Brandt D. Beal
CEO
In the retail industry, companies face situations where risks are encountered from all angles. They spend significant dollars and years building a positive reputation for their brand. For retailers, public perception is one of their greatest assets, but it can quickly become their greatest liability. Reputation is as important as product. This is especially true for convenience stores, an extremely competitive segment of the retail industry. With over 148,000 convenience stores in the United States, customers have many choices, often just across the street or next door, magnifying the retailers’ need for a good reputation.
Consider This:![200488761 001[2] resized 600](/Portals/107851/images/200488761-001[2]-resized-600.jpg)
When Mary stops for gas and realizes the pay-at-the-pump feature is broken, she either drives away or, perturbed, goes inside to wait in line behind four others to pay, consciously deciding she won’t come back to this convenience store. This isn’t her first bad experience at this establishment. She’s due in a meeting in 20 minutes, and this place has put her behind schedule. Next week, she’ll stop at the competitor across the street.
On tonight’s evening news, “Contaminated Fuel Causes Multitude of Expensive Breakdowns” is the headline with the classic zoom-in straight to the big logo out in front of the store. Where are the local consumers getting gas next time they need to fill up? The retailer chooses not to respond to media inquiries and the public is left wondering. The supplier is probably at fault, but the customers directly blame the store. How many customers were lost because of this expensive and common accident?
The college student stops in and grabs a sandwich on his way from class to work, but the retailer’s cooler is broken and the sandwiches haven’t been stored at proper temperature. He drives off, eats the sandwich and suffers the consequences. Now, 250 of his buddies on Twitter are expressly aware where NOT to grab a bite for lunch.
With social media, mobile phones and the evening news, word spreads fast. And there’s no tempering of emotion, no goal of fair objectivity like companies have grown accustomed to with traditional media. This makes a positive reputation even more important. Retailers must continuously reevaluate their practices to proactively manage their image. In the event of unforeseen mishap, they must have a response plan. Retailers work hard to get customers in the door but must work even harder to keep them when something goes wrong.
To learn more about reputation management and Gibraltar's RiskIMPACT approach, please download our white paper on brand reputation and/or watch this video interview with public relations expert Blake Lewis.
Earlier this month, GibraltarU presented their seminar, Worker’s Comp: Killing Costs in the Details. The video below has a recap of the topics.
The presenters were:
Cathy Allen, Executive Vice-President of Human Resources. Cathy brings tremendous experience in helping business owners understand the connection between Workers’ Comp and HR.
Pepper Grey, Vice-President of Risk Management. Pepper specializes in assisting businesses keep their workers safe from injury as well as showing them how to protect the business and the employee when an injury occurs.
C. J. Baker, Senior Risk Advisor. C.J. has quickly become an expert in calculations of the NCCI Experience Modifier. You will want his keen insight as the biggest changes in 20 years are on the horizon.
Leave a comment with any questions you have about the seminar or go to www.gibraltaru.com to learn about future seminars.
C.J. Baker
Senior Risk Advisor
Nobody wins when an employer allows Human Resources issues to devolve in the work place. This article details how a court in the Midwest recently threw out an EEOC class action lawsuit that accused an employer of sexual harassment. Some employers will celebrate this as a victory against an overbearing EEOC but let’s ask who won?
The female drivers were obviously wronged in a horrific way.
The male drivers will no doubt be sued individually and their ability to work will be seriously impaired.
The employer has lost many good female drivers. With today's driver shortage, that alone is a serious issue. Also, they’ve spent $4.4 million defending themselves. It is unlikely that they will collect that from the EEOC but even if they do, no one will be paying them back for the time and headaches. Perhaps most dramatically, they’ve had their name muddied all over the country through articles like this [Lubbock Online].
So who wins?..... maybe the lawyers.
This situation obviously presents an extreme example. I doubt many of your employees are behaving so terribly. The point is that employer's of all sizes are subject to unbelievable hassles and costs before their insurance company ever writes a check.
