Trends Bringing a New Era of Workforce Risk

(DESCRIPTION)
Title, The Great Retaliation: Why Risk Managers Should Heed New Trends in Workforce Sentiment. Logo, More Data Is More. Logo, Constitution State Services.

(SPEECH)
JUSTIN SMULISON:
Welcome to today's RIMS webinar sponsored by Constitution State Services. The great retaliation, why risk managers should heed new trends in workforce sentiment. I am Justin Smulison -- business content manager here at RIMS, the Risk and Insurance Management Society.

A few notes before we begin. If you have a question for the presenters during today's session, please submit them by writing in the question box at any point in the presentation. We will gather them and reserve time at the end for Q&A or the panelists will reply to you directly afterward. Following this session, the recording will be available through on demand events page of rims.org and all downloads and contact information will be accessible to the sponsor.

And on with today's presentation. Our panelists will share insights on the industries likely to experience above average quit rates over the next two years. They will also explore how proactive management of team dynamics can be critical to boosting morale and retention amidst perceived or real salary inequity.

RIMS is thrilled to welcome a large global audience, please welcome your moderator, Cora Hall of Constitution State Services.

CORA HALL: Thank you so much and welcome, everyone. We're so glad you were able to join us today. We are honored to bring together these experts and really thought leaders on such a challenging and interesting subject. We hope you will walk away with a greater understanding of what drives resignation and employee retaliation and what all this could potentially mean to your loss costs.

We have worked with our talented risk control team to bring together some practical ideas you can take away to get ahead of the trends and really protect your organization. So I'm excited to introduce Dr. Anthony Klotz from the University College London School of Management. Joining Dr. Klotz will be Constitution State Services leaders Keith Anderson, our VP of General Liability, and Bob Kreuzer, Senior Vice President of risk control.

(DESCRIPTION)
Slide, Our panel. Panelist, Dr. Anthony Klotz, Associate Professor of Organizational Behavior at UCL School of Management in London. Panelist, Keith Andersen, Vice President, General Liability, Constitution State Services. Panelist, Robert J. Kreuzer, Senior Vice President, Constitution State Services, Risk Control. Moderator, Cora Hall, Assistant Vice President, Business Insurance, Marketing Strategy, Travelers.

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So let's jump in. Dr. Klotz, we're going to start with you. As the predictor of the great resignation, can you provide us with an overview of what you were thinking in 2020 and contrast that with what you see today? What is the scope of quitting?

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Anthony Klotz. The speaker is in a small video inset in the upper right corner of the screen.

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ANTHONY KLOTZ: Yeah, so in terms of what I was thinking in late 2020, Cora, I think I was thinking what a lot of folks were at the time. A lot of hope that the vaccines would arrive and be effective and that the economy would open back up swiftly and that the world would get back to normal.

But at the same time, something that I saw a little bit differently were these four different trends going on that I felt would keep the world of work from going back to normal while the rest of the world did. So I study employee resignations. Not just why employees quit their jobs, but how they quit their jobs and what leads them to leave in different ways. And I was seeing these four trends.

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Slide, Great Resignation, 2020 Drivers, backlog of resignations, essential worker and leader burnout, remote work at scale, pandemic epiphanies leading to life pivots. Photo, A man wears a mask, shield, apron and gloves and stands with his hands on his hips in a warehouse-type store.

(SPEECH)
The first of which that was pretty straightforward. There was a backlog of resignations in the system. We all lived through 2020 and the recession that went along with the pandemic and the other disruptive events of that year. It was not a good year to quit your job. And so we saw resignations drop way off in 2020 versus their highs of 2019, and which led me to believe if the economy opened back up quickly, a lot of individuals were waiting to enact their plans to switch careers, to switch jobs until that happened. And that would create a lot of tightness in the labor market that would fuel more resignations.

Along with that, there were historically high levels of worker stress and burnout. And what struck me as really interesting is that stress wasn't limited, necessarily, to the frontline workers who got us through the pandemic. We were also seeing high levels of stress in the executive suite, among middle managers, among workers who were trying to complete the impossible task of educating their kids from home, while at the same time, having a full time job.

And so burnout is a clear predictor of turnover. And so if the relief in the economy came in 2021, I reason a number of people would take a break and that break could come from a break quitting and leaving their jobs for a little while or just switching jobs and getting away from that which burned them out.

The third element was remote work. Possibly, the largest experiment in the workplace in the history of work that we had with millions of workers quickly switching to remote work. And there's a number of pros and cons when it comes to working remotely, but one thing you can't argue with is that remote work provides individuals with more freedom and autonomy in terms of how they arrange their work lives than working in person does. And there's pros and cons to that.

But as human beings, we have a fundamental need for autonomy. And so we're seeing this in the headlines today that when you give individuals increased autonomy for a year or two years in their work and then you ask them to give that autonomy back up, it often doesn't go well and it leads to higher resignations.

And then, finally, the pandemic was unique in that it was a public health crisis. And when individuals face life or death situations, and during the pandemic, every night on the news we would experience the infodemic of bad news about the pandemic, that makes people reflect on their lives. Am I living the life that I want to live?

And so we had millions of individuals who were locked down at home reflecting on their lives and saying, is my life on the right path? And when we ask that question, we often look at how much satisfaction and how much meaning am I getting from my job?

So you had all these individuals having their pandemic epiphanies, as some people have called it, at the same time. And so those four forces I felt like were coming together such that if the economy did open back up, it would open back up with a wave of resignations accompanying it. And that's what we saw in 2021.

