Howard Karp, a chef at the Waldorf Astoria and instructor at the California Culinary Academy who cooked for four U.S. presidents, once told me the secret of cooking: “It’s all in the technique. There are no shortcuts.”
Exquisite food comes from a highly trained, coordinated and cohesive kitchen operation that involves culinary skills such as slicing, dicing, searing and sautéing. Chef Karp added: “One must also understand the chemistry of cooking.”dwdwdw He explained that the order and manner in which all the ingredients are “introduced to one another” makes all the difference.
Watching him cook a five-course dinner for a small group of us was like watching an artist paint a masterpiece. I never followed a recipe card again.
In my world, risks are a common ingredient and need to be handled just as expertly as the fish, meat and other ingredients that Chef Karp works him magic on. The risks to business ventures include:
Damage to reputation/brand
Economic slowdown/slow recovery
Failure to attract top talent
Failure to meet customer needs
Some organizational risk management programs I’ve seen follow a recipe of sorts that seems to have been passed down from one risk manager to another — but only good wines and spirits improve with age.
Clearly, the prevention of accidents (workforce, property, fleet, customer, etc.) establishes the basis for sustained profitability. So, boards demand that senior management have robust involvement in the organization’s enterprise risk management (ERM) efforts. Risk management departments cannot operate outside the business flow and related decision-making processes. Management silos have no place here. Decisions about risk must be driven across all operational aspects of the organization in a consolidated, standardized fashion to build trust and meaningful partnerships with operations.
But the traditional corporate approach to reducing risks is one clever safety campaign after another. Risk management staff, especially those in workers’ comp, obsess on frequency and severity — cutting the number of claims and reducing reserves and settling claims. Risks are “managed” by things like: compliance enforcement; personal protective equipment (PPE); signs; and those safety contests. Risk management operations are often buried in finance, HR or legal departments.
But these loss controls, from my experience, are no match to the potential losses that may occur under a bureaucratic, disliked supervisor.
Senior management must raise its game and focus on the strategic components of risk, such as: alternative risk financing, market economics, reputational risks and human capital. In turn, management needs to know the true costs in each business unit. Relevant risk factors may be buried in a ream of statistics, but corporate executives need to know if their risk management program is making an impact. How is information collected, managed and disseminated? Are your analytics predictive?
After 38 years of directing risk management, I believe that organizations must embrace what some friends and colleagues are calling a culture of safety (COS). This is the pièce de résistance.
COS involves using embedded risk management teams in each business unit to send signals up and down the corporate ladder that loss control is much more than a motto or simple list of steps to take. COS requires developing loss-control programs that are a product of the DNA of a specific organization. COS builds strong, binding partnerships among business units that allow the development of a platform for data analytics, volatility analysis, forecasting and reporting that allow for continual improvement through ERM/Six Sigma. COS has demonstrated significant savings, in the tens of millions of dollars a year at a single company.
There are five essential stages to a viable culture of safety:
Awareness, repositioning of responsibility and analytics
Cultural sustainability through behavioral economics
Behavioral change through positive observations
Combined service, safety and engagement measures
Extended service, safety and engagement measures to the community
An organization should have a vision to assess knowledge, skills and abilities and work with HR to train employees to bring about new levels of expectations. Old safety methodologies focused on inspectors; audit and regulatory-based decisions; checklists and processes; task completions; and frequency-based decisions. COS, on the other hand, is behaviorally focused using coaches, trainers and outside consultants who partner with teams of employees who are already technically proficient and operational savvy. In addition, key performance indicators (KPIs) can help shape behaviors.
To deploy a viable COS, companies should consider using qualified outside experts as a diagnostic tool to identify and quantify risks using meaningful analytics. Companies need to know how they stack up against the competition. This type of analysis by reputable firms can provide practical insights for senior management and lead to the building blocks for a fine-tuned corporate risk strategy and an enhanced culture of safety.
One such consulting firm, Operant Solutions, inspired me to write this article with stories on risk management successes it presented at the RIMS Western Regional Conference in Lake Tahoe recently. (If you’re interested in getting a copy of the presentation, you can contact Sue Antonoplos at 650-336-3144.)
I am inspired by the words of Julia Child: “Cooking well doesn’t mean cooking fancy.”
A contractor’s most important resource, and one of its leading costs, is its employees. By investing in employee, supervisory and leadership development programs, those in construction and facilities management (CFMs) can expect positive ROI and other measurable outcomes in both risk management and human capital. This strategy combines organizational development practices to leverage human capital risk management and protect a company’s bottom line.
