Ways to Reduce Labor Costs in the Security Industry

Control your biggest expense — labor costs — by focusing on electronic timekeeping and drastically cut time theft and other forms of fraud.

Security services is a low-margin industry, and service contractors face enormous pressure to save money wherever possible to minimize expenses and protect revenue. Of course, with any service-based organization, labor is always the largest expense. According to IBIS World’s 2019 reports, wages account for 63.8% of a security contractor’s revenue, so managing and reducing your labor costs effectively can have a significant impact on your business. Here are tips to get you started.

1. Digitize Your Timekeeping

You can’t manage your labor costs if you can’t accurately track your labor hours. Some security companies still record their guards’ hours manually, leading to incorrectly logged hours, time-wasting processes — and worst of all — opening the door for time theft. When using a digital timekeeping system, you have access to real-time attendance information so you know who’s on site and who’s not — which helps you avoid overpaying your employees in “false time.”

There are several digital timekeeping options available that can track your employees’ hours based on your job-site needs and availability. With something as simple as a landline telephone, you can use designated phone numbers and employee ID numbers to clock your guards in and out in a matter of seconds, verifying their location with Caller ID. Mobile timekeeping lets your guards use their mobile device to clock in and out with GPS verification to confirm their location. Biometric technology is especially useful for high-security locations or events and is effective in preventing certain types of fraud like buddy punching. Use fingerprint readers, finger vein patterns or facial recognition to identify and authenticate employees at clock in.

2. Prevent Overtime Before It Starts

Overtime for hourly employees is the number one profit-killer for security companies, and it frequently isn’t billable to your clients. When the labor expense category consumes over half of your revenue, it’s important to control the things you can. So, the secret to reducing overtime? Stop it before it starts.

If you’re still using paper (and yes, that includes spreadsheets) to schedule your security officers and track their time, you typically can’t spot overtime problems until after they happen. With effective scheduling software in place, you should be able to see the schedule for the week, and also in context with adjacent weeks to spot any overtime problems before they happen. Your solution should be able to alert you to those issues as you’re scheduling, as well. As a bonus, the right software will help you schedule the right guard according to qualification and compliance needs, too.

3. Make the Most of Reports and Budgets

While monitoring time and attendance and reducing overtime can help you make a dent in your labor costs, you also need to be able to review your data regularly and easily. When you can get to the root of the problem quickly, you can focus on the right way to fix it. Dynamic reports that go beyond basic grids will allow you to find bottlenecks in your process, overtime patterns, discrepancies and exceptions.

Nearly every mobile time and attendance system generates labor data that can be tracked daily. The same goes for scheduling. Each day, managers should review reports of the previous day’s labor, broken down by job. The goal of daily hours reviews is to ensure labor doesn’t go over budget, while at the same time ensuring workers aren’t neglecting an account, leading to a quality issue. Similarly, proactively managing schedules through reports not only helps you avoid bottom-line-busting overtime, it can help you spot holes and exceptions in your schedules ahead of time to prevent failures in maintaining your contract SLAs.

Now more than ever, it’s imperative to get a handle on your hours and reduce labor costs as wages rise across the country and the cost of doing business becomes more expensive. For additional tips on saving labor costs by reducing your overtime hours, download our eBook, The Security Contractors’ Guide to Reducing Overtime.