The Challenge Facing the Private Security Industry Today, April 20, 1989

The second Alden Miller lecture to the
University Of Maryland  Institute Of Criminal Justice And Criminology

Lefrak Hall, College park, Maryland

April 20, 1988


Thank you.

I am delighted to be here tonight, and I am honored by your Invitation to deliver the Alden Miller lecture.

I’ve spent my entire career in private security and devoted all my Energy to creating a company that is unique in the industry. I’m Proud of Guardsmark and of what it represents: a way of doing Business that holds principle above profit.

If there is any secret to our growth over the years, it is that Quality should not be considered a relative concept by business Owners, but as an absolute. Quality comparisons of products and Services should be made by consumers. The only quality Comparison business owners should focus on is that between their Product or service and an absolute standard of quality that is always just out of reach. That’s how Guardsmark was built. On quality and supreme Excellence.

Putting principle above profit has cost us over the years, at least In the short run. Disarming our security officers lost us many customers, who though their security required a Wyatt Earp or a Doc Holliday to keep the peace. And our selection, training, and Supervision programs created overhead costs that kept us out of The running for very competitive contracts that centered on price as the determining factor.

Fortunately, there’s always a market for the quality leader in any industry. Proving that to skeptics in the private security industry was a great challenge, one that’s closely related to my subject, “The Challenge Facing the Private Security Industry Today”.

However you look at the industry-and I’ve looked at it from every angle over the last 39 years there is really only one overriding challenge confronting the industry. But before I go into that, let me give you some background.

The private security industry includes a wide range of both products and protection services. Products range from specialized Locks and closed-circuit television systems to devices for ensuring that conversations are kept private. The product side of private security is fascinating, especially in the use of sophisticated Technology to solve age-old problems of protection.

But tonight I want to talk to you about the service side of private security, which is what the average person associates with the term “private security.”

Protection services are performed by store detectives, investigators, armored car couriers, specialized operatives, consultants, and security guards. By far the most numerous of these are the security guards.

It is important to note here that the term “security guard” is limiting and conjures up the image of some only passively standing guard over an installation. At Guardsmark we refer to our people as “security officers,” which conveys more closely the active nature of their responsibilities and our belief in their professionalism. But for our purposes tonight, I’ll use “security guards,” in referring to the industry as a whole.

According to the Hallcrest report, a study of the private security Industry, the estimated total expenditures for all private security in 1980 were $22 billion, with a projection of market growth of up to $53 billion by 1995. Revenues for contract guard and investigative Services alone were projected to reach $12.2 billion by 1995, almost 20 times what was estimated for the year 1969 by the Rand report.

Hallcrest also estimated the industry’s total employment in 1982 at somewhere between 1.1 to 1.25 million, almost double the number of law enforcement personnel in the united states. The industry has seen annual growth of approximately 15 percent in recent years, so although firm numbers are not available on current private security employment, the total is considerably larger than the 1.25  million at the upper end of the Hallcrest estimate. Approximately 75 percent of these are security guards.

In private security, guards are employed either by security service firms-contractors that specialize in providing security-or by individual manufacturers, retailers, financial institutions, and so on, which collectively is called the proprietary market. The trend is toward the replacement of proprietary guards with Contract security. In 1978, contract security accounted for approximately 55 percent of the market. By 1985, its market share Was up to 65 percent and still growing.

While proprietary security forces represent a shrinking part of the market, their numbers are still significant. The challenge that confronts proprietary security today is the same one facing security service companies. My comments tonight, except where they are obviously limited to contract security, are meant to apply equally to contract and proprietary security.

The tremendous market growth can be traced to the increasing concern for security among today’s senior business executives. Unfortunately, many of these executives are willing to hire guards because they see them as a panacea for all of a company’s security problems. That is a common misconception and a dangerous Underestimation of the security problems that face us today. Security guards perform many essential functions, but guards are not the sole solution to every problem. Computer fraud, contract rigging, and industrial espionage are only a few of the sophisticated crimes that require sophisticated and well-planned security programs that go well beyond the stationing of guards.

The job of the security guard can be demanding, wearing, and excruciatingly tedious. Despite all that, the guard must remain alert at all times, because the normal pattern can suddenly erupt. At any moment, a security guard may have to deal with violence, a robbery, an accident, a medical emergency, or a fire.

If a security guard is alert, aware of his or her responsibilities, and properly trained in appropriate procedures, quick action can save both lives and property. Since security guards protect not only libraries and grocery stores, but also banks, hospitals, chemical companies, major industrial institutions, airlines, and nuclear installations, we all depend on the qualifications, honesty, and Judgement of security guards.

