Facing up to the challenges of SIA regulation

Everyone in the security industry, and particularly the manned security sector, is aware of the issue of licensing – arguably the most significant development in the last 20 years, and one with potentially far-reaching consequences. At present, companies are focusing on the ‘today’ and what resources they need to have in place in order to meet the Government’s challenge head on.

For many, especially the larger companies, licensing is a logistical headache requiring specific project teams and managers to ensure nothing is missed. It demands almost daily liaison with the Security Industry Authority (SIA) on various issues that inevitably arise with an exercise of this magnitude, even down to ensuring that application forms are completed correctly and have the proper identification documents attached. Apparently, many of the door supervisor application forms were rejected straight away because of errors and incorrect ID – an easy mistake to avoid.

When considering a business of our size, meeting the SIA’s deadlines means training more than 100 security officers per week, liaising with the external examination body (as we are obliged to add the examination pass number to the application form), assisting the officers to complete all of the paperwork (if required) and then submitting the forms.

In common with other security companies, the reactions from individual security officers to licensing have varied, although the majority appear to have welcomed the extra training and agree that the introduction of licensing will raise standards in the industry. They believe that, ultimately, they will be better off in terms of both career progression and benefits.

Needless to say, if our officers are not licensed by March 2006, then we’ll not be allowed to employ them. Neither will any other private sector manned security company for that matter.

Most of our officers view regulation as a positive move towards increasing professionalism in the security manpower sector, and the conflict management training is most definitely being well received. If our experience is indicative of an industry-wide view, then there is much to cheer.

Facing up to the challenge

That said, there are a number of challenges worth highlighting. First, today it’s not atypical for a manned security workforce to include a large number of operatives from abroad. This will mean obtaining overseas criminality checks. It seems wise, therefore, to prioritise this group of security officers as it will most likely take longer to process their applications. There are still something like 20 countries about which the SIA has not yet provided details of the overseas authorities that the security officer should apply to for a criminality check. The industry must continue to work closely with the SIA on this aspect with a view to maximising the number of licensed and trained security officers available.

For 2005, manpower businesses have invested heavily to meet the SIA deadlines. Aside from the licence cost of £190, and £35 for the registering of qualifications, we’ve also had to take into account other ‘real’ costs. Who pays for the trainers? Who pays for the cover provided while the officers are off-site in training? Who covers for the management teams and their time spent liaising with the SIA? It is easy to believe figures like £600 for the cost of licensing per individual on this basis.

The degree to which these costs are passed on to the customer during 2005 will vary from security company to security company, given the nip and tuck of competition. However, the costs are there and are being incurred.

If one looks at the recent return on sales percentages of, say, the Top 10 players in the industry (and I realise you have to work a little with the numbers to discern the real profitability of the purely guarding sectors as a number of the players operate in other parts of the security market), from a strictly business perspective it is not a sustainable position to absorb the costs.

The next two years, 2006 and 2007, will be a very different story in terms of costs and pricing. That is a certainty.

By the time we reach March 2006, we will all have a more accurate idea of the proportion of the overall workforce currently employed in the security sector that will not be able to obtain a licence. Estimates of between 15% and 30% have been quoted and, if these prove to be correct, then new security officers must be recruited into the profession.

Against such a background, there will inevitably be a limited supply of good quality, trained and licensed security officers. Wage costs – and by that we mean not just pay but Terms and Conditions of contract as well – should increase significantly in years two and three as security companies endeavour to retain individuals of the right calibre, and attract and train new entrants into the sector.

Possibly, we will not see this until years two and three of licensing in England and Wales as people begin to understand the true worth of the regulated security officer. The industry will also be affected in 2007-2008 by revisions to the Working Time Directive, which would impose tighter restrictions on opting out and an increased administrative burden on employers to keep records on those employees who have opted out.

Drawing some important parallels

An overview of other markets draws some interesting parallels. In Australia, for example, there is a licensing regime for all of the security industry, manpower as well as electronics, which has been in place for some time now. Although federal criminality checks are undertaken, licensing is a state-based regime.

