by William H. Truesdell, SPHR
Every business in America is subject to crisis of one type or another. Whether it’s the sudden death of the Chief Executive Officer, computer viruses invading company records, environmental impact from chemical spills, product liability, or natural disaster, the risk faces all of us.
Some say we shouldn’t go looking for problems where they don’t exist. That, to do so, will only arouse concern and waste valuable company resources which need to be allocated to more important projects.
Well, ready or not, we are sometimes faced with a crisis which could cripple our business, or worse. Take these all too familiar situations for example:
- On December 7, 1987 at 4:45 p.m., tragedy struck PSA flight 1771. A disgruntled employee reportedly fired a pistol inside the cabin while in flight. Over forty lives were lost.
- On January 3, 1988, one million gallons of diesel fuel spilled into the Monongahela River near Pittsburgh, Pennsylvania. Ashland Oil Inc. owned the facility from which the leak originated.
- In October, 1989, Hurricane Hugo ravaged Puerto Rico and then smashed full-force into South Carolina. Billions of dollars of damage, and many deaths were the result. Businesses and individuals both suffered.
- On October 17, 1989 at 5:05 p.m., the San Francisco Bay Area was devastated by an earthquake measuring 7.1 on the Richter scale. Dozens of lives were lost and property damage again totaled billions of dollars.
- On September 11, 2001, terrorists struck the World Trade Center in New York City and the Pentagon in Washington, DC. Over 3,000 lives were lost. Countless businesses were impacted.
Union Carbide’s 1984 gas leak at Bhopal, India, the Three Mile Island nuclear power plant incident on March 28, 1979, and Ford Motor Company’s struggle with older models which slip out of park into reverse are additional examples of crises faced by businesses. And, then, of course, there were: Johnson & Johnson’s September 30, 1982, Tylenol crisis; and, the Exxon Company’s crisis created when one of its tankers, the “Exxon Valdez” ran aground in Alaskan waters releasing most of its crude oil cargo into the environment.
For their impact on so many millions of people, both Hurricane Hugo and the San Francisco earthquake capture our attention. In both cases, business activities were substantially impacted or suspended because of interruptions in transportation and communications systems. Naturally, most business people think of disasters in financial terms. Inventories destroyed, facilities and capital equipment damaged or lost, and business records ruined. This focus is particularly common among people who are remotely located from the crisis or otherwise not personally involved in dealing with the situation. Anyone who has logged personal experience with such serious adversity knows that the first order of business is always to concentrate on satisfying immediate human needs.
We have recently witnessed an increase in violence from disgruntled employees and former employees. The impact on companies in these situations has been severe. Impact on specific individuals, victims of violent attacks, has been devastating.
Floods, fires, transportation accidents, and terrorist actions are all causes of disasters that could befall any business in America. And, small businesses are not exempt. What would be the impact on your business if: You, the HR professional, suddenly were prevented from doing your job; employees involved in a serious traffic accident with a company vehicle were found to be using illegal drugs; or, one of your employees was discovered to have embezzled a third of your yearly budget?
What responsibility does a company have when faced with such tragedy?
Planning is the answer.
Unfortunately, not enough of us want to think about “down-side” planning for risks which conjure up unpleasant thoughts. Actually, many of us actively avoid involving ourselves in the process. There seems to be an artificially optimistic sense that whatever might happen probably won’t touch our lives much. Others of us believe we are such good business managers that we can deal with anything that could happen. Therefore, it isn’t necessary to spend time or energy on a problem before it exists.
Have you ever witnessed a public demonstration demanding better earthquake or flood preparedness? Not likely. People simply do not want to deal with those issues until the problem is “real.”
We have only to read the daily newspaper, however, to realize that “it” is happening to businesses all around our country. Executives who have emphasized the importance of preparation, invariably lead their companies in reacting more appropriately to such calamities.
There are five basic types of business crisis: Product related, finance related, employee related, facilities related, and natural disaster or catastrophe.
Three things must happen for any business to react well under true crisis circumstances:
- A crisis management plan must exist, ready for use.
- The plan must be kept up to date and actively reviewed with all employees. (Its existence, if not its detailed content.)
- The plan must be implemented, unhesitatingly, when it is needed.
