'I spent the first 10 years of my adult life as an activist United Methodist minister -- active in seeking to bring truth, righteousness, and justice to prisons, individuals, and the environment. I have spent the past 7 years working for a small Southwest trucking company as a different kind of activist -- devising counterstrategies to protect against lavish liability judgments, duplicated environmental regulations, and frivolous employment-discrimination claims.
This is not, however, a lament penned by a fading liberal or the complaining cry from the oil-transportation industry protesting a belated entry into the modern world. This is simply an account of how one small, struggling company is trying to manage the reality that regulators of all types -- in the form of lawyers, judges, and state and federal government officials -- seem to be besieging us in increasing numbers each year.
I have come to realize that to deal effectively with regulators, I must take an activist approach not unlike the activist approach necessary to lobby for women's rights or pollution controls. It just doesn't work to sit back and hope that the regulatory problems will go away or somehow pass us by. Nor does it work to react defensively and hire a lawyer every time a regulator heads our way. What works best, in my experience, is to confront the problems head-on -- acticipating difficulties, mobilizing your forces, negotiating, and, when necessary, playing hardball.
Before I provide details of my approach to regulation, let me make a few observations that I believe are necessary to put the regulation issue into perspective. There's a growing perception that deregulation and federal government spending cuts have somehow reduced regulatory pressures on smaller businesses. Actually, the opposite is true. The confusion stems from a problem of semantics. Deregulation means economic deregulation, not the removal of legal constraints. For a 50-year-old company like the one I work for, trucking-industry deregulation has mainly resulted in a change in the competitive environment. Ten years ago, we had half a dozen or so competitors; now we have 26. This increased competition obviously has effected the way we do business, but it has not meant that we operate under fewer legal constraints than before. We still have to deal with officials from such federal agencies as the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA), and the Equal Employment Opportunity Commission (EEOC). Even if their numbers have actually been reduced by cutbacks in federal spending, those deductions have been more than compensated for by the duplication of federal regulations at the state level.
Moreover, regulation of another sort has cropped up in the form of liability and employee suits. The public may pay good money to see Smokey and the Bandit and cheer the truck drivers as their convoy breaks through a police barrier, but we in the trucking industry must constantly remind ourselves that those same moviegoers are potential plaintiffs any time they catch a truck making a wide right turn. And while business owners gloat about the declining influence of labor unions, they forget that disgruntled employees have the equivalent of unions in the courts and government employment regulators. Indeed, it was a complaint by a terminated Turner Bros. Trucking Co. employee in 1982 that first drove the implications of expanding regulations home to me.
I had joined the company, which hauls oil-industry pipe and moves drilling rigs, in 1979 as its first manager of personnel and human resources. That was just about the time the EEOC was beginning to intensify its scrutiny of smaller companies for their hiring and firing practices. As I sought to identify how Turner Bros. might be vulnerable, I found that most of my industry colleagues considered our concern unwarranted: who cared about a little oil trucking company in Oklahoma?
I soon discovered that the government cares when, in 1982, one of our truckyard managers terminated a female employee as part of a reorganization to reduce our payroll. During the course of her employment, he had made a statement about how dangerous a dark pipe yard could be for a woman alone at night. Although a position for night duty never opened up, and the employee was never denied a job because of sex, the statement became important after she was terminated. She went to the EEOC, and we had a sex-discrimination charge on our hands. We produced documents to show we had laid off seven males for each female, but there was nothing we could do about the manager's statement, which I am still convinced showed nothing but his genuine concern for the safety of an employee.
We finally settled the claim out of court. While the amounts involved for legal fees and the settlement weren't astronomical, they were enough for us to take notice and realize that regulation in the large sense was a growing and potentially quite costly phenomenon.
It was at that point that I concluded we had to do more than simply react to suits and government inspectors as they descended on us. Rather we had to anticipate potential problems and move aggressively to head them off before they became costly to Turner Bros. In other words, we had to take an activist approach to regulation.
Underlying this activist approach is something business texts refer to as risk management. The idea behind risk management is to reduce large financial risks via any of several options, including the following:
1. Transfer it with insurance.
2. Absorb or retain it.
3. Remove it completely, say, by discontinuing production of a particular product, or by not offering a particular service.
4. Reduce it by educating employees, installing new equipment, or taking other steps.
How can risk management be used to cope effectively with regulation? By using a combination of these four options. For instance, by improving our employee safety program through greater employee awareness and gift awards (option 4), our workers' compensation insurance premiums declined substantially (option 1).
Since we adopted risk management as the key to dealing with regulation, my title has been changed to "personnel and risk manager." Some might argue that such a title is a contradiction in terms, since people are a company's greatest asset and equipment its biggest risk.
I feel employees are at once a business's greatest asset and risk. I have worked in prisons in two countries and firmly believe that even the most worthless human being prefers to end the day feeling worthwhile, but many things happen during a workday that can have the opposite effect. When that occurs, employees become a risk the organization must manage.
