Q&A with Marc-André Aubé, Chief Operating Officer, Garda
After years of acquisitions, Garda has been in the process of streamlining its back office and readying itself to maintain its contract with the Canadian Air Transport Security Authority. The company’s Chief Operating Officer talks about how important the company’s employees are to its future success.
Canadian Security: You have been busy integrating all the companies it acquired over the last few years. What has that been like?
Marc-André Aubé: Since 2007 the management team has been busy repositioning the company on a solid basis from a systems standpoint coast-to-coast. The goal was to integrate all of the smaller companies which totalled about 20 different security solutions companies that we’ve purchased.
It was a challenge culturally to put all these companies together over the last four years. Our mission was to put them on a common system. It’s been more than a year and we have stabilized from a back office standpoint, and we are able to move to the next step. Our mission now is all about recruiting the right people. The challenge of the next decade will be staffing. We need to find the right people with the right skills that really differentiate us from the others and that’s what we’ve been focused on for the last year — finding the right tools to recruit and attract the best talent.
CS: How many employees does Garda have now?
Aubé: At last count we have about 20,000 employees in Canada. Every division has had growth. Pre-employment screening is growing very quickly. We have won some very large contracts with big organizations. If you look at the U.S., 95 per cent of organizations will do a criminal record check. In Canada it’s 35 per cent. At the same time, seven per cent will have a criminal record and 10 per cent have a credit problem. That’s not to say they shouldn’t be hired, but if you’re paying a head hunting firm to find someone why wouldn’t you pay an extra $50 for a background check?
It’s cheap to do a criminal and credit check in Canada and the price goes down with volume. We are also now checking suppliers for large corporations. This is a booming business and the demand is there. When companies get a presentation from us the reaction is usually, “Why weren’t we doing this before?” Or, “Why are we paying people internally when we can reduce costs by outsourcing it?” It’s an area that is growing for us by about 25 per cent a year. Some companies are doing background checks internally with their investigation departments and we tell them they can reduce their costs dramatically by outsourcing the task to us.
CS: What are you looking for when hiring new staff? Garda currently has a significant piece of the airport screening contract at Canada’s airports. The Canadian Air Transport Security Authority (CATSA) has made it clear it wants better customer service from screeners at airports. Are you factoring that into your hiring and training?
Aubé: Generally speaking, I think CATSA and Garda are going in the right direction. The public deserves better quality of service. Our employees are more sensitive to providing the level of service the passenger deserves. It’s a sensitive issue in the U.S., so it’s had a ripple effect here. Definitely, the CATSA RFP is designed in that way and CATSA wants to improve the passenger flow. We are also focused more on increasing passenger flow and quality of service. It is a bit of a change — in the past there was more emphasis on security and even now the focus is on security but with more of an emphasis on customer service. What it comes down to is finding the right people depending on the needs of our clients. We have the entire spectrum from entry-level security to the higher more skilled people and everyone has a pay scale and bill rate that matches the need. That is done through a good scheduling system that we have, consistent across the country, which allows us to find in our database the right people with the right skills clients want. We’re also using Facebook and making better use of social networks to attract the best people. More importantly, we pay more. Paying more and giving more benefits helps us attract better people.
CS: And when the economy picks up it’s going to be even tougher to find those people.
Aubé: Yes, and in 2007 we did have a hard time finding those people. It was a mess; we had no résumés coming in and you had to pay more. But in 2008 the economy collapsed and we had an unemployment rate of 10 per cent which gave us a break in recruiting. But we’re preparing for the next wave. We are going to hit a wall and wages are going up. We’ve all had a break in the last two years, especially in Ontario, for finding the right people. It’s tough to find 25-year-olds who want to make $12/hour.
CS: How do you convince clients that your guards are worth more than your competitor’s guards?
Aubé: We try to have similar pricing to our competitors but try and pay a little more and have them more focused and better trained so that less supervision is required. It’s really an HR-driven strategy.
CS: The guard companies who qualified to bid on the CATSA RFP are busy preparing their response. Garda is an incumbent going into this. What is your position on the way it is being handled?
Aubé: We are confident, even though they have split the territory in four regions (Quebec, Atlantic Canada, Nunavut (Iqualuit); Ontario; Western Provinces and NWT; B.C. and Yukon) that we will keep the level of business we currently have with CATSA. We are confident we won’t reduce our revenue with this client. We also feel that government should or will look at this from a national security perspective. We hope they prefer a Canadian provider rather than a foreign organization. There are at least 12 Canadian providers and that means CATSA doesn’t need to go outside of Canada to find a provider. We understand that it’s likely there will be new suppliers as they want to reduce their risk.
CS: You view yourself as an outsourced HR organization. Some of your competitors are touting themselves as technology providers as well as providers of guard services — integrators of access control and CCTV. Are you interested in getting into that area as well?