Jessica Gremmer
Client Advocate
A bill that would allow Oklahoma businesses to opt out of traditional workers’ compensation is moving closer to becoming a reality. If the bill becomes law, significant changes are in store for Oklahoma businesses as well as the insurance industry.
Last week, the Oklahoma Senate passed the Employee Injury Benefit Act, which would allow some companies to opt out of the state-run workers’ comp system. The bill, much different from the previous version approved by the House, must now be considered and voted on by the House before it goes to the governor for approval.
Qualifying companies that opt out of the state system would manage their own injury benefits plans and be required to provide benefits that are at least comparable to those of the state plan. Most companies would be required to buy insurance to cover the benefits in case the company went bankrupt. While the proposal is similar to the Texas "nonsubscriber" alternative, the Oklahoma option includes employer requirements that are much stricter and provide more employee protections.
To qualify to opt out of the state system, an employer would need to have a workers' compensation experience modifier greater than 1.00 or have total annual incurred claims greater than $50,000 in one of the three preceding policy years. The employer must notify the Oklahoma Workers' Compensation Court and Oklahoma insurance commissioner in writing of its decision to opt out. The commissioner would monitor compliance and require an employer to confirm its qualified employer status.
An employer’s benefit plan would have to provide for payment of medical, disability, permanent bodily impairment, death, and dismemberment benefits because of an occupational injury.
The bill would require companies providing their own workers’ comp to have either accidental insurance coverage of at least $2 million per occurrence or a bond, letter of credit, or more insurance as determined by the commissioner. The minimum amount would be $3 million.
Oklahoma Senate President Pro Tempore Brian Bingman, R-Sapulpa, believes the bill would not only reduce costs and save money for current Oklahoma employers; it would also make the state more attractive to companies looking to locate, relocate, or expand. The legislation has received strong support from some of the state's leading employers including Quik Trip, Hobby Lobby, Sonic, Melton Truck Lines, Advance-Pierre Foods, ResCare, Dollar General, Regis, AutoZone, Unit Drilling, and Best Buy.
Bingman said the bill also was designed to protect workers and to provide the same level of benefits currently available through the existing workers' compensation system.
This is a complex issue, and The Gibraltar Group will continue to follow it. Check back here for more information as the bill continues to be considered.
Blake D. Lewis
Sr. Risk Specialist
Behind the visible attributes of every product and service sold in our economy is an invisible value. It’s reputation, and it can simultaneously be the hardest value to acquire and the easiest to lose.
With the delivery of products or services according to all expectations comes the willingness and confidence of individuals to buy what you have to sell. When all is working right, today’s highly technological environment can make you an overnight success. Yet, if something goes wrong, the same rapid communications makes managing reputation even more difficult. What negative comments people make about a person or an organization one day just might end up in social media the next few minutes, rather than traditional media the next day.
With the increasing amount of challenges faced in protecting reputation today and a matching level of exposure received, there needs to be a more defined sense of control.
Business leaders tend to focus more on the short-term cost than the long-term impact, when facing a problem or incident. However, at the end of the day, how organizations are viewed by their constituents often has a greater impact on a company’s ability to survive than the financial factors might suggest.
To prepare for a crisis, the time is now to develop a strategic plan for what you and your organization will do when facing threatening reputational risks. The following is a framework a company or organization can follow in order to help better protect their reputation:
- Conduct a risk analysis
- Identify key participants in an image protection program
- Take corrective measures to eliminate or reduce risks that can be controlled
- Create and exercise a practical issues and crisis response plan before it’s needed
- Establish or enhance awareness and a culture for protecting your organization’s reputation
Whether you’re facing a Tylenol tampering case like Johnson & Johnson or recovering from a $2.15 billion market loss from an ill-fated resignation letter delivered in the “New York Times” like Goldman Sachs, it’s about being proactive in reputation risk management.
