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  • NRM_Oz
    replied
    Labour Oncosts are the biggest killer here and it was discussed in an unrelated post of going armed and requiring almost all sites be armed to cover the additional costs. A standard company security licence is going to cost $500.00 US + uniforms, etc and equipment + staffing provisions + recruitment and the list goes on.

    Some security companies work on sheer volume (1000 bodies x $1.50 / hr GP) where others like myself when I ran my firm worked on margins of $18.00 / hr) as I did not do sheer volume work but high risk clients. Patrol services are a good example of sheer volume needed to cover costs and ensure clients are close to each other as you pay for a bum in a car, a car, running costs and on-costs if that person does 10 clients or 100 clients. Personally I hated patrols because clients would come and go and come back again when their discount services were no longer delivering on their promises.

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  • Lynch Mob
    replied
    There is not a "right" answer to the outsourcing issue. Depending on the situation, outsourcing may make sense and in other cases it will not make any sense.

    Let me put out the disclaimer that my company does loss prevention outsourcing (not security or shoplifting), so I am a bit biased.

    Outsourcing often does cost a company significantly less than in-house. The comparison usually stops at hourly wages, but to employ someone in-house there are many more costs that drive up the price. You have hourly pay, benefits, costs of turnover, costs of training, insurance, and travel. You also assume all liability for the individual. In the end, these costs are not usually generating any profit for a retail company. Most companies lose money on their in-house services, and at best break even.

    The reason why outsourcing can save money is because the outsourcing company can leverage more resources across multiple companies. They are specialized in providing a service and SHOULD have better processes in place for recruitment and training than a retail company does. The outsourcing company cannot afford to lose money, their entire profit is based upon getting paid for the services they provide. In my business, I can actually pay my people more than most in-house LP programs can, because we profit from the skills of our people. In-house LP is generally seen as a cost, and the company is always seeking to reduce those costs, which means lower payroll.

    I also don't believe that you get any more committment to your company by in-house vs. outsourcing. Very few employees are ever committed to their company, they are just committed to getting paid. If they are supervised improperly, you will get lousy people regardless of who is signing their check. If you have bad experiences with outsourcing security, it is probably due to the supervisors and has nothing to do with the individual at store level.

    Unfortunately, there are many companies out there that take shortcuts. These are usually poor business people, and they are short-sighted about their business. For me, I cannot afford to have a slacker on my team. I cannot afford to be in a position where one person could blow a multi-million dollar contract. As a result, I must demand a higher level of performance from my people than an in-house department must demand. I realize not all companies feel the same way, and that is what makes it more difficult to get business, but I believe that any good responsible outsourcing company will look at the business in this way.

    In the end, it is up to the decision makers to figure out which method will save money. If Walgreens had been a little more responsible, they could have gotten away from this incident almost untouched. However, they were just looking at their expense line without consideration of the impact of their decision. And, considering you read about many more lawsuits that come from in-house LP and security compared to outsourced services, I think it becomes clear that there is just as much risk, if not more, by employing those people in-house.

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  • N. A. Corbier
    replied
    There are contractual obligations that clients can force on security companies, with stiff contractual penalties, to prevent the warm body-do nothing security guard problem.

    If the guard service firm gets 30 a man hour for an LP gig, and gets hit with a bunch of requirements, then they'll actually fulfill the requirements. Yes, it means they can't put the 5.75 dollar an hour guard with no training out there, but there are plenty of other contracts that the normal minimum prevailing wage guard can be used at to make up for the lower profit on the site.

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  • Mr. Security
    replied
    Makes sense. While your experience in switching to contract security has been positive, I have to wonder if that is the rule with other sites. From what I have seen, contract is plagued with low wages, high turnover, and employees who simply lack the conscientiousness that in-house is more likely to have.

    Some of the blame is with the clients themselves who really don't want security to be proactive and only contract with security because of legal and/or insurance reasons. That being said, there is plenty of blame left over for the contract companies as I have all ready explained.

    Bottom line: I'll go with in-house over contract anytime.

    Leave a comment:


  • Curtis Baillie
    replied
    Originally posted by Mr. Security View Post
    I could see saving money on contract if the in-house had been employed for several years and had accrued raises over time. Was that the basis for the savings, or was it due to the rising cost of health care coverage, something that contract companies usually skimp on?
    It was a combination of many factors, including salary and the expense of providing company cars to each team.

