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What's Missing from Risk Services: Employment Practices Compliance Monitoring

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Article: What's Missing from Risk Services: Employment Practices Compliance Monitoring

Article Date: Wednesday, January 1, 2003

Article Source: The Betterley Report

Betterley_reprint_final.pdf

What's Missing from Risk Services: Employment Practices Compliance Monitoring

By Ken Thrasher, CEO of Compli
The Betterley Report - Oct/Dec 2002

        Compliance monitoring is the missing link. With the economy in a slump, a hard insurance market and corporate ethics in the news and in the minds of jury pools, employers are feeling the squeeze from increased “people risk”. A continuing dramatic increase in the frequency and severity of employment lawsuits over the past decade has left employers and insurers alike looking for answers. Traditional risk management tools and services – 800 numbers, reference manuals, training seminars and audits – are important elements to managing employment practice-related risks but have varying effectiveness.

        The corporate ideals of “being in compliance” and “reducing risks” are impossible to realize with disconnected, passive tools. The elements of a compliance process — Orienting, Training, Documenting and Reporting — need to
be included in a comprehensive system that promotes consistent implementation by actively engaging all employees
from the board room to the mail room. Implementing an Employment Practices Compliance System (EPCS) is the
path employers must choose to find the missing link in today’s risk management services — Monitoring. By combining the core elements of a compliance process, employers are able to monitor their workforce compliance in real-time for the first time.

        Monitoring in real-time means employers are able to easily and continuously assess their level of risk exposure broken down by location, department, supervisor or any other parameter. Employers are now empowered to create a
customized risk index that serves as a barometer to quantify the effectiveness of corporate compliance processes. The best part is that with an EPCS, the risk index is delivered in minutes, not months.

        To meet today’s strict compliance guidelines, employers need to retire the memos and adopt a compliance system, one that verifies participation, but also trains, analyzes and reports on a regular basis. Compliance must become an
everyday part of the job for all employees enterprise-wide.

        Compliance is a process, not a document. Valuable, accurate compliance monitoring is only possible with a
system built around the core elements of a compliance process. Whether the process is mandated by law – as we’ve seen with sexual harassment and now with the Sarbanes - Oxley Act – or is specific to a particular company, the
elements remain the same. Employers must orient employees to changing policies or corporate procedures, train and test
comprehension of those policies, document all interactions systematically to reduce the level of exposure to claims and report on exceptions to enable appropriate, preventative action to be taken. Current workplace compliance programs are still based on the old rules. Traditionally, the HR department routes policy forms and collects employee signatures. This is no longer enough. Besides being time consuming and costly, this document-based process no longer produces the level of documentation demanded in court.

        An EPCS manages the compliance process effectively by ensuring consistent implementation of policy across an
employer’s entire work force, whether in different buildings, cities or states. Compliance is the responsibility of the entire company not the HR department. As the frequency and severity of harassment and discrimination claims continues to rise, employers need to focus on risk avoidance. And, as the cost of EPLI premiums and retentions begin to reflect those losses, employers and insurers can benefit greatly fro m enabling technology that takes a proactive approach to managing the compliance process. The solution starts with monitoring, education, and prevention.

COMPLI' EPCS: Leveraging Process & Technology

        Orienting – Businesses are in a constant state of change. So are the needs of all employees. Compli’s EPCS orients all employees, new or old, on federal, state and company policies relevant to their job function. With Compli everyone has consistent access to the information and tools they need to be a part of a compliant workforce.

        Training – Getting employees to sign off on policies is not enough in today’s litigious era. Training is necessary to
reinforce understanding. Compli’s EPCS can assess an employee’s understanding of any policy, by running him or
her through a policy test, reviewable by the employee’s supervisor, management and HR. Analyzing the results can
re veal where understanding is weak and more intensive training is needed.

        Reporting – To monitor effectiveness of orientation and training processes, Compli’s EPCS has robust exception reporting capabilities that allow employers to quickly assess their company’s strengths and weaknesses. Employers can get an inside look at their company. Where there’s a problem , they’re finally the first to know.

        Documentation – Compli’s EPCS document database is a critical element in helping substantiate an employer’s
compliance efforts. Centralized documentation means one place to find what you need no matter how decentralized
your business may be. The enterprise-wide application stores all employee interaction, including policy sign-off, training
scores, and complaint forms – with a time and date stamp. Suddenly, you have a detailed digital record of your entire workforce, including all relevant data a company needs to diagnose risk and confirm compliance in the company.

        The direct value of an EPCS to a company’s internal processes and compliance efforts is clear. Even more significant is the system’s favorable impact on a company’s relationship with its insurance provider or broker. Clients of Compli are leveraging benefits gained from the system when negotiating for lower premiums and retentions during the
EPLI re n ewal process. For example, a non profit organization with over 700 employees recently re c e i ved proposals from previously uninterested A++ rated carriers, simply by implementing the EPCS. The potential for a positive impact
on loss experience was enough to justify these carriers’ leap of faith. Other customers have shared the cost of their Compli system with brokers looking to position them as lower risk to EPLI providers in the immediate future. Clearly, brokers and i n s u rers are recognizing the ability of an EPCS to improve risk characteristics of employers and complement EPLI policies.

        Compliance has not been a top-of-mind issue. That’s changing. Today, the stakes are high for everyone. A single discrimination or harassment lawsuit can strike any company, undermining your reputation. Damaging your company morale. Dulling your management team’s focus. Hurting your shareholder support.

        By properly implementing an EPCS, companies start a chain reaction that concludes in a win-win-win situation for
their employees, the company and their insurance provider. Better informed employees lead to a reduced number of
claims, resulting in lower damage awards. An EPCS, coupled with EPLI, will provide an elite standard of protection
against employment related risk.
 

About the author: Ken Thrasher is the CEO of Compli Prior to joining Compli, Ken served Fred Meyer Stores for 18 years in executive positions including CFO and executive vice president with oversight of Human Resources. In 1999, he was promoted to the position of president and CEO after the firm merged with The Kroger Company, the nation’s largest grocery store chain. Currently, Ken serves on the boards of numerous Oregon-based organizations including Albertina Kerr Centers and the Oregon Mentoring Initiative.

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