Michael Padilla-Pagan Pay
How the Grinch Almost stole our Christmas: Partnership vs Vendors
I almost feel like Santa Claus, as I have been traveling over the last month visiting all our customers and employees around the world and then having our annual manager meeting in Slovakia.
And, in October, I met the Grinch. A large company acting differently to officially proclaimed code of conduct. We would not let them spoil our yule time, cheers and work, and so we terminated our agreement. As the CEO, if you may allow me, my role is to make sure that the organization's leadership maintains constant awareness of both the external and internal competitive landscape, opportunities for expansion, customers, markets, new industry developments and standards. And so as 2017 ends, and this is my last article for this year, I wanted to address this topic not only to all potential customers and clients, but to all members of our Industry.
I am sure members from our industry have stressed this in the past: Corporate security services should move from the focus on “vendor relationships” to an emphasis on partnerships, from the tactical short-term to a more strategic long-term perspective, and from cost to value. In the end, security service providers and corporate clients need to embrace a shared understanding of security’s strategic role not only in duty of care, but also in business continuity, brand equity and shareholder value. More conversations need to be had about the benefits of partnership compared to the limitations of vendor-buyer relationships. Now, I know our friends in procurement consider us “vendors”, and I recognize that we are selling a service. There is nothing wrong with that, but decades of experience have also taught me that there is a big difference between relationships based on partnership and those that are simply vendor-buyer. And to be honest, I really don’t like to be considered just a vendor. Vendors sell standard wares to standard clients. Strategic partners work with clients to solve specific needs in customized ways – not to provide cookie-cutter solutions off the shelf.
Whether it is Al Thuraya Security, AL Thuraya Consultancy or ICESERVE24 or any one of our 11 companies, we have worked hard to earn the kinds of partners who see security, risk and intelligence as strategically important. The character, quality and efficiency of our solutions, and how these interact with internal and external stakeholders, matter to them. We have served many of these partners for more than a decade, and we have learned and grown together. We were never satisfied with security guard discussions, and we are happy to see that many (though not all) of our colleagues in the industry have also moved beyond this redundant formula.
It’s by listening to our clients, and better understanding their needs, that we have grown from vendors into partners and expanded our spectrum of services. We now have conversations about a broad range of risk needs, and solutions that encompass both proactive risk mitigation, training, intelligence, social media and narratives insights as well as corporate values and preferences. These discussions start with a shared, fact-based understanding of risks, then proceed to proactive risk mitigation solutions that are as good as they possibly can be with the available resources, and pay close attention to the client’s particular culture and brand and value compared to cost.
Everyone who knows the security personnel business understands that it’s very cost competitive. Margins are never fat. Cost is always an issue. For some, it seems to be the only issue. This is a fact of life in our business like everyone else’s, and while we’re not here to dispute it, we would like to expand conversations about cost to encompass considerations of value in a more transparent way.
Ours is a labor-intensive industry, and hourly costs for personnel make up the bulk of almost any contract. Labor costs are readily comparable, and all companies must operate within the same confines of supply and demand, legislation, etc.
So, for instance if security personnel hourlies make up the bulk of a program’s cost, and all companies have to pay about the same hourlies, why don’t security companies always come up with the same program costs when bidding on RFPs? Because some bids include more than the minimum labor costs.
There is a simple question that changes the conversation from “cost” to “value”: What would you like me to leave out? Because both cannot be maintained and it is a difficult - though obvious - choice to sell.
What the lowest bids leave out saves money in the first instance, of course. Naturally, it also changes program quality. Everyone gets this. What some people do not get – because we haven’t been good at talking about it, is that what gets left out might save the client money in the short run, but will end up costing more money (and other trouble) in the long run. Let me give you an example.
Some of the line items that typically get left out of low bids are middle management, training, and wage increases. None of these items is a particularly popular topic of conversation. They all cost money. And yet, they all matter. Actually, they are the differentiating factor between a sustainable, successful, effective security solutions and a bunch of crises waiting to unfold.
Yes, slashing middle management has been a corporate mantra for decades. And for many industries it makes a lot of sense. In a labor-intensive industry like security personnel services, however, where the quality of the service is directly related to the quality of the people providing it on the frontline, it doesn’t always make sense. Moving beyond supervisory roles, middle management and back office functions within training, HR, compliance, and intelligence analysis can make a real difference and add value. Security services need strong leaders, including middle managers, to set clear goals and effective KPIs that are agreed with the client and provide reliable diagnostics. It is through managers relentlessly following up on early warning signals, and continuously addressing performance gaps, that program quality is established and maintained. How else can it be done, really?
Similarly, if your budgets don’t allow for relevant training, how will you ensure that your people acquire and maintain the skills they need to provide good security and keep pace with evolving risk scenarios?
And in an industry where staff turnover is relatively high – and where staff turnover has very clear cost and quality consequences – how does never increasing wages, or never providing any kind of career ladder, encourage the best people, instead of the second-best, to stay on? Well, it doesn’t.
We need to change the conversation from “labor costs” to investment in people. Whether the people are entry level, middle or top management, they are all important. Yes, procedures and technology matter, but without committed people, there is no security.
Of course, we need to make monetary investments in the form of proper training and sustainable career planning. But we also need to invest our time and ourselves. When leaders care about their people and consistently demonstrate it, it gives results. You can’t train commitment, but you can earn it. And when companies earn the commitment of their staff and clients, good things happen. You get passionate people who care about what they do. This kind of passion is contagious! And this investment pays off in the long run by providing excellent results and minimizing poor performance issues and larger scale mismanaged incidents.
From a Narrow Definition of Duty of Care to a Recognition of Security’s Strategic Importance
Duty of care is obviously security’s first concern. We’re here to protect people and assets, and that is always our primary goal. But security also affects other areas of concern for our clients. We need to expand our conversations with them about these areas.
Corporations with highly prominent leaders, with busy public schedules, might require executive protection services at home or abroad – not only to protect the principal, but also to safeguard shareholder value. Every company with a connection to the internet needs to think about the convergence of cyber and physical security, and how to navigate the rapidly evolving risk combinations that involve both.
The fact is I could go on, but I think you get the picture. For an increasing number of corporations, security is a strategic issue. We need to initiate and engage in more discussions that treat it as such, this year we stop the Grinch, but I believe as a industry we all need to have a conversations as the world is going to need more partnerships to deal with the uncertainties of the future.
So, shall we have conversation?