Two’s company

As chief executive and deputy chief executive respectively of the UK’s first ‘super contractor’, Lars Norby Johansen and Nick Buckles have the weight of massive responsibility on their shoulders.

Last year’s merger of Danish security giant Group 4 Falck with Britain’s leading commercial player Securicor has created a protection behemoth. Group 4 Securicor currently operates in 110 countries worldwide, employs 340,000 people – the company is now one of the biggest employers in this country, no less – and oversees interests in manned and electronic security, cash services and prisoner escort programmes spanning both public and private arenas.

On home shores, the company’s turnover (estimated to be somewhere in the region of £340-£360 million per annum) is almost double that of its nearest competitor, Reliance Security Services.

There’s a huge onus on Johansen and Buckles, then, to be the exemplars of Best Practice, tireless campaigners for first class Terms and Conditions among the workforce (not just at Group 4 Securicor, but throughout the industry) and to be seen to be at the forefront of the Security Industry Authority’s (SIA) drive for better standards.

The industry expects – and, in some cases, demands – that Group 4 Securicor deliver. So does the equity market. So too the Trade Unions. Ditto the blue chip clients. All of which calls for strong leadership skills, incisive commercial acumen and clarity of vision.

On arrival at the company’s refitted Crawley headquarters, a mere stone’s throw from Gatwick Airport, it’s clear that Johansen and Buckles mean business. “We want to become recognised as the world leader in security provision,” states Johansen, the softly-spoken, 55-year-old Dane who started his working life as an assistant professor at Odense University. “Basically, we want to be the preferred supplier. We shouldn’t be in business if we have no ambition to better ourselves.”

In this context, the only way in which Group 4 Securicor can improve is by ousting major rival Securitas from the Number One slot in the global rankings. “It’s an incentive for us to have a strong competitor like Securitas,” adds Johansen. “They’re a very good company with a fantastic trading record. The fact that they have been the leader of the pack for some time now has helped the rest of us, so we can only hope that they continue to perform strongly, but we most certainly harbour a desire to be world leader and world Number One.” A tactful, well-reasoned response quite obviously underpinned by a steely determinism.

Continuing with the global theme for a moment, Group 4 Securicor grandly promotes itself as a ‘global security solutions provider’. Like a good many other corporate sound bites, this phrase is somewhat open to interpretation. What, one wonders, is Johansen’s definition?

“Organised crime is becoming more complex, and more global,” he states from within the confines of the Scandinavian-style pine and chrome-rich surroundings of Group 4 Securicor’s ultra-sleek Conference Room. “Modern criminal gangs are global. They have no respect for borders. Leading on from this, and more importantly perhaps, terrorism has taken on a far greater global perspective. At the same time, our clients have increasingly become more global in their outlook. We must feed the needs of those customers. You cannot do so by selling ‘standard’ products. No two countries are identical, and no two industries are the same, which is why we must be flexible enough to provide tailor-made security solutions combining different components.”

Reasons behind the merger

Indeed, this was a prime factor behind the decision to merge Group 4 Falck’s security businesses with those of Securicor. Group 4’s electronic security division in Europe turns over £370 million, offering new possibilities for synergies with Securicor’s established security guarding operation. Likewise, Securicor’s growing strength in cash services plugs an accepted weakness at Group 4.

“The development of integrating systems and software that will enable our customers to combine manned security with electronic alternatives is the future,” suggests Johansen. “Clients will only attain the highest levels of security provision in the most efficient way by doing so.” To this end, Johansen isn’t ruling out acquisitions of what he terms “specific competencies” in the IT sector such that Group 4 Securicor might improve on its integrated solutions capabilities.

Exuding a quiet reassurance, Johansen goes on to explain that he’s just returned from a two-week, fact-finding mission in the Lebanon, Syria and Jordan where Group 4 Securicor is looking to open up new operations. Present clients in the Middle East include some of the biggest international banks whose management teams simply cannot rely on local contractors – they need a high quality global player. Johansen could have followed Securitas’ philosophy here and provided security by way of sub-contractors, but decided against the idea. “If you’re talking about quality security provision, you don’t want to be dealing with sub-contractors,” explains Johansen, who first became chief executive of security and fire safety specialist Falck some 16 years ago.

Interestingly, Johansen is now looking to move Group 4 Securicor into the Chinese market, where the growth potential is enormous. He presided over a similar incursion 12 years ago in India, when starting a security division from scratch that now employs 70,000 people. Johansen is immensely proud of the fact that his vision turned into a profitable business currently growing at a rate of 30% per annum. “The ball started rolling with our contracts at the British and American Embassies,” continues Johansen. “The security managers there wouldn’t work with local sub-contractors. ‘Global’ is a nice buzz phrase, but I can assure you that where security’s concerned there’s something behind it.”

