Stuart Lodge – Security – in-house or contract?

Stuart Lodge, CEO of Lodge Service
Stuart Lodge, CEO of Lodge Service

“Contract security services… an expensive luxury?… nice to have but are they critical to the business? … are they value for money?”

Every day, there are questions like these raised in boardrooms around the UK as companies evaluate their security needs..

In deciding whether to retain an existing in-house team or use a contractor, the major question has to be this: why do we need security; what are the benefits? What are the costs?

Key criteria for comparing in-house and contract services, and the candidate service providers, are as follows:-

1.    Capability to address identified security issues in line with the business’s core strategy
2.    Proof of a cost-effective solution, with measured results –  clear KPIs, with a target ROI (Return on Investment)
3.    A flexible structure and programme with the capacity to adapt to changing risks, work practices and business needs
4.    Professionalism, and engagement of the workforce and other stakeholders
5.    Lines of responsibility and reporting: how security will be held to account

Then the task is to determine the specification for security support – whether it includes guarding, remote monitoring and access control, store detectives, investigations, and technical and corporate support.

A major determinant is going to be cost of course. Let’s examine an example of a retail business, looking at the budget for cover by a store detective.

In-House vs Contract Costs

The total cost of a professionally-trained store detective includes salary, NI, car and travel.

For a 40 hour contract week we deduct holidays and average annual sickness, to produce a productive deployment of 33 hours per week.

For security work by a third party, payment is only due on attendance and the rate is inclusive of travel and bank holiday deployment. The annual cost of deployment works out at some 31 per cent less than in-house.

Evaluating overall value, there are wider issues to consider. The potential advantages of internal recruitment can be broadly summarised as follows: –

1.    Loyalty – staff probably have a better understanding of the business
2.    Training – this can be more specific to the core business operation
3.    Management – teams can be deployed and managed within normal business processes
4.    Personnel – there is direct control over recruitment and training with in-house HR teams

For a Third-Party Contract

1.    Cost, of course – some 31 per cent cheaper
2.    Flexibility – deploy anywhere, any time; upscale or downscale as required. Remove poor productive operatives without the restrictions
3.    Training and court time – no cost
4.    Insurance – for any claims against operative’s actions then liability is with the contractor
5.    Unplanned absence – no cost

There is also a compromise option: retaining a core in-house capability and supplementing it with a contract service, to provide flexibility and additional cover at peak times, or deal with specific threats or points of vulnerability.

Based on cost comparison alone, contract wins over in-house staffing: but where the service is further enhanced with good training and professional delivery by the contractor, then outsourcing the security function would be difficult to argue against.

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