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Bus and Motor Coach Library

Professional Management Series #2 - Safety
The Value of a Written Safety Program

author – Matthew Daecher, Daecher Consulting (2005)

In order for any business to succeed on its own merits, revenue must be greater than costs.  In a passenger transportation operation, more money must be received from paying customers than that which is paid out in operating costs.  Hence, the key is to minimize costs so that you can earn profit at the lowest possible revenue amount.  Many costs are fixed while others may vary upon the amount of business generated.  One cost which is always ambiguous is safety.  Most owners associate direct costs of accidents (insurance deductibles, replacement/repair costs, premium increases etc.) as safety-related costs.  Costs of complying with regulations are also often looked upon as "safety costs".  However, safety, and its impact on a company's profitability, is much more. 

In reality, the aforementioned costs do not result from safety, but instead, unsafe acts.  Regulatory-related costs are just that - they really do not have a lot to do with an overall safety/risk management program.  The costs of compliance are incurred with or without any other facet of a safety effort.  In fact, when looked at properly, safety is actually a tool which, when used properly, will minimize costs in many areas, thereby allowing a company to profit at a lower revenue number.  There are many facets to a comprehensive safety/risk management program and in this article we will talk about one of those key ingredients - the importance in documentation of the program's key principals and elements. 

I visit a lot of passenger transportation operations - some small, some large, and most of them somewhere in-between.  The smaller companies are usually relatively young with growth aspirations.  The mid-size and larger operations usually have a history - starting small and growing steadily to their current size.  Many companies are multi-generational family-run operations; others were bought along the way.  I've learned along the way that usually one does not decide to go into this business one day by buying a large operation without having experience in the business.  In fact, almost every company I visit started small and grew to wherever they are now - it's certainly a logical progression.

Besides the obvious differences in operational characteristics, many companies of like sizes have a lot of similarities.  Larger operations tend to be more formalized, while smaller companies much less so.  By formalized, I am talking about documents relating to the company operations - policies and procedures are usually the terms used.  I attribute this to the fact that smaller operations usually have more hands-on involvement by owners who do not perceive the need to establish formal policies and procedures as they have their "hands" in every aspect of the operation.  Also, large operations are seasoned and have had experiences in their history which undoubtedly have played a role in the adoption of formalized safety programs.  Mid-size operators are usually hit or miss when it comes to formalization - some have learned from others that documented policies and procedures are important to a cohesive safety program, while others have learned from experience, much like the formerly mentioned larger operations.  However, many mid-size operators still do not have formalized safety programs - a hangover from their younger years.
I don't mean to infer that the documentation of a safety program is not necessary for a smaller company.  While some benefits of a formalized program may not be applicable to a small operation with hands-on involvement by owners, there are other benefits which certainly do apply even to the smallest company.  The truth is, when a company begins to grow from smaller to larger is when the documentation usually comes into play and pays off.  However, another unfortunate truth is that when a company is transitioning, the owners are usually too busy trying to accommodate and manage the growth to take the necessary time to establish a formalized safety program.  That's why it's important to establish a formalized program early on - so you are prepared for future growth and the joys and headaches that come with it!

Why is it important to document your risk management program?  There are four key reasons for doing so.  First, establishing a formal safety program will document the intent of the company and commit you to your safety program.  It will set the standard for your organization in various areas, and prepare you for future growth and success.  It's no secret that the vast majority of the most successful operations have a documented safety program, and documenting yours will be a step in that direction.  It will establish your proactive stance when it comes to safety/risk management and insure you maintain that position.  It will cause you to analyze the various elements of your operation and identify the critical behaviors that are important to minimizing risk for every element identified.  There will be a lot of analytical thought that goes into documenting your ideals and positions in various areas, and you will have cause to verbalize your ideals and those of your company.  Your policies will be well thought out, rather than defined on the fly.

