provide documentation for his particular training program, including the following:

  • The specific training topics and the learning objectives for each topic.
  • Copies of all initial and recurring training topic lesson plans, including the length of time of each topic presentation.
  • The manner in which the training was presented–lecture, online, group exercises and discussions, problem solving, etc.
  • The identification and qualifications of each topic presenter.
  • Proof that the individual actually attended the training, preferably with the individual’s signature acknowledging the training.
  • A testing program to determine the topic comprehension of each security officer.
  • Proof that the individual security officer attended mandatory continuing training sessions.

Are Security Officers Properly Equipped and Present a Professional Appearance?

The security officers should be equipped with distinctive uniforms identifying them as security officers. They should also be equipped with flashlights, appropriate keys and communications equipment. There should be a mandated standard for the cleanliness and appearance of all uniforms and equipment. Additional equipment as necessitated by specialized business operations must be provided.

How Are Individual Security Officers and Security Operations Supervised and Managed?

The lack of adequate supervision and management of the security officers and security operations are significant causes of negligent security claims. A negligent security claim can result in an average judgment of $600,000 plus attorney’s fees and loss to the reputation of the business and its owner or operator.

At a minimum, there should be at least one supervisory inspection on each shift that includes all security posts and activities. A security supervisor should be utilized on-site when possible; however, a single on-duty security officer cannot be considered a supervisor, as by definition a supervisor must have someone to supervise. When an on-site supervisor is not feasible, the security vendor should provide an off-site supervisor who is required to inspect the business at least once per shift. A security vendor manager should inspect the security site at least monthly. The business owner or his representative should inspect the security operations on a random basis to ensure compliance with contractual requirements. Each inspection should be documented and provided to the business client.

Has the Security Company or Its Employees Been Defendants in Security Negligence Litigation?

If a security company, its staff and officers have been defendants in a negligent security litigation claim that should not be an automatic disqualifier. It is necessary to review the court records to determine the circumstances of the claim and the outcome of the litigation. It is not unusual that a negligent security claim will be made but either dismissed at a later date or found in favor of the defendant. If the action is a justified claim, the matter will provide insight into the security vendor’s operations.

*Note: This article is presented for informational purposes only and is not intended to constitute legal advice.

 

About the Author:

Grayling D. Livingston is the founder and president of Get A Security Quote (GASQ), a search for hire, lead generation, and sales support-type service that supports contract security firms, to include security consulting, sales and marketing activity. GASQ work with end-users of contract security services who don’t want to own (or own) a full-time security staff and are looking for the best value for their money and expect the services to match the fees or services. For more information, visit www.gasq.us.

 

license and insurance, contract security company

 

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In-house or outsource security? Key considerations for hiring guard force

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In-house or outsource security? Key considerations for hiring guard force

by Grayling D. Livingston [topic: outsource security] | written for Security Info Watch |

In house or outsource security
Photo credit: (courtesy bigstockphoto.com/Yastremska)

As an end-user of security services, it is important to understand that the lowest price may not always signify the greatest value and that there are some benefits that are more important than price. The costs of high-risk security guard services are driven by valued-added services and benefits, not by price.

Are you concerned about the security of your premises, preventing break-ins and protecting your employees, customers, clients and vendors? Whether you are trying to decide between investing in an in-house security staff or turning over the non-core business function to an outside security firm, there are several things you should keep in mind when building your case for senior management buy-in for either option. First and foremost, every organization must weigh the potential costs for establishing an in-house security team or outsourcing the job to a third party.

Let’s say, for example, ABC Construction is building 300 new mansion homes at a cost of $1.5 million per house. The project manager is naturally concerned about the safety and security of the property, equipment and homeowners, and is looking for ways to keep assets protected. The crime statistics for the address of the property show high rates of property crimes, especially vandalism, burglary and trespassing.

After conducting a basic risk analysis, it is determined that the property is high-risk and the cost of a potential theft would be significant in heavy equipment loss given that the average cost of each piece of equipment is $150,000. The countermeasure proposed to mitigate the risk is to hire or outsource security firm to patrol the property around the clock. The cost to perform the function in-house is over $700,000 annually while the cost to outsource security function is $250,000 annually, resulting in a total net savings $450,000.

On the surface, it would seem like the decision to outsource security to a third party would be a no brainer given the cost savings. But just turning over a function as vital as security to the lowest bidder without conducting the proper due diligence would be ill-advised and potentially negligent.

Determining the Risk Level of a Facility or Property

The only valid method to determine the risk to a facility or property is to have a comprehensive risk assessment conducted by a qualified security risk management professional. The crimes committed on the property and in the adjacent neighborhood have significant impact on the reasonable and appropriate countermeasures to be employed at a facility or property. The risk assessment is a significant defense document in the event of litigation.