Download our white paper to learn more about reputation risk and management techniques your organization can implement.
ImageGUARD™ is a joint venture of The Gibraltar Group and Lewis Public Relations. To learn more about Lewis Public Relations, visit the company’s homepage.
Brandt D. Beal
CEO
The retail industry is among the largest contributors to the U.S Economy and in 2010 accounted for over $3.7 trillion in sales and 14.5 million employees, second only to healthcare. Shoppers may not be aware of it, but every time they frequent grocery stores, fill their vehicles with gas, shop for clothes at the mall or purchase a best seller from a bookstore, they are also contributing to insurance and risk management costs. Included in the price consumer’s pay for these items is a small amount to cover risks borne by retailers. While a consumer may not be aware of a retailer’s risk and its financial impact, retail companies most certainly do since they operate on smaller profit margins, often as low as 2%.
The risks that affect retailers typically fall into three categories:
Hazard Risk
The probability of loss inherent in an organization’s physical and human presence such as damage to property assets, occupational injuries, injuries to third parties, auto incidents, employment related lawsuits and faulty products.
Business Risk
The probability of loss inherent in an organization’s quality of operations such as increasing competition, economic conditions, borrowing capacity, cash flow, key employees and business continuity following a catastrophe.
Strategic Risk
The probability of loss inherent in an organization’s business strategy such as consumer preferences, product innovation, brand management, acquisitions and supply chain.
The cost to insure hazard related risks for retailers can range anywhere from 0.6% to a staggering 1.5% of total revenues. This means many retailers spend more on risk than the owners’ take home in a year. Lowering the cost of risk will allow retail organizations to optimize the bottom line without necessarily increasing sales, which is key in today’s economic climate. Let’s review some cost drivers in a retail company’s cost of risk:
Hazard Risks:
Workers’ Compensation
- Largest Driver of Cost – Both Direct & Indirect Costs
- Occupational Injuries Create Significant Indirect Costs
- Significantly Impacted by Escalating Medical Costs
- Driven by Slip, Fall & Strain Claims
General Liability
- Significant Direct Costs
- High Percentage of Litigation
- Driven by Slip & Fall Claims
- Claim Frequency is Decreasing but Severity is Increasing
Employment Practices Liability
- High Insurance Premiums
- Costs Driven by Litigation
- Frustrating & Time Consuming
Property
- Smaller Cost
- Low Frequency but High Severity
- Claims can be Significant & Effect Operations
The cost of business and strategic risks, while harder to measure, can potentially be catastrophic and these risks are typically either not insured or are uninsurable. In 2007, TJ Maxx uncovered a cyber attack that resulted in the hacking of over 45 million credit card numbers. Another example is employee turnover. The National Retail Federation estimated industry turnover at 110% along with a conservative cost estimate of $3,500 per employee. Both of these examples threaten both sustainability and profitability. We have all seen multiple small and big-box retailers shut their doors and file for bankruptcy after failing to properly manage and mitigate their business and strategic risks. When we ask business owners what risks “keep them up at night” they frequently mention these types of risks.
Business & Strategic Risks:
Brand Reputation
- Significant Loss of Revenue Opportunity
- Retailers Greatest Asset is its Brand
- Lengthy Restoration Period
Cash Flow & Balance Sheet Protection
- Prohibit Growth
- Decrease Competitiveness
- Decrease Shareholder Value
- Fluctuating inputs like Gasoline & Diesel
- Access to Capital
Human Capital
- High Employee Turnover – Typically Greater Than 100%
- Low Employee Engagement – Typically Less Than 60% Engaged
- Quality of Customer Service
In a highly competitive market of price wars and shrinking profit margins, retailers must holistically manage the cost of hazard, business and strategic risk to protect their sustainability and profitability. For more information on how you can optimize your profit margins by redefining risk and cost, please download our white paper below.