What Is Human Capital Risk Management?
Defined as leveraging human resource assets to achieve an organization’s strategic and operational goals, human capital risk management implies the following realities for CFMs to consider:
Human capital is a tangible asset
Human capital yields tangible and intangible results
Human capital can generate a positive or negative rate of return
Human capital risk management can create a sustainable competitive advantage
Benefits & Consequences
There are numerous benefits of leveraging human capital risk management strategies. Likewise, there are serious consequences for failing to effectively manage human capital risk management strategies.
The categories of human capital costs include salaries, health and retirement benefits, workers’ comp and other required insurance costs (e.g., state and federal unemployment taxes). Other possible human capital costs stem from losses attributable to consequences from unsuccessful human capital risk management practices, including: fraud and internal theft; absenteeism; substance abuse; and costs of incidents, accidents and injuries that include workers’ comp losses and resulting third-party liabilities. These costs can be affected by the type of contractor, where the contractor (or project) is located, whether the contractor is union or merit shop and other variables.
Today, senior business leaders are looking to the HR function to provide innovative solutions to attract, retain and grow their talent. The evolution of HR to a talent management model focuses on processes leading to organizational development. As a result, the modern HR department is responsible for seven fundamental functions:
1) Compliance – Ensure regulatory and legal compliance
2) Recruitment – Find a work force
3) Employee Relations – Manage a work force
4) Retention – Maintain a work force
5) Engagement – Build an engaged work force
6) Talent Development – Create a high-performing work force
7) Strategic Leadership – Plan for a future work force
Investing in human capital makes good business sense, especially considering the costs to recruit, onboard and train a new employee. Not only is employment advertising and recruiting costly, but there are also other adverse impacts to the business. Work previously being done by the exiting employee still needs to be completed, so it falls to teammates and the supervisor.
A new employee typically does not reach full productivity until at least four to six months into her new role. In total, the lost productivity costs to turn over one employee is at least six months.
The Link Between Employee Engagement & Business Performance
Engaged employees want both themselves and the company to succeed. However, companies often only focus on employee satisfaction, which can lead to complacency and a sense of entitlement. Employee engagement is frequently defined as the discretionary effort put forth by employees – going above and beyond to make a difference in their work. Discretionary effort is the extra effort employees want to give because of the emotional commitment they have to their organization.
Unlocking employee potential to drive high performance results in business success. However, according to research by the Employee Engagement Group, 70% of all employees from all industries are disengaged. Employees with lower engagement are four times more likely to leave their jobs than highly engaged employees. And disengaged managers are three times more likely to have disengaged employees.
Research shows employees become more engaged when business leaders are trusted, care about their employees and demonstrate competence. By working to engage their employees, contractors can improve their productivity, innovation and customer service. They can reduce incident rates and decrease voluntary attrition.
One of the earliest links between employee satisfaction and business performance appeared in First, Break All the Rules: What the World’s Greatest Managers Do Differently, which includes a cross-industry study that demonstrated a clear link among four business performance outcomes: productivity, profitability, employee retention and customer satisfaction.
The organizations that ranked in the top quartile of that exercise reported these performance outcomes associated with increased employee engagement:
50% more likely to have lower turnover
56% more likely to have higher-than-average customer loyalty
38% more likely to have above-average productivity
27% more likely to report higher profitability
Recognizing and acting on the correlation between engaged employees and business performance will directly affect the bottom line. Some strategies employers can implement to increase employee engagement include:
Focus on purpose and values vs. policies and procedures, which has led companies to outperform their competitors by six times.
Encourage empowerment and innovation, then reinforce and reward the right behaviors.
Unleash the flow of information and ensure individuals have a clear understanding of how their particular job contributes to the company’s strategy and mission.
Understand and demonstrate that work/life balance is important.
Developing Sustainable Leadership & Human Capital Strategies
Many organizations are hyperfocused on implementing training programs and processes. However, training should not be the only activity. Effective human capital management demands forward thinking and strategic planning about how contractors can engage their human resources to make a difference in driving the business forward into the future.
A spectrum of sustainable employee, supervisory and human capital and leadership development strategies includes orienting/onboarding, performance reviews and developmental plans, coaching/mentoring, job rotation and cross-training, 360-degree feedback surveys, defining career paths, work/life balance and competency assessment.