A second reason for establishing documented policies and procedures is to clearly define and communicate company standards and expectations.  What standards must be met to become an employee at your company?  How do you expect employees to behave and perform while performing their job duties?  What behaviors are critical to them being successful as an employee of your organization?  A company's documented policies and procedures define a commitment of behavior by the organization and a standard of behavior for all employees.  It establishes a clear expectation of behavior.  It specifically expresses the intent of the organization in implementing the policies; it defines accountability for managing and maintaining adherence to the policies; and it defines clear expectations of performance and penalties for failure to meet performance standards.  It also defines the minimum qualifications and skills required to meet performance standards, and whether knowledge and skills must be attained previous to hire or will be provided through training after hire.  Consequences of poor behavior and not meeting standards will be clearly defined.  These consequences can incorporate the company's philosophy on how often any individual may fall below required standards and what the company will do each time this happens.

Third, documented policies and procedures will insure a consistent management process in critical areas.  While you may know how to handle each situation and your standard process to follow, does everyone else at your company?  What if you were at an important meeting and unreachable and an unusual situation arose - would whoever was left in charge know how to handle it?  What if a key person in your company left and had to be replaced - would you be able to maintain consistency through the processes that person was responsible for without any documentation of how to proceed?  How do you manage your employees? 

What should be done when an employee fails to meet the standards and expectations of him/her that have been established?  Documented policies and procedures will allow you and your managers to make consistent decisions affecting the key elements of risk management in your organization.  Employees will be hired, trained and disciplined in a consistent manner, leaving no room for politics or favorites; processes to comply with regulations will be consistently performed; accidents and injuries will be consistently investigated and reviewed; maintenance will be consistently performed to insure the least amount of unexpected vehicle issues.  Providing a consistent service and experience to your customers is vitally important, and so is consistent management of the various critical elements of your operation.  Being inconsistent breeds trouble and lessons learned the hard way, which can be avoided by a well thought out and documented risk management program.

Lastly, documenting your safety policy can help mitigate liability and damages when bad things occur.  Now, you'll have some insurance folks tell you they want you to have documented policies, others who will tell you they don't want you to have documented policies.  You'll even have some who tell you both at different times and different circumstances.  The truth is this - if you carefully draft your program using policies that you can live with and will follow, it can't do anything but help you.  The key is following the policies you adopt.  By adopting relevant policies and following them, you will establish your operation as safety-focused and any chance of someone claiming you just don't care when it comes to safety, or that your actions (or inactions) resulted in unnecessary injury, or any other outrageous claim, won't have a leg to stand on. 

So which policies and procedures should you have documented?  Well, there is no definitive answer since it depends somewhat on the specific operation.  While there are certain policies that should be adopted by every passenger transportation operation and could be considered 'core' components of a safety program, the number of procedures may vary greatly.  What's the distinction?  A policy is a statement of practice, whereas procedures are drafted to accomplish policy directives.  Policy is what will be done; procedure is how to get it done.  Generally speaking, procedures will greatly outnumber policies and will change or be amended more than policy.  Procedures may also include additional materials, such as forms or reports, which are used to accomplish the task laid out in the procedure.  That being said, here are six key policies which should be a part of any transportation operation's written risk management program:

Safety Policy 
A safety policy is a short and sweet statement of the company's position on safety.  It is more like a mission statement - it should outline the company's dedication to the safety of its employees, and the general public, as well as the expectation of employees to follow all company safety and health policies as well as laws and regulations.  Safety policies are generally no more than one page in length, and should be signed by the owner/CEO.

Employee Management Policy
The management policy dictates how employees will be managed, from the time of their application forward.  There are key components to this policy, which sometimes are separated into individual policies themselves, rather than viewed as an encompassing management policy.  The three key components are hiring, training and discipline.  Procedures, processes and forms are usually developed in connection with each component to insure consistent compliance with standards and regulations and documentation of activities.

The hiring component sets the standards/minimal qualifications for applicant eligibility for general or specific positions.  Setting standards will insure that only qualified and desirable applicants are hired to positions within the company. 