Dr. Bruce Baker
Human Capital Advisor
Once upon a time, a young man started a business selling insulation to chemical plants. The young man loved talking to his clients and regularly dropped by to check on them personally. He was a good salesman. He always kept his word and did good work at a fair price. Therefore, his business grew rapidly. He hired workers, opened lines of credit, and rented office space. In less than ten years, his revenue was measured in the millions. To most, it seemed that his life was great. Like many young men, he had a young bride and young children. While she was a patient and loving wife, she began to grow tired of his long hours and grumpy moods. He regularly missed important family events and seldom came home in time for dinner. He felt guilty for causing her anguish.
Additionally, the young CEO had started experiencing health problems. He never had time to eat properly or exercise. He was frustrated by almost everything about his company. He no longer had time to spend with clients and check on jobs.
The business was not fun. Not anymore. Now he had meetings. Meetings about personnel issues. Meetings with accountants. Meetings with lawyers. He did not like meetings. He wanted to be a salesman and he hardly ever had the chance to meet with clients anymore. He was close to burnout. He was beginning to consider getting out of his business entirely.
In the midst of his pain, he met with a friend after work. Turns out his friend had experienced many of the same problems and frustrations. “What did you do?” he asked. “I hired a coach.” The executive, not so young anymore, was thunderstruck. “A coach!?!” He had never heard of such a thing.
Fast forward twelve months and our executive is beaming. He has filled his toolbox with resources to manage his business more productively. He spends the majority of his time on activities that bring the biggest return for his company. He has trained a trusted second-in-command that is skilled at tasks our businessman despised. His wife is happier; his health is better. Life is moving in the direction of great again.
If you find yourself frustrated with your lack of productivity, review our whitepaper on Executive Productivity to learn more about what we are doing internally and how you can increase your own productivity.
Greg Shinsky, CSP
Director of Risk Control
Most employers know that OSHA 300A summary logs are required to be posted in the workplace today, February 1st, and remain posted until April 30th. What business owners may not know is that now is the time when OSHA is developing their annual hit list.
An OSHA hit list contains companies that are targeted for comprehensive inspections. Companies on the hit list face a high probability of an on-site OSHA inspection in the current year.
How does a company get on the list? OSHA collects data from the previous year focusing on days away from work or days of restricted work due to injury or illness. Anything over the OSHA threshold automatically triggers inclusion on the hit list.
If you fear your 2011 injuries will put your company on the hit list, now is the time to prepare. The Gibraltar Group can assist you in conducting a mock inspection that will prepare you for when the OSHA inspectors arrive and help you improve your safety record.
In a few weeks, we will be publishing a white paper on how to calculate your DART rate, prepare for an OSHA inspection, and involve your entire team in creating a safer work environment. To make sure you are notified of the white paper, click here to subscribe to our feed.
Michael Breler
Client Advocate
Most organizations today depend on external vendors to provide goods and services necessary to run daily operations. Apart from the apparent cost in engaging in these relationships, it is also important to understand that vendors can add complexity to an organization’s overall risk. Failure to manage this risk can further add to the cost factor of the vendor relationship. In some cases the additional cost can be severe enough to leave you in financial distress or even put you out of business.
Fortunately, there are some simple and cost-effective strategies for managing vendor risk. The most important one, perhaps, involves the development of contractual agreements that are designed to transfer high risk and high frequency exposures to your vendors. This risk management strategy, also known as contractual risk transfer, commonly provides drafting indemnification, hold harmless, and defense agreements. Additionally, it ensures appropriate coverage, limits, and endorsements are being requested from each specific vendor. A vendor contract alone, however, is not sufficient to mitigate your risk for litigation and financial loss. Without a systematic process for requesting and tracking incoming certificates there is no control measure in place to ensure that each vendor is complying with the insurance requirements outlined in the agreement.
