I do not advocate abandoning measures to motivate employees. Quite the contrary. Employee participation and motivation are offensive measures that create a better defense in a regulated world. A broadened risk-management function does not have to be in opposition to effective human-resources management.
Risk management in the context of regulation entails using any of several distinct management tools and approaches, as follows:
* Work with regulators, not against them.
For executives of smaller companies, one of the most irritating aspects of the existing regulatory climate is the abundance of minor technicalities in the rules and laws governing business. But just because many minor technicalities exist doesn't mean they have to be followed to the letter.
Taking an activist approach to regulation means working with regulators informally before they work on you. This sounds dangerous and, when tried with narrow-minded and rigid regulators, it probably is. But in my experience, most regulators are open-minded people who are simply trying to do their jobs as best they can.
Let me give you an example. A few years ago, I took a copy of a computerized truck maintenance program to the regional officer of the U.S. Department of Transportation. Even though the format was not quite what his predecessor had advised, the officer agreed it complied with the spirit of the regulation. While I was there, I invited him to come out to the company to see if he could convince our drivers to wear their safety belts. The officer accepted both the proposal and the invitation.
As part of the informal approach to regulation, I have found that you can often head off time-consuming and costly formal problems by showing evidence of voluntary compliance. This past summer, for example, a local inspector for OSHA showed up unannounced to check on our conformity with the Hazard Communication Standard -- a recent regulation requiring companies to inform employees of possible dangers from chemicals being used in the workplace. The first thing I did was to tell him that we had received an exemption through the Oklahoma State Department of Labor's OSHA consultation division because we had volunteered for and passed a state inspection. When he saw the state letter of certification, he decided not to do his own inspection of our facilities.
He next asked for our written program to inform employees about the chemicals we use that might possibly be hazardous. I had started work on such a program some months before but hadn't completed it, since I had doubts that the requirements for a written program extended to trucking companies. Rather than argue with him about my doubts, however, I simply showed him my written efforts thus far. He seemed pleased with what he saw, and the session was over.
We could have had a difficult time with the inspector if I had been defensive about the fact that he had come unannounced and was making demands I felt we didn't need to comply with. The session could have gone on much longer. Indeed, any inspector can find all kinds of violations if he or she tries hard enough. The real payback may come if you can get your voluntary efforts admitted into evidence at some future trial. Voluntary actions would go a long way toward discouraging a verdict of gross and wanton negligence, or the imposition of punitive damages.
* Rely on the oral tradition.
Some managers insist on putting their procedures and policies in writing, but they are liable to regret the practice if they ever wind up in court. Written policies provide excellent fodder for plaintiff cannons. Any sentence can mean several things in the hands of a skilled attorney. But a skilled defense attorney can defend correct procedures, even if they are practiced orally.
We found that out a few years ago when we were sued by another company's employee, who was injured while unloading pipe from one of our trucks. He contended that our truck was improperly loaded. Our attorney called as a witness the supervisor responsible for overseeing the truck's loading, put him on the stand, and let him be himself. He had much experience loading trucks and explained the fine points of correct and incorrect loading. He argued that in the case at hand, everything had been done correctly. We won the case.
In my view, small companies do not have to create General Motors-length personnel documents. The time may be better spent training managers and supervisors as to why certain things must be done in certain ways. Their testimony will make or break your case anyway, once it reaches the courtroom. Workers with little formal education often have excellent recall of the spoken word. Smaller companies should use this capability as an asset.
This doesn't mean that you should discard all your documentation. Indeed, some written rules are necessary, but they should be of a general, policymaking nature.
Back in 1983, we were sued for $1.5 million by a rail company, charging negligence after one of our trucks was struck by a train. On the witness stand, I was questioned by the plaintiff's attorney about what Turner Bros. does to encourage its drivers to operate vehicles safely. I discussed the training films and lectures we use, and displayed a policy statement we had composed just a few months before the accident. The statement warned drivers that speeding tickets would be dealt with by suspension or firing. I'm certain that document was helpful to us in settling the suit out of court.
* Use old-fashioned paternalism.
Paternalism is supposedly passe. Now the buzzwords are "employee participation" and "shared decisionmaking." Yet it has always amazed me how much weight old-fashioned paternalism carries with employees. They do care if the boss shows up and speaks to them. They like to be called by name. A turkey or a ham at Christmas is worth much more in employee goodwill than the cash value of the gift.
In the context of regulation, I am convinced that employees who feel good about the company are less likely to create problems than those who feel bad about it. Call a man a number, and he will act like one. Those are difficult statements to prove, but I do know that our most paternalistically managed facility -- at Fort Morgan, Colo. -- has the lowest rate of bodily injury, property damage, and cargo damage claims of all of our 10 facilities. I also encounters fewer employee-related suits than any of our other facilities. The Fort Morgan facility is run by a manager who projects a strong father image. Each year he holds an awards dinner to honor the most productive employees. It's a family affair.
