In the Physical Security Guard industry, there an ever-present balance between offering competitive wage rates, while keeping margins low. In an industry where the differential between costs and profits are very tight, it’s a challenge to provide a wage rate that keeps your costs in check, while maximizing billable hours. What is the current state of pay in physical security, and how can you ensure you are in line with the rest of the industry? We look at the trends, plus some key takeaways on assessing costs, understanding margins, and how workforce management solutions can help bridge the gap.
What is the current state of operations with respect to pay?
In the process of analyzing the challenge, we surveyed a sample set of physical security firms, ranging in various sizes and locales.
The guard firms that participated spanned a wide range throughout the continental U.S., however the majority of guard firms centered around California, New York, and Texas. This is in line with the market distribution, which is similar across the market.
Looking at the size of the firms in the market, we saw an interesting distribution in terms of number of employees. Again, looking at the distribution, the largest grouping is under 100 employees per company. This is not surprising, since the wider market has a larger segment of the market that is on the Small to Mid-Sized Business size. The size distribution fits in line with the wider market.
Within the data set, what are companies doing to ensure that they are operating efficiently and minimizing costs and keeping profits?
Let’s look at the overall pay rates. Pay will vary by size of the company, bill rates that can be contracted, and number of clients. However, within the survey, most of the respondents varied from low average of $14/hour to higher averages in the $23/hour:
In addition, when looking at operational efficiency and how the workforce is distributed, it’s important to understand the idea of Non-Billable Overtime. Incurring Non-billable Overtime can be an indication of an organization’s ability to adequately staff resources that are under hours to fill a post. The inability to post resources that are under hours can be a leading indicator of lack of resources, lack of visibility into schedules, or overall efficiency of a company’s ability to operate.
In this case, only 14% over respondents highlighted a 0% overtime rate that is not billable. The remaining 86% had some level of overtime that they incur, which cannot be billed to the client. This is a leading indicator that there is some level of risk associated with operations around resources. Some of the causal factors that lead to this are related to turnover, cost of hiring new employees, and not leveraging workforce management solutions to gain visibility and control.
Bureau of Labor Statistics (BLS) Released a new report that mirrors the pay rates
The bureau of labor statistics recently released their annual report on the Security Guard industry, highlighting the various firmographic data points that analyze similar pay rate trends. In the report, they highlight the national average wage rates for the industry:
|Mean hourly Wage|
Mean annual Wage
It also looks at the percentile ranges for the occupation:
There is a definitive difference in pay rates as you go past the 50% percentile. The distribution is not even, so there is a data point within the industry that has a higher pay rate than the average. Where do the majority of these higher pay rates lie?
Pay Rates will vary by state and location
The BLS looks at the states with the highest concentration of of jobs and mean wages in that location. You can see states and locations such as DC, Nevada, New York and others fall into the higher category.
|State||Employment (1)||Employment per thousand jobs||Location quotient (9)||Hourly mean wage||Annual mean wage (2)|
|District of Columbia||13,410||18.82||2.44||$21.16||$44,010|
Much of these areas are due to the high levels of security required (e.g. government contractors), or concentration of clients (e.g. major metropolitan locations). So the more concentrated the location, and the nature of the occupational requirements will dictate the skill level and overall pay rate of the guard.
The Takeaway: Understanding local Pay Rates help you Remain Competitive
When you look at the statistics, it’s clear that there is a true variance in the overall pay rates for physical security. Companies looking to remain competitive should take this data to assess how they are falling in line with the wage and labor rates, respective to the location and clientele in which they are working. A few key points to consider:
- Pay Rates will Vary by Skill Set: Armed guards are typically paid more than unarmed. It’s important to understand the nuances of the workforce to accurately determine the pay
- Bill Rates are Tied to Pay: Depending on how you bill your clients, the margins you can afford with determine the pay rates. Margins are already tight, and the constant balance between remaining competitive on wage will ensuring profit margins is key
- Seek other ways to improve Costs: Reducing Turnover, Non-billable Overtime, and overall Operational efficiency can offset some of the costs from employee wage and labor. Many will implement a workforce management solution to help drive efficiencies through visibility and control in operations.
Statistics are just that; numbers that point out how the industry looks as a whole. When you get down into operations, it gets a little more complex. Ensuring that you are meeting the proper wage rates for your employees, remaining operationally efficient and taking any cost mitigation and turning them into profit is important to ensuring your security workforce thrives.