Is Contract Security Ready For Metrics Based Contracts?

Back in 2010 I had a GREAT idea for a new company.  My father and I had recently sold our contract security company, so I was looking for my next challenge.  Prior to selling I’d had a lot of success acquiring new contracts based on our use of technology.  The main component of our technology offering was a wand based tour tracking system which provided our customers with proof that our officers were doing their jobs.  Although that technology is now considered outdated, it was pretty cutting edge back then.  I was surprised how impressed prospective clients were when I showed them our tour tracking reports that proved that our security officers were awake and alert.  Then again, why wouldn’t they have been?  It was something that they’d wanted for a long time, quantifiable proof that they were getting what they paid for.  Based on those conversations,  I wondered “Would contract security buyers be willing to pay a company to ensure that their contract security officers were doing their job?”

Over the course of a year or so I developed a business model based on the premise that contract security buyers would pay a company to monitor their contract security officers. Part of the business model also included implementing a metrics based contract between the buyer and the security guard company.  Based on the contract security company’s performance, the company would either be penalized for non-performance, or contractually guaranteed a billing rate increase for meeting certain metrics. It was a great idea, but buyers couldn’t get past the idea of paying another company to ensure that their security guard company was doing what they were supposed to be doing anyway.

Fast forward to today, please feel free to disagree, but I still believe that contract security buyers are willing to compensate their contractors based on their officers’ performance.  Let’s take a look at the current dynamic between buyers and their security guard vendors.  I would argue that most contracts, outside of the billing rate, typically favor the security guard contractor. In most cases, as long as a security officer shows up, the company gets paid.  Whether or not that officer has been trained, does rounds, or sleeps on the job (as long as their not caught) the company gets paid. Taking that into account, how do you think your buyers feel about that lack of accountability or the lack of recourse for poor performance?


…imagine a different type of paradigm, one in which the contract security company has measurable goals, or metrics.


Now let’s imagine a different type of paradigm, one in which the contract security company has measurable goals, or metrics.  If the company meets those goals they are awarded that much sought after billing rate increase.  If they don’t meet their goals, they are penalized in the form of billing rate deductions.  I can hear the complaints and push back right now “It’s too hard as it is to make money, why would I agree to billing rate deductions?” Yes, this would require more resources allotted for training, hiring, and overall operational management,  but the payoff might well be worth it.  In fact, if I were still managing a contract security force I would much rather be negotiating contract metrics and billing rate increases at the beginning of a contract than begging for a billing rate increase every year.

You and your buyers need a way to monitor and evaluate how well you and your officers are performing their duties.  A contract that includes metrics will keep you focused on ensuring that your officers are living up to your client’s expectations.  It will also help your clients to objectively evaluate the job that your officers are performing.  I have seen it happen dozens of times at contract renewal time.  At the contract renewal meeting clients seem to only remember the bad things that your officers have done. As a result, you can forget about any increases that year.

Is what I am proposing easy? Not by any means.  But people often ask if I was going to start a security guard company today how would I do it. My answer is 1) Specialize; 2) Leverage technology; and 3) Negotiate metrics based contracts.

If metrics are part of your security guard contract I would love to hear what your experience has been.  Or if you think that metrics based contracts would never work, please tell me why in the comments section below.

 

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By Courtney Sparkman

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