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Copyright 2012 Books24x7®. All rights reserved. Reproduction in whole or part is prohibited without the prior written permission of the publisher. This ExecBlueprints™ document was published as part of a subscription based service. ExecBlueprints, a Referenceware® collection from Books24x7, provides concise, easy to absorb, practical information to help organizations address pressing strategic issues. For more information about ExecBlueprints, please visit www.execblueprints.com.
The HR leaders from NRD Holdings, Rubio’s Restaurants, Parkview Health, and FCCI Insurance Group on:
Important Legal Issues Every HR Executive Should Know About
Wendy Harkness Chief People Officer and Chief Legal Officer, NRD Holdings LLC
Angelica Gamble-Wong Vice President, People Services, Rubio’s Restaurants
Debra Faye Williams Senior Vice President and Chief Human Resources Officer
Parkview Health
Lisa Krouse Senior Vice President, Human Resources and Support Services
FCCI Insurance Group
To many company leaders, compliance is not “sexy,” or even interest-ing. Some even consider paying fines and settling lawsuits for non-compliance as inevitable costs of doing business. But the authors of
this ExecBlueprint respectfully disagree. They describe how HR can part-ner with the business to develop compliance strategies that actually address the company’s objectives and culture — and save money in the process. This should not, however, be a reactive endeavor that kicks in only when a new law is passed. Rather, HR should develop and house a “compliance infrastructure” that performs many invaluable functions, including researching applicable laws and weighing risks. HR drafts the policies and procedures, but the executive team gets the final say. Then HR educates managers and employees on not only the mechanics of compliance, but on why the policy has to exist in the first place. Finally, HR audits compliance efforts. One practice is to ask front-line managers: How is the policy really being implemented? After all, surprises in the conference room are way better than surprises in the courtroom. n
Action Points
I. What Challenges Does HR Face in Ensuring Compliance at Their Companies?In many organizations, business leaders are necessarily more concerned with maintaining fiscal health than complying with regulations, and view penalties as a cost of doing business — and HR as the “policy police.” What’s more, HR can encounter resistance at the front-line level if managers feel that following regulations will create more work.
II. The Bottom LineIt can be very hard to measure the avoidance of risk because, after all, how do you measure what has not occurred? However, the costs of fines and settlements for violating laws/regulations are very real (estimated by one industry source as 2.65 times the cost of adherence) — and you may need to look no further than your own company’s records.
III. Must-Have Components of a Compliance InfrastructureCompanies that haven’t instituted compliance programs often scramble to adhere to new laws, wasting time and money in the process. Instead, HR should proactively develop a strategy whose key steps include assessing risk and costs for non-compliance, drafting policies, training staff, conducting reviews and audits, and enforcing consequences.
IV. The Golden Rules for Partnering with the Business on Compliance ConcernsThe last thing people want to hear is “you can’t do that.” In order to foster a culture that takes compliance seriously, HR needs to work with colleagues to find solutions that will meet business objectives. Then, employees must learn what is expected, and why. Finally, inform your managers that they could face personal liability for non-compliance.
V. Essential Take-AwaysChances are your company’s CEO wants to comply with all applicable laws and regulations. However, they require your expertise to determine how adherence will fit with business goals — and make the company even more competitive by saving on lawsuits. They also need help assessing: What impact will new laws and litigation have?
Contents
About the Authors . . . . . . . . . . . . . . . . . . . . . p.2
Wendy Harkness . . . . . . . . . . . . . . . . . . . . . . p.3
Angelica Gamble-Wong . . . . . . . . . . . . . . . . p.6
Debra Faye Williams . . . . . . . . . . . . . . . . . . . p.9
Lisa Krouse . . . . . . . . . . . . . . . . . . . . . . . . . . p.12
Ideas to Build Upon & Action Points . . . p.14
© Books24x7, 2012 About the Authors ExecBlueprints 2
About the AuthorsWendy HarknessChief People Officer and Chief Legal Officer, NRD Holdings LLC
Angelica Gamble-WongVice President, People Services, Rubio’s Restaurants
Debra Faye WilliamsSenior Vice President and Chief Human Resources Officer, Parkview Health
Lisa KrouseSenior Vice President, Human Resources and Support Services, FCCI Insurance Group
Wendy Harkness is the chief people officer and chief legal officer at NRD Holdings LLC,
and is a licensed attorney. Ms. Harkness is a dynamic human resources leader with more than 20 years of cross- industry experience. For the last decade, she’s put her significant experience to work partnering with top food industry brands including Popeye’s, Domino’s,
Checkers/Rally’s, Subway, and many more. A recognized employee relations expert and leading people strategist, Ms. Harkness leverages her legal and business knowledge with a hands-on approach to drive business results.