A “high risk” facility can be described as such based on the following considerations:

  • A facility that is open to the public with no access control.
  • A multi-occupancy facility that contains several stores, shops, or offices.
  • A location with a prior history of numerous reports of criminal activity within or on the property.
  • A location that sells or produces a high value items, such as a jewelry store, gun shop, marijuana store, etc.
  • A location that has previously contracted with armed security officers for a justifiable reason.
  • A location at or near where homeless and other undesirable individuals are known to loiter.

The normal completion timetable for conducting and reporting the risk assessment is dependent upon the type and size of the facility, the level of cooperation of the facility management, time to obtain records, and related activities. Experience has shown that the assessment of the average facility requires a minimum of 40 hours. The average professional has a business rate of $100 to $125 per hour plus expenses.

Expensing the risk assessment cost requires a business decision. The assessment cost can be a turn-off for those who do not realize the value of the assessment. If the guard services company requires a risk assessment before providing services and expects the client to pay the entire cost of the assessment, the client will go to another vendor because of the cost. Even if the client signs a contract with the risk assessment requirement prior to receiving services, the client may void the contract unless there is a specific contract provision that precludes voiding the contract after the risk assessment.

It is suggested that the security vendor and the client share the cost of the assessment on an equitable basis. If the facility is determined to be “high-risk,” the security vendor can increase the hourly billing rate for reimbursement of assessment cost. An hourly billing rate should not be finalized until completion of the assessment and the identification of reasonable and appropriate security measures. Prior to the finalization of the billing rate, a provisional billing rate could be identified and subject to revision upon completion of the assessment.

Combating Negligent Security Claims

Negligent security claims may result when there is a violation of the premises liability laws that specifies that personnel should be safe and secure within their work and business environment. There is no guarantee of absolute safety and security, but the security measures employed must be reasonable and appropriate to counter probable criminal risks. Court decisions have held that the business owner can outsource security duties, but cannot be relieved of responsibility for safety and security.

The types of problems that could result in a negligent security claim include:

  • Failure to conduct a risk assessment to identify potential risks.
  • Failure to have an adequate security operation.
  • Failure to properly supervise and manage in-house and contract security operations.
  • Failure to have qualified and properly trained security officers.
  • Failure to have documented safety and security policies and procedures.
  • Failure to enforce safety and security policies and procedures.
  • Failure to have an adequate and appropriate background investigation protocol.
  • Failure to have an appropriate activity and incident reporting program.

Return on Investment

Like an insurance policy, there is no definitive way to predict a tangible return on your financial investment. The intangible return comes from an increase in employee and customer moral due to an increased feeling of safety and security. The real return on your investment comes if the business becomes the defendant in a negligent security claim. Having conducted a risk assessment and developed reasonable and appropriate countermeasures will be a significant benefit in litigation.

Value can also come from both tangible and intangible factors. Tangible factors include the financial or other measurable benefits that customers get from using contract guard service, transfer of recruitment cost, transfer of employee benefits cost, transfer of training and retraining cost, just to name a few. As an end-user of security services, it is important to understand that the lowest price may not always signify the greatest value and that there are some benefits that are more important than price. The costs of high-risk security guard services are driven by valued-added services and benefits, not by price.

Not All Security Firms are Created Equal

The choice between a proprietary (in-house) guard force or contract guard services is one of quality control of personnel, loyalty, and reliability versus flexibility and cost. There are several advantages for a company to hire its own security staff in house. Some of the advantages include: selecting, training, and supervising your own security staff. Hiring you own security staff also creates a more direct relationship between the company and security personnel in comparison to bringing in contract security guards. In addition, security personnel hired directly have been known to be more reliable.
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The professional quality of security personnel and cost of some contract security guard firms varies for many reasons which affect the quality of services they provide. Some contract security firms do not have experienced security professionals who possess the appropriate client business skills and knowledge of client industry. Many security guard firms also do not have reasonable and appropriate training programs which could increase potential liability for their clients.

A highly qualified, licensed, insured, experienced high-risk security guard firm is worth their cost; an essential to handling myriad potential problems a business owner may face, as well as reducing potential negligent security litigation. For example, using a high-risk security service firm with armed security officers significantly elevates the potential risk for the business owner. It is highly recommend that you consult an attorney before hiring a service provider to protect your facility or property.

Additionally, a mature, well-trained, highly qualified and experienced security officer is required when there is a need for a firearm for protection of property and individuals. Situations may arise where a “shoot-don’t shoot” response is necessary on an immediate basis. Additional costs for using a high-risk security firm come from additional insurance, fair market value of security professionals, weapons licensing costs and advanced firearms training. The use of a high-risk security firm with armed security officers may also give the public the impression that the facility or property is dangerous.

About the Author:

Grayling D. Livingston is the founder and president of Get A Security Quote (GASQ), a search for hire, lead generation, and sales support-type service that support contract security firms, to include security consulting, sales and marketing activity. GASQ work with end-users of contract security services who don’t want to own (or own) a full-time security staff and are looking for the best value for their money and expect the services to match the fees or services. For more information, visit www.gasq.us.

 

in-house security, outsource security, outsourcing,  Security Executives

 

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