Will the ‘Subcontract Bubble’ Burst?

Subcontracting has been a useful and essential tool for the vast majority of security companies for a good many years.

If a potential new client needs a dog handler, and your company does not employ any, then a suitable self-employed professional is only a phone call away. If that new client wants mobile patrols of a site that is outside of the area in which your company operates, there will always be a closer company able and willing to do the job on your behalf. This form of subcontracting has always been highly successful in ensuring that operational needs are met.

There has been a problem however, that is as old as the contract security industry itself.

Not all subcontractors are created equal, and the calibre of work received ranges from good to abysmal. When you take on subcontractors, or utilise their staff, they are generally not people that you have recruited, interviewed or vetted, so you rely heavily on the professionalism and assurances of the subcontractor. To your client, these individuals are representatives of your company, and their performance may enhance or damage you company’s reputation.

Some security companies that provide professional subcontracting services, work in partnership with larger organisations that need smart and reliable officers, sometime due to the expansion of contractual requirements, other times new work comes on board at short notice that the larger partner could never hope to fulfil in time. Some of these ‘service partners’ provide their own contract management and site supervision, ensuring that the people they provide are up to the required standard, preventing reputational damage to either party. Some of these partnerships have been running for some years with the larger organisation benefitting from the speed and efficiency of the smaller’s administration, HR vetting, onboarding and training systems. Symbiotic working relationships of this type are proving both successful and, to a large degree, reduce the requirement for staff agency subcontractors.

The majority of traditional staff agencies that provide security officers, are Security Industry Authority, ACS approved. Indeed, many clients will only allow the use of subcontractors if they hold ACS approval status. Unfortunately ACS approval has proven to be disappointingly easy to obtain, and no longer serves the intended purpose, of highlighting the best companies in the sector.

According to the British Security Industry Association (BSIA) there will be an anticipated shortfall of licensed, UK security personnel this year to the tune of 60,000. Every security company leader that I speak to, tells me that recruitment is becoming immensely difficult. The reduced pool of candidates are obviously attracted to higher advertised pay rates. The issue is exacerbated when security companies that try to increase their charge rates to the client, are met with resistance, and without being able to elevate salaries to an attractive level, retention of staff then also becomes a problem. A vicious circle.

Retaining customers, sometimes regardless of profitability, is hugely important to a security company’s business continuity and resilience, so, not wanting to lose contracts on cost grounds, when a client has refused to pay more, many companies are increasingly turning to subcontractor staff agencies to provide the officers required. Despite these agencies being ASC approved, and providing guarantees about the standard of personnel supplied, as we previously mentioned, their mainly minimum wage workforce can sometimes fall very short of hopes or expectations.

This has led to a backlash from security companies, tired of complaints from unhappy clients about a myriad of annoying issues, ranging from minor, to absolutely catastrophic.

Alarmingly, as things stand at the moment, if just a few of the biggest National end users of contract security personnel, instantly put a halt to the use of subcontractors, sites would simply go unmanned (Lawfully anyway. Unless the tea lady, office junior and Michael from accounts, are prepared to change rolls and rapidly provide an “in-house” security solution?)  Big name contract security companies would go to the wall, and worse still, the surviving security companies would not be able to replace them as they would require a phalanx of fully paid and employed PAYE security officers, sitting at home doing nothing and without any other commitments. A free fall change of this magnitude would take many months to recover from.

Thankfully more intelligent thinking prevails as it is now clear that significant industry improvement is already underway.

For many subcontracting staff agencies, the writing is already on the wall. The SIA is cracking down hard on agencies that don’t pay the minimum wage, those paying cash in hand, those that do not properly vet their staff, and those that employ officers with dubiously obtained training certificates. The departure of these rogue traders cannot come fast enough.

So, where does this leave the industry and what will the future hold?

Training organisations are reporting record numbers of new candidates through the doors. With much tougher SIA training standards, these successful new security officers should help raise the bar of professionalism within the industry. I’ve also spoken to several company bosses that are increasingly turning down, or refusing to tender for contracts if the charge rate obtained does not allow for a more realistic and desirable salary for the officers. Pay rates will have to increase. There is some sign of this already, from the bigger online recruitment Job Boards. Like it or not, clients will have to pay a wage more commensurate with the responsibilities of the security jobs they need performed, rather than as little as they think they can get away with. The rule of supply and demand should help solidify this change.

But change doesn’t come easy. There will be pain and no doubt, several companies that can not navigate the changing road map, won’t make the journey, but just maybe, a few years distant, the security companies left standing, subcontractors or otherwise, will be more resilient and professional. We all hope that the end users of the service that we supply, will be much wiser, and more enlightened about the crucial business necessity that quality security represents.