Ms. Harkness serves on the board of directors for the Hospitality Education Foundation of Georgia and was formerly the president of the Chain Restaurant
Compensation Association and a steering committee chair for the Organizational Readiness Committee for the Women’s Foodservice Forum. She is a frequent speaker at industry, association, and legal conferences.
Angelica Gamble-Wong joined Rubio’s in February of 2011. Previously, she was with Virco
Mfg. Corporation where she served as an officer and its first vice president of human resources. Prior to joining Virco, Ms. Gamble-Wong started the human resources department for Edison Capital, a subsidiary of Edison International.
Throughout her 20 years of human resources experience, Ms. Gamble-Wong has led HR departments in startup, fast-growth, and turnaround environments. Three times she has started HR depart-ments from the ground up, and is a strong proponent of the utilization of technology in the HR function. Her experience has been in a wide variety of
industries including manufacturing, finance, and hospitality. She has spoken to leaders and written articles on the importance and benefits of strategic HR as a competitive advantage.
Debra F. Williams is a servant leader with a passion for creating human resources strategies that
attract, engage, develop, and retain a high-performing workforce. Her com-mitment to aligning talent strategies to business strategies has proven to enhance organizational culture and performance.
Her diverse career includes both human resources and operations leader-ship roles in health care, education, and business. She currently serves as senior
vice president of human resources for Parkview Health in Fort Wayne, Indiana. A Michigan native, she has held senior leadership positions with St John Health, Detroit Public Schools, McLaren Health, RL Polk, and Sinai Health System.
Ms. Williams currently serves on the boards of the United Way of Allen County (Chair Elect), Early Childhood Alliance, SCAN, Turnstone, the University of St. Francis School of Health
Sciences Advisory Council, the American Society of Employers, and the advisory board of the Inforum Center for Leadership. She was appointed by the Fort Wayne Mayor Tom Henry to serve on the Gateway Advisory Committee, and by Indiana Governor Mitch Daniels to serve on the State Workforce Innovation Council.
Lisa Krouse, Esq., is senior vice president of human resources and support services at FCCI Insurance
Group in Sarasota, Florida. FCCI is a commercial property and casualty insur-ance company rated A- (excellent) by A.M. Best Company.
Prior to joining FCCI, Ms. Krouse was general counsel, SE region and vice
president of human resources at Zenith Insurance Company. She also served as vice president and assistant general coun-sel at NCCI for nearly 10 years and was a partner in the law firm of Adorno & Yoss.
In addition, she has written for many publications on legal insurance and employment law topics. She is admitted
to practice before the U.S. Supreme Court and is a member of the Florida Bar, District of Columbia Bar, and the New York Bar.
☛ Read Wendy’s insights on Page 3
☛ Read Angelica’s insights on Page 6
☛ Read Debra’s insights on Page 9
☛ Read Lisa’s insights on Page 12
© Books24x7, 2012 Wendy Harkness ExecBlueprints 3
Wendy HarknessChief People Officer and Chief Legal Officer, NRD Holdings LLC
HR and ComplianceAs the HR leader for my company, I must be well-informed of existing and emerging issues. It is my responsibility to evaluate risks, keep the other members of the executive team informed, and to recommend and execute appropri-ate courses of action.
Many times, compliance may require policy changes, system upgrades, employee training, etc. Accordingly, I work within the organization to develop a plan to meet the compliance objectives. When I meet with the executive team, I already have a tentative project plan in place, which we fine-tune during the meeting so we can stay ahead of the curve.
As opposed to dealing with com-pliance issues on a one-off basis, it is important to have an overall com-pliance strategy. If there is an overarching strategy, HR leaders can often anticipate and prepare for the next level of required compli-ance rather than working on single issues. Having a strategy allows the leader to address potential problems comprehensively, saving valuable time, effort, and cost.
Importantly, HR leaders must encourage organizational accep-tance with respect to compliance.
While most executives fully under-stand the benefits of compliance programs, many front-line manag-ers resist compliance efforts. For them, being in compliance may mean it takes longer to do their jobs, requires more administrative effort, and, if they do not have first-hand exposure to the consequences for non-compliance, offers few pal-pable benefits. As a result, keeping managers trained and fully engaged is a challenge. While scare tactics are used sparingly, managers need to understand — for their own pro-tection — the penalties the company faces if it fails to comply. They also need to know that they may be held personally liable for compliance failures and that, increasingly, criminal liability is possible as well.
ROI for Compliance (and the Cost of Non-Compliance)Prior to allocating scarce budget dollars to any project, system upgrade, or process improvement, prudent companies will likely require its executives to analyze the ROI. The trouble with determining the ROI on compliance is that the very nature of compliance is based on “what ifs.” Fundamentally, company compliance initiatives are designed to prevent breaches of laws, regulations, etc. If the aim of the initiative is successful, the breach is avoided. Accordingly, analyzing fines and fees for an avoided breach is a difficult analy-sis for which there is no magic percentage.