In 2019 before the pandemic was the highest number of resignations in US history since they began tracking it in 2000. In 2021, resignation rates climbed almost every month up to levels 25% higher than in 2019. And those high resignation rates have stuck with us throughout 2022, although importantly, I'll note that they have plateaued in 2022. They're kind of hovering up they're at that 20% higher than 2019 level.

And I believe part of the reason that they're hovering there, or that they have in 2022, is because employers haven't just sat alongside doing nothing in the face of this-- these increasing resignations and higher turnover. You've seen over the past year organizations making bigger investments in employee compensation benefits, flexibility, family friendly work policies. And that's really, I think, paid dividends in terms of getting these resignation numbers under control.

Now, in terms of what we're seeing right now, there is a bit of tension. There's tension because workers have seen, in many cases, a better future of work. A different way of working.

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Slide, Tension Between Employer and Employee. Some employers want return to pre-pandemic, photo, three people work together in a conference room. Text, Employees like the new way of work, photo, a woman works on her laptop outside on a sunny porch.

(SPEECH)
Employers, in many cases, have been a little bit slower to adopt to those new ways of working and for good reason.

2019 was a good year for many businesses. And a lot companies are saying, can't we get back to normal, to the way things were? And workers are saying, can't we get to normal in terms of a new normal, the future? And now, with some economic headwinds that I know we'll talk about today, you see the power starting to shift away from employees and a little bit back to employers.

Unemployment numbers, especially in different parts of the globe, are creeping back up. And we're also seeing shifts in resignation rates in different industries as well.

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Text, Resignations, Trends to Watch. Stabilizing, retail, restaurants, health care, photo, a woman stands facing forward and wears a medical uniform. Text, Increasing, professional services, transportation, photo, a person sits at a desk with a cup of coffee and participates in a video conference.

(SPEECH)
At the start of the spike in resignations, we of course-- I was talking about burnout in employees. So we saw really high spikes in resignation rates in the industries that got us through the pandemic.

And so you think of the frontline workers in the pandemic, in health care, retail, food service, and so forth. Those rates are still high, but they've stabilized a little bit. And now, we see other industries spiking. And in the past few months, the resignation rates in the US have shown that industries like professional services and transportation have all of a sudden started to see higher resignation rates.

I think in terms of thinking about industries, it's also important to think about within industries. And I've talked to similar organizations who are competing with one another within the same industry. And I'm often struck by how different of turnover rates two different companies within the same industry are facing.

And a lot of it comes down to, are organizations really using this time to invest in workers and trying to make that future of work a reality? Trying to experiment with new ways of working that will lead to higher employee well-being. Or are they playing the wait and see game and hoping that we return to the old ways of working.

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Slide, How do we make work more flexible and inclusive? Photo, from above, a woman sits outside on a sunny, tiled porch and works on her laptop.

(SPEECH)
Two of the biggest factors in terms of employees starting to resign less is flexibility and inclusivity. You've heard so many workers say, before the pandemic, I arranged my whole life around work. I want that to change a little bit. I want work to fit around my life a little bit more. And that's not just about remote working, that's just about flexibility in general.

And increasingly, people say, I want to be able to be myself at work. I want to be able to bring my whole self to work. And so these programs around inclusivity are also helping as well.

CORA HALL: That's really insightful. Thank you for all that. I think probably, especially our audience is wondering, how will inflation and a possible recession change the game?

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Text, Great Retaliation. 2022 Drivers, socio-economic divide fueled by inflation, fear of recession, value of work from home as a financial benefit or raise, mid-leader burnout from turnover and onboarding. Photo, a man in a uniform holds his hardhat by the strap in his left hand and walks across the floor of a warehouse.

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ANTHONY KLOTZ: Yeah, so inflation is a tough one. And I think it's frustrating for everyone involved, for employers and employees and organizational psychologists as well. Because what inflation does, and the daily news of inflation that we see, and in the daily ways we feel inflation, when we go to the gas pump or to a restaurant, really narrows employees focus on their paycheck and pay.

And so organizations then have to respond and have conversations about pay and give pay raises. And obviously, I would-- I'm a fan of increasing compensation to keep up with inflation and those sorts of things. But from a psychology standpoint, pay doesn't really motivate workers. It doesn't lead to a more engaging worker experience.

Pay is just kind of like the ticket into the employee engagement carnival. It just gets you in there, but it doesn't move the needle very much. And so inflation is a really difficult headwind right now and a bit of a distraction for organizations that are trying to give employees more satisfaction and more meaning through their work.

Now, in terms of a recession and resignations, to the extent that we start to move into a recession and depending on where you're at in the world, you may already be in a recession or there just may be signs on the horizon that it's coming. But a recession will definitely depress resignation rates because the job-- unemployment goes up. The job market isn't as good.

And you may want to quit your job, but you look out there at the job market and say, no, this is not a great time to quit my job. And like I said, we saw this in 2020 during the pandemic. And so I think this is a bit of a tricky time for employers because what a recession-- not that anybody's hoping for a recession. But I've heard organizational leaders say to me that the great resignation is going to end as soon as a recession hits. And I don't necessarily disagree with them or it doesn't really matter to me.

But the drivers of the great resignation don't go away just because resignations go down in response to a recession. So what you have right now are employees who are really wanting their organizations to embrace new ways of working. They want their organizations to invest more in them. Or maybe they even feel unfairly treated and they want the organization to do more.

A recession just means that they're less likely to quit their jobs over that. But it's really important to think about-- quitting your job is not the only response if you feel like you're being treated unfairly. And I think it's no coincidence that as we've hit these economic headwinds, this discussion of quiet quitting has all of a sudden captivated the internet. And I can't think of a term in the business community that appeared and been more explosive in recent years.