    Leave a comment:


  • Mr. Security
    replied
    Curtis

    I could see saving money on contract if the in-house had been employed for several years and had accrued raises over time. Was that the basis for the savings, or was it due to the rising cost of health care coverage, something that contract companies usually skimp on?

    Leave a comment:


  • Curtis Baillie
    replied
    Originally posted by S Messina View Post
    "Incredibly, the expert witness hired by defendants testified that the President of the California's Bureau of Security and Investigative Services informed him that loss prevention agents do not have to be licensed. The jury disbelieved this testimony and found that the law requires loss prevention agents to be licensed, which requires finger prints to be sent to the California Department of Justice and the FBI."

    I know this is just a news article but I find it funny that a jury would "disbelieve" the "Expert" witness and then "find" that the law says something different from the experts testimony. Where did they "find" the Law?

    I could be wrong, but as far as I am aware, LP agents are NOT required to be licensed here in CA. If anyone knows the Law that requires it I would love to know about it, I have a lot of friends who work as LP's and they did not get any license.

    That being said, if the LP is employed by a Private Patrol Operator as a security guard, then they are required to have a guard card which includes the background checks.
    In this case the LP agent was in fact an employee of a security guard company that had contracted with Walgreens to provide LP services. He was required to be licensed. This was made clear in the article.

    As far as disblief - I'm sure the plaintiff's attorney provided their own expert who blew the defense expert out of the water, and rightfully so.

    Leave a comment:


  • S Messina
    replied
    "Incredibly, the expert witness hired by defendants testified that the President of the California's Bureau of Security and Investigative Services informed him that loss prevention agents do not have to be licensed. The jury disbelieved this testimony and found that the law requires loss prevention agents to be licensed, which requires finger prints to be sent to the California Department of Justice and the FBI."

    I know this is just a news article but I find it funny that a jury would "disbelieve" the "Expert" witness and then "find" that the law says something different from the experts testimony. Where did they "find" the Law?

    I could be wrong, but as far as I am aware, LP agents are NOT required to be licensed here in CA. If anyone knows the Law that requires it I would love to know about it, I have a lot of friends who work as LP's and they did not get any license.

    That being said, if the LP is employed by a Private Patrol Operator as a security guard, then they are required to have a guard card which includes the background checks.

    Leave a comment:


  • NRM_Oz
    replied
    Food for thought

    Something I was discussing just now with my crew was:

    1. If you get a great team of contract S/O's - they can resign and you don't know WHOM you will end up with. Also you have less control over WHOM is replaced and their aptitude to the work involved.

    2. Contract staff just come and go - they don't care if your company makes any NP for the month / year - provided they get paid.

    3. Employees can become stale / stagnant and it is up to the management team to ensure this does not happen.

    4. Both employees and contract S/O's will steal the eye from a needle if they wanted to and it is easy to blame someone else

    5. Collusion between employees for dishonesty can be more common than documented.

    Leave a comment:


  • Curtis Baillie
    replied
    Originally posted by SecTrainer View Post
    I have a little difficulty understanding how there would be reduced liability, presuming that you would have been the one to write the manual for either contract or in-house security, and presuming also that you would have had the power to have an in-house officer removed just as you did a contract officer.

    These things being the same either way, why the difference?

    I'd have to see the details of a 45% reduction in salaries and benefits before concluding that it was derived from staffing efficiencies, rather than at the expense of the LPOs by way of lower wages and/or cuts in benefits. Certainly, this is atypical of the difference that most companies would realize in labor costs between in-house and contract personnel WHEN the same hiring, training, equipment and supervisory standards are maintained. If there was that much "fat" in the in-house service program (unneeded officers, too much supervisory staff, etc.), they could have realized at least some of those savings without contracting, simply by trimming the fat themselves.

    A company switching to contract services is very lucky in most cases to realize true labor savings of 20% with a contract service...and even that is usually only during the early years of a multiyear contract. Toward the middle and late years of such contracts, the typical experience is that the savings dwindle to around 5 to 10%.
    Of course, my company was not absolved from liability, but as long as I was enforcing the terms of the contract, training requirements and performing all of the necessary due delligence, the contract company would bear the brunt of the liability.