Aubé: I want the technology to be concentrated on recruiting and scheduling. When I talk to my clients, most of them want a sharp person who smiles, is on time and is courteous because a security guard is usually the first person seen in their organization. I don’t think guard tour software is a big differentiator; it’s not our focus and cameras aren’t either. We feel the market is well served by the ADTs and Chubbs of this world. They can import hardware from China at a fraction of my cost. I’d rather partner up with them than try and compete.
We are about to deploy a tool at Pearson to help with scheduling — that’s to help my client manage customer flow. As you go through the airport in the afternoon they aren’t busy. More and more they want us to optimize the schedule and put more people on when more travellers are there.
CS: You recently purchased a company called Kolossal in Quebec. What is that company and are you starting to make acquisitions again?
Aubé: Yes, we’re ready to do acquisitions again. We were in a platform creation mode and now we have processes in place everywhere in the country. There was an opportunity there. The owner was 64 years old and ready to retire and the price was right — $7 million for a book of business of $65 million. We feel once this company is re-organized and merged into our system it will become more profitable and a nice acquisition.
CS: You didn’t come from a security background. How did you find you way to Garda?
Aubé: I’m a chemical engineer and I worked in the pulp and paper industry. I also hold an MBA. I worked for eight years in corporate finance, financing acquisitions and helping companies grow. The last one I helped grow was Garda and it was my client at the time. In 2007 the last acquisition was a relatively big one and it needed someone to manage it while the U.S. operation was being re-organized. I accepted the job with the Canadian operation with the goal of merging everything and ensuring some financial synergies, but also to make sure operational synergies happen so the client sees the positive results.
CS: What’s your impression of the security industry?
Aubé: When I talk to my team and when I talk to people outside the company I say we are a good company in a weak industry. The industry, generally speaking, is not very disciplined — it does not always understand cost structures; a lot of people are providing a service but don’t understand exactly the real cost of doing business. For example, if you call an HR outsourcing company and you need a receptionist nobody will be surprised to hear they may have to pay $25/hour for a receptionist. With no training, the person is paid $12. If you ask for security guard we will sometimes bill $20/hour and some clients will say that’s too expensive and there are ways to pay them less and yet the guard is being asked to protect something. More often they are protecting assets often in the hundreds of millions of dollars. It’s something we’re trying to work around — it’s one of the challenges of the industry, generally speaking. It’s an industry that needs to be consolidated, that needs to be organized and disciplined — for the benefits of clients as well. It needs to reflect professionalism. We are paying more than the industry but we still see companies paying wages that are more reflective of 30 years ago.
CS: Why do you think that is? We see health-care organizations taking the lowest bid. Is it the economy that says a public health organization is going to find its cost savings from its guard contract? Is this still about educating the client?
Aubé: In health care we have almost every hospital in Quebec and there is a fantastic opportunity for us in health care. The public sector is pushing the price downward and it’s hard to fight against. They want to reduce their budget and I understand that but there is also the argument that security people are less costly to use because of the efficiency of the administration and the low margins in this business. We’re barely making five per cent margin. We’re one of the largest with economies of scale and we’re barely making five per cent margin.
There is opportunity there for users to use security guards in ways to reduce the cost even more. Where we would like hospitals to move to is from asking for lowest cost per hour which drives the wages down and the quality down and start asking about the total program cost. Instead of looking at 25 cents an hour look at a $5 million contract, reduce it to $4 million and get a lot more efficiency out of it and you save a lot more. That’s what we’re pushing them to do — try to look at it from a global standpoint by improving the security program by adding better people and processes and talent instead of squeezing the wage of the employee. You can’t pay someone $10/hr and expect a good result.
CS: Where do you want Garda to be going in the future?
Aubé: We want to double the size of this organization in the next five to seven years. We feel we can get $1 billion in revenue in Canada for security solutions including investigations, pre-employment and screening operations. We feel the market is growing at roughly six per cent a year. Alberta is booming and the economy is growing. We are planning for growth of seven to 10 per cent per year organically and the rest will come from acquisitions. We have access to credit and the bond market and there’s appetite for investors to invest in this company. We have $600 million in revenue in the U.S. from cash logistics. The market in the U.S. is picking up and in the Middle East we have about $110 million in revenue.
CS: A few months ago Garda President and CEO Stephan Cretier said public policing organizations need to give up some of the work they are currently providing and let private security take it over. Do you think that will happen more as local government budgets are squeezed?
Aubé: If governments want to save costs this is a huge opportunity for them to outsource to the private sector. You see police officers patrolling parks; we can do that for $20/hour — a fraction of the cost. There’s hundreds of millions of dollars of savings there and yes, there are issues with the police unions but if governments want to make changes they can. They should let the private sector do it at less cost. We have the solution but it needs political will. Compared to what we see in Europe — they realized decades ago that a lot of security work could be handled by private sector in an outsourced model.