February 2018 – Security costs are rising rapidly as wages increase. Many service/outsource providers are looking for options to control costs ranging from automation options, selected overtime (since benefits are already paid for) and better controls on staffing. Security costs, however, are still driven primarily by the labor costs. Service providers/outsourcers can use security benchmarks to review staffing for:
- Staffing levels at manned entrances
- Frequency of rounds
- Video monitoring
- Bidding on new projects
- Client justification of existing staffing levels
- Showing the need for additional or reduced staff
- Extending the current contract (eliminate bidding process)
For many locations the minimum wage is increasing. Now outsource providers may ask, “How does this impact my operation? I am already paying well above the minimum wage.” Increases in the minimum wage will tend to drive up wages in a variety of industries and you may experience a higher turnover rate until the wage rate for security workers in your company matches the marketplace. There are many industry “rules of thumb” for the ratio between labor costs and materials, but for most security service providers the cost of labor is around 90% and the cost of materials and equipment is about 10%. To provide acceptable service you need to manage the materials component of the security contract effectively but managing the labor component will have a much greater impact. Here is how benchmarking can help.
All good, high quality, benchmarking services should provide a module to benchmark staffing levels at a high level. At a minimum, you should be able to benchmark total security staffing levels. If you try to get more granular, you quickly learn that most organizations can not readily report their staffing by specific activities such as carpet cleaning, furniture cleaning, or window washing. That is because many security service providers perform them in-house or contract them, but they don’t typically track them at the activity level.
Let’s learn what we can from benchmarking security services at a high level and see the benefits. We have used examples from FM BENCHMARKING to illustrate how easy the process should be, and this approach will allow you to obtain the key output reports in the minimum amount of time.
First, focus on what is important! Security labor represents about 90% of the costs, so benchmark the total staffing profile. Good benchmarking comparisons need to be made with a relevant peer group. For a quick analysis, we create a chart showing the area secured per worker of a good peer group. Figure 1, for example, shows this for office facilities.
This allows you to see at a glance how well your facilities are staffed compared to other office buildings. There are 337 buildings in this peer group with a median staffing level of about 14,000 gross square feet secured per worker and a first quartile performance of 15,600 gross square feet per worker. Notice how flat the chart is for both the second and third quartile. Half of the group in this sample falls between about 12,000 and 16,000 gross square feet secured per worker. The significant variation is in the first and fourth quartiles. By looking at, and comparing similar types of facilities, you will be able to make intelligent “data driven” decisions.
Let’s add another filter to see if the building size has an impact on security staffing. Our building is larger than 600,000 GSF so we turn that filter to produce the graph shown in Figure 2.
There are 163 buildings in this peer group with a median staffing level of about 14,150 gross square feet secured per worker which is about the same as in the first sample. However, the chart is even flatter with only a few outliers. About 80% of the group has a staffing level of between 12,000 and 16,000 gross square feet secured per worker. Because there is less variation in the first and fourth quartiles, we are confident that there is a more accurate comparison; however, because the median is about the same, it mean that building size doesn’t impact the average performance.
The usual “next step” is to total the square feet cleaned and staffing level at your facility and divide them to determine the square feet cleaned per worker at your facility. Let’s assume the size of your facility is 650,000 GSF and the staffing level is 60 workers. This produces a staffing metric of 10,833 gross square feet secured per worker which is in the fourth quartile and clearly an outlier. This is an opportunity for the outsource/service provider to look carefully at the staffing levels and possibly reallocate some resources or review the service frequency.