Developing a crisis management plan involves a process, rather than an event. It requires more than one yearly meeting. And, it necessitates involvement of every key executive in the business. Because of the impact on employees and dependents brought by many possible crises, Human Resource professionals can play a major role in plan development and implementation. They can even take the leadership role in plan development, if others can’t or won’t.
Initial planning activities should focus on brainstorming all possible or potential crises facing the business. Ask, “What is the worst thing that can happen?” Then ask, “Next to that, what is the worst?” List as many answers as possible.
Involve people in the company who normally are involved in such decisions and activities. The executive team is key to a successful planning effort. Its members are the individuals who will have to either implement the resultant plan when tragedy strikes, or struggle through the situation as best they can in the absence of any thoughtfully planned management reactions.
When the list is as long as you can make it, start sorting out the “most likely” from the “least likely.” It is possible to quantify the process so that each possible crisis can be weighed against all others in terms of its potential severity. Quantification is accomplished by analyzing five factors: Intensity of the crisis; Scrutiny which will likely be given the situation by media and government representatives; Impact on normal company operations; Impact on the company’s image or reputation; and, Financial impact.
Combining all you know about each of these five factors will allow you to score the possible crisis and determine its actual potential for devastating your business.
Considering the likelihood, or probability, that each situation will occur next gives an indication of where the planning effort should initially focus. You may find that there is a very low likelihood of a product tampering crisis, but natural disaster could occur at any time. These discoveries allow you the opportunity to focus on planning your corporate response to those situations your team believes may actually come to pass.
Most crises can be anticipated. Airlines, for example, being in the business of transporting passengers in airplanes, know there is a risk that someday one of their planes will crash. Knowing that, it would be reasonable for them to plan for such a possible catastrophe. And, they have. That’s why PSA was able to react so well to its tragedy in 1987. PSA’s successor, Southwest Airlines, is sure to have an equally well thought out crisis management plan. Companies with fleets of trucks have need to plan for highway spills. Service companies may need to plan for loosing computer records or the ability to process customer information.
To develop a Crisis Management Plan, it is necessary to address several subjects. First, the type of crisis the plan is being designed to handle.
Next, identify the members of your crisis management team. Membership may vary depending upon the nature of the crisis you develop plans to manage. For example, when planning for a product related problem, you may wish to involve product engineers. They may not be required as members of a team designed to deal with a finance related problem. Who is selected for team membership should be based upon the expertise offered to the crisis which must be faced.
Your plan should also specify where the crisis management team will operate. What equipment and supplies should be available at that location? What communication equipment is required? What reference materials and support personnel should be on hand? Is it clear to everyone in the company who the team members are and what authority they carry while the team works through the crisis?
Other questions to be answered in the planning process include: How will team members be notified they are needed when the time comes? What happens if one or more of the team members is away from the team work location? What will be the assigned role for each member? What action plan steps will each member have responsibility to take?
Planning to handle a natural disaster requires different action items than does a product or financially related crisis. Identifying which civil agencies are important contact points can save a great deal of effort in preparing for a disaster created by Mother Nature. Determine if your county or state governments have an Office of Emergency Services you can contact. Consider how linkages to federal offices and agencies can help when needed. The Federal Emergency Management Agency (FEMA) has been designated as the national coordinating body in times of natural disaster. Local offices of your Congressional or Senatorial representatives may also be important communications links to you.
Once your crisis management plan is compiled, route it to every manager in the company. Provide training sessions for all employees which will help them understand your company cares enough about them as well as its business to undertake this effort. Review your plans at least once a year or more frequently if conditions warrant.
The extra effort necessary to consciously prepare for a serious problem will all be worth it when the crisis occurs and you and your management team know how to react. It will not be necessary to trust to the judgment of people under stress, hoping that they will make the right decisions. Advance planning will have already mapped out a reasonable response which can be modified as necessary to the immediate situation. Modifying your plan is much easier than wondering what should be done after the crisis has hit.
Do you know when your next crisis will strike? Are you prepared? It would be worth your effort to begin managing your next crisis by planning for it now.
Ready Resources: HR Web Store Safety Resources at Safety Resources Here you will find CD ROM containing “Emergency & Disaster Plan Customizer” and another containing “Safety Plan Customizer.” You will also find Survival Kits for individuals and groups and First Aid Kits.
