Mitigating Costs - How does the NLW increase affect the industry

26/04/2018

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On Easter Monday, the National Living Wage (NLW) received a 33p-per-hour increase. Going from £7.50 to £7.83 increasing in line with inflation.
 

The rise represents a 4.7% increase on last year. The treasury claims it will leave employees £600 better off a year which equates to an additional £50 per month.
 

In the Security Industry there has been intense competition causing reduced wages for frontline employees and a race to the bottom to undercut competitors. We can already see where that road leads to with other operators in the facilities management sector.
 

But due to the competitiveness of the market and the recent increase in the NLW the cost can not just be absorbed. A business that thinks outside the box and finds greater efficiency and value elsewhere will come out on top. But how can it be done?
 

Integration of Technology

Integration of technology is one way which can drive efficiency within a business. Integrating technology is not about hiring robot security guards on wheels that scan hallways and squeak when they detect something is wrong. Security is much more than that.
 

Integrating technology into the workplace is about improving the performance of our officers and giving them the tools and training to work to the best of their abilities.
 

Dynamic Resourcing

Flexible resource that can react to changing demand throughout the year allows a business to reduce costs on otherwise unnecessary placements. There are not many sites that need securing with the exact same requirements all year round, especially in the retail and distribution sectors that tend to have peak periods throughout the year.
 

Having a dynamic resource of security officers, that are trained across multiple sites allows for a combination of static officers which can be bolstered by a reserve when needed. Combine this with smart data, analysing trends in footfall for example, creates a predicted demand which we can adhere to throughout the year.
 

New Models of Working

The security industry is widespread with contracts that just require a certain amount of hours to be completed each week. This setup is just run of the mill and doesn’t encourage innovation or cost savings in any way.
 

A commercial model that we find works is the Gain Share model, where the client and service provider are rewarded for the saving initiatives they discover. Whoever discovers the saving receives a larger percentage of the total capital saved. Usually split 60/40% or 70/30%.
 

Additional savings like this can drive innovation and cost savings as best practice is shared throughout the business.
 

Summary

There are multiple ways for a business to address the increase in the National Living Wage. At Cordant we are looking to go one step further.
 

In October 2017 our parent company, Cordant Group became a social enterprise looking to develop three key areas that the group can positively impact. The workplace, education and healthcare.
 

Due to this Cordant Security are looking into new ways of how we can improve the lives of our employees and the communities they work and live in.
 

One area which we aspire to achieve is becoming partners with the Living Wage Foundation. We want to be able to pay our officers an improved wage for the work they do. 
 

The increase in the National Living Wage is a welcome one which helps us take the right steps to where we aspire to be in the future.