Consider the following case study:
Problem
A regional wholesaler utilized a temporary staffing agency to supply additional labor. One of the temporary employees while performing duties for the company was critically injured resulting in a $1.5 million settlement. The wholesaler was deemed liable. The staffing agency’s workers compensation carrier indemnified the injured employee as due, but turned around and
subrogated against the wholesaler’s general liability carrier. Because the company had failed to request and obtain a waiver of subrogation endorsement from the staffing agency, the staffing agency’s workers compensation carrier was able to recover its payments to the injured employee. To add further insult, the wholesaler’s carrier ended up non-renewing their insurance and the company was now stuck with a catastrophic claim on their loss history making them subject to substantially higher insurance rates.
Solution
This case may have been prevented if the wholesaler had required the staffing agency to provide a waiver of subrogation in their favor. This clause could have been incorporated into the contract and verified by requesting and obtaining a compliant certificate of insurance from the staffing agency.
In today’s litigious business environment, failure to effectively manage the risks associated with vendors is not only widespread but also extremely hazardous to the sustainability and profitability of any organization. The implementation of carefully drafted contractual agreements and a comprehensive certificate-tracking program can be an extremely cost-effective solution. It minimizes potential liability exposures and helps you mitigate the risks of litigation, financial loss, business interruptions and higher insurance rates that ultimately could endanger the health of your organization.
Brandt D. Beal
Chief Executive Officer
At Gibraltar, we expect our team members to give 110% in every area of their job by taking ownership over their work and producing results. We work hard to create positive outcomes for our clients. In doing so, our team members must demonstrate a high level of business acumen, drive, and dedication. This past month we embarked on a cultural revolution that I believe will further instill a sense of ownership in each of our team members.
Results-Based Work Environment
At the end of the day, our clients, business partners, employees and I desire that our efforts at The Gibraltar Group create positive results. Because we have many Generation Ys (a.k.a. Millennials) on our team, we saw the opportunity to change our internal policies and benefits to better motivate our Millennial team members and align more closely with our company mission and values. After a few lengthy discussions with our human resources, finance, and operations leadership, we made some significant changes. We decided to start treating our employees like owners since we expected them to act like owners.
Gibraltar Compensation – The 7.8.9 Plan
I thought it was time to create and implement a compensation structure that better rewarded our employees for the hard work they do. Our 7.8.9 Plan is a simple, but powerful, formula that 
rewards our team members monthly. As an owner, I receive a pay raise through growth and profitability, so, why not implement the same structure for our employees? We want to put our employees in control of their financial future. The 7.8.9 Plan, combined with our annual profitability bonus, creates a compensation program that Rocks!
“No Limit” Vacation Policy
We have never micro-managed the hours of our team members. They have diligently worked the hours required to get the job done. They regularly answered emails and voicemails late at night and even while on vacation; however, we micro-managed their vacation. This just didn’t seem right, so I decided to get rid of our vacation policy altogether, allowing our employees to take the time they need while still creating positive results. It’s ok if our employees need a day to recharge; it would also be ok if they wanted to plan an epic three-week tour of Europe. We only have one rule in our vacation policy, which is really more like a responsibility statement:
“In everything you do, we ask that you act with The Gibraltar Group’s, your colleagues', and our clients' best interest at heart.”
Telecommuting Policy
My creative juices are hard at work late at night which is why I am notorious for sending emails in the wee hours of the morning. I also know that I am sometimes able to work more efficiently and effectively when I am away from my office and its distractions. We implemented a policy allowing our employees to work off-site when needed, as long as their availability to colleagues and clients is unaffected. The next time you speak with your Gibraltar representative he or she may be at the local coffee shop enjoying a latte while securely connected to Gibraltar’s computers and telephones.
At the Gibraltar Group, we have experienced 100% growth almost every year since our inception. We realize that our team members’ talents, commitment, and hard work are the reasons for our continued success. Our employees are important to us. Our goal is to create an environment where career fulfillment and personal growth are normal outcomes. In that environment, financial rewards occur naturally.
Download the white paper below to learn more about these and other human capital strategies that can help you recruit and retain quality employees.