Unfortunately, too many of the security guards working in the United States today are unqualified, dishonest, unreliable, and violent. Many of them use drugs and many have criminal records. That’s a problem for business. It’s a problem for our society. And it is a problem for each of us individually.

And this lack of quality-caused in good part by the lack of a responsible attitude among owners-is the major challenge facing The private security industry today.

Nobody keeps statistics on how many guards each year are convicted of or implicated in cases of murder, arson, rape, robbery, Or simple dereliction of duty. But the number is staggering. Every month, newspaper clippings that detail such incidents around The country flow into our office.

And every month I am shocked at the evident lack of quality of the nation’s private security forces. There are guards who are convicted felons, guards who steal form the companies they are Hired to protect, armed guards who shoot bystanders, or other guards, or themselves. There are guards who hear voices, are thrilled at the sight of fire, or feel bugs crawling on their bodies.

Don’t misunderstand me. These guards are in no way representative of the industry. To claim that they are would be as mistaken today as the characterization of the average private security guard that was made by a rand corporation study years ago: “an Aging white male who is poorly educated and poorly paid.”

The truth is that most security guards are dedicated, hard-working People who take pride in doing their job well. They’re White and Black, Hispanic and oriental: aging males and young females: Poorly educated and college educated. Some have little responsibility beyond wearing a uniform: others are highly skilled and trained professionals familiar with sophisticated security devices, chemical hazards, firefighting equipment, first aid procedures, sound safety precautions, the proper handling of security violations, and the limits of their legal powers

In an excellent security services company, such professionals are not the exception, but the rule. But in many of the thousands of companies now operating, these professionals would not be the rule, but the exception.

How can we account for such a situation?

We believe there are five main causes.

First-and there is no escaping this the primary blame must be placed on the industry itself. There are no industry standards for the selection, training, and supervision of security officers and guards. many security services companies hire people off the street, put them in uniforms, and assign them to their posts before lunchtime.

The companies do not even attempt to check the applicant’s criminal records. They do not check military service records, or personal references, or previous employers. They do not check Educational claims. They do not administer a test for drug use; They do not care to use the polygraph; they do not test for Literacy. And after hiring the applicant, they do not have the Employee take a personality test-such as the Minnesota Multiphasic Personality Inventory-for purposes of placement.

This lack of quality control in the selection process is matched by Inadequate training. Surveys conducted for the Hallcrest report Indicate that 60 percent of contract security guards receive less than eight hours of training before beginning their assignments. The median is four hours.

That’s four hours to cover fire protection and fire prevention, First aid, legal powers, investigation and detention procedures. Building safety, crisis handling, crowd control, use of equipment, And report writing.

It is anyone’s guess how many people have been harmed because security guards have not been properly trained; how many elderly People have died in fires because the guard did not know proper emergency procedures; how many heart attack victims have died Because the guard did not know CPR; how many innocent teenagers and even children have been falsely accused of shoplifting because The guard did not know proper investigation and detention Procedures.

Many of these unqualified and undertrained guards are frequently unsupervised.

To a security service company that demands supreme excellence. Quality control programs are unavoidable costs. But to many of the thousands of private security companies, these costs are both avoidable and uneconomic.

They are uneconomic because these companies seek only those contracts that either by law or policy go to the lowest bidder. The widespread use of low-bid contracts is the second reason that quality is not an urgent priority in the private security industry.

Margins in the industry have always been low, and low-bid contracts Force security service companies to slash their overheads to make A profit. Invariably, that means keeping quality control programs to a minimum. But it is precisely those programs that create and maintain a professional security force and allow a company to progress and modernize to meet the increasingly sophisticated security demands of our times.

In private security, the low-cost provider offers a high level of Illusion, but a low level of quality.

The fault here lies not so much with the low-cost providers. For everyone deserves to make a living. The blame rests on those sectors of government and industry that do not understand the difference between low-bid contracts for products and low-bid Contracts for services. Products can be tested before the contract is awarded to ensure that specifications are met; the same Is not true of services.

The third reason that quality suffers is a combination of Relatively low wage rates and relatively high turnover rates. Historically, security has not been a major concern of corporate executives. As a result, security was assigned a low priority in terms of both organizational interest and budget. Security forces were composed of basically unskilled non-professionals. Such as retirees and college students working part-time, who could not command higher wages in other occupations.

The legacy of relatively low wages is still with us, even though the business world-over the last 20 years-has sharply upgraded Its perception of security and its importance. High turnover among security guards is basically the result of low wages, as guards jump among companies for very little extra pay.

