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I find myself frustrated because companies and those in the HR Function won’t allow me to help them as much as I can. I’m frustrated when I see the trivial feud of HR Executives truly trying to make a difference and be excellent. I’m frustrated when I speak and exhibit at a conference and the attendees are more interested in getting their CEU credits and whatever you’re handing out at your exhibit than they are truly learning things from the speakers or the vendors. I am frustrated because HR Executives as a group have not exhibited the dedication, vision, nerve, defiance, edginess, etc. that I like to be associated with. And unfortunately, we have relegated the concept of relationships at our companies to these executives.
HR has to take it on the chin and realize that there’s good reason for the harsh criticism. They have to take it as a wakeup call and an opportunity. HR represents an incredible opportunity that few organizations or individuals are committed to. Those who are committed to the process of building human excellence will generate additional values at their companies and in their personal lives. So, there’s a choice, either you kick ass at HR and receive the rewards or you stay in your comfort zone and continue to get run over.
Perhaps the two greatest impacts on HR over the last few decades have been technology and the law. It’s gotten to a point where we can access all levels of data regarding our operations. Human Resource Management System and Human Resources Information Systems have been designed for every level of size and complexity. Technology has also been utilized to organize performance management. Managing a HRIS system is like managing information on steroids. The reality is that while many of these companies pump the time saving advantages of being able to pull various reports, few executives ever find the time or reason to pull them. As a result, the technology is utilized at its lowest common denominator.
The most drastic employment law changes in the workplace have occurred during my career. When I began my legal career in 1983 most of the law was concerning union work. Few people brought sexual harassment, discrimination, or other statutory claims. That was primarily handled by agencies such as the Federal EEOC and the California DFEH. Over the last 30 years, the amount of law that one has to know related to the HR function has easily quadrupled. Go to an HR conference today and you will see at least half of all presentations being related to compliance.
Don Phin, Esq. is VP of Strategic Business Solutions at ThinkHR, which helps companies resolve urgent workforce issues, mitigate risk and ensure HR compliance. Phin has more than three decades of experience as an HR expert, published author and speaker, and spent 17 years in employment practices litigation. For more information, visit www.ThinkHR.com.
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You own your home, have your own business, and drive a new car. Though you are not rich, you are comfortable. It will be a shame to lose it all if someone sustains injuries by your car or at your home or place of business.
You have insurance you say; you have standard auto liability insurance. The limits are $100,000 for a single person and a total of $300,000 for multiple people. Suppose you are responsible for any accident involving a shuttle taking ten people to the airport. Three hundred thousand dollars allows on average $10,000 per person. That is hardly enough to cover the emergency room fees let alone any surgery, rehabilitation, lost wages and other medical expenses. If there is a fatality, you may consider bankruptcy.
Your business has a small storefront on a busy street. A middle-aged executive comes into your place of business following a rainstorm. Your floor is wet and slippery, and the executive slips and falls. He strikes his head, loses consciousness, and goes into a coma. Your general business liability insurance has the same limit as your auto insurance – $100,000. It may cover part of the hospital bill, but the official says he is permanently disabled and sues you for future wages for $1 million. Since your business is a sole proprietorship, bankruptcy beckons.
Your son invites a friend over for a swim in your pool. He dives into the shallow end strikes his head and suffers traumatic brain injury. Sadly, the damage is permanent — with standard liability limits of $100,000 — well, you know, bankruptcy stares you in the face.
The inexpensive, elegant solution to the problem is umbrella insurance. When a claim exceeds your standard liability insurance limits, your umbrella insurance policy takes over and pays up to your umbrella liability limits. Most people who buy umbrella insurance extend their liability limits to $5 million.
Though you hope never to use it, for a few hundred dollars per year, you can protect your assets, and avoid financial disaster. Umbrella insurance pays when you are responsible for an injury that exceeds your standard liability limits.
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Getting the job. It’s a tough task where too much optimism can cost dearly, too little can cost receiving the bid. If too many low bids occur, who’s responsible to the stockholders?
Because the construction industry works by a bidding system rather than a negotiated contract, errors can be difficult to remedy. Leaving out the painting number on a half-million foot office building costs dearly.
Computerization of the bid process has helped and hurt. The program will not allow forgotten inputs, but people tend to believe a computer generated number.
Quality control for bids is essential for survival, both for the estimator and the executives. The estimator calculates the bid, but the executive signs the contract.
The decision to sign the contract drives the scrutiny if money is lost. Directors and officers insurance protects the executive financially when stockholders seek redress in response to a catastrophic contract.
Getting fired is the lesser issue to being sued for incompetence or fraud. The directors and officers exposure boils down to one unfortunate fact. The covered position must make decisions in real time ahead of perfect knowledge; the claimant has the benefit of hindsight.
You can protect yourself by knowing your duties as a director or officer:
1. You must act in good faith and give prudent care in your decisions.
2. You are required to be loyal to the business.
3. Disclosure: you must disclose material facts to regulators, other board members, officers, creditors,
bondholders, stockholders, and other potential investors.
Implement a policy of redundant checks on all contracts, bids, offerings, scopes of work, payments, or any other routine agreements which can lull people into complacency. Routine hides defective work well.
Spot check bid numbers against industry averages, or have this capacity in the computer program. If you’ve been in the industry awhile, check your gut instinct against the line items in the bid. If they don’t make sense, recheck. Consider every contract your responsibility, otherwise they may come back to haunt you.
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Have you ever compared premium quotes only to discover the policies had different deductibles, limits, or even a different audit basis? Confusing, isn’t it?
Premiums do not compare easily, nor do they necessarily reflect costs of your risk profile. Lower premium is not always your best bet. If it were, going without any insurance would be every company’s default position. But, uncovered risk puts companies out of business every day. So, how do you know the right amount to budget for insurance? You don’t, so budget for risk, and from that, buy insurance.