Perhaps the best way to think about costs is not to estimate com-pliance costs at all, but to evaluate the cost of non-compliance. According to a recent report by the
Ponemon Institute, the cost of non-compliance is 2.65 times the cost of adherence. Brian Nesmith, direc-tor of corporate compliance and ethics for The Home Depot, refer-enced data at last year’s Compliance Week conference indicating that, on average, compliance failures cost a company $81 million for every $1 billion it earns in revenue. Whichever lens a company chooses to view compliance costs, it is clear that the cost is high.
Wendy HarknessChief People Officer and Chief Legal Officer
NRD Holdings LLC
“For the record, non-compliance is never recommended. Granted, some violations are more serious than others, but they still represent risk to the organization.”
• Over 20 years of cross-industry experience
• Licensed attorney
• Recognized employee relations expert
• Bachelor’s degree, Human Resources Management, St. Leo University
• J.D., Stetson University College of Law
Ms. Harkness can be e-mailed at [email protected]
As opposed to dealing with compliance issues on a one-off basis, it is important to have an overall compliance strategy.
Wendy Harkness
Chief People Officer and Chief Legal Officer
NRD Holdings LLC
© Books24x7, 2012 Wendy Harkness ExecBlueprints 4
Wendy HarknessChief People Officer and Chief Legal Officer, NRD Holdings LLC (continued)
However, even figuring the costs for non-compliance can be com-plex. In many cases, depending on the law or regulation that is vio-lated, fines/penalties are spelled out within the statute(s). But not every law, statute, or ordinance is that clear. Often, violations will incur fines within a specified range. To complicate matters further, some breaches will violate city ordi-nances, state laws, and federal regulations resulting in multiple exposures.
While determining the costs for some violations is possible, the extent of the assumptions necessary to accurately use them in an ROI analysis is problematic. Specifically, companies have to be aware of and well-versed on the specific laws to which they must adhere. Notably, not all laws apply to all businesses — some, for example, apply to public companies, but not to pri-vate companies. Some laws do not apply to employers unless they have at least 15 employees and some apply only to companies with 50 employees. Other regulations are industry-specific and in some cases state laws can supersede fed-eral laws. Attempting to calculate the ROI of compliance or non-compliance is at best onerous and, at worst, is no more than a guess.
Risk vs. RewardCompliance is important, and non-compliance can cost a company a lot of money. However, whether or not to comply with one regula-tion or another involves daily choices. For example, every day you drive a car, you are making the deci-sion on whether or not you are going to comply with local traffic laws. Are you going to obey the
speed limit, use your blinker, and come to a complete stop at every stop sign? Do you always obey every rule? Admittedly, you know the rules of the road, but you weigh the risks. Companies do the same thing.
Occasionally, the costs of remaining in compliance outweigh the risks companies face for non-compliance. For example, some city ordinances severely restrict signage for restaurants. Per the ordinance, restaurants are not allowed to post advertisements that exceed a specific height, which lim-its the customers’ ability to see the restaurant’s special value meal deal. A manager, aiming to hit his sales target, may take a chance and dis-play the prohibited advertisement anyway to attract more business. The manager knows that, if caught, the restaurant may have to pay a small fine, but he takes the risk because he also knows that govern-ment signage enforcement officials are unlikely to be out measuring sign height for fun on a Saturday night. In this scenario, the manager decided that the benefit of more business outweighed the risk of a minor fine.
Compliance Recommendations: AccountabilityAccountability is crucial to any compliance effort. Everyone that is responsible for any portion of com-pliance should unequivocally understand the expectations, adhere to the relevant policy, and be held accountable for their actions. In the recent post, “The Seven Deadly Sins for a Compliance Program,” blogger/lawyer Tom Fox considers the example (below) in which the manager acknowl-edged that she knows the policy. She decides to take the risk of not following the policy (and thereby exposing the company to repercus-sions for non-compliance) because she thinks that not following the policy will help her make her num-bers. The moral of the story, of course, is to ensure that your com-pliance policies are known and followed and that they have teeth. Non-compliance must be discov-ered through routine internal audits and consequences must consistently be applied throughout the organi-zation.
© Books24x7, 2012 Wendy Harkness ExecBlueprints 5
Wendy HarknessChief People Officer and Chief Legal Officer, NRD Holdings LLC (continued)
Creating a Compliance InfrastructureTo establish successful compliance programs, a solid infrastructure is essential. The best compliance programs are simple and straightforward. This five-step process outlines some important elements to consider when creating or evaluating a program:
Establish Policies:1. Determine risk areas.
2. Determine compliance requirements for each risk area.
3. Determine cost and consequences for non-compliance.
4. Draft relevant policies.
Conduct Training:1. Prepare (or have prepared)
formal training materials.
2. Track training.
Monitor Compliance:1. Determine monitoring method
(audits, software, etc.).
