Welcome to the first article in a 4 part series on improving the service that you receive from your contract security provider. In this series I will outline 4 critical areas that every buyer or contract manager for security services needs to evaluate before, during, and after choosing a security guard provider. In this first article we will discuss one of the most important aspects of selecting a contract security guard vendor “Understanding the Billing Rate”.
The billing rate that your bidders provide is the result of adding up all the costs associated with staffing your property, plus some number that represents what the bidder wants to make from the contract. The largest portion of that billing rate is usually the guards’ wage rate.
Determining Contract Security Guard Wage Rate
The most important component of building and maintaining a successful contract security force is ensuring that your guards are being provided adequate compensation. In order to do so, you as the contract manager must determine how much other businesses are paying for security guards within your area for similar scopes of work. This amount should be the benchmark by which contract managers judge contractor bids and in no case should the contractors proposed starting wage be lower. As part of the bid evaluation you should request a wage rate analysis for your area from any potential bidders. By ensuring adequate compensation for the contract staff at your facility you will be able to help reduce the amount of turnover that you see at your facility. In addition to providing the wage rate analysis, each bidder should be required to state what wage that they are proposing in their bids.
Tip: If you have a high rate of guard turnover 9 times out of 10 the wage rate at your site is probably too low.
Security Guard Benefits
Secondly, in addition to wage rate the contract manager has to ensure that the security guards are also given benefits that will help retain top talent at your location. Some of these benefits can include:
- Company supplied uniforms
- Vacation days
- Sick days
- Medical benefits
The best way to ensure that you are receiving the type of officers that you need is to ensure that these benefits are outlined in your bidders’ proposals. The most economical way to pay for these benefits is to provide your contractor the ability to bill you directly for benefits given on behalf of the contractor. When direct billed, these costs which are typically hidden in a comprehensive billing rate, are billed by the contractor only when they occur. This is more advantageous to you as the contract manager because you will only pay for benefits that your security officers receive. By using direct billing, costs associated with temporary and part time employees are also reduced. A greater level of benefits can then be given to officers who are employed longer.
Your Billing Rate Breakdown
Although wages and benefits are two of the best indicators of the quality of your guard force, they are not the only indicators. To understand the security programs that your bidders are providing you must look at the program in its entirety. The best way to do that is by requesting a line item breakdown of your billing rate with each bid. That billing rate should include at a minimum:
- Payroll Taxes
- Gross Margin or Markup
Most security guard contractors use pricing tools similar to the one below that will generate billing rates based upon the resources that they will allocate for your location.
As you can see from this sample pricing page, it would be relatively easy for two bidders to come up with the same billing rate but propose radically different services.
Ethical and credible contractors should embrace this approach to billing rate review with open arms. This allows for an apples-to-apples comparison of their pricing models and protects them from incurring costs that are uncompensated. However, the most profound impact of evaluating your billing rate is on the behavior of the security guards themselves. When security officers feel like they are being treated fairly they are much more likely to exhibit the positive behaviors that you desire: Attention to detail, professionalism, and alertness.
Series: Improving Your Security Guard Service
By Courtney Sparkman