Report from the end user seminar

The Security Industry Authority (SIA) intends to start mandatory regulation of this sector in early 2005 following the imminent licensing of door supervisors.

Speaking at the joint British Security Industry Association (BSIA)-SIA seminar at Coventry's Windmill Village Hotel Conference Centre, SIA chief executive John Saunders stressed that buyer/supplier relationships will require what he referred to as "re-engineering".

Saunders stressed: "Buyer-supplier relationships must rapidly change from being price driven to solutions driven, from buying relationships to building relationships."

Saunders pointed to low profitability levels in the industry, with reported pre-tax net margins in many cases of less than 2%, leading to a number of major guarding companies posting losses in the past 12 months. He termed the current 35% contract churn rate "unsustainable", and compared this with staff turnover rates in already regulated European countries (including Sweden, where the churn rate stands at 16%, and Finland where 47% is the norm – both figures substantially below that of the UK).

"We must stop this huge wastage in staff turnover," urged Saunders, "with an industry average of half the workforce changing each year. This is the major issue that demands to be addressed. The cost of this turnover is currently a good deal higher than that of licensing and training. The future relationship between suppliers and buyers will require some clever negotiating, but it must change."

A partnership approach
Reminding end users that the average 27% gross margin of 1990 had declined to 13% in 2002, seminar chairman David Dickinson – chief executive of the BSIA – stated that, in the context of rising cost units, a partnership approach between supplier and customer should aim to maximise the budget in achieving the most cost-effective solution to the specific challenges faced. "This may well involve the use of technology," asserted Dickinson, "so the industry should be looking ahead at how systems might be imported and adapted from other areas of business to help negate higher costs."

Speaking alongside Saunders and Dickinson, Professor Martin Gill – director of Perpetuity Research and Consultancy International – warned that the changes being introduced by the SIA are not negotiable. "That message needs to be put across loud and clear," urged Gill, "because there's still a perception within the industry that there may be a way around these licensing rules. There isn't."

On the same point, John Saunders spelt out how the SIA intends to police statutory licensing, as well as the likely scope of regulation. He stated: "Enforcement by legions of inspectors working up and down the country would not be a clever or effective strategy. Instead, a partnership approach will be adopted, designed to make it easier to comply with licensing rather than fail to meet the required conditions."

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Accordingly, the SIA will be working with agencies including the Inland Revenue and Her Majesty's Customs and Excise to share intelligence, resources and planning, while a collaborative strategy with the security industry at large will aim to encourage whistle-blowing.

Acting on transgressions
Next on the podium, Richard Childs – a long-standing member of SMT's Editorial Advisory Board – stated that the SIA should be afforded the power to initiate its own enforcement action against transgressors instead of having to ask the police to perform the task.

"Leaving this matter out of the Private Security Industry Act was a grave omission, although the situation may yet change," commented Childs. "The police will certainly not have enough resources to afford this work sufficient prioritisation. In my view, the concept of working partnerships is often a Governmental excuse for not doing anything at all." Controversial stuff.

When the seminar moved on to examine the scope of regulation, it emerged that the inclusion of in-house security operatives is now increasingly likely (though whether or not that will happen before licensing of officers begins remains unclear). Saunders told the assembled clients: "90% of the dialogue we've had with the industry indicates that we should indeed extend our powers to include in-house teams. We have to put that evidence to the Government to justify such a move when we think the time's right."

The future for training
On the hugely important subject of training, Dickinson warned that the industry potentially faces the need to complete 500,000 days of staff training before February 2005, even allowing for exemptions among door supervisors and security officers.

This requirement arises from the setting of competencies by the SIA, including two days of training for door supervisors on communication and conflict management skills. The SIA is currently consulting with the industry on similar requirements for the variety of guarding roles.

In his polemic, Martin Gill urged end users and guarding suppliers alike to regard the price of proper training and competency assessment procedures not as a cost, but rather as an investment that will help bring benefits including new business opportunities, an enhanced image and reputation and reduced staff churn rates.

SIA chief executive John Saunders said that the industry's future annual spend on training will exceed £80 million, in addition to the £30 million cost of licensing each year.