The training component will identify the types and frequencies of training an employee will receive.  Some companies choose to hire only experienced individuals, believing that this will eliminate the need for training of that individual.  However, even the most experienced individual should undergo orientation training, discussing your company's policies, procedures and expectations.  Also, refresher training should be done on a periodic basis to help remind employees of important issues and ward off complacency.  Lastly, remedial training or an employee evaluation of some sort should be accomplished after preventable accidents and injuries or unacceptable performance to help reduce the risk of additional like incidents. 
The discipline component should identify the performance expectations of the company and the consequences for unacceptable behaviors/incidents.  Define a system of progressive discipline which treats unacceptable behavior in a progressively severe way, but which always includes training as a remedial component.  While you don't want to keep anyone who is an unacceptable risk, you don't want to lose someone who is salvageable and who can remain an acceptable risk.  Holding everyone accountable to the same standard in a consistent way is important, so be sure to consistently apply the discipline policy; don't play favorites, or the goal of employees taking responsibility and being accountable for unacceptable behavior will never materialize. 

Drug & Alcohol Policy
Documentation of this policy is relatively straightforward since the requirements are contained in the Federal Motor Carrier Safety Regulations.  However, even prefab generic policies designed to meet the regulatory requirements must be customized by each company for the policy to be truly compliant.  Also, the regulation defines the minimum requirements - you may wish to add additional components to the required policy to make the standards more stringent.  For example, what about employees besides those covered under the regulatory requirements?  Will they be subject to drug and alcohol standards?  What are they?  

Vehicle Maintenance Policy
Regulators also require documentation of a preventative maintenance program, as well as evidence that the program is followed.  This policy should incorporate your PM schedule as well as other schedules, including major maintenance/repair and tire rotation/retirement.  Annual/periodic inspections, handling of driver vehicle inspection reports, and unscheduled maintenance should also be included in this policy.  As with other policies, forms, procedures and processes used to accomplish the policy and document activities must be developed.

Accident/Injury Reporting and Investigation
This policy should define what the company considers an accident and other terms it may use in managing employees (incidents, etc).  It also should spell out the standards which must be met by employees and management for reporting (when, to who, and how), recording, investigation, and determination of cause and preventability.  Forms and procedures related to reporting, investigation, and cause/preventability determination should be developed to accomplish the standards of this policy.

Environmental Health & Safety Policy
This policy lays out goals and responsibilities for maintaining a safe workplace and complying with workplace and environmental regulations.  These regulations are worthy of highlighting in a separate policy as they are frequently overlooked in transportation operations.  The policy should indicate employee and management responsibilities in maintaining a safe workplace and meeting workplace and environmental regulations.  The policy should detail general, safe work rules as well as other items to be accomplished in conjunction with the policy, such as facility and equipment familiarization, workplace inspections and audits, housekeeping, and provision and use of personal protective equipment to name a few.
While there are additional policies which may be applicable to passenger transportation operations, drafting and adopting the above policies is a good start to formalizing your safety program.  Your formal program will undoubtedly change as time progresses and you discover new risks to manage and new ways to manage the known risks.  Measuring the effectiveness of the program and making necessary changes and tweaks will most likely dictate changes over time also.  Processes and procedures will change as you discover more efficient means of accomplishing the policies. 

As you can see, formalizing a safety program will take considerable thought and time.  For any company without one, now is the time to act and commit your program to writing - it will cause you to analyze critical elements of your business which affect its performance and may give you insight into areas of opportunity for improvement.  At the very least, it will establish your ideals and standards to be met as you move forward.

Matthew Daecher is Vice President of The Daecher Consulting Group, Inc.  The Daecher Consulting Group specializes in loss prevention and safety services for commercial vehicle operations. Mr. Daecher is a transportation specialist with over 10 years of experience in the transportation field.  He holds a Bachelors degree in Business Management from Kent State University, with specialized accident reconstruction education from Northwestern University. Throughout his career he has been involved in multiple aspects of transportation safety including risk analysis, risk management, and accident reconstruction.  He is an accredited accident reconstructionist and has appeared as an expert witness in numerous cases during the past seven years. Matthew has developed and provided training to motor carriers, insurance companies, attorneys, and other groups in the areas of accident investigation, and safety and loss prevention techniques and processes. He currently consults with public and private clients, including municipalities, attorneys, insurance companies, commercial motor carriers, and other professional groups in these areas of expertise.