2. Determine monitoring frequency and schedule.
Reporting and Analysis:1. Establish compliance reporting
roles and responsibilities.
2. Establish internal protocols for non-compliance notifications.
3. Determine how and how often compliance efforts will be reported.
4. Establish analysis team.
Address Non-Compliance:1. Enforce pre-established
consequences for non-compliance.
2. Establish follow-up procedures and timeframes.
3. Consider retraining.
4. Re-evaluate compliance program for enhancement. n
Estimating Loss of Reputation for Non-Compliance
In the event of non-compliance (especially if made public), how can a company accurately estimate its loss of reputation to its customers, vendors, employees, community, etc.? For some companies, a guesstimate of costs is better than no data at all. To form a best guess, companies can use the following information/metrics to anticipate the cost of compliance:
• List of categorized violations, i.e., FMLA, SOX, etc.
• Number of violations by category from previous year(s)
• Number of lawsuits from previous year(s)
• Defense costs
• Loss of productivity tracking (manager time, HR/in-house legal time, etc.)
• List of known costs for specific violations (i.e., incomplete I-9s, FLSA child labor violations, etc.)
© Books24x7, 2012 Angelica Gamble-Wong ExecBlueprints 6
Angelica Gamble-WongVice President, People Services, Rubio’s Restaurants
The Fix Is In If you were to tell an executive team that they could significantly better utilize their existing resources, save money, spend more of their time focusing on growing profits, and realize a high ROI by investing in a new automated sys-tem, it would be a fairly easy deci-sion or, at a minimum, you would have their attention. Now, let’s have that same discussion about invest-ment in the HR department to ensure compliance. All of a sudden the sell goes from easy to challenging.
Part of the issue is that the ben-efits of the investment in compliance and HR are often not well articu-lated or quantified, so an appropriate ROI cannot be calcu-lated. An HR practitioner who makes a subjective argument to people who make decisions based on quantitative factors is set up for an unnecessarily steep uphill battle. Often times, without the appropri-ate quantification, the costs associated with employment law-suits are treated as fixed costs of doing business. They are perceived as inevitable and, as such, should be accrued for and insured against when possible so that time and effort can be spent on other things that make the company more prof-itable. Managing these costs in this manner treats them as if they are fixed costs, and that ongoing efforts to control them are largely irrele-vant. I disagree. In fact, these costs
should be treated as controllable costs with the potential to be reduced if not (as discussed later) completely eliminated.
Avoiding LawsuitsWhen having this discussion with executives, the response I often receive centers around this argu-ment that employment lawsuits are a part of doing business. I agree, to a point; there is nothing that any HR practitioner can do to com-pletely insulate the company from employment lawsuits. Any employee can decide that s/he has been wronged and file a lawsuit. Money will need to be spent either defend-ing the suit or bringing it to settle-ment. However, I propose that employment lawsuits are a variable cost and can be somewhat con-trolled if the appropriate measures are taken. Additionally, I propose that class action lawsuits can be significantly avoided if good prac-tices, policies, and procedures are in place.
One of the best tactics to help avoid class action lawsuits is to ensure that all company policies and procedures are up-to-date. Spend the time and resources annu-ally to address any new regulations or case law that has gone into effect. Then have a full compliance audit every three to five years, just to ensure that nothing has been missed.
Don’t Make Compliance Complicated The best policies and practices are only helpful if they are put into practice appropriately — and the best way to ensure that is to pro-vide the training all the way down to front-line management. Make certain, in fact, that compliance training is provided for the entire organization. Compliance discus-sions that take place on the execu-tive level and are not cascaded down to the managers (who often
Angelica Gamble-WongVice President, People Services
Rubio’s Restaurants
“Companies who successfully manage compliance are often rewarded with a competitive advantage. Watching litigation trends in similar industries will help maintain that advantage.”
• Joined company early 2011
• Previously HR VP, Virco Mfg. Corporation
• Has led HR function in startup, fast-growth, and turnaround environments
• Certified SPHR (Senior Professional in Human Resources)
• Bachelor’s degree, Social Ecology, UC Irvine
• M.B.A., UCLA
Ms. Gamble-Wong can be e-mailed at [email protected]
Although companies cannot be completely insulated from employment lawsuits, it is far from correct to assume that these are fixed costs that cannot be managed.
Angelica Gamble-Wong
Vice President, People Services Rubio’s Restaurants
© Books24x7, 2012 Angelica Gamble-Wong ExecBlueprints 7
Angelica Gamble-WongVice President, People Services, Rubio’s Restaurants (continued)
have the most day-to-day impact on the greatest number of employ-ees) are missing the mark. On the same note, when completing the compliance audit, ask these same front-line managers how the policies and procedures are really being implemented. Surprises in the conference room are better than surprises in the courtroom.
