Stuart Lowden – Forget Business Licensing, we need much more than that…

Stuart Lowden – Executive Director of Wilson James

Stuart Lowden CSyP FSyI, executive director of Wilson James, winner of the 2015 Security Excellence Award – Security Guarding Company of the Year – discusses the need for the industry to look at higher standards within itself.

“I think we’ve now accepted that Business Licensing will be a long time coming, if at all. And if it comes it probably won’t be anything like the model originally envisaged, and broadly accepted, by the manned services sector. Unfortunately, it will probably be closer to what became known as the Licensing Lite version, a compromise model designed to appease those demanding lesser regulation.

“There are those who will argue that some form of licensing is better than nothing at all, particularly if it helps the Security Industry Authority (SIA) in driving criminality out of the industry. But the concerns I have are centred on lessons learned from the Approved Contractors Scheme (ACS) and the unwitting part it has played in reducing investment in the manned services industry. Don’t get me wrong, both company licensing and ACS are useful tools that can be used to drive up standards within the industry, but not if they are the only tools in the box. What the industry needs is a third and higher measurement mechanism, one that puts company licensing and ACS into context.

“Before exploring this thought further we need to revisit ACS and understand why it has played a part in driving down investment.

“When the ACS was introduced many companies, particularly those operating at higher professional standards, saw it as an extra tax on the industry and its customers. It was the ticket to pass Go, allowing companies to ’employ and deploy’, thus avoiding the crippling delays while waiting for staff to get their licenses. But, we assured ourselves, if ACS becomes a badge of honour too, meaning we are the best of the best, surely that will allow us to differentiate ourselves from the merely adequate.

“But of course that was not how the SIA saw things. Their primary mission, and you can’t blame them for this, was to clean up the public facing, disreputable side of the licensed sector. It was not for them to control market forces. So they set a bar for ACS, an entry point, that was relatively simple, one that would encourage the majority to apply to join.

“And I suppose the industry didn’t see that as a problem. We wanted to have a cleaner, more reputable industry, the economy was relatively vibrant at the time, our collective customer base seemed to buy into this greater professionalism, what could possible go wrong…

“As we entered 2008 the first signs of our industry’s Perfect Storm could be seen. The economy was starting to dip, budgets were being tightened, many customers were re-evaluating their buying criteria and their procurement methods. There was a new urgency to reduce the cost base, so the security sector, and much of the service industry at large, was put under the microscope.

“Perhaps a joined up industry, singing off the same song sheet might have been able to withstand this greater scrutiny. However, it’s not a joined up industry, it never has been truly joined up and it feels like it’s got more fractured over the past six years. Today it contains a vast range of different players, each with their own different business models. Some deliver security as a specialist service, sometimes within a wider security offering, others deliver it as part of a package of services. And it has become fiercely competitive, almost to the point of irresponsibility, particularly where margins can be sacrificed on one service, loss-leading in effect, to help gain margin on other, non-security products. The inability of our industry to price work consistently has meant that contracts are traded too often on grounds of price rather than service quality. Buyers cannot be blamed if they assume that this low margin, commodity approach is merely the new norm, just market forces at work.

“The creation of ACS has not helped in this perception. ACS has been strongly promoted by the SIA and has become the Corgi badge for the sector. And while this has served a very useful purpose in driving up standards in the lower reaches of the industry this has been done at the expense of those already operating to high standards. That is not to say that ACS hasn’t helped us all manage our processes better but it has unwittingly eroded the value of professionalism. It has levelled the playing field so that all 800+ providers appear to be equal, which clearly can’t be true.

“Before ACS, the more professional companies were able to trade on that very level of professionalism. In the absence of a definitive, clearly understood benchmark, buyers were forced to do their homework, do their own due diligence, visit reference sites, speak to other customers. They might take solace in BSIA membership or NSI Gold inspection but they had to understand the nuance of each and its relevance to their needs. Today, ACS has made things much simpler. This new government stamp has made it so much easier to buy on price and so much harder to promote quality of service.

“Now let’s add one last ingredient to this mix

“The final contributing factor has been the industry’s willingness to trim its support costs and operating overhead to the bone to retain or win business. Sacrificed in this cost-cutting drive has been investment in site-based training, investment in wider personal development, investment in on-the-ground management. As a result, I would estimate that the cost of doing business has been trimmed by between 4-6 % over the past six years and only 1-2% has been through being more efficient. There are obvious exceptions to the rule, I’d like to think we’re one of them, but I think our industry, as a whole, has stripped out of its operational base millions of pounds worth of valuable investment.

“And at what cost to the future of our sector? I am concerned that we are slipping backwards towards an increasingly commoditised industry, where a reducing number of enlightened buyers see the value of a professional service, where the buyers default is that we are simply ‘as bad as each other’. And yes of course the sector will trot out exemplar clients where the supplier has been innovative, gone the extra mile, invested in things. Of course we can all turn it on when we have to. But what of the underlying health of our sector, what of our ability to persuade people generally to join our industry? What are we doing about building careers within our sector? What if it’s now normal that security officers don’t see managers anymore, process welfare queries through a help desk, get the bare minimum training.

“The recession has caused much of this damage but it has also helped paper over the cracks. Never has labour been so available, staff so unwilling to change jobs. That false level of stability has allowed the sector to strip out operational management, trim back training budgets, suspend personal development initiatives. It’s gone too far of course and it’s hard to see margins returning to where they need to be to guarantee consistently high levels of service. Things might change if the economy picks up and the service industry coughs into life again. The better employees might return to old jobs or seek our industries better able or willing to look after and develop them. That will make things interesting for all of us.

“So where do we go from here?

“We can’t change the economy, we can only try to predict when it might improve and be ready for the staff churn that will ensue. We can’t change the competitive drivers within our sector. It is what it is, we have to improve our offering so that buyers don’t think of us as a mere commodity.
We can’t stop certain providers choosing to treat their staff as a mere commodity, there is clearly a market for that service, they are comfortable supplying it
We can’t change the mindset of the Regulator and expect it to do us any favours. We certainly can’t change ACS to any meaningful degree, not in the short term at least

“What we can and must do is to take responsibility for professionalism within our sector. It is not the job of the SIA to do this for us. Neither do I believe that existing British Standards are sufficiently different from ACS to raise the bar enough.

“We need to start by developing one or more higher standards that spell out what a truly professional service looks like. These standards need to go well beyond the ACS entry point and existing British Standards. They need to be achievable but stretching, but most of all they need to be tangible differentiators, clearly defined so that they can be easily explained and justified to buyers. We need to use these standards to ‘sell’ professionalism to buyers and destroy the myth that all ACS companies are equal, they are clearly not.

“The SIA have done a good job of addressing the quality standards at the base of our sector’s quality triangle. In essence the SIA is delivering the push from below. We now need the collective will to move the industry on from there. We need to create something that will pull companies up that triangle, hopefully regaining the momentum we had at the very start of Regulation ten years ago”.

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