But really, what quiet quitting says is-- if you listen to what workers are saying about it, is they're saying, this doesn't mean that we're quitting or changing our performance in the core element of our job. What quiet quitting is quitting going above and beyond our job description.

It means not arriving early or pulling an all nighter when needed. It may mean I'm not going to attend those non-mandatory meetings. It may mean I'm not going to speak up when I see a safety issue that doesn't affect me.

And so you can imagine that even though quitting those tasks-- those are outside employees technical job descriptions. That can be really harmful to an organization if employees say, I'm not going to go above and beyond anymore.

And so I think what will happen is if we hit these economic headwinds that are being forecasted is you will see resignation rates decrease, but that's not necessarily great news for organization. Because it means you still have these individuals who feel like maybe they're being underinvested in or that their organization isn't doing enough to adjust to new ways of work. They're just not going to quit.

And in a good situation, they will stay engaged and they'll speak up. But in less positive situations, they'll quietly quit or worse.

CORA HALL: OK, thank you for that baseline. So let's dig into your newest work. Can you tell us what you're learning about employee retaliation?

ANTHONY KLOTZ: Yes. And so this builds on the comments that I was just making, but it goes a step further. I was talking about organizations that just that are playing wait and see and maybe not quite embracing new ways of working. There's also increasing reports of organizations rolling back some of the benefits that they've given to employees over the last year or two years as they've sought to get turnover under control.

And so family friendly work policies, you see lots of rolling back of flexible work policies, some at large organizations that make the headlines on a weekly basis. And I think it's important for organizational leaders to realize, it's perfectly fine to roll back benefits if it's really a business necessity to do that. But that needs to be clearly communicated to employees.

What we're seeing a lot of is just benefits-- compensation being rolled back, flexible working being rolled back without a whole lot of an explanation. And that's a recipe for disaster because individuals view this as an unfair situation. If they've had flexible working for two or three years and their productivity has stayed where it was when working in person and then that benefit goes away, they view that as a loss.

And in fact, there's an economist named Nick Bloom at Stanford who's quantified remote working. And he's found that remote working workers value that the same as they value a 6% pay raise. And so that means a couple of things.

Partly what it means over the last few years is there's been this divide between in-person workers and maybe white collar or professional workers who have been able to work from home. Essentially, the remote working boom gave a number of people who were able to work remotely the equivalent of a 6% raise while leaving in-person workers behind. And so there's a bit of unfairness there.

And now, as organizations start to roll back, start to tighten their remote work policies, this is just one example, workers may view that as a pay decrease. As organizational psychologists, we haven't really studied yet what happens when you start to take away flexible working policies.

We have studied what happens if you reduce employees' pay and you don't give them a good explanation for it. And this is where the retaliatory nature comes in. If employees feel like their pay is reduced unfairly, you will see your company theft numbers or shrinkage numbers go up. As individuals, all of us are pretty good at finding ways to balance the scales if we feel like we're being treated unfairly.

And so I think this is a bit of a dangerous situation. And this is especially true when it comes to quitting. So just as an aside, so again, my area of research is how employees quit their jobs. Do they quit in really positive ways by giving lots of notice and maybe training their replacement and staying on call when they leave? Or do they give no notice and they just walk off the job. Or else, they cause some damage when they leave. Or they recruit other employees and start turnover contagion when they leave.

What predicts whether employees quit in positive ways or quit or negative ways? It's how they feel that they were treated by their organization during their time. My research shows that when employees feel like they were underinvested in by their company, they tend to resign in more negative ways, like I just described.

And so it's really important in this period of elevated resignations, and even as those go down, that organizations realize that rolling back-- if you have to roll back some of these benefits, this flexible working, really make sure you're communicating with your employees the business reasons for doing it. Explaining the justice behind the decision as opposed to just deciding it. Otherwise, that unfair treatment or perceptions of unfair treatment is just a big predictor of retaliatory behavior in employees.

CORA HALL: Is all of this generational?

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Text, Generational Differences. Graphic, Economic abundance, millennial and boomer. Lean & serious, Gen Z and Gen X.

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ANTHONY KLOTZ: Yeah, so one of the most common questions I get is, is this a generational issue? And I think generational differences are really great for us to get our heads around. But unfortunately, they don't explain much difference in employee behavior or employee performance. They're really descriptive, but they're not very predictive.

Now, there are some theories that may be relevant here when it comes to generational differences. And one of these theories suggests that the generations that are in the workplace right now that grew up and were raised during periods of economic abundance, maybe those generations-- and I'm talking about the millennial generation wide, the baby boomer generation.

Because they grew up in periods of economic abundance, maybe those generations aren't quite as resilient. Don't have quite as much grit. Don't have quite as much tolerance for unfair treatment or injustice as generations that grew up in maybe less fair circumstances, in tougher economic situations, and that would be Gen X and then Gen Z, which grew up during the financial crisis and the recession that came after it in '08.

And so there are some differences that may be useful when it comes to generations. One surprising element when it comes to generations is surveys that have been run that have asked different generations how much they prefer and want to work in person versus remotely. It is often the results of these surveys or the flip of what a lot of people would think.

The generation that would like to be in person the most is actually Generation Z, the youngest generation in the workforce. And that sort of makes sense because, early in your career, you want that in person career development. And career development and onboarding virtually, I don't think we've quite got down yet.

And then, as you get later in your career, have a family, have some disposable income, working remotely seems a little bit more appealing. So there are some generational differences, but it doesn't explain quite as much difference as you might think it would.