Build compliance into your automated systems. Include in your compliance audit the blue-print for how your systems are structured to pay employees. Are these systems in compliance with all federal and state wage and hour laws? Look at workflow to see how the system is routing approvals (and, arguably more importantly, denials) for things like time off, merit increases, and leaves of absence. Is the system helping ensure that the appropriate people are involved so that there is no dis-parate impact or treatment? The more that your HRIS or payroll system can help manage compli-ance, the more likely your company will be in compliance. The opposite also applies. An issue within your systems is likely to significantly impact your compliance, and can be used to demonstrate a system-atic problem throughout the company, making a class more likely to be certified if a class action lawsuit is pursued.
Staff HR Appropriately The HR professional has quickly evolved from someone who “likes to work with others,” to someone who “likes to work with others to ensure that things are being done correctly and optimally from a business perspective.” Ensure that your human resources team
includes people who are comfort-able with the technical aspects of compliance and are comfortable digging into details. Companies that manage employee work life-cycles by having more engaged employees and less litigation and lawsuits than competitors realize a competitive advantage.
This competitive advantage can be further leveraged. Entering a
state with tough employment regu-lations, such as California, can be a barrier for companies unable or uncomfortable with their abilities to ensure compliance with addi-tional regulations. The company that is comfortable dealing with the additional compliance require-ments may more successfully enter into, and remain profitable in, these markets. Additionally, a
Managing Compliance at Your Company: Key Considerations and Practices
• Realize that employment lawsuits are a variable cost and do not treat them as a fixed cost.
• Help manage these costs by: o Completing an annual compliance review to ensure compliance with all new regulations and case law o Performing a full compliance audit every three to five years o Ensuring that your systems are in compliance. Look especially at systems that govern payroll and the workflow that determines approval and denials of employee pay and benefits. o Automating compliance as much as possible o Cascading compliance training all the way down to first line managers. o Including HR team members who are comfortable focusing on compliance and working through those details.
• Understand how strong compliance capabilities will provide a competitive advantage and potentially more opportunities.
• Stay ahead of employment litigation trends by reviewing what is happening in similar industries.
© Books24x7, 2012 Angelica Gamble-Wong ExecBlueprints 8
Angelica Gamble-WongVice President, People Services, Rubio’s Restaurants (continued)
company with strong compliance programs will arguably spend more of its money on profit-generating initiatives and less on lawsuits, especially the more expensive class action lawsuits.
ConclusionAlthough companies cannot be completely insulated from employ-ment lawsuits, it is far from correct to assume that these are fixed costs that cannot be managed. Although most executives would not propose that they are fixed costs, in effect many companies treat them that
way because they do not take the necessary and feasible steps to manage and minimize their expo-sure. Some of these steps include undertaking compliance audits, automating compliance through the use of HRIS, payroll systems,
and workflows, training managers throughout the organization, and ensuring that the human resources team includes members who are comfortable with analysis of the details that often make or break your compliance programs. n
Study Trends
Another tip to avoiding lawsuits is to look at similar industries and see what new litigation is hitting those industries. For example, retailers should look at what is occurring in banks and restaurants, as many of the same environments and issues exist. Once new areas of litigation have been identified, review your policies and procedures and see what steps can be taken to protect your company. This is one way to try to stay ahead of lawsuits, as they tend to follow trends.
© Books24x7, 2012 Debra Faye Williams ExecBlueprints 9
Debra Faye WilliamsSenior Vice President and Chief Human Resources Officer, Parkview Health
Laws and Regulations in Health Care
Awareness and Presentation of GuidelinesThe most important employment and labor laws currently governing health care are no different than those for any other organization. We are still required to be compli-ant with the same employment and labor laws as non-health care orga-nizations. For HR practitioners to be viewed as strategic business partners rather than the “policy police,” it is important that we are not only aware of the guidelines but that we have a clear under-standing of the business objectives and present the relevant guidelines within that context when engaging with operational leaders. The last thing a businessperson wants to hear is “the policy says” or “you can’t do that” without also being presented with options of what she or he can do to achieve their business objectives.
In my experience few leaders have reckless disregard for employ-ment laws. Often they simply lack in-depth knowledge of sometimes complex statutes and appreciate the expertise we bring when it’s presented in the framework of viable business solutions.
The Role of HR In many companies I’ve worked for, I’ve inherited a team of indi-viduals who were good HR practi-tioners and understood employment law, labor law, and all of the HR theory inside and out. However, they were often perceived as the policy police. It is my view that while HR members should be stra-tegic business partners, subject matter experts, and internal consul-tants, the decisions (with a few exceptions) surrounding talent acquisition, leadership develop-ment, performance management, or total rewards should be made by the appropriate leader. HR can certainly provide the expertise, and collaborate and partner with the leader, but that person should make the decision that is best for their business and own it. If they do not own it then it does not become part of the fabric and fiber of how their department does business, and the leader may lose credibility with their teams.