Books of Interest: Inevitable Surprises: Thinking Ahead in a Time of Turbulence, by Peter Schwartz, 245 pages, Gotham Books, ISBN 1592400272.
Avoiding Disaster: How to Keep Your Business Going When Catastrophe Strikes, by John Laye, 272 pages, John Wiley & Sons, ISBN 0471229156.
Pick up any business publication today and you will find information about one of the latest people-management techniques. Many are successful for a time, but often managers and employees alike tire of them. When that happens they add to the “just another fad” attitude in the workplace.
Why don’t these management systems last longer? How come they sound so good, yet fail during application?
The answer is simply this: Nothing will stand for long if it isn’t supported by a strong foundation. Employee management systems are no exception. Without strong foundation they, too, will falter and collapse.
It is the basics of interpersonal skills that make up the foundation for successful employee management…the socalled simple things like communication and leadership skills. Managers who recognize this continue to practice these skills even though trying to use new techniques. Those who forget find new systems failing and employee relations suffering in the final analysis.
Fundamentals are important. Great coaches always insist their teams practice the fundamentals of their sport. It may not be glamorous to spend hour after hour shooting baskets from one spot on the court, but it is necessary. Hitting a blocking sled until every bone aches is no fun either, but football professionals do it because blocking skills are basic to good performance on the game field. Figure skaters and gymnasts don’t win championships by their interpretive performances alone. They have to demonstrate proficiency in the “compulsory” phase of competition as well...the basics.
Get back to the basics of supervision. The skill on which all other management skills rely is communication. Forget that and you might as well set fire to your cash receipts, because you will be wasting money either way.
Communication happens verbally, non-verbally, and in writing. Our verbal communication depends as much on how we say something as on what we say. Is the message complete? Do I use words and terms that can be easily understood? What is my tone of voice? Inflection? What is my volume? What emphasis do I place on the words I say? Try this exercise to see what we mean: Repeat the following sentence several times, out loud, placing emphasis on a different word each time. “I didn’t say that Jack was dumb.” What we say as managers will be understood differently based on how we say it.
Good verbal communication also depends on where things are said. Managers communicate in meetings, in telephone calls, in discussions and during individual conversations. Choosing the proper setting for your communication is another way you can increase chances of its success.
Non-verbal communication occurs through body language, our dress, grooming and use of personal space. Eye contact is very important in our American business culture. The positive message it sends here can be very negative in other cultures, however. Gestures we make with our hands and arms are also strong communicators. We use gestures for emphasis and to tell people what is “really” important. Touch is another strong form of non-verbal communication that can send a message like, “You’ve done well,” “I agree with what you’re saying,” “I like you.” Touch is also distasteful to many people on the receiving end of a conversation. About the only acceptable form of touching in American business is the handshake.
Whether we honor or intrude on other people’s personal space is also a part of our communication skill. The average American carries a two foot bubble of privacy around himself or herself. When someone steps within our two foot bubble, we become uncomfortable and tense. Communication effectiveness drops off rapidly. We feel it is more acceptable for people to “come close” during social situations than in business settings. If you like to get “nose to nose” with people as you talk to them, you might want to think about how your closeness impacts your communication. It may not be good communication if your words are eloquent, but because of your positioning the other person is so uncomfortable your words are never heard.
Written communication, like oral communication, is effective based not only on what is said, but also how it is said and where it is said. The message must be complete and in words the reader can understand. Underlining, highlighting, marginal notes and handwriting all impact the meaning of the message. Formal letters convey different messages than memos, notes and directives. Lists are different still. Some managers write notes by the dozens as a substitute for talking with workers. Overall, written communication is less personal than face-to-face conversation.
In communicating with others we should keep in mind that the sender is responsible for the intent of the message while the receiver is in control of its impact. To be sure your message has gotten across as you intend, ask the listener for some feedback. Say you would like them to tell you what they just heard. Such a test provides you the opportunity to make corrections to any misunderstandings before they become critical.
Listening is a crucial part of the communication process. Good managers will spend more than half of their communication time listening to workers. And, they will test their understanding of what they hear by using active listening skills to restate the message. A little awkward at first, this can become one of your most used techniques for assuring you are clear about what others tell you. It is important because everyone wants to feel they have been given an honest hearing. Ask yourself how you feel when someone has really “listened” to you and you knew at the end of the conversation your message got across. Much better, probably, than when you walk away wondering if you were heard.