Relatively low wages make it difficult to hire and retain the best Employees, because by definition they have the ability to move into Higher paying fields. As a result, many companies have no Alternative but to hire the most marginal employees who have Little work ethic, few skills, and no lasting attachment to the Work force. These guards have no upward mobility, but they make up for it in lateral movement as they drift in and out of jobs according to their whims or their immediate need of a paycheck.

The fourth problem in raising the quality of security guards is the difficulty of checking criminal records outside the immediate jurisdiction. Criminal record checks are an essential part of any sound selection program to ensure that guards are protectors Rather than predators.

The need is evident. In the early seventies, the owner of a security Services firm in Pennsylvania discovered that 10 percent of his security force had criminal records. More recently, it was reported that of all the security guards in New York state in 1980  66 percent had arrest records. In California, 20 percent of all applicants for security licenses have conviction records.

The difficulty of running a thorough criminal records check Derives from the hodgepodge of policies and procedures on the state level, an incomplete centralized data base on the federal level, and private security companies’ lack of access to criminal records on a formally recognized basis.

States and municipalities have their own ways of handling requests from private security companies. Some respond quickly, and others Can take up to six months. Some will ask the FBI to check federal Records as well as those of states that have forwarded their Records to the FBI’s identification division. But the records Forwarded by the states are incomplete, inconsistent, and Unreliable.

The last, and perhaps most important, major factor in the quality Issue is government passivity. regulation of the private security Industry is left with the states and municipalities, and in general The states have left it alone. The haphazard and piecemeal regulation of the industry by the states is almost totally ineffective.

Only a few states require that security guard applicants be Screened for criminal records, drug use, or mental health Problems. Only two states North Dakota and Michigan-mandate minimum educational levels; only Pennsylvania and the District of Columbia have physical health standards; and only nine states require that a check be made of military discharge status.

Training requirements are just as lax. The vast majority of states have no general training standards. Only five states require classroom training, and four require additional on-the-job training in security procedures.

As for armed guards, 28 states mandate no special firearms training.

Since armed guards usually do not provide more security, but always invite greater risk, the absence of strong regulation is hard to fathom. The presence of guns, the lack of training, and the threat of instant escalation is too often an explosive combination that leads to unnecessary and avoidable taking of Lives and undermines the very notion of security. Many of these guards are young, underpaid, and not accustomed to wielding authority. To many of them, their gun is their authority and they have no experience or interest in defusing hostile confrontations.

Unfortunately, many of these armed protectors of the peace are hired essentially as gunslingers, bounty hunters, and serve no other function.

The failure of any state government to establish in law valid and Acceptable standards for private security creates a danger to the Community. The lack of legislative direction also creates problems for the quality-conscious company that refuses to compromise its own strict standards. In the absence of clearly defined, legally established standards, state agencies involved with hiring and employment are free to push their own agendas.

Those agendas often include seeing to the employment of people who are unqualified, inexperienced, with no history of positive responsible behavior such as holding a job, but with a lengthy history of being arrested. There is no doubt that such a person needs a job. Useful employment brings with it not only income, but also a sense of dignity, responsibility, and self-worth. But a person with such a record has no place in private security. For state agencies to argue otherwise compounds the quality problem that already exists.

Such a position betrays an abysmal lack of understanding of the role that security service companies play in the protection of the community. But without legally established standards for security personnel, security service companies must either Surrender their standards and hire the unqualified, or bear the cost of standing up for what’s right. In one instance, Guardsmark has spent $300,000 defending its hiring standards against such well-meaning but unenlightened advocacy.

The quality issue in the private security industry will not disappear any time soon. The five barriers to industry excellence cannot be dismantled, or leaped, overnight. Low industry standards, low wages, low-bid contract policies are not mere surface problems, but ones that are deeply entrenched in the history of the industry. and industry access to criminal records and state licensing or Regulation of the industry would involve lengthy policy and Legislative changes.

There is currently no strong public or legislative impetus to help The industry carry out its responsibilities. On the contrary, new legislative measures that aim to protect the rights of individuals Simultaneously make the job of the industry more difficult. The most current example is the polygraph bill that was recently passed by congress. In this case, as in many others. The cure will prove worse than the disease. no help is ever offered the industry. It is almost as if a security Incident on the order of the challenger disaster will be required for the needs of private security to be addressed on the legislative level.

But creating excellence in private security can be done, and it must Be done, sooner rather than later. The growth of the industry and the trend toward privatization are leading to an increasingly Important role for private security in the economic health of our nation.