As a business owner and entrepreneur, identify and assess your risks. Uncovered liability risks, like driving vehicles or manufacturing a product, can destroy your company. Running out of postage will probably not slow things down. You prioritize and decide what liabilities you want to assume and what liabilities you want to transfer.
For example: automobile physical damage. How large is your fleet, how predictable is this loss? If you have one executive new vehicle with financing, you’re going to buy insurance to cover it; just think deductible versus premium. If you have twenty similar vehicles, say panel trucks, and the fleet is paid for, you may consider not insuring the physical damage for collision or other perils. Why? Because you’re just paying a fee to bank the money while you do the claims legwork anyway. Your drivers can reduce your risk through defensive driving techniques and not drinking, texting or using cell phones. Keep the premium, accept the risk.
How about your products in transit? Is the value in one load big enough to ruin your company financially? Or do you ship relatively small amounts by common carriers. The former requires insurance, the latter, self-retain the loss.
Okay, you’ve thought through your process. Now, in plain English, tell the agents what you want covered. Employee safety and health, if my products cause harm, if my car hits someone, this type of list. Then, how much per incident are you willing to pay? First $1000 of any loss, that type of decision. Now, choose a number or some percentage of your annual gross and limit all claims to that amount; the most you’re willing to pay for all claims, including insurance premiums. Let the agents design around these parameters and compare these programs.
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The best predictor of future behavior is the past. Maybe, but it’s at least helpful to review the past with an eye towards improvement.
Reviewing losses can be tricky. Insurance company analysis utilizes an “exposure unit”. Sometimes an exposure unit is one thousand dollars in sales, one hundred dollars in payroll, square feet of a building, one hundred dollars of value, or per person. The important idea is to compare relative risk and loss rather than absolute quantities.
Chart your losses, particularly insurable losses or claims made or paid. Now chart payroll, number of employees, sales, goods manufactured, units manufactured, or any other reasonable business data points.
Compare the trajectory of the charts. Does the pattern of losses mirror one of the other statistics? For example, does your workers compensation losses trend with payroll, sales, number of employees, or even square footage of your business?
Some claims history is explained by firing one employee, maybe a bad driver. Don’t ignore the fact that a bad driver got through your screening system. Make sure that leak has been plugged before thinking the problem is resolved.
Other claims may be reduced by a larger work area. Perhaps employees were just too crowded to work safely. That would indicate resolution, but think in terms of square foot per worker as a crowding issue in the future.
When you find your unexplained losses and the closest statistical trend, let’s assume claim dollars and gross sales, than forecast the business statistical trend and the claims amount.
This chart will also predict your insurance costs.
Use the same format to hindcast claims. Start now and project into the past. How much error is in this prediction? If it’s close year-to-year, it should be a good indicator of the future.
Start thinking about why these two data sets mirror. Do claims rise as you push to meet demand? Do you over-staff to meet demand and some employees lose focus? Are your claims about products not being quality checked at a certain volume? Once diagnosed, any loss control issue can be resolved, and pay you dividends. Ask your loss control service for help on these issues.
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Safety is more than a set of activities focused on accident prevention. It is a way of thinking about how you work, and it should be at the heart of any successful company. Weaving safety into your company’s mission, policies and procedures is a great way to demonstrate its importance and ensure its effectiveness across your company.
It should be about a shared vision that is expressed by core values and behaviors, where everyone walks the talk. By addressing unsafe acts and conditions before they become accidents, you build your safety culture.
Four Steps to a Safety Culture
The following four steps can serve as a starting point in driving safety across your business.
1. Evaluate risks. To understand how to create a safer workplace, you must first understand the risks you face every day. Each task and associated risk should be properly evaluated, and safety-based changes should be considered.
– Analyze past incidents and near misses. Understand that past incidents can help you identify root causes and identify risks and exposures that threaten the safety of your employees and the success of your business.
– Identify the risks before they result in loss. Review your work policies and procedures, buildings and equipment, employee work practices and behaviors and geographic location to determine if there are opportunities to prevent or mitigate loss. And hold people accountable to the practices.
2. Design a plan to keep safe. A good plan is the best place to start, but it is only the beginning. Once you have a plan, you must act to eliminate or minimize risk.
– Get commitment. Your management team should be committed to a safety culture from the beginning.
– Stay focused. Keep focused on the risks and exposures identified during your evaluation.
– Prioritize your efforts. Focus on the risks that pose the greatest threat. You should consider frequency and severity of the loss potential, and/or the opportunity to prevent or mitigate risks.
– Identify solutions and resources. Your solutions can vary from implementing engineering controls to creating administrative policies and procedures. These can help create positive changes in safety attitude, commitment and culture.
3. Implement your plan. Implementation entails communication of the plan and its details, training, regularly scheduled practice and drills, and ongoing review. A thorough plan will cover a number of potential risk areas, including buildings and equipment, the environment, employees, customers and vendors.
– Communicate and train – the real test of a safety program and culture is not what is written down on paper, but rather how well it actually works. How well your plan works is often dependent on what your employees know and what they do at the time of an incident.
4. Monitor, evaluate and improve your plan. As your business environment changes, so should your safety program. Regularly test your plan to determine if it fits the changing business environment and reflects changing accountabilities.
– Monitor the plan and collect feedbackto determine the effectiveness of the plan.
– Regularly compare your safety performance against the plan’s expectations.
– Make adjustments when necessary.
– Recognize success. Be sure to communicate and celebrate your safety successes.
At Travelers, our team of risk specialists visit more than one hundred properties every day, and are able to share lessons learned and insights for helping create a safety culture. Start building your safety culture today. Learn more about developing yoursafety management program.
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