We all have personal habits that can interfere with our ability to listen effectively, Opening mail or reading while someone is talking to us blocks our ability to hear the message being sent. Interrupting, taking telephone calls, looking out the window, glancing at the clock and asking irrelevant questions can all indicate we really aren’t listening.
Pracitce your listening skills and you will find the quality of your communication increases dramatically. Give up the excuse that you are too busy. It takes much more time, and often money, to correct a problem after it has occurred when it could have been prevented altogether with good listening.
The next time you give instructions to one of your employees, think through what you know about that person, the complexity of your message, and consciously design your communication so it is as effective as you can make it. The basics are important. Practice them and increase your skills, then you can think about trying some of the more popular management approaches.
Get the basics down first.
For more information and for samples and examples from our book, Practical applications for management skills development
Within its pages you will discover a wealth of management approaches that will result in greater productivity, and happier employees.
Demographics in our country have shifted substantially in recent years. In California, for example, there is no longer a “majority” race or ethnic group. All groups fall below 50% according to Census 2000.
The number of women who are in or returning to the employment arena has climbed so fast that they number nearly 50 percent of all workers. Many women are working because there is serious need for more than one income in a family these days. In 1960, only 19 percent of American women with small children were employed outside the home.
That demographic change has led to greater need for child care services. As such, child care is becoming a more popular benefit among employees. The reason is simple. Some arrangement must be made for the children’s care while mom and dad are working.
All other factors being equal (salary, commute distance, working conditions, etc.) potential employees indicate they will accept a job with employers who provide child care because it is so important to them. Large employers like IBM, 3M, and Procter & Gamble have substantial resources which can be allocated to creating and maintaining such programs. How can the smaller employer compete with such giants? Not only are there ways, you may find them appealing.
Here are eight child care options you might want to consider as an employer, even if you only have one other employee:
- On-site or near-site child care center – this is the expensive approach requiring funding for facilities and staff.
- Resource referral service – identify a service bureau which will provide referrals to parents when they need child care: before or after school, sick child options, in-home options, or summer camp programs.
- Change your personnel policies – allow flexible benefit plans to fund employee selection of child care (sometimes called cafeteria programs), allow “flex-time” starting and ending schedules, allow job sharing, allow paternity leave or child care leave. Perhaps you could allow employees to take pre-tax advantages offered by the federal government in the Dependent Care Assistance Program. Companies can reimburse tax withholdings to employees when vouchers for the cost of child care are submitted. The limit is $5,000 per employee and employer support comes in the form of record-keeping.
- Family day-care network – sponsor programs linking many businesses together to share information about programs which employees can utilize. Identify providers and share information.
- Subsidy programs – provide cash payments to employees with new born children or sick children that will help defray the costs such situations always bring. Payments can be made in a lump sum or monthly for a set period of time.
- Consortiums – establish a near-site center which is sponsored and used by many employers in the same general area.
- Parent education programs – sponsor on-site seminars on child care subjects or provide free literature to employee-parents.
- Charitable contributions – make donations to a child care center near your business, develop school-age sponsorship programs or sponsor sick child care at a local center or in-home using a local Nanny service.
Why should you consider getting involved? Because nearly 75% of women in the workforce have children under the age of six years. Furthermore, you may find your business unable to attract and hold the quality employees you want unless you have some form of child care program to offer. And, you may be able to have the government pay for part of all of your program. Many state and federal programs allow either tax incentives or subsidies to such employer benefits.
To get more information on the subject, check with your local county. Many have Child Care Councils or Childrens Councils which focus on helping employers with child care issues. Another valuable resource, also free of charge, is your local Workforce Investment Board (WIB). Funded by the federal government, your WIB can likely provide a list of service providers in your local area. Call the office of your state Senator or Congressional Representative. Often they have publications about state programs, and federal programs, that they will be pleased to send to you. And, the Internal Revenue Service can provide information about federal tax benefits for your company’s potential child care program.
Of course, there are entrepreneurs opening service companies in many locals which will find a program that fits your particular business needs. You can identify such resources by talking with your local Chamber of Commerce or other business support group.