Johansen is also looking at start-ups in Australia, Spain and Portugal. “For a variety of reasons we’re not in those regions yet,” he says, “but you would expect us, one way or another, to find the right client organisations with which to partner.” Of that there can be little doubt.

At this point in the conversation, Nick Buckles – the clean-cut, 43-year-old former chief executive of Securicor who will take on Johansen’s role when the Dane decides to step down – outlines another reason for Group 4 Securicor’s enhanced global drive.

“In the US,” suggests Buckles, “directors of security are beginning to play a much stronger role in determining who their security providers are throughout their operations. They’re starting to piece together global tenders for guarding and electronics so that they know the risks faced in all locations will be dealt with in a consistent manner. We believe that trend, coupled with some additional drive from dedicated procurement departments, is the starting point for many more global framework agreements.”

Security is so important now that the buying decisions must be made by people who know the subject and the issues involved almost inside-out. That is true whether financial risk or physical risk is the prime concern. Security has to be at the top of the agenda for every Board of Directors

Lars Norby Johansen, chief executive, Group 4 Securicor

Squaring two circles?

While seeking to broaden operations worldwide, Johansen and Buckles are still in the throes of knitting together the old Group 4 Falck and Securicor operations into one cohesive whole.

Speaking from an outsider’s perspective, there certainly appeared to be contrasting styles at play pre-merger. On the one hand there was Securicor, a proudly British operation expertly run by Buckles with an almost Civil Service-like precision, whereas Group 4 Falck exhibited a clear preference for a more relaxed – but nonetheless focused – commercial machinery based on consensus. How does that square with the British approach to running big people businesses?

Johansen is swift to dismiss any talk of differences in management style and culture. “In terms of values, norms and beliefs, I do sincerely believe that the two organisations were very much alike. The merger has necessarily entailed meticulous planning, but so far we’ve been able to orchestrate the process with no problems at all.”

Nonetheless, he does point out that there have been “victims” along the way. “Right from the start, we’ve adhered to the principle of taking the best person for the job. That has created disturbances, but it was never about the management team having to be 50% Group 4 and 50% Securicor.” There’s clearly a ruthless streak behind Johansen’s serene exterior, but that’s an essential trait underpinning any successful businessman.

If truth be told, at Board level there’s a pretty even representation from the old companies. With the closure of Group 4 Falck’s head office in Copenhagen it was somewhat inevitable that the new structure would be Securicor-biased.

At the same time, though, the refitted head office is designed as the catalyst for a new culture that’s neither Group 4 nor Securicor. “The culture is now consensus-oriented,” states Johansen with obvious gusto. “There’s enhanced quality in the decision-making processes. The management team is involved in daily discussions about the business, and that’s great. I wasn’t unhappy with the way I was working before, but I do feel the set-up is even better now.”

Buckles points out that the Securicor business model was all about a larger executive team with a strong functional input on Human Resources, marketing and finance. In contrast, the Group 4 model necessarily centred on operational expertise. “In the new company, the operational management is strongly provided by the Group 4 side of the equation, the functional management by Securicor,” explains Buckles. “That’s why we have the ideal blend for the UK.”

The proof of the pudding, as they say, is in the eating. At the tail end of 2004, Group 4 Securicor held its first integrated management conference in Stratford-upon-Avon, a two-day event designed to promote the ethos of the new company and explore its core values. “I have been with Group 4 for so many years that it takes a lot to surprise me about the business,” asserts Johansen, “but I was genuinely amazed at how positively the merger is being viewed. There’s a tangible feeling that we can create an even better company, and attain that market-leading position.”

Buckles chips in: “We have a bigger critical mass and a larger customer base to work with. When you operate with a lower overhead base for larger revenues, you can begin to reshuffle that overhead a little and work on those areas that you perhaps couldn’t in the past.”

Value-added security services

One area that will demand attention post-licensing is the concept of an ‘added value’ service. There are two sides to this equation. You might talk about ‘added-in value’ (whereby the contractor creates a greater reassurance of a positive end result in the form of secure premises) or ‘added-to value’ (wherein the service provider contributes something above and beyond basic client requirements).

“The added-in perspective is more realistic, to my mind,” asserts Buckles. “First and foremost, we’ve always positioned the company as a security business, providing better, more efficient and more effective security. That’s how we differentiate from those companies who also like to offer cleaning and maintenance services. If you’re talking about added value in general terms, there isn’t a great opportunity there. To be honest, there’s always a danger that you’ll dilute the core offering through diversification. However, there are ways in which you can provide security that will enhance your image among your customers’ own clients. Once the basic security solutions are in place, it’s all about going that extra mile in terms of how you deal with clients’ customers. That said, I don’t believe that we can fundamentally change the role of the security officer.”

Johansen adds his views to the mix. “Security is a basic need. With all due respect, it holds a position in any client organisation’s hierarchy that’s far higher than cleaning or general facilities issues. In contrast to some of the service conglomerates, we don’t believe in the theory of one-stop shopping.”