CORA HALL: Thank you, Dr. Klotz. Keith, I'm going to bring you into the conversation because some risk managers that are listening to this might dismiss the trends as being more of a human resources issue. But how are we thinking that risk managers and CFOs really need to understand how this is manifesting into a workplace risk? What do you think about in terms of general liability?

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Temporary Workers & Agencies. New Risks. Temporary agencies have more bargaining power, shift injury risks to employer, opens up possibility of general liability claim instead of a Workers' Compensation claim. Photo, A person writes in a document.

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KEITH ANDERSON: Yeah, thanks, Cora and great question. And Dr. Klotz has taught us a lot already. And I want to go back to something that he kind of brought on earlier on in his discussion, that's the disengaged employee. And I want to bring that little bit broader. So employees are disengaged, but in this environment where there's a war on getting good qualified talent.

Sometimes companies settle and bring in people that maybe aren't as qualified as they would like. And when these two dynamics are happening, it does create some exposures that aren't readily apparent on its surface, but that do lead to some consequences.

So when you think of liability exposures, it can really, realistically, take several years for some of the issues, especially when you think about quality control, to really manifest itself. So it may be years down the road before somebody knows our product was made incorrectly or there's an issue with food because the ingredients weren't correct.

And so some of these things you don't see right away, but there are some things that you do see right away. And so we look at liability and what's happening in the workforce now, we believe employers should consider the well-being of their employees, as Dr. Klotz has so-- has put out already.

And an employer does need to make employee engagement a priority, especially in these times, because it results in better quality control, better productivity, and probably most importantly for an employees' perspective, is safety.

So we've seen a trend during these last couple of years where we're all challenged on finding qualified employees, but employers are using more temporary firms or temporary staffing firms to bring in workers. And this does create a new risk. And so this risk has always been there, but we're seeing it more and more often in today's environment.

So some of the risks that it creates. When you bring in inexperienced people, it can impact you in many different ways, but I want to touch on just two. High level quality control is absolutely-- especially in a manufacturing type environment, quality control is so critical.

But think about injuries to workers. And we typically think of this as a worker's compensation type exposure, but it isn't necessarily just a worker's compensation exposure. And based on all the claims that we see in our organization, 35% of employees are injured within their first year of employment.

So that's pretty significant. And this isn't just the employee that's brand new to the work industry. This can be a 20 year experienced person, but they're new to a company. That first year, and actually, if we take that stat out to three years, it grows. At first year it's critical, the first three years are just as important.

But we really see that people joining new organizations does create exposure, and worker's compensation or employee injuries is definitely one of them. And so when you engage with an employee staffing firm, just a couple of things that we're seeing manifest in our claim experience that I think it's worth mentioning here.

Qualifications. Even though you're using a temporary-- or another firm to vet employees, they may not have the same expectations as you. So you need to do a double check to make sure that you are getting a qualified worker or that the job that you're requiring them to do meets their qualifications. The risks are just too high.

You still need to onboard and train. Companies need to check and confirm that the real-- that the person can really do the job and/or have the qualifications that they claim that they have. And let me give you just a high level, simple example. Forklift operator. Forklifts are in every warehouse, every manufacturing plant. So many people are qualified and certified to drive forklifts. It's almost a given in many organizations.

You need to check to make sure somebody that comes into your organization does have that qualification by more than just asking, but actually, observing. Putting them through a test certifying them yourself. That is just one example of many we could talk about.

So the exposure does change when two-- and I do want to talk about that this is a little-- so why am I bringing this up? Because this does turn into a general liability exposure that the injured-- what we typically call an injured worker will still have an ability to file a worker's compensation claim with their temporary agency employer.

But you as the one that are bringing the employee into your organization, you are now open for a liability exposure that would-- under normal circumstances, would simply be a workers' compensation exposure. But that is now your exposure.

And keep in mind is if you are or as you engage with these firms that you apply appropriate contract management. So historically, temporary agencies would protect you as their customer in the event injury or accident happens. The playing field has changed. They have the superior bargaining power. Now we are seeing on a routine basis that are engaging with a temporary agency are now-- they're requiring in the contract that you protect them.

So make sure that you're looking out for that. And keep in mind, temporary workers, it's not just a worker's compensation exposure, but there are liability exposures that you will be faced with.

CORA HALL: Wow, so how could this all play out in the courtroom relative to verdicts?

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Social Inflation, Changing sentiment toward corporation and the value of money. Photo, scales of justice and gavel and sound block.

(SPEECH)
KEITH ANDERSON: Yeah, Cora, so we're seeing that-- we're seeing this and just general liability as a whole changing in the courtroom. We talk a lot, and I'm sure everybody is about social inflation, which is a term that captures anything that seems that's going bad anymore, especially when there are large dollars attached to it.

But there is something changing in society. People are changing their views, and especially towards business and corporations. Corporate accountability is higher today than I've seen in my 30 plus years of being involved in insurance claims. Companies are held to a high standard.

So that's what we're facing. That's what you're facing in a courtroom with jurors. Also, there's that appreciation for the value of money. A court and a jury or a trial is in order to make somebody whole. We've gone well past that. It's not about making that person whole, but now, it's about generating generational wealth for that person. And juries are not appreciating the value of that money or actually where that money comes from.

And they take these things, the changes in environment, how juries are viewing things, whether it be money or corporate accountability, the plaintiff's bar is very good at what they do. They are. And we see it day in and day out and you see a lot of headlines about these large verdict awards.

Well, the plaintiff bar understands societal changes and shifts and they're exploiting that. So when they go to the courtroom, they have a story to tell and they're doing a very good job at telling that story.

