Avoid Work Comp Audit Aggravation

by | Mar 12, 2019 | Risk Management | 0 comments

Avoid Work Comp Audit Aggravation

If I could do away with one thing with Work Comp insurance, it would be to eliminate the audit process! The mere word “audit” makes my skin crawl. Unfortunately, I cannot wave a magic wand to rid ourselves of the Work Comp audit, so here is some helpful information to make your audit go as smoothly as possible.

First of all, the purpose of the audit is for the Work Comp insurance company to receive the appropriate premium for the exposure that your business has. If you have more employees, you have more exposure to a workplace injury. Because your employee situation can change drastically throughout the year, looking back at the prior year is the only way for the insurance company to gain the proper premium. They do this by utilizing an audit. So if your audit shows that you had more payroll than estimated, you’ll owe more premium, if you had less payroll, you’ll get the respective premium back.

Understanding the timeline of Work Comp policy is critical. Here are the basic milestones for your policy:

Projected annual payroll is given to the insurance company to generate estimated premium.
You pay premium throughout policy year based on payroll estimate.
Your policy renews using prior year’s estimated payroll amount.
A Work Comp audit is required to adjust prior term premium.

There are four key points that I want you to be aware of regarding audits:

Non-Compliance – Audits are required by the insurance company and failure to complete them will result in cancellation of your current policy and any future policies until the audit is completed.

Class Codes – No matter how your policy was set up at the beginning of the policy, the audit will ultimately determine the classifications of all employees. To get the proper class codes, make sure:
– To have specific job descriptions for everyone outline their exact job duties.
– To keep separate payroll records for the different jobs performed by your employees.

Sub-Contractors – Sub-Contractors will be considered employees, unless you have a certificate of Work Comp insurance from them showing active coverage during the dates they worked for you.

Payroll Adjustments – You don’t have to wait for an audit to adjust your payroll estimate. This can be done at any time during the policy year at your request or it may happen automatically when the insurance company adjusts the payroll on your current policy to match the prior year’s audited payroll.

Because Work Comp audits are a source of frustration for every tree care company, here are my tips for being prepared for your audit.

Designate a friendly, knowledgeable individual to meet with the auditor. This person should know what each employee does for the organization. If an employee’s job duties are unclear to the auditor, they will assign the highest code to that individual.

Prepare payroll records by classification for the policy period. Make sure to have overtime pay in a separate category so the auditor can discount it back to straight time.

Show your officer payroll separately, as the officers payroll is capped and some companies have elected to exclude officers from coverage altogether.

Prepare a summary statement of the payrolls by classification.

If you use subcontractors or independent contractors, have Certificates of Insurance copied for the auditor verifying the subcontractor/independent contractor carries their own Work Comp insurance.

Have documentation of how you arrived at your payroll numbers available, but not copied, for the auditor. Often the auditor will only take your summary and a few pages of your documentation that the auditor will ask you to copy for them.

Talk to appropriate employees about attire and duties for the day of the audit.

Stay with the auditor at all times. The auditor should not be allowed to wander around the premises and question employees about their duties.

Ask the auditor to send you a copy of their worksheets. Get auditor’s business card so you can follow up for the worksheets.
Confirm the payroll and classifications from the audit worksheets as soon as possible to avoid any mistakes.

We have created a simple audit checklist to help minimize the audit aggravation. If you’d like a copy, contact me at [email protected].

Written by: Eric Petersen

Keys to Great Company Culture

by | Feb 4, 2019 | Business Strategy | 0 comments

Keys to Great Company Culture

Google.

Zappos.

T-Mobile.

We’ve all heard about giant companies having great company culture, right? But what about your tree service? How can you create the best culture for your team that keeps your top performers engaged while still attracting new talent?

Creating the proper culture doesn’t happen overnight, however, focusing on these four key areas will help you accomplish this important aspect of your business.

Your Why – Employees want to be a part of something bigger than just work. They want their employer to stand for more than just the services they provide. So, ask yourself: why do you do what you do? Write it down and share it with everyone in your company. Ask your employees for their input and have them help define who you are. If you are struggling trying to define your why, check out an article that I wrote last year here (What is your Why?).

Delivering Happiness, a book written by Zappos’ founder Tony Hsieh, states that his company’s culture was simply based around living a life of passion and purpose. This translated into treating his employees like they were family and empowering them to be able to do whatever they could to help their customers have a great experience with their company, aka deliver happiness to their customers. I strongly recommend reading this book for ideas on how to improve your company culture.