Research & Connect With Peers
Developing a sustainable human capital development program can seem overwhelming, but that does not need to be the case. Reach out and connect with peers and subject matter experts to identify and share best practices and challenges. There are many resources available that can be tailored or adapted to meet your business needs.
Define & Align Sustainable Long-Term Human Capital Strategies
It is essential to not only align human capital strategies with core business strategies but to also continually review them to ensure long-term sustainability and to address areas for development and improvement. Connecting these areas of focus will ensure a consistent vision is communicated and executed throughout the organization.
To gain a better understanding of your company’s human capital strategic thinking and planning, conduct a needs assessment or gap analysis. Based on the results, a human capital action plan can be developed to help guide your company’s future human capital leadership and investment.
Integrate Human Capital Strategies With Organizational Culture
All human capital strategies should closely align with a company’s intended organizational culture. The strategies may require a shift in culture, but not so much that it creates implementation barriers. Having a formal rollout and communication plan developed in advance will help prepare employees for the coming change.
A variety of communication approaches helps to reach all intended stakeholders and should include what, why and expected outcomes. To ensure all employees “hear” the message, communicate strategies that outline a clear plan and are easy to follow through creative visual and auditory media. Examples include interactive meetings to communicate coming changes, postcards with graphics that present the message, e-mails that are fun and positive, conference calls so people can participate regardless of location, as well as podcasts, webinars, Skype, etc.
Implement Talent Review & Succession Planning
To create a culture of learning and development, contractors should include all employees in their talent development practices rather than focus only on preconceived “high potentials.” Through an effective talent review process, managers can determine the potential future and developmental needs of all employees.
Effective talent review discussions will unveil high-potential employees, which will help populate employee development
and succession plans. True high potentials should be given stretch goals to be accomplished throughout the year to aid in assessing and developing their readiness for future roles.
Everyone Is a Leader
At the end of the day, it is not realistic to expect companies to provide the same training to all employees. However, it is important to remember that everyone is a leader in what they do. Setting these expectations better prepares employees for future leadership roles and helps to build accountability across the company.
Importantly, not all leadership competencies and behaviors will apply to every position. However, by consistently applying higher performance expectations across the organization, employees who were not previously considered high-potentials might begin to excel and even surpass previously identified potential levels. You never know when a new rock star employee will emerge!
Case Study: Lakeside Industries’ Annual Leadership Conference
Lakeside Industries, Issaquah, WA, is a third-generation family-owned business operating for more than 60 years. A producer of hot mix asphalt and paving contractor with 20 locations in Washington, Oregon and Idaho, Lakeside Industries has a total of 625 employees and is signatory to various locals of three labor unions: Laborers, Operating Engineers and Teamsters.
The vision of the company’s third-generation President Michael Lee is to “attain exceptional performance in everything we do.” In this case, “exceptional” has been further defined as aspiring to attain “world-class” performance. He says:
“Several years ago, we realized the need to invest in its leaders. We know that effective leaders translate to improved quality, employee engagement, better communication, fewer incidents, higher production, etc. Each of our 12 divisions operates as an individual entity with its own crews, shops, plants, and fleets. Geography and diversity produce challenges related to training.
“We started with two groups. Managers and PMs were in one group, and superintendents were in the other. Each group met once a year locally to share ideas, procedures and challenges.
“We also used this time to conduct leadership training. Sometimes instruction was internal, and sometimes we brought in external experts. While this was a great start, we knew we needed more consistency communicating company objectives, ethics and expectations. Many of our foremen never had any formal leadership training.
“So, for the past few years, we’ve had one annual meeting that includes every employee in a leadership position. Managers, PMs, superintendents, foremen and anyone who supervises another employee is invited; about 175 people attend annually. To remove distractions, we hold the three-day meeting in Denver, CO.
“Each year we decide which company goals are our top priorities. We bring in a speaker to communicate those goals and to motivate and train our leaders.
“A very popular component is the breakout sessions. All PMs and superintendents meet in groups, as do paving foremen, project superintendents, traffic control supervisors and so on. There are usually 10-12 breakout groups that are conducted by a facilitator in a roundtable format to address issues specific to their positions. We have also conducted breakout sessions by division. It’s an opportunity for division leaders to communicate outside of their daily busy environments and set goals for the coming year. We ensure training is interactive and effective. There is also time for relationship building with recreational activities.