But let me illustrate just real high level on a claim example of how this plays out in the courtroom. And I'm going to go back to the temporary worker type scenario. And this is a case that we're involved in right now.

Simple on its surface. A temporary employee comes in, he's certified to draw-- or he's told in his application that he's certified to drive a forklift. And so the employer puts him in a forklift and it's a simple job. It's taking these 700 pounds bags of sugar from point A to point B and stacking them.

So it comes off the assembly line, it's packaged, he's supposed to lift them up, take them a couple hundred yards away, and then stack them two high. So he's doing his job. On his second run of the day, second bag that he is moving, as he's going around a corner, he clips or hits another bag on the corner.

He knows he did it and there's footage-- video footage of this. And so he's kind of stuck. What do I do? It's his first day on the job. Second load. He wants to do a good job so he stops the forklift and he runs over to this bag of sugar that is beginning to fall and he tries to hold it up. And we can all script what happens. There's no way that he is going to be able to hold up 700 pounds of product.

And so it falls and it crushes him. Very sad. Couple steps, this could have been avoided, but it's what it is. So put on your plaintiff attorney hat. And now that the plaintiff attorney understands that relationship of an employee, employer, and temporary worker, this is no longer a worker's compensation claim to that plaintiff lawyer. He is able to sue the employer directly on theories of liability.

And his story is pretty simple. What? You brought him in, day one, you put him in a forklift without certifying him, and you tell him what to do. And then, he's trying to protect the business by not allowing this product to go bad by spilling out onto the floor. He was doing everything he could for you. You put him in a no win situation. You should have perceived or you should have been on the lookout that these types of things could happen and that you put him in harm's danger based on your failure to properly train him.

That's what we're up against now. So that it's so important, especially in this environment with so many new employees, so many that are new to their roles that proper training happens. It prevents you and us from being in the courtroom fighting a case that has a lot of sympathy with it.

And then, Cora, if you won't mind, if I can just-- a couple real high level things. So I've talked a lot about the employee and the safety. You want people to go home alive and well. So that's why I'm focusing on that.

But there is another piece of this that really impacts businesses and that's the quality control piece. On average here in our organization, on a latent defect or something that was manufactured, constructed, or put in a product that was manufactured incorrectly, constructed incorrectly, or it didn't meet the specs of the product that was supposed to be part of a bigger product.

On average, on these late defects, we don't see claims arise out of the bad products until, on average, four years after they're constructed. So we go back in as we investigate and try to understand what happened. A lot of it-- most of it is quality control related. And that we can, in many cases, pinpoint exactly what happened at what point on the assembly line or what person in a construction setting actually caused this.

And some of it has to go with the disengaged employee that just didn't care. Somebody that just was in over their head. They didn't know what to do. They were trying to do a good job, but they just didn't do a good job, or that they weren't properly trained.

So there's these product issues that happen and think of product recalls. How many of those have happened? And a lot of it can trace right back to the way it was manufactured or put in place at the beginning. Nobody intended any of this. It's just what happened.

But Cora, if I could give you just one example, and this kind of illustrates it for me, at least. Think of a construction project, building a hotel. Every hotel has a bathroom with a shower. A contractor was out-- part of their job was to install the bathrooms and part of that is a shower and the plumbing.
Brought in some day laborers to do a simple job, and that was to put down the shower liners. And this is to prevent water from leaking into the building. That was their job. They spent some time with them, 15 to 20 minutes. Here's how you do it. Here's how your pocket. Here's how you attach it. And that was their job.

These liners, there's nothing really that special with them, but it's very important what they're there for. Well, think of a hotel five story, several hundred rooms. These day laborers went through and they put all the shower liners down. And then, on top of that comes the tiling. Showers are built, so we have bathrooms.

Three, four years later, all of a sudden this hotel starts experiencing leaking in some of their bathrooms and the ceilings and the bathrooms below. One by one, they're repairing them. Then, it's more than one, it's two, it's three, it's four, it's five a floor. So as we investigate this further, what we learned is that every one of those-- the shower liners had been put in incorrectly or upside down.

So this was just damage waiting to happen. And these are all been leaking for the four year period. And once it was finally opened up, mold and everything else you can think comes along with that. And so it was very expensive.

But that one, we take it right back down to quality control and helping your employees make sure that they understand their role. And it's not just the training, but it's to come in and check, monitor, and make sure that they are executing the way you need them to execute.

So I could give you more examples, Cora. I think that's probably good for our conversation today. But a couple of things to be on the lookout for.

CORA HALL: Awesome, powerful examples. Thank you. Bob, I want to bring you in. Do you think any of this is preventable?

(DESCRIPTION)
Prevention Through a Culture of Safety. Flow chart with arrows that point both ways. Onboarding, culture of candor, talent pipeline, skill development & confirmation, safety/operational procedures. Photo, a hard hat and a pair of gloves sit on a wood table.

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ROBERT J. KREUZER: Yeah, that's a challenging question. And I think the short answer is yes. And Keith hit on a couple of techniques to try and stay out in front of it. And I myself have said for years, being in the industry for 25 plus years, is the best way to not have to contend with Keith's example of a construction defect, claim, or a workers' comp injury or even social inflation. Because those things, once they get in the system, it's really hard to navigate, as Keith alluded is to not have-- is to not get there.

And so I do think there's some key things. And you're staring at them on the screen in front of you where I think these things are very important. We have some examples we're going to share as we continue the discussion just around how important onboarding is. And both Keith and Dr. Klotz talked about it.