There are different grades of licence ‘down under’, reflecting the differing competencies and qualifications required for specific tasks. One senses among the workforce in Australia a greater degree of self-esteem and pride in the job compared to their colleagues in the UK. The licensing regime, it is probably fair to say, was instrumental in bringing this happy state of affairs to fruition.

Most of our officers view regulation as a positive move towards increasing professionalism in the security manpower sector, and the conflict management training is most definitely being well received. If our experience is indicative of an industry-wide view, then there is much to cheer

South Africa also enjoys a security licensing regime which again has different grades of licence reflecting differing competencies and qualifications, and which includes supervisory training (which we believe to be critical).

Of course, it must be stressed that there are certain unique issues in South Africa affecting the security arena, but both licensing regimes – with their different grades of licence and different training and qualification requirements – have been instrumental in raising the professionalism of the security officers, and providing better job fulfilment and career paths for them to boot.

On the issue of licensing, then, Chubb sees it as a very positive move towards improving the status of security officers, raising their competencies and thereby their profile. We see this phase of licensing as the start point, and look forward to subsequent phases of various grades of licences reflecting several competencies and qualifications.

Yes, there will be a cost and price impact, but if we are providing a better service these can be justified. We can see a role for the Approved Contractor Scheme as a further differentiator between those security manpower businesses that just want to provide the basic service and those who really wish to excel. The SIA is already working on the Approved Contractor Scheme criteria, of course. As far as we’re concerned, the higher they set the hurdles the better.

The technology experience

As people-based security solution costs are already high and set to increase significantly over the next few years in the UK, this will continue to stimulate interest in electronic security solutions. Not as a direct substitute, but as a complement to security manpower.

What, then, are the challenges to be faced? When it comes to technology and the application of that technology, it is perhaps sensible to retain a healthy degree of scepticism. So often, technologies from other sectors arrive in the security arena only to fail with indecent haste because they were trying to solve problems the end user either didn’t want solved, or the cost implications were out of proportion to the cost of the initial threat. Alternatively, the technology itself was not joined-up with other technologies and the response part of the security equation.

Despite such scepticism, we are currently seeing a significant technology shift which will intensify over the next two-to-five years. Such developments will be viewed against the aforementioned background of increasingly expensive manpower-based security solutions.

In the UK back in the 1990s, many investments in CCTV technology were financed by reductions in the security manpower budget. At the time, guarding contractors were all expanding mainly on the back of the huge drive for outsourcing. Any surplus manpower released by technology was able to be used elsewhere. This time around, it may be a very different scenario.

There are several reasons for this. The main drivers on the technology side are the increasing availability – and decreasing cost – of network bandwidth, the decreasing cost of digital storage devices, the increasing availability of broadband, improvements in neural networks, the expansion of cellular radio to carry more services, current developments in RFID technology and the decreasing cost of thermal imaging solutions. Bear in mind that this is an edited list!

Over the next few years, much of this technology will be harnessed on a cost-effective basis to tackle some of the long-standing issues in electronic security, including the spectre of false alarms. The improvement in content analysis, for example, will greatly assist in being able to make sensible use of all of the millions of digital video images that we store on a daily basis.

Convergence of systems

It is highly likely that remote diagnostics and remote servicing of electronic security systems will be further facilitated by these technology drivers, and that we will see a much greater convergence of the traditional disciplines of intrusion, access control and CCTV over the next couple of years.

Of course it’s all-too-easy to become carried away. Despite the advances in technology, security businesses still need to be able to offer a joined-up security solution and here, in the UK, one has to deal with other services and agencies to make that happen in the real world. More often than not this takes time.

To summarise, significant improvements in both the cost and reliability of electronic security solutions will drive change. In the medium term, as the manpower-based solutions become more costly, new electronic solutions will be far more attractive to the end user. The $64,000 question is this… Will there come a time when one will replace the other?

In truth, probably not. Both disciplines will be required, but it will be interesting to see how the behaviour of the customer of the future – and the security solutions they specify – may be very different from the behaviour of the customer of today.

How much will cost remain the determining factor when procurement time is nigh?