I’ve experienced situations where leaders have been reluctant to make a decision or own it, and those same leaders would often say, “Well, HR told me to do this,” or “HR said that I must do this,” which to me is a recipe for disaster because it undermines trust in both the leader and HR.
The Role of HR in Regulation Compliance
HR LeadershipRegarding compliance with indus-try regulations, my department’s role is to ensure that within HR and throughout our organization, we have the appropriate processes and controls in place. The most important element, however, is to
Debra Faye WilliamsSenior Vice President and
Chief Human Resources Officer Parkview Health
“Our organization takes compliance very seriously and the expectation that we are continuously compliant with all applicable regulations and statutes is in the fabric of our culture.”
• Previous senior leadership positions with St. John Health, Detroit Public Schools, among others
• Past president, National Association of African Americans in Human Resources, Greater Detroit Chapter
• Adjunct professor, College of Graduate Management, Lawrence Technological University
• B.A., Journalism, Wayne State University
• M.B.A., Lawrence Technological University
Ms. Williams can be e-mailed at [email protected]
The last thing a businessperson wants to hear is “the policy says” or “you can’t do that” without also being presented with options of what she or he can do to achieve their business objectives.
Debra Faye Williams
Senior Vice President and Chief Human Resources Officer
Parkview Health
© Books24x7, 2012 Debra Faye Williams ExecBlueprints 10
Debra Faye WilliamsSenior Vice President and Chief Human Resources Officer, Parkview Health (continued)
make sure that all employees are educated and understand the “whys” behind the requirements so that as they perform their roles they understand what is expected of them — and why.
Training HR Staff MembersIn our department, we often joke that my focus is supposed to be on strategy and the focus of the rest of the HR staff is on detail and execution. In all seriousness, I am extremely fortunate that I work with a stellar team who are all sub-ject matter experts in the laws and regulations that govern our work. Equally important, they also recog-nize areas that require greater exper-tise. For those occasions we have a very carefully selected team of exter-nal partners with expertise in employment law, compensation, and
benefits who share our vision and “strategic business partner” philosophy regarding HR’s role.
Possible Legal Challenges
Conflicting RegulationsThe top challenges we face when complying with regulations are not necessarily related to HR regula-tions per se, but related to the myriad health care regulations that may often have implications for HR practice. The biggest challenge is that sometimes different agencies have different expectations regard-ing competency assessment, training, or documentation, for example, and that may sometimes require us to do something multiple ways to ensure we meet everyone’s requirements.
Enforcement of Employment and Labor Laws
Over the last couple of years, we have seen an increased enforcement of employment and labor laws on a national scale. Over the prior 8–10 years it appears that the resources may not have been avail-able to the various oversight agencies to enforce all of the regu-lations in a reasonable timeframe. However, of late our industry is beginning to see more audits and resources provided to oversight agencies in order to enforce the statutes related to pay, equal employment, and so forth. When I first came on board about three years ago, I did an audit to assess our level of compliance and we were complaint, as I expected we would be.
What Key Points Should HR Remember When Partnering with the Business
to Uphold Employment Laws?
Generally speaking, the same employment and labor law standards apply regardless of the industry.
To be most effective, HR should offer its expertise within the context of business solutions.
In high-functioning cultures, operations leaders — not HR — make and own decisions that affect employees.
The goal is to be continuously compliant.
© Books24x7, 2012 Debra Faye Williams ExecBlueprints 11
Debra Faye WilliamsSenior Vice President and Chief Human Resources Officer, Parkview Health (continued)
The Right to Work vs. the Right to OrganizeThe subject of the right to work versus the right to organize has risen on the national radar. While I can certainly see both points of view, for me it’s a different issue. If employers do the things they should be doing with the workforce — being transparent in their commu-nications, providing a work environment that allows everyone to bring their best selves to work and be successful, providing employees with market-competitive total rewards, investing in employee
development, allowing employees to be participants in designing and implementing their work, and pro-viding the framework for employ-ees to be fully engaged in their work — one might argue that both positions become moot. In the end
an employment relationship is no different that any other relation-ship in that it has to be grounded in mutual respect and trust to flourish. n
HR Information Security
Again, the requirements and standards for maintaining confidentiality of employee information is the same regardless of industry. One unique consideration in health care is that sometimes our employees are also our patients, and in those circum-stances appropriate guidelines and protocols are in place to ensure HR records and patient information remains separate and confidential.
© Books24x7, 2012 Lisa Krouse ExecBlueprints 12
Lisa KrouseSenior Vice President, Human Resources and Support Services, FCCI Insurance Group
Compliance Challenges and the Health Care IndustryOne of the biggest concerns that currently govern our industry is health care. The challenge is that there isn’t just one law. There are so many compliance issues to understand as they relate to employee benefits as well as risk and exposure. Since there are so many critical pieces, it takes a lot of time, energy, and commitment to do the right thing, to manage it all within the HR department.