    In the case of savings to my company, the in-house staff salaries and benefits were substantially more than a uniformed contract security company as you are describing. These were very high salaried management positions with higher that industry standard benefits. You were not comparing apples to apples.

    In the case of the recent Wallgreens - S&J Security court decision it appears that Wallgreens has a equal or greater liability as it would appear that they failed to perform their due delligence.

    Leave a comment:


  • SecTrainer
    replied
    Originally posted by Curtis Baillie View Post
    Here's what I wrote last May when I was asked about the savings I experienced when switching from in-house to outsourced shoplifter apprehension services.

    Savings consisted of:

    Salaries/Benefits: (Monthly) In-house - $28,000 Contract - $15,500

    Company Vehicles: (Yearly) $50,000

    Reduced Liability: In the years I used contract services there was one "nonsense" suit settled for $500 by the contract company. This was not the case with in-house staff. I won't divulge figures here.

    I wrote the policy/procedure manual that was followed by the contract company staff. I could have any contract employee removed.

    Shoplift apprehensions increased an average of 200 per month, therefore Civil Demand income sharply increased. I was able to take the savings and invest it in programs that further saved the company money.
    Yes, I've seen this before and admit that it raised some questions in my mind, so I might as well ask them now.

    First, I have a little difficulty understanding how there would be reduced liability or improved performance, presuming that you would have been the one to write the manual for either contract or in-house security, and presuming also that you would have had the power to have an in-house officer removed just as you did a contract officer.

    There is a myth that it is harder to fire employees than to remove contract personnel, but in the case of at-will employees this is simply not true if a company just knows its labor law. All you need is the appropriate policies in place and documentation. I have fired officers on the spot without ever once having any repercussions, but I did it right, and they had violated clear policies that provided for instant termination. In other cases, it was necessary to step through the "progressive discipline" procedure established by the company, but this had its benefits too, because it actually saved us some very good officers. This, of course, is the whole point of having progressive discipline.

    The exception in terms of firing at-will would be a union situation, of course, but a union contract would also likely hinder a vendor's client from removing an officer at will as well.

    The point is, these two things (procedures and the ability to remove bad or ineffective officers) being the same either way, why would there be any difference in performance and/or liability? I must not be seeing something because it just doesn't make sense to me.

    I can think of "reasons" a vendor's staff might make more arrests, but they are bad ones. For instance, in-house staff might be more reluctant to deal with employee theft than contracted staff. I say this is a bad "reason" for poor LPO performance because it isn't difficult at all to spot such behavior by the LPOs, nor to get them to see the light of day on this excuse. Ditto in the case of staff who might begin to collude with friends or outsiders.

    Second, I'd have to see the details of a 45% reduction in salaries and benefits before concluding that it was derived entirely from staffing efficiencies, and not at the expense of LPOs by way of lower wages and/or cuts in benefits vis-a-vis the in-house program. Certainly, this is not typical of the savings that most companies would realize in labor costs - again assuming that the same hiring, training, equipment and supervisory quality standards are maintained. And, if there was that much "fat" in the in-house service program (unneeded officers, too much supervisory staff, etc.), they could have realized at least some of those savings without contracting, simply by trimming the fat themselves.

    A company switching to contract services is very lucky in most cases to realize true labor savings of 20 - 25% with a contract service (unless there is a drastic reduction in personnel quality)...and even those savings are usually only realized during the early years of a multiyear contract. Toward the middle and late years of such contracts, the typical savings will dwindle to around 5 to 10%, presuming that there is a maximum turnover or retention clause with penalties, and a clause providing for required annual personnel wage increases. Any good contract will have both of these clauses, of course, in order to be sure the contractor is paying its personnel properly and minimizing turnover.

    The only other place I can think of for such savings to come from would be staffing flexibility, i.e. not having to have "headroom" with extra in-house staff in order to meet increased demands during special shopping seasons, etc. A contract service can provide extra people on a temporary basis just while they are needed...but then you get a different set of problems, and I can tell you stories about those. "Reduced liability" is certainly not a feature of temporary people, in my experience.