“An important component of this concept is follow-up. It’s essential to repeat and reinforce what was learned when we return home to our busy routines. HR and risk management/safety work with division managers to integrate learned concepts into daily operations. Key learning points are communicated to all of our employees.
“Our vision is for the entire company – from divisional and departmental managers to field staff – to understand and implement our goals and expectations. We want all employees on the same ship, sailing in the same direction, and we work on this all year.
“We started with the goal of training effective leaders, but we’ve unexpectedly achieved so much more. There is improved communication among peer groups including:
we have innovation, new lines of communication, collaboration and lasting relationships;
our leaders are now united and understand the company’s vision; and
our leaders make better decisions and communicate more effectively, resulting in more engaged employees, improved quality, and what we call safe production.
“The bottom line: This leadership conference is absolutely worth the investment.”
As the construction labor market tightens because of demographic, societal and industry shifts, finding and keeping skilled workers will become increasingly challenging. Progressive workforce development strategies can differentiate contractors as employers of choice.
CFMs who think strategically recognize that employee, supervisory and leadership development programs, processes and practices can provide a competitive advantage. Investments in human capital yield tangible and intangible gains that improve productivity, quality, risk, safety and financial performance. This should neither be unexpected nor surprising: after all, people are our greatest asset.
This article was co-written by Tana Blair and Tammy Vibbert. Tana Blair is responsible for organizational and leadership development at Lakeside Industries in Issaquah, WA. S he can be reached firstname.lastname@example.org. Tammy Vibbert is the director of human resources at Lakeside Industries in Issaquah, WA. She can be reached at email@example.com.
Defying the conspicuously silent logic of the hoary adage that “what happens in Vegas, stays in Vegas,” disavowing any apostolic compulsion to confess, we herewith reveal the transparent composition of our recent presentation before the National Workers’ Compensation and Disability Conference and Expo, held in Las Vegas from Nov. 20, 2013, through Nov. 22, 2013, with apologies and atonements to David Letterman, he of the infamous Top Ten, as well as Alan Pierce, Esquire, our tactfully laconic moderator during our Vegas session on Nov. 22, allowing our panel, and our attentive audience, to review and identify the following potential causes as reasons injured workers seek attorney representation in workers’ compensation matters:
1. Claim Denial
This is the number one reason why injured workers hire attorneys;
Denials are often, but not always, triggered by claim investigation;
Multiple factors influence claim denials, including medical evaluations, work restrictions, availability of alternative-duty work, prior claim history, and employer input.
2. Injured Worker Represented In Prior Claim
The existence of a prior attorney-client relationship, obviously dependent upon prior claim outcome, will usually result in an injured worker retaining attorney for a new claim.
3. Confusing State Forms
Certain jurisdictions, Pennsylvania being one of them, employ compensation forms that even judges, experienced counsel, and the most highly sophisticated claims adjusters struggle to understand, in terms of their effect on compensability, disability, and related issues;
Receipt of a state form, accompanied by a form letter, can be confusing to an injured worker unskilled in compensationitis;
The same form can be the impetus for the Google keystroke, the counterpoint being to use simple, direct, and non-insulting directions for form execution and return.
4. Cessation/Termination of Claim Benefits
Stopping benefits, absent agreement to the stoppage, generally results in attorney retainage;
Employer-filed WC litigation seeking to cease/terminate claim benefits drives injured workers to attorneys.
5. Process Overwhelms and Confuses
Although not rocket science, it is a not uncomplicated process to secure or retain workers’ compensation benefits, particularly when potentially related to other alphabet soup statutes, such as FMLA, ADA, and Unemployment Compensation, as well as private disability coverage.
6. Dissatisfaction with Medical Care
Cannot get medical treatment authorized;
Does not like employer-designated health-care practitioner;
Disagrees with, or will not follow through with, treatment recommendation;
Cannot get the claims adjuster to answer questions regarding medical compensation benefits.
7. Third-Party Liability
The existence of third-party liability typically results in the involvement of personal injury attorneys, with referral to workers’ compensation claimant attorneys;
Potential third-party liability triggers potential subrogation lien interests of the employer/insured.
8. Google It
In general, the ability to find and retain skilled legal representation, in any kind of practice area, is only a computer keystroke away;
It is also there on the radio, on the drive to the doctor’s office;
It is ubiquitous;
It is splattered all over public transportation;
It is emboldened by numerous publications and periodicals.
