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1997 report on New Zealand’s security industry: Constants and change

NZ Security Magazine, Feb/Mar 2018

After two decades, NZ's security industry still a 'race to the bottom'.After two decades, NZ's security industry still a 'race to the bottom'.

 

A two-decade-old report sheds intriguing light on the state of New Zealand’s security industry in 1997, and in doing so shines perhaps a more revealing light on the extent to which the industry of today remains, well, stuck in the ‘90s.

 

In his NZSA CEO’s January newsletter, Gary Morrison wrote of a report unearthed during a recent clean-up of the NZSA’s Takapuna office ahead of the association’s move to Albany. The 28-page Analysis of the New Zealand Security Industry is dated August 1997.

Prepared by three Massey University extramural students undertaking Strategic Management Studies, the purpose of the report was “to analyse the security industry, describe its history and development and predict its long-term future.”

Although the report does not constitute an exhaustive or deeply analytical research output, it nevertheless makes for intriguing reading though a 2018 lens. As Gary wrote in January, reading the paper “it was interesting to reflect on how many things have changed but also how many of the issues and points raised back then are still relevant today.”

 

Big growth potential

Written from the context of the late 1990s, the report characterises security as a new, recently privatised and largely unregulated industry, with low entry/exit barriers and swelling with opportunities for development and growth.

A key driving force for the industry’s 5.75 percent annual growth, apart from privatisation (ie. decline in scope of services provided by NZ Police and other agencies), was the growth in crime (4.46 percent annual growth in the 25 years to 1997).

As it turns out, the report correctly forecasts that the industry would continue on its growth trajectory. As Gary points out in his newsletter, the number of licensed providers has doubled over the 20-year period since, and licensed employee numbers have tripled.

In 1996, the industry had 968 license-holding businesses (a 53 percent increase on 1986) and 5,380 CoA holders (employees). It also had a high turnover of participants approaching an annual rate of 40 percent, and it was estimated there were around 1,600 illegal operators.

According to a report by Dr Trevor Bradley in the April 2017 issue of NZSM, as of December 2016, 24,294 individuals were holders of an individual license or CoA (each one covering any number of the eight licensing categories) – an over four-fold increase on the number 20 years previously.

Despite the growth, the report also highlights the industry’s lack of profitability, which it characterises as minimal.

 

Lightly regulated

According to the report, the industry was not regulated until 1974 when the Private Investigators and Security Guards Act came into effect. Even then, the industry of 1997 remained ‘lightly regulated’.

“Little restriction is placed on an individual or group wishing to set up in the industry and entry costs are low,” it observes. “An applicant for a license as a Private Investigator or a Security Guard (not being a company) must not have a criminal record and have had at least 12 months experience as an employee in the industry.”

All that’s needed to start up in the industry, it states, “is a vehicle for private services; untrained manpower for crowd control/security; a supply of intruder alarm systems and relatively little training to sell and install them.” What could go wrong?

Fast-forward to April 2011, and the Private Security Personnel and Private Investigators Act (2010), writes Dr Bradley, “finally ‘modernised’ an obsolete regulatory framework first introduced over three and a half decades earlier. Having broadened the scope of regulation and raised, albeit modestly, the barriers to entry, the Act helped narrow the wide gap that continues to separate New Zealand’s regulatory regime from more comprehensive models overseas.”

20 years on, and despite the PSPPI Act and the establishment of the Private Security Licensing Authority (PSPLA), many would argue that the industry remains under-regulated despite some recent work by the NZSA and others to fill gaps in the licensing regime left open by the 2011 legislation.

 

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Fragmented and competitive

A US security expert presenting at the 1997 NZSIA Conference, notes the report, stated “I perceive the (security) industry in New Zealand not to be an industry, rather a collection of businesses doing their own thing.” Despite ongoing consolidation and the presence of an industry association, the report highlights fragmentation as a key characteristic – and weakness of the industry.

“The industry needs to promote its ability to provide the consumer with a valued, total security solution,” it states, “rather than a specific product or part of a solution.”

In this regard, perhaps little has changed. It’s an observation, for example, unanimously echoed by experienced security consultants Bruce Couper, Craig Bidois and James Yearsley in three other articles featured in this issue of NZSM. Product-driven rather than risk-driven solutions appear to continue to undermine the credibility of the industry and its value to its customers.

Describing industry profitability as relatively low, the report quotes Ray Beatson, the then CEO of NZSIA, as attributing this “to the lack of sophistication of purchasers in evaluating the value of the security services (ie. purchasers are price driven, and unable to quantify the benefits).

The report appears to attribute this lack of sophistication to the relative youth of security as an industry in a country where “security has historically been provided by state funding of the Police.” It is perhaps for this reason that “security of our wellbeing has not been a high priority for most New Zealanders because they have, in the past, probably taken their security for granted."

Complacency is an adjective that continues to be widely used to describe New Zealanders’ attitudes to security.

The report also suggests that, as a service-based industry, security is challenged by the fact that consumers find services difficult to differentiate because of their intangible nature. “Marketing thus becomes a key success factor so customers can feel comfortable in placing their trust in the industry.”

 

Weak on training

Readers of NZSM throughout 2017 will recall a number of articles critical of the industry’s training record. While the reform of industry training settings is a pressing issue that is still very much with us, at least we can be thankful that we’ve made at least some progress since 1997.

“Companies or individuals wishing to set up in the industry are not legally required to undergo any pre-employment or induction training,” states the report, “and there is no legal requirement for employees to be trained.”

“Training in the security industry has not been structured and has either been left up to the larger companies… or else industry participants received their training through the electronics/electrical industry in the case of alarm/CCTV installers or the uniformed services for others.”

Of course, this changed somewhat with the imposition of mandatory training in October 2013 – over two years after the new Act came into effect. But like the level of regulation in the industry, the level of mandated training remains frustratingly ‘light’.

Whatever improvements may have occurred in training in the intervening 20 years, it would seem that the following observation by the report’s authors remains entirely valid: “The pool of labour personnel is generally not well skilled… As a consequence, the labour force has low bargaining power, does not command premium remuneration and thus the industry pays low wages.”

While the industry has clearly developed over the past two decades, there are key areas where it has been stuck fast. Low profits, low remuneration, insufficient training and a level of regulation incapable of putting the breaks on the industry’s ‘race to the bottom’ mean that New Zealand continues to regard the security industry as cheap.

 

RELATED ARTICLES

Mandatory training in NZ's security sector

NZ Security, April/May 2017

Security industry slammed for failure to train

NZ Security, Feb/Mar 2017

 

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