    Vendors tout efficiencies, and it is sometimes true that a vendor can be more efficient in some ways than in-house programs - "sometimes" being the operative word. However, it is also true that in many cases what clients are comparing the vendor to is, in fact, a highly inefficient, wasteful in-house program. If so, the best solution very often is not to jump ship, but to trim your own in-house sails because a vendor will have no real advantage over a well-run, highly-efficient in-house program when it comes to other advantages of in-house programs that a vendor cannot hope to match.
    Last edited by SecTrainer; 12-10-2007, 09:13 AM.

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  • Curtis Baillie
    replied
    Originally posted by SecTrainer;47619[I
    ]'It's always dangerous to make generalizations, of course, but it seems to me that there is much more in the way of cheesy practices, corner-cutting and downright malfeasance with outsourcing security vendors than there is with in-house security programs.

    It never seems to occur to a company that is considering moving to an outsourced solution to ask themselves this simple question: "If it costs me $20 an hour to field a qualified (meaning: properly selected, trained, equipped and supervised) in-house officer, AND, assuming the vendor must add profit to his costs, just how is Sleazebag Security Company going to provide the SAME quality of program for a billing rate of $17 an hour?"'[/I]
    Here's what I wrote last May when I was asked about the savings I experienced when switching from in-house to outsourced shoplifter apprehension services.

    Savings consisted of:

    Salaries/Benefits: (Monthly) In-house - $28,000 Contract - $15,500

    Company Vehicles: (Yearly) $50,000

    Reduced Liability: In the years I used contract services there was one "nonsense" suit settled for $500 by the contract company. This was not the case with in-house staff. I won't divulge figures here.

    I wrote the policy/procedure manual that was followed by the contract company staff. I could have any contract employee removed.

    Shoplift apprehensions increased an average of 200 per month, therefore Civil Demand income sharply increased. I was able to take the savings and invest it in programs that further saved the company money.

    Leave a comment:


  • Maelstrom
    replied
    Sub-contracting out could be considered by many to be a disgusting practice also, from the point-of-view of the consumer hiring/contracting A1 Security on the Friday only to see 'Bottom Feeder Security' working the contract the following Monday would seem a little inappropriate... something that could be likened to buying an F100 pickup only to be left riding a Vespa scooter!

    Leave a comment:


  • NRM_Oz
    replied
    101% agreed Sec Trainer. Taking over this role I fired all contracted security staff because of the quality of staff and those not even turning up or sling-shotting from site to site to pretend someone is on site. I then got as many "MUM S/O's" who work school hours and are happy for the 6.5 hours a shift to be home for their kids from school. These ladies are perfect for our stores and happy to be paid 8 hours to keep moving around key risk stores. But it costs us less than running it through a contract company as they are paid a premium to work for us but still we are 12-14% cheaper than going through a contract company - besides female S/O's are very hard to find.

    Leave a comment:


  • SecTrainer
    replied
    It's always dangerous to make generalizations, of course, but it seems to me that there is much more in the way of cheesy practices, corner-cutting and downright malfeasance with outsourcing security vendors than there is with in-house security programs.

    It never seems to occur to a company that is considering moving to an outsourced solution to ask themselves this simple question: "If it costs me $20 an hour to field a qualified (meaning: properly selected, trained, equipped and supervised) in-house officer, AND, assuming the vendor must add profit to his costs, just how is Sleazebag Security Company going to provide the SAME quality of program for a billing rate of $17 an hour?"

    The simple truth is that the cost advantages that many vendors claim to have over in-house programs either don't exist at all, or they simply don't add up to the $3 per hour difference. Either something is going to get cut or done on the cheap, you will be lied to about the services you are actually receiving, OR you're looking at a "loss-leader" billing rate that will rise significantly when it comes time for contract renewal.

    The use of "loss-leader" rates is one disgusting and, in my opinion, unethical practice in the vendor industry. A vendor that can afford to do so (usually the big ones) will quote an initial rate that they actually lose money on, driving smaller and perhaps even more conscientious companies out of the market. These scavengers view the loss as a cost of "purchasing" market space, just like advertising and other forms of marketing. Then, once they've hogged the market space and driven their smaller competitors out of business, their clients will discover that they have fewer choices when contract renewal rolls around, and no way to deal with the new higher rates except to capitulate or start up their own in-house programs again. Since starting up their own program again will usually involve even higher costs (starting with finding a new security manager, having fired theirs), very few will choose this option.

    Leave a comment:

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