At the 11th annual CSP Leadership & Crisis Prevention Forum, held in May in Charlotte, N.C., more than 30 attendees hashed out the complexities of the Affordable Care Act (ACA), workplace violence, product liability, cyber liability, preparing and recovering from natural disasters, and clamping down on fraudulent workers’ comp and liability claims. Despite the great diversity in issues, one central best practice repeatedly rose to the top: Be prepared.
Scenario: Flooding and power outages from a storm challenge a c-store chain’s ability to provide fuel and to reopen.
QuickChek Corp., an approximately 130-store chain based in Whitehouse Station, N.J., thought its mettle was fully tested in 2011 by the one two punch of Hurricane Irene, which unleashed prolonged rain and flooding; and a Nor’easter, which dumped up to a foot of snow on the region only a few months later. By this point, “We thought we knew what we were doing,” said presenter Suzanne DelVecchio, counsel for Quick-Chek. The company installed a generator at its headquarters and had five on standby for stores. It coordinated with key suppliers to have the essentials in stock. And it lined up electricians, its general contractor and generator logisitics while planning where to move employees in coastal stores.
And then came Superstorm Sandy in October 2012. “It started with the rain, which wasn’t so bad,” DelVecchio said.“And then we had the wind. And the wind took down everything: trees, power lines. And then we had a storm surge.” Because Sandy hit at high tide, the surge pushed much further inland than is typical.“Everywhere you went, power lines are down, trees are down.
“We woke up on Tuesday, Oct. 30, and had 20 stores in New Jersey open,” she continued. “Our No. 1 goal became to reopen our stores.” The chain’s No. 1 challenge? No power. “Not having any power led to every other issue we had.”
For one, even the stores with gas couldn’t pump it out of the ground. QuickChek couldn’t get some of the generators to its sites because primary and secondary roads were closed. And when fuel and generators did reach their destination, drivers had to contend with local curfew and traffic c restrictions. (DanGiampetroni, manager for Kohler Generators,Kohler, Wis., pointed out that single outage can recover the cost of generator—$13,000 to $26,000, depending on the model—after factoring in lost revenues, inventory, wages, community use and more.)
But perhaps even more challenging for QuickChek were barriers thrown up by the government.
“Our local government was probably more unprepared than everyone else,”DelVecchio said. “They didn’t know what to do. And they were openly hostile to some of us.” Civic unrest flared up around a few sites as the stores doled out fuel, and some local police departments balked at having to protect the stores. “We had the police tells, ‘If you open your store, we will arrest you,’ ” she said.
Meanwhile, QuickChek was discovering that a state of emergency means business as usual in terms of regulations. For example, it was forbidden to sell premium gas at the price of regular because of the state’s below costlaw. It needed a waiver to provide customers with hot food, another to operate beyond local curfews, and another to bring in gas from other states and let truckers work longer shifts.
“We learned we had to take care of ourselves,” said DelVecchio. “We needed to be proactive. There was no one else who was going to come in and do this for us.” She did say, however, that Gov. Chris Christie was a helpful ally, introducing fuel rationing, which helped calm customers, and stepping in when the local police chief threatened to shut down a QuickChek site.
The company also learned communication is key—between headquarters and stores, with suppliers, employees, out of-state peers and customers. The chain posted store openings on its Face book page and through Twitter, inviting folks to stop in to get warm, grab a cup of coffee and charge electronics.
Going forward, QuickChek is eager for government officials to accept c-stores as an essential service during states of emergency. Legislators later pushed 45 bills that would require fuel retailers to have a generator on site and operate within 24 hours, but none recognized their crucial role in supporting communities.
“Food and fuel are not considered essential, “said DelVecchio. “But what are people going to do when they have no power and no food and fuel? We need to be essential so we can get our people on the road and into the stores, and get us to reopen.”
Scenario: In the aftermath of a workplace shooting, a large discount chain confront show to address traumatized staff.When you have more than 7,700 stores across 46 states, odds are very good that on any given day, some of your employees will face a traumatic event with lasting repercussions.
Consider the example of Family Dollar Stores Inc., Mathews, N.C. Its most expensive workers’ comp claim, which totaled $2.3 million, was awarded to a store manager who was duct-taped during robbery and had a gun pointed at her head. Although she was physically unharmed, the employee suffered immense psychological trauma, with $2 million alone allocated to a lifetime worth of pharmaceuticals.
As David Smith, Family Dollar’s divisional vice president of risk management, explained to attendees, the company wanted to not only show employees that it cared but also establish a process for dealing with traumatic events and to minimize the associated costs. At any given time, Family Dollar has 1,400 workers’ comp and 1,200 general liability claims pending.
“It’s really the right thing for an employer to take care of an employee, and once a bad thing happens to respond appropriately and compassionately to treat that employee … after they’ve been a victim of workplace violence,” said Smith with Crisis Care Network, Wyoming,Mich., to provide critical-incident response services and create a crisis-prevention protocol. In any traumatic incident, even if no physical injury occurs, employees are offered the opportunity to receive counseling on the phone, in person or in a group setting from Crisis Care, depending on the situation’s severity.
For example, after a robbery, the store manager would call a third-party claims administrator to provide basic details, who would then refer the case to Crisis Care. Within an hour, Crisis Care would call the affected employees, assess their condition, provide support and then offer a toll-free number to call for additional help. Ten days later, Crisis Care would follow up with employees. After implementing the first phase of the crisis-intervention program in 2003, Family Dollar’s retention post-robbery increased to 86%, compared to less than 70% prior to its launch. In addition, only 6% of robbery incidents became workers ‘comp claims, and because employees appreciated the company’s compassionate response, the actual claims were 15% less costly.