And I was trying to count the number of times Dr. Klotz used the word investment. And I really believe there are a lot of traditional things that folks on the line do every day. And I think it's a little bit of doubling down on some of that and also thinking differently. I think that was another phrase that I heard Dr. Klotz use and try and be more proactive in terms of looking out for some of these dynamics.

I think it's really important as you go from the top clockwise making sure that whatever you have from a safety and operational procedures standpoint shared and shared often. Keith's example is you put somebody in a seat, in that case, of a forklift. And without follow-up, it becomes-- you're trusting a lot in that new employee.

And I think skill development, I'll talk a little bit more about this later. There's some neat things going on in several industries that I'll highlight. And from a recruiting and pipeline perspective, there's a lot of different things you should be doing and can do to look for talent, whether it's some of the traditional pools that you're all fishing in versus trying to look differently at the skills you need, what skills you have, and how do you bridge that gap. You might be able to look in some different places.

And one thing that I'm big on is trying to create a culture of candor between-- think of corporate office and shop floor or management versus shop. I think having that two way communication is so important just it creates this-- and both Keith and Dr. Klotz talked about it-- transparent communication, creating an environment of engaged employees. There's a lot of data out there that suggest that things go better, and I'll talk about some of that as we go forward.

So those are a couple of big things and we'll expand on some of that as we move forward, Cora.

CORA HALL: Thank you. Dr. Klotz, I saw you nodding your head. So as you think about those managers, how are leaders taking in all of these changes?

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Are you supporting frontline managers enough? Leaders are burned out too, CEOs retiring at record rates, middle and frontline managers matter most, deciders without power. Photo, From above, three men wear hardhats and look at a spread out floor plan. Text callouts over the photo read, Time for onboarding? Right mindset? Burnout? People vs operational needs? Time to deal with issues? Too many direct reports?

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ANTHONY KLOTZ: Yeah, well it's tough. I mean, it goes without saying, but I'll say it anyway, that leaders and managers are workers too and they're not immune from the increased levels of burnout and stress we've seen over the past few years. I mean, especially middle managers and frontline managers who have the pressure coming from above and below, but really don't have a lot of power.

And so I think now is a time of not just thinking about investing in your frontline workers, but really checking in on your leaders and especially middle managers. From just a safety and well-being and burnout perspective it's important.

And I think it's important to keep in mind, when it comes to burnout, we often think about exhaustion or that's how we might feel when we're really stressed and burned out. But there are some other signs of burnout that often show up in managers before exhaustion or instead of exhaustion.

And so if you have some of your best managers that are now showing signs of having a more cynical attitude toward work, like this person used to be really positive and now they're a little bit cynical, that's a sign of burnout. If you have managers or employees who don't have the confidence they used to have in doing their jobs, that reduced confidence is a sign of burnout.

And the same goes with silence. If you have a manager who used to be-- speak up a lot, be really engaged in meetings who's gone silent, those should be early warning signals to you that this individual needs some support and some help, really, with their job.

The other thing to keep in mind is we have really the last few years, and especially during the pandemic, it's gotten a little bit better. A lot of organizations shifted into firefighting mode because it was just like this-- we need to make sure our business survives the disruptions that 2020 caused.

And in some cases, companies have been slow to get back out of firefighting mode. And so I think now is a really important moment to look at the work that your managers are doing. Really audit it. For those of you who are HR professionals, do a job analysis on your managers and say, what percentage of their time are they spending on tasks-- operational tasks versus spending time with people and working on building relationships with their employees, supporting, coaching, mentoring their workers?

Because what we've seen happening is a lot of middle managers are overloaded. They can't get all of their people tasks and all of their operational tasks done in the same day. And when you're faced with the dilemma of, what do I do? Do I complete some tasks or do I have some conversations and work on people issues?

We often gravitate toward getting tasks done and crossing them off our to do list. They give us an instant payback, right? When we answer that email, we can get rid of it out of our inbox and we get a little boost of dopamine because we've completed that task.

Now, the problem is, when you do that day in and day out for weeks and months, you're slowly reducing your investment in your people. And the problem is this is just like our personal relationships. You don't notice one day when you miss investing in a relationship in your personal life. It's not until months or years later that you realize, uh oh, I haven't spent enough time with this individual. I haven't provided them the support that they need. And the same is true with workers.

And so, now, I believe, is a great time to say, do our managers have the bandwidth to really spend time with people building relationships? Because that's what a lot of workers want right now is somebody to listen to them and hear how they've changed over the last few years.

And so it may be time to shrink managers span of control or give them some more support. Not only so that it protects their own well-being and so that they can thrive at work, but also, that they can dedicate more resources to building relationships.

CORA HALL: Thank you. So Bob, I heard the word investment again. So I'm curious. Your team is working with a lot of front line managers. Do you have some practical ideas for us?

ROBERT J. KREUZER: Yeah, and I'm going to steal something that I was going to close with because it aligns so nicely with what Dr. Klotz just went through, and that's people, product, and process. And I do this myself. Trying to get 60% of my work week spending on people.

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Understanding Inter-Connected Risks. Graphics, Prevention strategies, exposures, cost implications. Photo, A man drives a fork lift and transports a large box through a warehouse.

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And to his point, I often check myself at the end of the week and like, OK, I probably spent too much time on process. It's such a good point. And if you double check yourself, or like to his point around checking with your leadership, I think your eyes will be open more than they are today. So I think it's such a great point.

We've also talked about how things are moving so fast. And workforce dynamics, obviously, it's staring at us all in terms of how quickly things are changing. And some things that we've seen out there as we meet with thousands of customers each and every week. I'll just hit on a couple of these.

