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Avoiding the pitfalls of price-driven security

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One of the big challenges facing every security director is how to cut costs while still maintaining a meaningful security program. As the cost of doing business rises, every organization is trying to spend less and still be effective and efficient.

Streamlined budgets have led to global purchasing, and buying security services is no longer the simple process that it used to be. Rarely do security directors make purchasing decisions by themselves anymore. Nor are these decisions based solely on protecting assets driven by security needs.

Instead, price has become the central focus of the buying decision. Security services are now treated in the same way as any other commodity that a company's procurement department purchases, whether computers, copy paper, light bulbs or toilet tissue. While this approach may seem sensible from a bottom line perspective, it really comes down to a "penny-wise, pound-foolish" philosophy, which leaves companies vulnerable and security directors holding the bag.

One of the inherent problems with focusing on price is that it overlooks the idiosyncrasies of security. Unlike tangible goods such as telephones or computers, security is a service provided by people. When you buy a computer, it's based on exact specifications -- gigahertz, RAM and the like. It's much more complicated when you buy personnel. Factors such as payroll taxes, insurance benefits, training, uniforms and the prevailing wage rate of a geographical area all come into play.

Moreover, there's a tendency to forget that the product providing the security service is human and, as such, has special needs to perform the job he or she is hired to do. A commodity doesn't get vacation days or need to learn how to do patrols or write incident reports. A commodity doesn't have to get dressed in the morning to look sharp so that visitors at the property or the company's CEO feel secure and comfortable.

But it's not until the quality of a company's security program suffers that the problems associated with price buys become evident. These days, to be competitive, security firms routinely lower their bids.

However, in order to lower a bid by even a few cents an hour, something has to be sacrificed. More likely than not, it's going to be something that is noticeable when it's cut from the program. If wage rates or benefits are reduced, it deters the best candidates from applying. If program initiatives such as CPR, First Aid or AED training are eliminated, the security staff won't be skilled enough to handle an emergency, which jeopardizes their ability to save lives.

Similarly, if customer service training for security officers is scaled back, it could ruin a company's first impression. As these and other security breakdowns occur, it reflects poorly on the security director, placing him or her in a tough position.

So what can a security director do? Although economics make it tempting for companies to allow price to dictate their buying decisions, they need to realize that when it comes to security, there are other ways to obtain efficiencies without eroding the end product. Purchasing security services is a fairly new item for company procurement departments. Conversely, security directors have the knowledge and expertise to know their companies' security needs. Instead of having a diminished role in the buying decision, security directors should take the lead so that procurement departments can make informed decisions and not act blindly.

First, a security audit needs to be performed to review the principal elements of the program. From the findings, the most cost efficient and effective security solutions can be determined. Better use of manpower, better deployment models, and the integration of enhanced technologies are all examples of how a more efficient security environment can be created without sacrificing the program's elements.

Next, a level playing field needs to be established. To do this, security directors need to document and fully analyze the program ingredients supplied by vendors such as wages, payroll taxes, the level of benefits and training hours. Vendors need to provide written documentation to ensure that their programs will be left intact. Some of the questions that need to be addressed include the following: What are the elements of the training program? How will the services provided be documented? What is the business review process that ensures that all of the conditions and elements have been met? What is the exact level of benefits?

After this information has been gathered, security directors need to make sure that the elements of the program are non-negotiable. This way during the bidding process, procurement departments will be making "apples to apples" comparisons. It will also allow quality to outshine the cheapest price.


Coleman is vice president of commercial real estate for AlliedBarton Security Services

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