Even if you have only one or two employees, you may soon need to establish some form of child care benefit for them. If you don’t they could easily walk across the street to your competitor and find work where those benefits do exist. The trouble with that is they take all their training and experience with them and you have to start all over with someone new.
Perhaps child care is something you should look into.
Never before in the history of our nation have managers and supervisors been so clearly challenged by the complexity of personnel laws. It used to be possible for an employer to simply hire someone who met the test of “personal liking.” There was no concern about equal opportunity, affirmative action or the need to consider other qualified candidates. Nor was anyone much concerned with how to handle the situation if the new employee didn’t work out once on the job. In our past, supervisors could get rid of employees by simply telling them to pick up their pay at the front office and leave. They were fired!
All that has changed. At least for employers with a desire to stay in business. Today we must be much more sophisticated about our recruiting and hiring practices as well as how we manage employees in their jobs. There is also more skill required by managers who must remove employees from the payroll.
We are hanging onto the final vestiges of a legal doctrine called “Employment at Will.” That concept which said either the employer or employee could terminate their employment relationship at any time for any reason…or for no reason.
Today, courts are telling employers they must reinstate former employees and give them large back pay awards because the employees were fired without “due process.” In other words, courts are saying employees have rights which must be protected and they may no longer be treated according to the employer’s whims.
Foremost in every supervisor’s knowledge of personnel law are statutes governing equal employee treatment. One of the prevailing myths in business today concerns private, closely held companies being exempt from such requirements. A myth it is, however. All employers are subject to some form of equal opportunity law. Federal legislation demands of employers certain treatment for employees. In some states, such as California, state laws carry that protection even further. None of these legal protections is contingent upon a company being owned publicly.
Title VII of the Civil Rights Act of 1964, the granddaddy of all such legislation, prohibits an employer from discriminating against an individual on the basis of race, color, sex, national origin or religion. If you have fifteen or more employees you are subject to its requirements. And, they apply to both publicly held and privately held companies. By comparison, you only need to have one employee to become subject to similar California legislation. Other statutes protect against discrimination because of age, pregnancy, marital status, physical or mental disability, medical condition (such as HIV, AIDS and cancer), pay differences based on sex, and political affiliation.
Some employers mistakenly believe equal opportunity requirements only apply to employment applicants. The truth is, equal opportunity is required in all “terms, conditions, and privileges of employment.” Included are such actions as hiring, discharge, compensation, promotion, classification, training, and apprenticeship.
Supervisors need to understand how their personnel decisions affect your entire business, not just an individual employee. If their action results in an employee being treated illegally, the employer can be liable for huge financial penalties. Employers who wish to avoid such serious difficulty are carefully training their management staff in all the requirements.
Some areas of personnel law are still evolving through interpretation in our courts. That only makes the supervisor’s job more critical, and training more vital. Drug testing, searching employee desks, lockers, computers and voice mail, smoking in the workplace, employee privacy rights, job references for former employees and surveillance of employees are all examples of subjects in evolution.
Other subjects which must be understood by today’s supervisors include personal liability for sexual harassment, immigration law, records retention and posting requirements for federal and state employment law information.
Today’s supervisors and business owners must be well versed in this entire collection of laws. You are not entirely isolated, however. There are experts available to give you the support you may need from time-to-time. Your labor/management attorney is one such resource. A professional human resources consultant is another. Don’t be afraid to ask for help. The cost of doing business today must include the costs involved in understanding and applying personnel law. Ignoring these requirements could cost you your business.
One thing is for sure…how employees are treated will only become more important to the “bottom line” as time goes by. Personnel law is not just for experts anymore.
Much has been written and said about the need for continually training employees and managers in the modern business world. Tom Peters, noted author and business consultant, is at the forefront of such advocates. Continually upgrading knowledge and skills, he points out, is a requirement for businesses wishing to succeed in the new millennium.
There are several very practical reasons for you to give serious consideration to investing in training:
- Technology Advances – more and more automation is being introduced to both the office and manufacturing environments. As machines and tools become more complex, it seems fashionable to have computers and robots. None of these tools is worth the capital investment if operators are insufficiently prepared to utilize their money-saving features.
