Established in 1975, Labor Finders is a national industrial labor staffing firm comprised of a network of more than 200 offices. Wayne Salen, the company’s director of risk management and CLM Fellow since 2007, discusses how he manages risk for the company, which has 200,000 customers and provides 16,000 jobs each day.
What is your approach to risk management?
A. The key is effective communication at all levels of the organization. Technical risk issues and risk ownership can be taught, but excellent communication is a soft skill with which many managers struggle. With our increasing dependence on email, IM, and social media, I think communicating critical topics to management will determine the strength of a company’s risk management capabilities.
What is your day-to-day life like?
Every day is different than is expected or planned. That is the attraction of risk management—the requirement to respond as the organization responds to daily activity. Some days involve working the critical areas internally; other days are spent with the many service partners who respond to our risk profile. The best days are a mix of both internal activity and external activity, hopefully more with customers than anyone else.
How does the economy affect your job?
Very frequently, an economic downturn can increase the level of activity within a risk management department. That happened to me in 1981 and 1982 during a very sudden economic down cycle. There was no time for the claims activity to subside. While everyone else was seeing less work, risk management was frantic with activity. Having been through a few economic cycles as well as hard markets, I believe each downturn or cycle is different. To expect prior tactics to work is a bit naïve, and that was proven this latest downturn.
Describe some of the risks you manage.
Risk is a big issue in our industry since it ultimately determines profitability or lack thereof. This is especially true of industrial temp staffers, as opposed to the lighter risk temp staffing (admin, healthcare, technical, IT, legal). High risk may well mean high reward, but effective management at the front lines is absolutely critical. Our biggest exposure rests in the employment arena: EPL issues, wage and hour, workers’ compensation, to name just a few. Cyber risk is beginning to take its place with the employment area, since reputational risk is highly tied to the cyber risk element.
What is one of your biggest successes?
Fifteen years ago, I used a wholly owned (inactive) corporation in order to purchase our many fleet/passenger vehicles (over 500) and lease them back to our many subsidiaries. This resulted in eliminating over $3 million in administrative expenses overnight from the many operating entities’ budgets/P & L’s. We became our own leasing agent and wholesale vehicle purchaser. This effort was looked at as a fleet management project, but I considered it just as much a risk management project. From it, we were able to use the residual sale value to our advantage, institute better reporting tools and well as providing our employees with the feeling that they were valued (upon receiving their new assigned vehicle).
As the chair of RIMS’ subcommittee on claims best practices, what do you consider to be the three top best practices for claims professionals?
The first is assuring immediate, effective and on-going communications with all stakeholders. Between the many dynamic interactions going on within a claim (i.e. attending physician, claimant, employer, claim adjuster, family, co-workers, etc.) instant communication will allow the claims process to be compressed and lag time between the various stages is severely reduced or outright eliminated.
The second is creating a partnering relationship within the organization or outside the organization. Whether you’re handling things in-house or with outside vendors, the question remains the same: Is there an effective partnership that brings value to the organization? This could include such things as virtual reports, routine risk assessment, mitigation reviews to determine effective results, and partnering so as to educate those without the experience of more senior managers.
The third best practice is to understand the capabilities of your claims/RMIS system so you can maximize the tools within it to assist risk owners. Very frequently, claims professionals do not know the nuances of their claims management system. It’s not uncommon for a TPA’s claims management system to be different from the customer system interface. It’s important to know your system from front to back, side to side, and top to bottom. Only then can you maximize its capabilities.