The privatization trend has accelerated during the 1980’s as the number of police declined both in total number and on a per capita Basis. Many traditional police activities have been turned over to private security companies to free up police officers for combating crime and especially violent crime. Ambulance services, enforcement of parking regulations, patrolling of housing projects. And other services—even in some cases protection of entire communities—have been taken over by private companies that can do The job just as effectively as police but at a much lower cost. This trend will continue, and private security companies will expand their activities into new areas that have always been considered public police functions. The need for highly qualified and professional private security personnel will grow accordingly. Meeting the quality challenge will require a five-point program:

First, the industry itself must live up to its responsibility to create and sustain standards of excellence in security services. This could be done by instituting a peer review program for Companies to complement the Certified Protection Professional (or CPP) program now used for individuals who may or may not be in the Security service industry.

Through its trade association, the American Society for Industrial Security (or ASIS), the industry should establish standards of Quality control that must be met or exceeded by companies that desire certification.

A certification board of independent security professionals, with or without ties to companies in the industry, could be charged with establishing a system of visitation, investigation, and reporting similar to the system of peer review used by the American Institute of Certified Public Accountants for new member firms.

Once the system was in place, the association could ensure its effectiveness through communications programs to its members and to the public. If this certification program were carried out properly, business, industry, and government would no more hire a private security company without checking its certification status than it would buy electrical equipment that had not passed testing by Underwriters Laboratories.

Second, studies should be done, either by academic experts-perhaps even here at the University of Maryland-or by private foundations on the effect of low-bid contracting on the private security Industry, the studies would surely document that low-bid contractors provide low-quality security service, and that they maintain their profit margins only by stinting on selection, training, and supervision.

An increasing number of businesses are coming to see the ill effects of low-bid contracting and they are wrestling with the real difficulty of learning how to evaluate service industries without using price as the sole criterion. studies showing that low-bid contracting for private security services is not cost effective would accelerate the trend.

Third, if the industry is going to attract better security applicants, then both wages and benefits will have to show substantial improvement. The chances of that happening will Improve greatly after the first two parts of this program are in place. Even then, private security companies will have to take the lead in convincing business, industry, and government that higher wage rates attract better applicants. And that means higher prices.

Fourth, it is essential that the private security industry gain access to criminal records on a regular and timely basis. The current  system is reprehensible, cumbersome, ineffective, and dilatory, and  it virtually guarantees that people with criminal records will  continue to be hired as security guards.

There are two possible solutions to this problem:

Since criminal justice agencies have access to criminal records, one Solution would be to have private security companies defined as criminal justice agencies for the purpose of selecting or licensing Security guards.

The other, more likely, possibility would be the adoption by the FBI of a proposal put forward by the search group, a non-profit national consortium of justice information. The proposal would effectively give private security companies access, through state criminal justice agencies, to the FBI’s interstate identification index (or III), the III is a data base that contains identifying information on persons with criminal records either in the federal offender file or in the states that have joined the III. The III does not itself contain the records. If a “hit” occurs on a particular individual, the requester is told where the record is located.

At the current time, private security companies have no access to The III because of the inconsistency of state laws on access to their criminal records. The proposal calls for states to join the III-20 states currently belong and for the states to allow the state where the request of a criminal record originates to set the criteria for access to the records. The success of the III and the implementation of the search group proposal would allow private security companies to learn within days if an applicant had a criminal record anywhere in the country.

It is absolutely essential that private security companies have access to criminal records of applicants on a timely basis. Guardsmark is working on a bill, to be introduced in the next Session of congress, to give private security that access.

Fifth, a coalition of interested parties-private security companies, chambers of commerce, citizens’ groups, criminal justice agencies, And similar organizations-must bring pressure on state Legislatures to regulate the industry.

Minimum selection standards should include a background and criminal records check, evidence of physical fitness, screening for substance abuse, proof of citizenship or intent thereof, and psychological testing after hiring-for placement purposes.

Training requirements should include a minimum of 24 hours of initial classroom training and an additional 16 hours of on-the-job training. Regulations should also mandate that a documented and verifiable record of supervision be maintained for each guard location.

This five-point program, if acted on, would lead to an immediate and tangible increase in the quality of private security services. There are those who would say that this program is too ambitious, that it demands too much, that too many vested interests stand in the way. But this program can be implemented, and it will be, if enough concerned citizens and organizations and criminal justice Professionals-commit themselves to bringing it about.

That’s the challenge facing the private security industry today. It’s a challenge that can be met given dedication, integrity, and a total commitment to excellence.

Thank you.