- Workforce Diversity – dramatic shifts in workforce demographics for all industries has created a situation some companies are using to their advantage. You will find advertisements for forms now carry references to their training opportunities, in an attempt to attract job applicants.
- Strategic Tool – whenever changes are made in a business, training is now accepted as the most effective management tool for successful implementation of those changes. Moving the business to a new location or community, announcing a new health plan, or creating job enrichment when promotions aren’t available, are all examples of situations where training can increase the likelihood of successful transition.
- Customer Demands – the days of giving customers what we think they want, or should have, are over. Now we must find ways to invite customers into our planning processes and everyday operations. Training employees and managers to seek out and act on customer needs and expectations is a requirement we can’t ignore. Skills like quality improvement, innovation, and listening are all based in sound training programs. Some sophisticated companies are even inviting their customers to participate in the training programs.
- Organization Changes – when restructuring, downsizing, mergers or acquisitions impact a company, training employees is the most effective way to assure such goals will be achieved.
- Global Competition – look at your competitors from a geographic perspective. What percentage are in this country? How many are off shore? Do you know what percentage of your industry revenues are currently secured by each? If issues like job security and skill obsolescence are important to you or your employees, training can be the answer to the question of competition.
One manufacturing company wanted to improve its level of product quality. In the initial three-month period, it sent each employee to an eight-hour training program. Its objective was to implement a new philosophy: Quality is produced, not inspected in.
In the first year, costs rose beyond the initial levels. The company found that sort, rework, and scrap costs increased as employee awareness of the quality goal rose. Product which would have previously been sent out of the factory to customers was now rejected. Record keeping also improved as employees tracked problems more closely.
After the initial cost increase, costs for sorting, reworking and scrap dropped sharply. Company pride increases. New quality and job standards were supported by all employees. Commitment improved.
Even if you don’t plan to undertake such a dramatic program, you can use effective training principles to enhance your business profits. First ask yourself how many dollars you spend on payroll each year. Include benefit costs, vacations, absenteeism costs, and the like. What percentage of your total expense is that? Your investment in human resources deserves the same level of maintenance expenditures as your investment in tools and equipment.
The place to begin your training effort is with new employee orientation. This is the time to impress new workers with company goals, values and expectations. Supervisors are key to orientation success. Even if you don’t have a formal orientation class, your supervisors MUST be trained to explain company policies, procedures, culture, goals, and internal politics. This is the time each new employee must be guided to gain confidence in your organization. Left hanging, and not a part of the “team” your new workers will be poor investments.
Keep in mind that you, the business executive, HR professional or legal advisor, set the tone for your company training programs. Executives who participate and exhibit a support for the “learning agenda” by actively listening to ideas of co-workers and subordinates, create a positive educational environment. Likewise, adopting an attitude that training is unimportant can permeate the entire company.
Any investment must be carefully tracked to determine it if is producing the desired result and is cost effective. Training is no exception. Here are some specific ways you can measure your training programs to see that they are producing the results you want:
- Cost Per Trainee – Divide the total development and delivery costs by the number of participants in the program. Needless to say, this must be financially acceptable to your business.
- Cost Per Trainee Hour – Multiply the total trainees by the number of class hours and divide the result into the total cost of development and delivery. This ratio allows you to monitor the impact of various alternatives for length of training programs, delivery approaches, etc.
- Knowledge Change – Pre- and Post-Tests can effectively indicate the amount of knowledge change brought about by your training program. Professional trainers will support your interest in measuring the improvement levels as a demonstration of their impact on your organization. Training objectives can even include a statement that improvement will be at least 30% (or whatever level you find appropriate).
- Skill Change – Questionnaires, interviews, demonstrations, and observations are all techniques for monitoring and measuring the levels of skill changes brought about by your training programs. These should be used three to six months following the training program to determine what lasting impact the program had on employee skills.
- Performance Change – Future performance appraisal ratings will tell you if training designed to improve performance has been effective.
In the final analysis, training employees and managers can improve morale and performance of employees and the caliber of your supervisory staff. It can also flow directly to the “bottom line” through increased customer satisfaction, order increases, product quality and employee efficiency. Remember that maintenance of your human resources through proper training programs will add extra value to your products and services and improve your financial performance.
In today’s world, anyone who can increase the profit or reduce expenses is bound to be called a hero.
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