While it is very hard to quantify the impact that an HR professional has on an organization (especially regarding influencing culture), you can quantify the impact an HR professional has in the area of com-pliance because if compliance is handled correctly and taken seri-ously, the company will avoid legal issues. Ethics also plays a big part
in this. We must uphold compliance standards that are applicable to our industry, and also address the expectation that our organization will establish and enforce ethical standards. This should be a top issue for every organization.
It can be very daunting to mea-sure the value of mitigation of risk. How do you measure what has not occurred? To gather information, we rely on surveys and external benchmarks that are used by other companies. We use this data to determine, for example, the average legal expense for a company of our size. We use benchmarking and survey data to review our own standards. I think we all need to know how we measure up.
Gathering HR InformationAs an HR leader, you have to pres-ent enough avenues and access to allow for the free flow of informa-
tion, which means you absolutely must do employee surveys. We do one every other year, while other companies may conduct them annually. By asking questions about
Lisa KrouseSenior Vice President, Human Resources
and Support Services FCCI Insurance Group
“Having an attorney you can trust is so important to an HR executive’s success.”
• Previously HR VP, Zenith Insurance Company
• District director, SHRM–HR Florida
• Member, Advisory Board, USF’s School of Business
• B.S., New York University
• J.D., New York Law School
Ms. Krouse can be e-mailed at [email protected]
Next to the health care issue, there have been widespread increases in litigation in the area of FLSA, specifically defining exempt versus non-exempt, overtime due, Title 7 and discrimination, etc., and it is critical that we understand the importance of this. We need to be alert to any potential issues as the number of generations — and disabled veterans — in the workforce increases. Overall we need to raise the level of awareness.
Lisa Krouse
Senior Vice President, Human Resources and Support Services
FCCI Insurance Group
Choose a lawyer who won’t just rubberstamp things or agree with the “HR” view; it is actually beneficial to have someone who will argue with you and play the devil’s advocate.
Lisa Krouse
Senior Vice President, Human Resources and Support Services
FCCI Insurance Group
Lisa KrouseSenior Vice President, Human Resources and Support Services, FCCI Insurance Group (continued)
© Books24x7, 2012 Lisa Krouse ExecBlueprints 13
whether employees feel comfort-able speaking up, whether they have a leader or a manager that they feel comfortable going to, etc., you get a good snapshot of morale and a report card of the culture.
We also conduct exit surveys with employees who leave the orga-nization. Even though they may be uncomfortable reading it, the top leader for that division receives that information from us. Employees say things when they are leaving that they may not have said when employed, and so the information can be very useful. Obviously, there
is a risk involved as some people will use this opportunity to vent, but we try not to focus on the indi-vidual, just on the aggregate data that may show trends. We also pro-vide ways for people to share information anonymously.
Role of Outside CounselHaving an attorney you can trust is so important to an HR execu-tive’s success. Moreover, team members should have access to this attorney. We want everyone to feel like a business owner and if they
have a problem, they should have access to the person who can help provide the solution. Choose a lawyer who won’t just rubberstamp things or agree with the “HR” view; it is actually beneficial to have someone who will argue with you and play the devil’s advocate. That way, you can see all the sides of the situation and get a better handle on how to address it. It is key that the outside counsel main-tain objectivity and continue to present information as it relates to both the external environment and the internal corporate culture. n
© Books24x7, 2012 Ideas to Build Upon & Action Points ExecBlueprints 14
Ideas to Build Upon & Action Points I. What Challenges Does HR Face in Ensuring Compliance at Their Companies?In today’s complex regulatory environment, many leaders and managers, unfortunately, consider fines and other penalties for not adhering to applicable laws and regulations as just another cost of doing business. Moreover, at such organizations, HR is often seen as the “policy police” that is out of touch with the company’s core concerns of earning profits and maintaining a competitive edge in the marketplace. In its efforts to protect the company from legal risks, specific difficulties that HR can encounter include:
• Development of sufficiently convincing arguments to leadership for investing in compliance efforts that appear not directly related to growing the business
• Differing expectations from different regulatory bodies
• Precise knowledge of which laws and regulations actually apply to their company — and which state laws supercede federal laws
• Pervasive beliefs among front-line managers that following certain rules will result in more work
II. The Bottom LinePrior to allocating scarce funds to compliance initiatives, company leaders might require HR to produce an ROI analysis. However, this can be difficult, as the very nature of compliance is based on what-if scenarios that may never materialize — while the costs of compliance efforts are real. That’s why the report’s authors recommend analyzing the possible/probable costs of non-compliance as well as assessing overall levels of employee morale (to determine if the company could be at risk for any class actions). Areas to explore include:
• How much has the company recently spent on lawsuits (including class-action lawsuits) relating to violations of particular laws, statutes, and ordinances?
