Outsourcing: Be Prepared for the call

Nov 1, 1999 12:00 PM, Rolland G. Watson

Sometime during your security career, it is likely your corporation will consider outsourcing. Outsourcing is a reduction in personnel achieved by shifting organizational responsibility to outside agencies. It occurs every day in financial institutions and other large organizations.

There may come a day when you are approached by the chief executive officer of your institution and will be instructed to outsource your security service providers. At that moment, you should be prepared to explain, demonstrate, and provide a cost-benefit analysis either for or against outsourcing. Your security officers hope that you, as their representative, will take an approach to save their jobs.

If you fail to retain your force, your job will change; if you retain your force, you may be asked to work more efficiently. In either instance, you must know all costs, pros and cons, and other specifics for both alternatives.

You will become involved if an outsource security survey is needed and in the contracting process. These duties are not to be taken lightly; they will require all your management and human relations skills to ensure your organization has the best possible security available at an affordable price. The selection and contracting process will consume time you would ordinarily spend as a supervisor; plan on alternatives for completing your day-to-day duties.

Even if the corporation has decided to outsource, they don't want inferior security services. Every organization wants quality at the most affordable price. You will be responsible for obtaining and contracting for that quality. The service will be what you make it. Here are some fundamentals of determining cost.

Determining Cost Several factors - all equally important must be included when costs are determined.

You should:

* Conduct a thorough cost-benefit analysis of both your proprietary service and anticipated contract service.

* Identify liability issues and costs. Consult with the supplier of your organization's current liability policy for your proprietary force. Determine:

a) What are your present costs?

b) How much can you save if you outsource?

In some cases, depending on the type of business, there will be no savings. Financial institutions, for example, have a blanket liability policy that covering the proprietary force at no additional cost. Determine liability coverage and cost for:

a) armed proprietary;

b) armed contract;

c) unarmed proprietary; and

d) unarmed contract.

* Quantify wages and benefits. How do you compensate your proprietary force? What is the cost of your organization's benefits package? (Traditionally, a benefit package may be 14 to 41 percent above salary.) In outsourcing, you should identify:

a) current salary and benefits;

b) local scales in relation to benefits and salary;

c) incremental longevity proprietary scales;

d) contract cost-per-hour versus salary per hour;

e) contract benefits; and

f) relative retention and turnover rates between proprietary and contract.

It is not unheard-of for some contract security forces to experience turnover rates of more than 800 percent per year. Would a turnover rate of that proportion be toleratedby your directors, suppliers and customers?

The article was adapted from "Security Supervision: Theory and Practice of Asset Protection," published by Butterworth-Heinemann. Reprinted with permission. The author, Rolland Watson, is protection/investigation chief for Bank IV Oklahoma in Tulsa. He is a certified instructor in private security and private investigations in the state of Oklahoma. He is considered an expert in financial security and has had policy manuals published by several financial institutions. Watson is a certified security supervisor (CSS) and a certified protection officer (CPO).

Focusing on integrating security equipment and technology with the human element - private security officers - to maximize security system effectiveness, the column addresses the roles security officers play in today's systems.

The author of this month's column, Michael A. Stugrin, CPP, is corporate vice president of strategic planning and marketing for Pinkerton. He has a Ph.D. in English from Pennsylvania State University. His background includes many years in the computer industry.

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