It’s an accepted truism that many in-house and contracted security managers kick-start their career in the private sector by joining the profession from a military or police service background. Such experience is undoubtedly a great preparation for some aspects of a security management role, but it’s not always the case that new entrants will be sufficiently well versed in the commercial skills demanded of today’s business practitioner.
More and more, security departments are being asked to justify their existence in a world where many business leaders view them as little more than a drain on the bottom line. That’s why being seen to be business ‘savvy’ is now so important for security professionals, all of whom need to demonstrate – almost on a continual basis – where the Return on Investment in themselves, their staff and their security systems is manifested and tangible.
Complete strategic planning
One of the biggest challenges facing such managers is business planning. There really is a wealth of difference between orchestrating but one element of a larger operation (as might have been the case in the military environment) and full strategic planning – wherein the security manager has to set the objectives and decide on key directions for his or her business or department.
Basic marketing skills are required even by those managers not directly in charge of marketing or sales. For contract guarding sector managers, understanding how the host company and its services are differentiated from competitors is vital. An organisation which isn’t differentiated – that is, it doesn’t offer a clear reason for customers to buy from it, for example – will probably obtain a share of business on a ‘Buggins’ turn’ basis, but it will not do any better than the market as a whole. In the event of a downturn, that company may even lose business.
Management gurus in the vein of Michael Porter PhD (the Bishop William Lawrence University Professor at Harvard Business School) have developed many ways of assessing business strategies. For instance, Porter’s famous ‘Five Forces’ theory examines the environment around the host company in terms of different areas – buyers, suppliers, competitors, barriers to entry and substitutes. These will all have an impact on profitability.
Increased power and margins
For example, if your guarding company is faced by many competitors, if barriers to entry are low (they have been prior to Security Industry Authority regulation) or if your operation is supplying large firms enjoying a hefty amount of bargaining power (which is all-too-often the case), your margins will be low.
You can then look at each area to see if you can increase your power and your margins – for instance, by using smaller suppliers who have to offer you a better price, or creating barriers to entry (by way of locking customers into multi-year deals, for example).
Being able to assess the market – and, in particular, the competition – is important. When asked to name their competition, most managers name the firms that most resemble their own. As a result, they may miss out on different types of business competing for the same clients. Equally, they might not have a good feeling for whether certain competitors are gaining or losing market share (and for what particular reason).
Towards the Boston Matrix
Experienced managers use techniques such as the Boston Matrix to explore competitive issues – by characterising companies as cash generative or cash ‘needy’, high or low growth, they’re looking to find out what kind of business they really are. Remedial action might be required. For instance, if your business is slow growing but many competitors are burgeoning at a fast rate, what’s the reason for that? It may be that your pricing policy is wrong, or that you’re selling to the wrong customer segment.
Even though you may not be in charge of your own security business, thinking like an entrepreneur is always valuable. Think through your organisation as if you were just starting it up. Good security managers, whether in-house or contract, will keep on rethinking the business – they don’t just carry on from one day to the next doing the same thing.
An example of strategic targeting might be: “We want to grow at twice the market rate and, in order to do so, we need to sell to fast-expanding end user organisations”. That’s a very different objective from “Increase sales”. It’s much more specific and measurable.
Setting strategic targets is one thing. Next, you have to decide how they can be measured. Without any quantitative targets it’s difficult to ensure that objectives are really being achieved. There’s quite a skill involved in stating qualitative judgments – such as ‘customer satisfaction’ – in qualitative forms which can then be measured. For instance, you might want to measure the percentage of regular contracts which are discontinued. If the figure rises from 5% to 15%, you know that customers are dissatisfied with the service you’re offering. Alternatively, you might run regular surveys where clients can rate you on a quantitative scale. Equally, you could measure the number of customer complaints.
Strategic budgeting: an overview
Most security businesses’ or departments’ primary measurement of success or failure is financial. This renders budgeting a vital business skill for any security manager. Some familiarity with financial accounts and how they work is obviously required.
While strategic planning is of most relevance to those who are joining an independent security firm in the private sector, in-house managers will also need to be able to handle budgets. Typically, a yearly budget will be set and individual monthly targets then created. Obviously, action needs to be taken if your revenues are below budget. In the guarding sphere, this could mean a new advertising campaign, changing prices or reshuffling the sales team. Equally, if costs are above budget, something needs to be done.
What’s behind the numbers?
Budgets are a blunt instrument unless you understand what’s behind the numbers. You need to look at the margin – the percentage of your sales that you keep in profit.
You also need to work out your unit costs. That might be one hour of manpower if you’re providing simple security guarding services or if you’re working as a consultant. It might be a mix of equipment and time – for instance, if you’re installing CCTV as part of the service and installations are fairly similar.
Many firms have a budget ‘panic’ once a year and then leave the budget pretty much untouched for the remaining eleven months, but it’s Best Practice to continue reviewing your financial situation every month to ensure that it remains appropriate.
With business continuity in mind
When you’re considering a risk, you need to do a simple multiplication sum – the chance of the event occurring multiplied by the expected severity of the impact. If you think through all your risks in this way, you can work out the likely major ones.
For business continuity purposes, you’re only going to think about risks that would disrupt the business, but when you’re faced with business planning, you need to think about economic risks, too (for instance, the risk of being unable to hire qualified staff).
While your own spreadsheet and finance skills might not be up to modelling the impact of those events on your business, someone in the Finance Department should be able to do so. That gives you a good feeling for risks to your budget and strategic plans.
You can then think about what to do to mitigate those risks. For instance, if you suspect it’s going to be difficult to hire qualified staff in a particular area, you might consider (re-)training staff within the company or you may need to increase salaries (and prices). If you have already thought through these risks, you’ll be in a much better position to react quickly to changes in the environment.
Acquiring the right skills
Where can today’s security managers acquire the commercial and business skills demanded of them? While some larger employers offer in-house courses in management skills, there are a number of other options.
For example, it’s possible to learn through reading management textbooks (though this will probably only suit a minority). A Master of Business Administration course requires a massive commitment of both time and funds, and will only be appropriate for a few.
Many local colleges offer part-time courses, often at a reasonable cost. These are generally quite formal, and focused on particular areas such as budgeting or marketing, and may well be geared towards accountancy or marketing qualifications. That being the case, some of the information may be more useful to the specialist rather than the general manager. An entry-level course will certainly teach you everything you need to know.
Possibly more useful to managers in independent security businesses rather than the in-house manager are courses aimed at entrepreneurs. They aim to teach all the business skills you’ll need in one dose. Your local Business Link is a good place to start.