Ramping his argument up a gear or two, Johansen feels it’s important to be dealing with decision-makers who aren’t just professional procurers. “Security is so important now that the buying decisions must be made by people who know the subject and the issues involved almost inside-out. Sadly, that isn’t always the case. If you look at what’s required of the Board of Directors these days, in terms of corporate governance and dealing with risk management issues and the like, then security is of the utmost importance. That is true whether financial risk or physical risk is the prime concern. Security has to be at the top of the agenda for every Board of Directors.”

A message which in-house managers would do well to communicate with the powers-that-be in their own organisations.

Regulation will create a new quality in the marketplace. Contractors are going to be forced into displaying a really professional approach just to meet the terms laid down by the SIA. Those who can make licensing work will be those solutions providers who have the ability to manage change

Nick Buckles, deputy chief executive, Group 4 Securicor

Client support is essential

At the moment, 70% of Group 4 Securicor’s revenue is generated by manned security, and Johansen is keen to enhance the industry’s reputation by offering better training for his officers in unison with improved career paths and higher wages. It’s painfully evident that this will only be possible with client support.

For his part, Buckles is the first to admit that Securitas has adopted a quality approach in this regard, and has constantly striven to raise the Terms and Conditions available to officers. “As long as you have the two industry leaders operating in this way then that can only be good for the market,” stresses Buckles. “However, if one of them were to decide on becoming the lowest cost operator in every sector, undercutting and growing market share through aggressive pricing, then that wouldn’t be a stable situation in which to improve security provision.”

A practice that far too many contractors have adopted for too long, on occasion having been forced down that route by the clients.

How does it feel being the standard-bearer for the UK contracting fraternity? Having thought for a moment, Johansen clasps his hands tightly together and leans forward. “We have to set higher standards. If we don’t, then we cannot hope to grow and develop as a company. It really is that simple. That process is all part of our philosophy in any case.”

Johansen supports this declaration by stating that Group 4 Securicor has instigated a huge educational programme, taking 1,500 officers away from the business every month so that they can be trained for licensing. “We’re acting in a responsible manner. Behaving as the market leader should behave. We’re not sitting around and waiting to see what our competitors might do.”

Buckles is now more confident than ever that there will be a big change for the better post-licensing. “Regulation will create a new quality in the marketplace,” suggests Buckles who, like Johansen, is fully supportive of the SIA’s work. “Contractors are going to be forced into displaying a really professional approach just to meet the terms laid down by the SIA. There’s a huge amount of time involved in preparing for regulation, while the project management and organisational skills needed are extremely high. Those who can make licensing work will be those solutions providers who have the ability to manage change.”

To date, the UK manned security business of Group 4 Securicor has exhibited very high retention rates. The ideal scenario for clients and contractor alike. What’s the secret?

“Simple,” chips in Johansen. “We pay well. We also respect the Trade Unions, with whom we have a regular dialogue. We’re a large employer, and we take that responsibility very seriously indeed. The fact that we’re now a fairly sizeable operation means that we can offer a wider range of careers which can only be beneficial in the longer term.”

Are they not worried that, once licensed, some of their officers might jump ship for pastures new? “It’s difficult to second guess issues like that,” says Buckles, who began his career at Securicor as a project accountant in 1995, rising to chief executive of the Securicor Group within four years. “As long as we’re flexible we would be able to cope with that. Flexibility, and your ability to respond quickly to market conditions, is what really counts.”

Strategy for the UK

Globally, the recession of the past few years has affected Group 4 Securicor as it has many other corporations whose tentacles spread far and wide. In the UK, Johansen and Buckles are, for the time being at least, pre-occupied with the integration process. It’s not surprising, therefore, to discover that Johansen doesn’t envisage any organic growth in 2005.

Buckles wants to ensure that the company retains more customers than ever this year, which in itself could be viewed as something of an organic growth policy in its own right. “Thereafter, we’ll have a great position from which to build,” he states. “There are some good growth niches to be exploited.”

When pressed on what those niches might be, Buckles will not elaborate. He does reveal a yearning for more guarding company acquisitions, however, and a desire to invest in further electronic security operations in the UK – encompassing intruder alarms, access control, biometrics and CCTV – to support Group 4 Securicor’s existing access control facility at Tewkesbury.

Buckles can also see opportunities arising from membership of the SIA’s Approved Contractor Scheme. “Government departments and private industrial users who haven’t traditionally been that keen on outsourcing security will take another look at private sector providers,” claims Buckles.

With Buckles looking after the numbers, logistics and control processes and Johansen sticking to what he knows best – ie strategy and entrepreneurship – it may come to pass that the Essex-born policeman’s son and the Danish academic can together be the modern day saviours of an industry that, for numerous reasons, has never enjoyed the respect it deserves and demands. It’s a tremendous opportunity that lies before them. n