I referenced talent pipeline a little bit earlier. And there are folks being-- and this might be a little bit like motherhood and Apple pie, but being a little bit more proactive and trying to scan out a couple of years and say, here's the skills I have today. What do I need and how am I going to get there versus reacting to the retirement or reacting to the resignation. Trying to be a little bit-- and it's tough in this environment because you can't be overstaffed, if that's the word you want to use. So trying to be really proactive and thoughtful around how we're filling those gaps.

And we work with companies all the time to help them look into the future and work on that talent pipeline and look for efficiencies in our workforce. And I'll talk about that two-way communication again. All too often, we'll work with larger companies and we do some analysis of how folks on the shop floor feel in terms of different aspects of a company's safety program or their injury management program.

And you see a disconnect between how leadership sees it and how the front sees it. And so working to close that gap through a variety of efforts, depending on what the gap is, is so important. If you don't know what the gap is, how do you-- how can you be expected to fill it?

And we all know it. And both Keith and Dr. Klotz alluded to engagement. And the higher the engagement, if you do some research, leads to less absenteeism, better productivity, and better safety records. So I think those are a couple of key things.

And lastly, let's not forget about your experience segment on your workforce too, just in terms of whether you're manufacturing something, whether you're in a finance sector. It's so important to connect folks to what they're working on and how that can help the company be successful can go a long way. You can't forget that segment of your workforce too.
So those are just a couple of highlights and I'll stop there and turn it back to you, Cora.

CORA HALL: Thank you. So I want to give each of you a chance for a couple closing remarks before we move on to questions because we have some that have come in. So Keith, I'm going to start with you.

KEITH ANDERSON: Sure, Cora. Thank you. So I'm going to be a little redundant what I talked about because I do-- we're seeing the dynamics change in the claim world. And a lot of it has to do with just so many new people into the workforce and some people that-- anyway, we're just seeing a lot of activity in the workforce.

And so just going back to that statistic of 35% of workers, at least based on our data, are injured within the first year of employment. That's significant. And although we can't really trace quality control back to these are all new employees that are causing quality control issues, yet there is a connection there. And we can't quantify it, but there is a connection there.

So that first year of an employment, especially in this environment when you're competing for this finite resources, you really need to know your employees abilities and have a plan to full proficiency.

I totally agree and endorse what Dr. Klotz and Bob have said regarding engagement and working with employees. I think there's so much value in what they've said. From my lens, it's really making sure that they have the ability and tools to do their job well to prevent liabilities down the road.

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Text, Invest in Your People. Photo, three people wear safety vests as they walk and talk. The woman carries a medium-sized mobile device and gestures.

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The largest product claims or defect-- latent defect claims we see, really, they manifest themselves so late in the game. And it's hard to fix something four years down the road. So that continual monitoring and making sure that things are being built, manufactured, designed in the way they intended, it never hurts to make sure that possibly over engineering things or overlooking thing-- or spending a lot of times over-- looking over things to make sure that things are done correctly.

So my parting words are invest in training and safety up front. It will reduce workers injuries and prevent those hidden exposures that surprise all of us down the road. So those are my closing thoughts, Cora.

CORA HALL: Thank you. Bob, anything you want to add?

ROBERT J. KREUZER: Yeah, I would-- I'm going to follow Keith's lead and hit on one theme that I think is so important and that's transparent communication. I used the word candor earlier, and it's not something that you decide to do today and it happens tomorrow. It's such an ongoing repetitive strategy so that as you talk to different groups.

We've facilitated sessions with our customers. We call them listening sessions or you can call them other things. And it's to hear from folks around, what's working well? And even more importantly, what do they see as challenges or obstacles that at least are on the table? And not that you can solve it today or when you hear it, but at least you can understand what that obstacle is and communicate around how you're trying to address it.

Because I think that in and of itself can go a long way to help establish that environment where you'll hear a lot sooner some of the things that Keith and Dr. Klotz talked about so that you can react quicker and put some things into place from a prevention standpoint.

So I would offer that. A transparent and a lot of candor and repetitive communication.

CORA HALL: Especially as we're trying to make the best in tough times. So Dr. Klotz, any closing thoughts from you before we move on to some of the questions?

ANTHONY KLOTZ: Yeah, just briefly, Keith was mentioning the importance of the onboarding process. I would like to talk about the opportunity on the other side of the spectrum, on the offboarding process. And so often when employees leave their jobs, the organization just sort of lets them quietly go away.

And in reality, when an employee is leaving, this is a really great chance to strengthen and build a positive relationship with that employee while they walk out the door. And you may think, why would we invest anything or spend time trying to build a relationship with an employee who's leaving us?

Well, of course, the reality is that many employees experience remorse or regret after they leave. It's hard to determine whether that next job is going to be what you're looking for. And so progressive organizations have realized that maybe their most valuable recruitment pool is their former employees.

Because when you hire an employee back, there's all of these wins that go along with it. That employee knows who you are. You know their skills and abilities. A lot of the training issues we've talked about today, they've already gone through that training. You know they can drive that forklift.

And so some organizations are making sure that they roll out the red carpet for employees when they leave and build a strong relationship with them. Just like universities, they've built alumni programs to keep in touch with their former employees so that even if those employees don't boomerang back, they're a positive voice for that company in the talent marketplace.

And so if you're overlooking the offboarding process right now, I think that's a great opportunity. Some organizations, up to a third of their new hires are former employees. And so if you've had high resignations over the past year or two, reach back out to those high performing employees who have left and see if they want to come back.

CORA HALL: It's a great point. So I'm going to-- the first question is to you, so I'll keep it going. With all of this increased turnover, are long-term relationships between employers and employees a thing of the past?

