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VSG, Compass Interview

by msecadm4921

One of the main changes in UK manned guarding has been Compass’ acquisition of VSG last year. Keith Francis, MD of VSG, pictured, and Steve Davies, MD of Eurest Services (Facilities Management), part of Compass Group, spoke to Mark Rowe.

So: how did one of the largest names in support services, Compass, come to acquire one of the largest UK guarding contractors, ten-year-old VSG? Steve Davies recalled the group CEO Richard Cousins in 2009 made a change in the way he described the company: food and support services, rather than only food services. Indeed you may know Compass as caterers, which is where the company has come from. Now it’s a FTSE 40 company; as Steve says, clients over the years ask the contractor to take on other services, whether cleaning, front desk or security. Compass in 2009 became an SIA approved contractor, which Steve recalled was ‘one of the best kept secrets in the security market’. Steve, for seven years at Reliance Security, joined Compass in January 2010. He recalled his interview in 2009; on arriving at head office, seeing the SIA-ACS plaque outside. The group had some 650 licensed security officers. The ways to grow were by winning more business; or, to go into the market and acquire. That would be quicker. Compass, then, looked for potential buys, ‘and very quickly identified one player we thought would be a fit’. The fit was defined by business culture, and the sort of clients, and retention rate of high 90s (around 95 per cent, that is). Steve met Keith at VSG’s Northampton head office, and when it came the acquisition was ‘very quick’, Steve recalled. Steve and Keith share the same boardroom. VSG with its 6500 officers is stand-alone; those 650 Compass officers are now part of VSG. For those who note these sorts of things, Keith Francis’ business card mentions only VSG, not Compass; his email address is a VSG one; and the VSG website is still running as before the summer 2010 acquisition. <br><br>Steve Davies spoke of ‘enormous synergies’ between the two companies; the opportunity to cross-sell, and to deliver a wider range of services. Opportunity, too, is a word that Keith Francis repeatedly used. “The thing that struck me very early on was the people agenda,” Keith said of Compass. “How strong that was within the organisation. That was a mirror of VSG in terms of the development we put into our employees across the UK.” Keith said: “Everything is about customer service, and how to improve it and how to focus on it … ultimately customer service will win and retain clients.” Compass, he added, have a ‘client base to die for’: “It will also take us into new markets.” Defence, schools and hospitals are among the sectors Compass are in. Work will, and has, come across VSG’s desk that would not have otherwise. <br><br>We were speaking at a client’s site, the National Grid head office on the green outskirts of Warwick. While the host asked that its security measures not be discussed, certainly the facilities management was faultless – and Steve Davies did ask me how I found the service. To measure service the contractor might have SLAs or KPIs, that measure customer satisfaction, by a ‘score-card’. Keith Francis defined service: “It’s about doing the mundane things, brilliantly.” It is, as he went on, how clients perceive the service: “It’s not how well we think we are doing, it’s how well the client thinks we are doing.” Again, this relentless return to the serving the customer. “The [security] industry has come a massive way in ten years,” Keith said. “It’s recognised people, it’s recognised development.” VSG is bringing in an apprenticeship scheme – maybe an unfortunate term, as by apprentice we’re not talking of school-leavers, but industry entrants. Keith Francis confirmed that the apprenticeships would have happened whatever happened to the Security Industry Authority; this is part of UK industry-wide training qualifications. <br><br>I asked about how manned guarding relates to technology. To recap, VSG moved into systems in 2007; it has a remote monitoring centre at its Northampton head office. Keith Francis began by answering in terms of a security officer with technology. The guarding company runs live roster management software that staff can view. Putting technology literally into the hand of the officer such as a PDA, that can save energy, and hence costs, and can add value; these, Keith argued, will be the key differentiators in the market. Steve Davies spoke similarly of facilities management staff on the road in vans. Say a client report something, such as a spill. Or there isn’t any soap in the dispenser in the toilets. The client emails or rings a central help desk (in Birmingham, in this case). That’s given a response time and a rectification time. The software finds the nearest person with the right skills to resolve the job. It’s sent to the FM employee’s PDA. The employee picks up the job and the co-ordinates of where to go. They drive there in the van, do the job, and confirm on the PDA that the job is ‘closed’. That goes back to the help desk; they send an email to the customer. In a set fraction of cases, the contractor asks for feedback, to measure the customer service on the job. The same process can apply for a mechanical and electrical engineer for instance. <br><br>What did I think? the men asked me. I avoided the question. Keith Francis took it up: “If you aren’t able to meet the needs of a client’s agenda, they will go elsewhere … I don’t think we would be as successful as we are today, if we were just delivering manned guarding into the marketplace.” Tenders, he added, are far more complex in their requirements than they may have been three years ago – asking for costs down, high value. “We have been able to successfully reduce manpower, and the cost of manpower, for many of our clients, while at the same time increasing the level of security, the value of security … I think we are only at the beginning of that [integration]; it has been talked about a long time in our industry.” The economic client, Keith suggested, is driving this; ending a reluctance to use technology. I wondered aloud if the recession was good or bad for private security; or good and bad? There are commercial pressures out there, Keith said. “We have to change, we can’t continue to deliver the model that was pre-2007. We have to be more efficient, in the way that we deliver.” Hence Keith’s repeated use of that word opportunity: there are a lot of opportunities out there. Steve recalled the days of the charge rate, and the price of the guarding; and the officer’s pay rate. In the difference lay the contractor’s margin. In a word, 168 – the 24 hours, seven days of the week you placed an officer on a site; or multiples of that 168. The ‘168’, Steve added, is no longer enough to give the client what they are looking for. Why not replace the officer patrolling at night with remotely-monitored CCTV? Keith spoke of reducing a client’s guarding bill by £3m; with a payback from the use of electronic security in nine months. “The challenge there is understanding their [client] business processes and integrating the security, to allow them [the client] to perform their business while using the latest technology to secure product; people; processes. And it’s those type of developments that add real value and break historical practices … so we don’t mind removing people from a guarding solution. Because we get a happier client, increased value and greater leverage in terms of retention as well. So it should be welcome; I think the market is big enough and wide enough that we can deploy our personnel on to other locations and at this particular project [the £3m reduced one] we have successfully deployed 100 per cent of the people who were removed from that contract. That’s a win-win for everybody.” Some clients, as Steve said, will not want to see their guard go, in favour of a CCTV camera. But take video analytics. As Keith said, it can add value, identifying people, aiding loss prevention, and as a marketing tool: “And that’s such a million miles away from providing a manned guard for 60 hours a week.” As he hinted there, he believes that the security industry needs to recognise that we cannot keep on the road of long working hours for officers. Which brings us back to that ‘people agenda’.

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