• Do applicable laws, statutes, and ordinances spell out fines and penalties for non-adherence?
• What industry data (such as from insurance companies) is available on the costs of non-compliance?
• Under what circumstances does the cost of compliance exceed the penalty for non-compliance?
• How comfortable do employees feel about speaking up (or approaching a manager) about their concerns?
• What possible loss of reputation could a company experience with customers, vendors, employees, the community, etc., if a breach or violation is exposed?
III. Must-Have Components of a Compliance InfrastructureFines and lawsuits can be significantly avoided if sound practices, policies, and procedures are put into place. It’s even better if they are a part of an overall compliance strategy as opposed to a one-off reaction to a new law; such a strategy can help HR leaders anticipate and prepare for new regulatory environments, thereby saving valuable time, effort, and cost. Key elements of an effective compliance program involve:
• Ensuring that the HR team includes members who are comfortable with focusing on compliance and working through the details
• Determining risk areas, compliance requirements, and costs/consequences for non-compliance
• Drafting relevant policies
• Preparing and conducting formal trainings of all staff affected by the requirement
• Building compliance into automated systems (e.g., payroll, HRIS)
• Conducting annual compliance reviews and full audits every three to five years
• Establishing internal protocols for reporting instances of non-compliance
• Enforcing pre-established consequences for non-compliance
• Periodically re-evaluating the program to identify potential enhancements
IV. The Golden Rules for Partnering with the Business on Compliance ConcernsAs the HR leader of your company, you need to be aware of existing and emerging issues related to applicable laws and regulations so that you can recommend appropriate courses of action to other members of the executive team. You are also responsible for encouraging organizational acceptance of compliance, which means sharing the very real consequences of non-compliance — which can even include personal liability. Effective approaches for
working with colleagues across the company on this important area include:
• Initially developing tentative project plans to meet compliance objectives and then fine-tuning them with colleagues
• Presenting leaders with options for how they can achieve business objectives while complying with applicable laws and regulations
• Providing necessary expertise in the areas of talent acquisition, development, etc., but allowing the appropriate leader to make — and own — the final decisions
• Ensuring that all relevant information and trainings related to compliance (including the “why” behind the requirements) is cascaded down to front-line managers and employees
• Asking front-line managers how policies and procedures are really being implemented
V. Essential Take-AwaysFew company leaders have a reckless disregard for the laws and regulations governing their industry. However, among all the concerns they face in running a business, they might not always view compliance as the highest priority — and may even consider it an impediment when it comes to achieving certain objectives. But, in this era of stepped-up enforcement on the part of federal and state agencies, companies can face harsh penalties for non-compliance in certain areas. As HR leader, you can play a key role in helping your company avoid such consequences by:
• Understanding your company’s business objectives so that you can present relevant guidelines in that context
• Learning what new litigation is affecting similar industries and proactively determining what policies and procedures will protect your company
• Ensuring all company policies and procedures adequately address any new regulations or case law
• Demonstrating how companies that adhere to employment laws can gain a competitive edge because they retain more engaged employees and settle fewer lawsuits
• When necessary, engaging external counsel who will help you understand all sides of an issue — not just the HR perspective n
© Books24x7, 2012 Ideas to Build Upon & Action Points ExecBlueprints 15
Ideas to Build Upon & Action Points (continued)
ExecBlueprints is a subscription-based offering from Books24x7, a SkillSoft Company. For more information on subscribing, please visit www.books24x7.com.
10 Key Questions and discussion Points
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When generating, transferring, and storing employee and payroll information, what security procedures is HR mandated to follow? Why were they developed? How effective are they? How do you partner with IT to ensure compliance?
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What role do you, as HR leader, play in key decision-making processes with regard to complying with industry regulations? What type of support do you receive from senior management in developing systems and procedures for complying with regulations?
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What are your best practices for meeting applicable legal requirements? What challenges have you faced? How did you address them?
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How do you train your HR staff to follow applicable laws and regulations? When hiring, what knowledge and experience with applicable regulations do you look for?
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In the next 12 months, do you plan to introduce new policies or procedures for complying with regulations? If so, what type? How do you plan to orient HR and company employees to the new policies and procedures?
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In the process of complying with applicable regulations, what are the top three challenges that HR presently faces?
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In the next 12 months, what new laws or regulations do you anticipate will be introduced for your industry? How do you, as HR leader, plan to address the new compliance issues that will emerge? How do you anticipate that these new laws or regulations will impact HR’s work or responsibilities?
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In your efforts to comply with applicable regulations, what role do vendors, consultants, and attorneys play? How do you select them? How have they helped you with compliance issues? What challenges have you faced when working with vendors, consultants, and attorneys?
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How is your compliance track record benchmarked at your company? Against previous records? Against those of comparable companies in your industry?
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