ANTHONY KLOTZ: Yeah, and what I believe is good news is that we don't see any evidence that employees don't want long-term relationships with organizations. Now often, the younger generations entering the workplace feel like they're going to need to switch jobs to advance their career. And that's why there's been such a big focus on companies doing more for the career development plans of their employees.

And this is informal, but when I talk to my MBA students and undergraduate students, I ask them, who would like to work for the same company their entire career and move up within the same organization? And over half of the hands tend to go up.

And so I think there's a bit of a myth out there that nobody wants to work anymore. That organizations aren't loyal to employees anymore. These generalizations, I don't find a lot of truth in.

CORA HALL: OK, another one for you. We hear so much about remote work. Are companies innovating when it comes to in-person work?

ANTHONY KLOTZ: Yes, absolutely. And really, few things get me as excited as some of the innovations that are happening at these organizations that are experimenting with new ways of working. We've heard a lot about the four day workweek. There's a fast food company right now that's experimenting with a three day workweek. And so that's pretty great.

There is a retailer that is trying to compete with gig work by saying, instead of having employees work eight hour shifts or even four hours shifts, employees can sign up to come in and work for an hour this evening on short notice and so that they can be a little bit more gig like in their scheduling.

There's companies that are bringing back sabbaticals or introducing sabbaticals for employees so that they can-- if they feel like they just need a break from work, they can take it every once in a while. And then, finally, there's an example of a bank that has a bunch of investment bankers. And investment bankers tend to work 100 hour weeks and get paid a lot of money. But that's not good for stress levels or work life balance.

And so this bank has started a second investment banking talent pipeline where individuals can opt in to 40 hour weeks for less pay. But if you really want to be an investment banker, you can be that without working 100 hour weeks. So an alternate path to this career. So lots of great innovation going on there.

CORA HALL: Interesting. Yeah, one of the questions we have is, are hybrid models really negatively impacting productivity or is that a myth? And it sounds like some employers are being really creative in terms of pushing the boundaries of that thinking.

But Bob, I want to bring you in. As you hear about things like sabbaticals and creative scheduling, do you know of any industries that are trying this successfully?

ROBERT J. KREUZER: Yeah, I mean, I'll name one. There's many more, but I was on a recent trip to Chicago and we were visiting with a pretty large manufacturer. And you walk around the shop floor and you see some workers who you could tell they'd been there for a while. And right next to that worker was somebody who you could tell was just starting in the industry.

And so you start to ask, what is the reason for that is? It's exactly the things we've talked about in terms of Dr. Klotz talked about transferring skills and knowledge. That was a way for this company to make sure they were getting everything out of that seasoned worker around that piece of equipment, which I thought was great.

And that was the bridge to that-- and I mentioned this earlier-- bridge to retirement where that person who was looking forward to retirement could work a little less hours and not go from a break of 50 hours a week to 0 hours a week. So it was really, I thought, very well done. And I think there's a lot of companies doing that.

With what's going on in this environment, it's been really challenging to execute on that. So that's just one example, Cora.

CORA HALL: That's a good one. All right, so one last question. Keith, I'm going to bring this one to you. Some of the questions are around with cost cutting and thinking about things like span of control. Is gig economy a solution, and what are some risks that maybe employers should consider?

KEITH ANDERSON: So definitely, the gig economy has grown. And Dr. Klotz mentioned gig like. So there's gig like, which are our employees working in a different kind of environment or schedule. And then, there's true gigs. So I'm just going to touch on gig employees really quick.

They do create different exposures. And it's still new enough we haven't seen all the exposures that can come from it. However, I would just caution if gig-- using gig employees is part of your business model, just be very thoughtful as you approach that. Because I think there's a trend or a perception that a gig employee is really an independent contractor.

So they do some work for me, but they are not me. So I'm not responsible for exposures that they may generate. And California has tried to just address that through some laws that they've passed. Some courts have looked at that differently than we may think of it as a true subcontractor or a contractor working for us.

And so I just-- you got to be careful there. Because if the connection is so tight that you are really controlling their work, their means, their methods, you need to be on the lookout that that potentially is-- in the law of the eyes is creating an employee employer relationship. So just be thoughtful as you approach that.

And I'd also just advise, Cora, you probably want to seek legal counsel as you get really deep with gig and making them part of your standard workforce.

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Slide, Thank you!

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CORA HALL: Excellent. Well, thank you all so much for your time today. And thank you to everyone who joined us for the webinar. Justin, I'll turn it back to you.

JUSTIN SMULISON: All right, that was great. I would like to thank Dr. Anthony Klotz, Robert Kreuzer, Keith Andersen, and our wonderful moderator, Cora Hall for their time and expertise. Today's session will be available through on demand events page of rims.org very soon.

Hey there, you can also find previous Travelers sessions from this year, such as Your Greatest Asset: Smart Risk Management in the Age of Workforce Transformation, which was held in June. Be sure to check out Rims Cast. That's the society's official free and weekly podcast. It is hosted by yours truly. Visit rims.org/rimscast to hear all 211 episodes.

We're looking forward to seeing you all at Risk World 2023 in Atlanta, Georgia, April 30 through May 3. RIMS' members can register now. Register early so that you can also reserve a priority hotel near the Georgia World Congress Center. Visit rims.org/events to register. Reserve your space. Public registration opens December 5th. You can join RIMS by visiting rims.org/membership. This was a wonderful session. I learned a lot. Thank you all and stay safe.

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The Great Retaliation, Why risk managers should heed new trends in workforce sentiment. Logo, Constitution State Services.

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