Scenario: After two employees text each other about daily store sales via their smart phones, one of the devices is stolen.
As smart phones and tablets become more ubiquitous, employers are being forced to wrangle with how to control company data stored on an employee’s personal device. It’s a trend that demands retailers institute a “bring your own device” (BYOD) policy.
“If you don’t already have a BYOD policy in place, or on the table, what are you waiting for?” asked presenter John Augenstein, IT quality and project ser vices manager for BIC Corp., Shelton, Conn. One in four devices used for work are smart phones or tablets, which Augenstein pointed out are highly risk-prone devices.
“They’re small, easy to use, easy to steal and easy to confuse,” he said, citing the epidemic of “Apple picking,” or iPhone and iPad theft. “The hardest challenge with them is: How do you secure the data?”
For example, two store employees could be casually texting each other about work. One asks the other how sales are going that day. “They’re not blatantly violating policy on purpose—that’s just how we communicate,” he said. “So if you don’t have a policy, they’re going to-do it anyway. Get ahead of the curve and develop a policy so if something happens you have legal recourse.”
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Crisis Management 101
While the c-store industry is filled with savvy businesspeople, they don’t necessarily know how to respond to a traumatic event. Crisis Care Network, Wyoming, Mich., which provides crisis response services, teaches business leaders a communication protocol called the ACT Process. Its components:
Acknowledge and name what happened. “One of the biggest mistakes that leaders make is to sweep it under the rug, or deny it or pretend it didn’t happen,” says Bob VandePol, president of Crisis Care Network. Instead, state the facts: Acknowledge what happened, name the affected person and their fate and recognize the impact.“It validates their experience,” says Vande Pol. “It’s also smart because people are always looking for something to blame, and leadership is the person in the crosshairs.” It will be more difficult for employees to point fingers at company leaders if they are within the “circle of impact.”
Communicate pertinent information with competence and compassion.“Nature abhors a vacuum, and if people don’t have information, they make stuff up,” says VandePol. He advises business leaders to share information simply—in three bullet points, seven words per bullet—because after a trauma, people cannot process too much information. Say updates will be shared, and then follow through—even if there is no new information. Second, be a competent yet compassionate leader. It’s a tricky balance, because under stress, leaders can become caricatures, VandePol says. Some focus on bottom lines and protocols, and appear very stiff. “Other people become extremely compassionate and blubber,” VandePol says. Here, support and even scripting are key.
Transition to a future focus. Provide employees with a path forward. “Most people are resilient and are going to go right back to the cash register or emails or truck, and so it’s good to push them in that direction,” says VandePol. Provide psychological fi rst-aid information to employees ready to move forward, and triage those who need more support to the appropriate level of care, whether it’s a doctor, employee assistance program (EAP) or counseling.
ACA: Pay or Play?
With the provisions of the Affordable Care Act (ACA) set to take effect Jan. 1,2014, large employers are faced with a few key choices, said presenter Stewart VanDuzer, fi rst vice president and director of special accounts marketing for Federated Insurance, Owatonna, Minn.: “Am I going to pay fines and not offer coverage, or am I going to offer health care?”
Some employers may decide not to offer health insurance to all full-time employees and instead take the chance of getting fined (the “pay” scenario). “If one of them goes to the exchange and buys a policy and gets a tax credit, then you’re in violation,” said Van Duzer. “Once they catch you, they penalize you on everybody.” This equates to a $250 fi ne per month for every employee who goesto the exchange and takes advantage of the tax subsidy.
For those who decide to “play,” the challenge is meeting ACA standards for minimum coverage while keeping premiums below 9.5% of employees’ incomes. For many of the retailers in the room, it is an expensive, but easy, decision.“We stress so much that everyone who works for us are team members,” said David Bridgers, vice president and general counsel for Thorntons Inc., Louisville, Ky., which has 167 sites in five states. “We have an ESOP now, and 25% of the corporation has been given to team members. It’s hard to say we’re going to pay a fine and put you out to the wolves.”
“What kind of a company are we? What kind of company do we want to be?”asked Steve White, vice president and CFO of Robinson Oil Corp., Santa Clara, Calif., which operates 34 Rotten Robbie sites. “We’re going to play. Now, it’s going to be more costly. The cost can be born by one of three people: the employer, the employee or the customer. We decided the employee is not going to be any worse off. It’s got to fit somewhere between us and the customer.”
There are also those who are going to drop benefits altogether, said Van Duzer:“We’ve got people saying ‘I’m out. I’m going to have double the number of employees, because now they’re all part-time.’ ” In this case, the employer is neither paying nor playing; however, because employers cannot create different classes of part-time employees, company officers would.
Avoiding Imported Risks
Steve Burkhart, vice president and general counsel, and Ryan Sullivan, corporate counsel for BIC Corp., shared an update on productliability concerns. This year’s presentation focused on the fact that regulators are increasingly targeting retailers with penalties and fines as more product is imported from overseas, where regulations and voluntary industry standards are ignored.
“Sometimes the only thing that’s local is the retailer,” said Burkhart.“You can have a foreign manufacturer who doesn’t even carry insurance policies here. You start to see rationale changing and focus going to the seller.”
BIC shared the following best practices:
- Control purchasing.
- Obtain indemnity and sufficient insurance coverage from highly rated companies.
- U.S. manufacturers should insist that Chinese exporters obtain appropriate insurance coverage from a U.S. or international insurer that will protect the companies in the event of a recall or lawsuit in the United States.
- Ask suppliers to provide proof of compliance to standards and regulations.“It’s just a piece of paper, but at least you made the effort, the due diligence: Somebody from another company, your supplier,
- attested that their product was compliant,” said Burkhart.
- Follow the law. Deal only with reputable, financially responsible manufacturers and distributors
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