9. Unpaid Medical Bills
Collection notices for unpaid medical bills drive injured workers crazy, resulting in attorney involvement.
10. I Hate My Job Almost as Much as I Hate My Boss
This evidences a lack of trust, not to be confused with pure retaliation;
It is the perception that has festered, infecting claim dispositions.
11. Referrals by Medical Care
Particularly true with chiropractors, as well as physical therapists, as they tend to be quicker referral sources than other practitioners;
It is a symbiotic medico-legal universe.
12. Fear of Being Fired
Are we surprised?
The fear of being fired, besides producing cold sweats and trepidation, produces psychological crisis, resulting in confrontation.
13. Family Prodding
It is the nudge while watching TV;
It is the frustrated “when are you going to do something about this?”;
It is the stuck at home, no paycheck, no ride to the doctor, no work, and no taking out the trash, no doing house chores, building a base of friction and frustration.
Is there a moral to our story?
Anyone attending the National Workers’ Compensation Disability Conference and Expo heard numerous presenters characterize workers’ compensation systems and procedures as having, at their core, the function of restoring injured workers’ physical and psychological capabilities to return to work to achieve pre-injury status. Several NWCDC panelists underscored the humanitarian policies upon which workers’ compensation statutes and systems are structured, placing great emphasis on the moral obligation of all workers’ compensation stakeholders to employ fairness in the administration of claims. The following tips are suggested for all, in the course of dealing with injured workers:
Avoid making assumptions about claim facts and claim personas;
In short, even in disputed claims, it is critically important to treat others, including the claimant, claimant’s counsel, the employer, any third parties involved in the claims administration process, defense counsel, and the administrative fact finder, as you would want others to treat you.
Risk managers are responsible for identifying and mitigating areas of risk in their business. They perform their role by implementing processes to manage and improve environmental controls, promote employee safety knowledge, training, and practices, and ensure adequate business insurance coverage to protect the people and assets of the company from injury and catastrophic loss.
But proactive risk managers also must think beyond their own firm. They need to ensure that those with whom they do business, including contractors, subcontractors, vendors, suppliers and tenants, all have sufficient insurance coverage to protect their firm in the case of accidents or claims, so the contracting company isn’t exposed to unprotected third party liabilities. This process of monitoring and tracking certificates of insurance is an essential task that, to be done correctly, should be as systematic and reliable as any other business process.
For example, a large manufacturer of animal supply products needs to require evidence of insurance from the company that supplies it with chicken feed. A technology firm needs to require a certificate from their security company. And a real estate management firm would require a certificate from a retailer that rents space in one of their office buildings.
The certificate of insurance management process can get complicated very quickly, and manual solutions seldom provide the reliability or efficiency even medium-size companies need. If you have more than just a handful of contractors or suppliers to track, with three or four lines of insurance each, it can quickly consume a risk manager’s valuable time. Manually tracking when various lines of insurance are about to expire or whether coverage limits are up to date is very time-consuming, even on a spreadsheet. It requires constant checking, cross-referencing, and follow-up, and frequently can still produce oversights and errors. This could leave your organization vulnerable.
Yet if you fail to track a certificate of insurance and a workplace incident should occur, you could find your organization held liable for insurance claims and costly lawsuits. Consider this scenario: let’s say a mining company hired a trucking company who in turn hired independent truckers who were responsible for their own insurance. If the mining company and the trucking company failed to verify the insurance of their respective subcontractors and one of the drivers were to cause an accident, the resulting lawsuit could hold the driver and both companies liable for damages.
Using an automated system to manage, track, and qualify your certificates of insurance can help ensure that your organization is adequately protected. This lowers your risk, perhaps even reduces your insurance premiums, and results in a more secure and robust bottom line.
Importantly, a dependable certificate of insurance management process protects your company from unexpected claims and litigation, potential business interruptions, and lets you focus on building a successful, safe, and secure organization.
Succeed Management Solutions, LLC offers a complete Certificate of Insurance Service, designed for organizations in any industry to deliver proactive management, control, and reporting of certificates of insurance. Succeed also offers a free webinar to review the needs for certificate of insurance management, proper contractor reviews, and audits. Learn how to save time, reduce costs, and ensure accuracy managing certificates of insurance. The live webinar occurs at 9:00 am Pacific/12:00 pm Eastern every Friday. Learn more about our Certificate of Insurance Management Service by emailing firstname.lastname@example.org to register for the webinar.