Faculty Advisor: Contract Security Challenges and Strategies: Part I

Q. Our annual spending for uniformed security officers is nearly 80 percent of my total budget. Senior leadership is always looking at the budget and whenever we have a cost-reduction initiative, security is one of the top three expenses challenged. How can I make sure that I have the right contract in place at the best price?

A. Contract security is often a large ticket item on any company’s P&L; unavoidably drawing the attention and sometimes scrutiny to your annual spend. Having the right processes in place and the right team of people assigned to support those processes can be an ongoing challenge, especially with the steady rate of change within corporate America today.

Some contributors that can dramatically impact your ability to maintain the best ROI for your security contract include:

• mergers & acquisitions
• internal company realignment
• rapid geographic growth
• significant increases or decreases to employee headcount
• annualized budget reductions/ less security staff

Amid these changes, security contract management can get lost in the shuffle, particularly when there are no apparent or known failures or deficiencies within your current program. Make the time when a change occurs to re-evaluate your security services; it can significantly impact the effectiveness of your program and the total spend.

First, begin by identifying the optimal goals for your security program and determining if they consistently are being met. Next, designate a small diverse team to assess the current security contract and the processes that are in place. Are the processes getting the desired results? Have they been reviewed or compared to recent industry best practices for improved efficiency? Do your internal and external clients perceive security as a valuable function? Oftentimes, putting your current program under the microscope will flag some easy to identify opportunities for improvement, and in some cases save money.

Assess your current security provider. If the results have consistently been strong and there is a proven record of partnership to tackle the tough challenges and to respond quickly to immediate needs, you may have the best company in place. Working with an existing contractor to improve current processes is the easiest way to achieve different, more effective results. Your contractor proactively should demonstrate a willingness to collaborate, share industry benchmarks and best practices, introduce new technology, and to identify cost savings during each contract period.

Contract renewals should include market adjustments to both wages and mark ups; it is important to remain competitive in the marketplace. Assess your security officer wages by geography and responsibility to insure your provider can attract and retain the right talent to perform effectively. The cost of turnover is more than just hard dollars. There are proven methods beyond just pay rates to attract and retain qualified personnel. Partner with your security provider to insure you have the best practices in place for high retention rates.

While some companies require contract bids upon every renewal sometimes there is an argument to renew with an existing partner if a proven ROI exists. Review your KPIs to insure you have the best measurements to drive performance; track hard & soft dollar savings. If you need to go out to bid, take advantage of the opportunity by asking the right questions in the RFP and clearly defining your security department goals at the onset of the process. Regardless of a change or not, you can learn a lot by going through the process and ultimately increase the value of your security program as a whole.  

Response provided by Heather O’Brien, former Security Executive Council Content Expert Faculty.

Heather answers a related question on finding the right KPIs to demonstrate security services value.