Guardsmark, L.L.C.

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Guardsmark, L.L.C.

10 Rockefeller Plaza
New York, New York 10020-1903
U.S.A.
Telephone: (212) 765-8226
Toll Free: (800) 238-5878
Fax: (212) 603-3854
Web site: http://www.guardsmark.com

Private Company
Incorporated: 1963
Employees: 18,500
Sales: $509 million (2005 est.)
NAIC: 541380 Testing Laboratories; 561611 Investigation Services; 561612 Security Guards and Patrol Services

Guardsmark, L.L.C. is a leading security company. Related services include drug testing, investigation and background checks, and consulting. The company is active in 400 North American cities. According to the company, Guardsmark hires only one in every 50 applicants. A lengthy written application, background check, and drug test await job seekers.

ORIGINS

Guardsmark, L.L.C. was founded in Memphis, Tennessee, in July 1963 by Ira A. Lipman. Lipman was just 22 years old when he started the company but had years of experience helping at his father's detective agency, including traveling cross country to drum up sales. He told Business Week that he started Guardsmark with a $1,000 loan from his father, who was not interested in providing guard services himself. A full-page ad in a regional edition of Fortune was an early, low-budget marketing coup for the company, Lipman added.

Guardsmark expanded in its first dozen years through internal growth and a couple of acquisitions. The center of its business was guarding factories, but it also worked in other settings, including screening for weapons at airports. After attracting some venture capital, branch offices were added in Boston, Atlanta, and San Francisco. Fifteen percent of company stock was floated publicly in 1970, raising $2 million, as Guardsmark acquired Lipman's father's detective agency. It was taken private again by Lipman in 1979, however.

By 1974, the company had 32 offices coast to coast and annual revenues of $20 million, about one-tenth those of industry leader Pinkerton's Inc. Guardsman was the seventh largest security firm in the United States, according to Business Week, and the only major nonunion player. The market remained highly fragmented, with at least 3,000 smaller firms competing. Lipman made a brash prediction to Business Week : "During my lifetime, Guardsmark will … be bigger than Brink's and Pinkerton's."

A BOOMING INDUSTRY IN THE 1980S

The industry was growing quickly from a shift to outsourcing of security by corporations. Guardsmark attained revenues of $56 million in 1983. Four years later, when sales were about $100 million a year, Lipman told Forbes that the typical company could save 30 percent by outsourcing its security.

Part of Guardsmark's pitch was the selectivity of its hiring. The company was then hiring about one in two dozen applicants. In 1976, after a shooting incident in Arkansas involving one of its employees, the company became the first security firm to license the Minnesota Multiphasic Personality Inventory (MMPI) from the University of Minnesota. Guardsmark developed a comprehensive drug testing program in the 1980s. A bachelor's degree became a prerequisite for managerial positions in 1981. The company eventually hired a psychologist to direct its human resources.

Although Guardsmark charged more than twice the average for its guards, according to Time, the extensive screening helped keep unfortunate incidents, and insurance rates, down. In addition, fewer than 1 percent of Guardsmark's guards carried firearms, noted Forbes, offering more savings on liability insurance. Overall the industry average was around 10 percent, reported Time in 1992.

RAISING STANDARDS IN THE 1990S

By 1990, Guardsmark had almost 8,000 employees. It was active in more than 400 cities and had more than 80 branches. According to Crain's New York Business, the Persian Gulf War in the early 1990s prompted new interest in security among U.S. companies concerned with the possibility of retaliation by terrorists. The total number of security firms in the United States was estimated at 13,000.

Increased crime during slow economies made the security business resistant to recessions. In the downsizing of the early 1990s, many companies were concerned about potential threats from angry former employees. More were requiring photo ID badges and other measures recommended by Guardsmark to control building access.

A wave of stories relating to public shootings gripped the American media. Some of these involved security guards gone bad, reported Time magazine in its scathing March 1992 exposé of the $15 billion private security industry, which employed about one million people, nearly twice as many as were in public law enforcement. Time described the industry as "a virtual dumping ground for the unstable, the dishonest and the violent," but praised Guardsmark for going against the grain through its rigorous selection process. For his part, Ira Lipman was publishing ads and articles calling for higher standards for the industry.

Guardsmark had 9,400 employees in 1995, when revenues were $175 million. A notable new hire was Weldon L. Kennedy, formerly deputy director of the FBI, who became Guardsmark's vice-chairman in April 1995.

By the end of the decade, Guardsmark was celebrating annual sales of more than $300 million. After growing at a double-digit rate for more than 20 years, it was the country's fifth largest security firm. It boasted a greater than 90 percent customer retention rate. The company had about 115 branch offices in the United States and Canada and employed around 14,000 employees. Further, the company was held up as an example of excellence by Time magazine as well as business guru Tom Peters.

RECORD REVENUES IN 2000 AND BEYOND

Revenues reached a new record, $342 million, in 2000, when the company employed 15,500 people. In September of that year, it announced that it had attained no-cost health insurance for all of its employees, a first among national security firms. Guardsmark said its employee turnover was a fraction of the industry average. By taking better care of its people than its rivals, it was able to attract better and more loyal staff. The company had become, according to Lipman, the largest private employer of former FBI personnel. Associates told the Memphis Business Journal that the firm's growth was due in large part to the dedication and focus of founder Ira Lipman. By this time, three of his sons had been brought into the business.

COMPANY PERSPECTIVES

Guardsmark takes a strategic approach to people, education, and management—proving that the best protection for businesses can only be achieved through uncompromising standards.

Guardsmark embodies the characteristics of outstanding security: top-quality people, extensive learning and development, and focused management.

This is the Guardsmark difference: a company founded on doing the right thing.

Guardsmark kept its offices open 24 hours a day in the immediate aftermath of the September 11, 2001 terrorist attacks on the United States. The company's thorough background checking of employees played in its favor in the anxious corporate environment that followed. Reflecting the need for security in an uncertain world, the company began using the slogan, "The time for urgency is now." Officials told the journal T&D that Guardsmark was constantly updating its training to meet new threats. Employment and revenues reached record heights in 2002 as the company opened 17 new offices.

The atmosphere of heightened security helped Guardsmark get legislation passed to allow private security companies better access to government records for background screening of prospective employees. Guardsmark had been lobbying for the changes since the 1980s. It later emerged in the New York Post and other papers that 30 senior officials at the company had paid $200,000 to five senators sponsoring the legislation, which was not technically illegal but did raise eyebrows among public watchdogs.

A new limited liability company, Guardsmark, L.L.C., was formed in 2003. However it was structured, the company was continuing to grow. Revenues exceeded $500 million by 2005. Guardsmark then had about 18,500 employees. It was a big corporate family, but not an overly friendly one; workers were ordered not to "fraternize on or off duty." The controversial policy was upheld by the National Labor Relations Board in June 2005. "A security officer who is overly familiar with a fellow security officer or a client's employee may overlook signals that, if detected, could be instrumental in preventing workplace violence," explained the company.