Structure = Direction & Communication – With your “why” firmly in place, you must provide the proper direction and communication to your team so everyone knows where you are headed and how you are going to get there. This structure to your organization is vital to keep everyone on task and engaged during the grind of production season. Providing clear expectations of what you expect each employee to do is critical. Everyone wants to know what they are responsible for and how that fits into the overall success of the company.

Collaboration. Not Competition – Teamwork, teamwork, teamwork. To build a great culture, you need to have everyone working together for the common goal. Take an honest look at your company to see if you have unintentionally pitted one crew against another or have fostered a competitive environment between employees. Friendly sales competitions may work for some companies, however, the vast majority of your employees want to be successful together. Make sure to include a member of each department on your safety committee, as well as conducting strategic planning sessions so that every employee feels that they are part of the team and building something great.

Have Fun – Some owners mistake “company culture” as only about having fun at work. While enjoying what you do and the people you do it with is very important, it really is only a piece of a comprehensive company culture. Take time to plan team events to get everyone together to relax and socialize, whether it be at a cookout at 2pm on a Friday or an evening trip to a local Escape Room. Ask for input from your team to hear what they would like to do. Create a “Social Committee” and give the members a certain dollar amount to spend on fun activities each month.

Having an exciting culture is something that all employees want and will help attract quality workers to your business. Think about these four areas within your company and how you can focus on building the best culture possible.

Written by: Eric Petersen

5 Levels of Leadership

by | Jan 29, 2019 | Business Strategy | 0 comments

5 Levels of Leadership

Have you ever found yourself asking “Am I really doing a good enough job as the leader of my company?” In the spirit of Crew Leader Month as declared by the TCIA, I want to give you some insight into the five levels of leadership to help you determine where you can improve.

At the 2018 TCIExpo, Todd Kramer gave a great presentation on leadership and talked about what it takes to be an effective leader. He used John Maxwell’s 5 Levels of Leadership to explain the different stages of development that leaders go through. So, where do you rank yourself as a leader?

Position – This is the lowest level of leadership and one where the leader has subordinates, not team members. The leader was given the position to lead without much qualification. They have authority to direct others based on the rules of the organization. All leaders start off in this capacity, however, to be truly effective, they must desire to grow beyond this level.

Permission – Leaders at this level have begun to understand how to use influence to have their team perform the work. The leader focuses on the relationship with the individual team members and gets them to want to do the work versus just complying with orders. The leader helps foster trust between everyone on the crew thereby truly instituting a team first attitude.

Production – Good leaders get results. This becomes the difference between Permission and Production leaders. The Production leader has a strong sense of self-discipline and work ethic to be productive, while at the same time continuing to understand how their influence on their team affects the results. Without achieving the desired goals, a leader does not reach this level.

People Development – At this level of leadership, leaders invest their time and energy into helping their team members grow and develop as individuals. Their focus is not on direct production as much as it is on developing the potential in each team member. This can be difficult for highly productive leaders, but makes a dramatic impact on the company. The more well developed all team members are, the stronger the company.

Pinnacle – The highest leadership level, unfortunately is rare in the tree care world. Here the leader has been so successful at all of the four prior levels that they have created a legacy of leadership in their organization. They have been able to develop other level 4 leaders inside their company and are viewed as mentors to those within the industry. Pinnacle leaders are ones that strive to make the entire tree care industry better.

Great leaders are not simply born great. They have developed their skills over time and worked their way up level by level. Don’t forget to continually invest in your own skills as a leader of your company. Attend leadership courses and talk to others about their challenges as a leader to hone your skills.

If you are interested in growing you leadership skills by connecting with similar sized tree care companies in the Thrive Peer to Peer group contact ArboRisk today.

Written by: Eric Petersen

3 Critical Cyber Security Measures

by | Jan 8, 2019 | Risk Management | 0 comments

3 Critical Cyber Security Measures

“Cyber Security? Only mega corporations like Target and Home Depot have to worry about that. I’m just a small tree service. I don’t have anything that hackers would want.”

Be honest, have you ever found yourself saying that? Chances are you have and, naturally, this article will tell you why you need to pay attention to what is going on in the cyber security world. Last year, I attended a Cyber Risk Seminar and learned that 69% of data breaches occur from a negligent insider (or former insider). That means someone inside your company either clicked a bad link, emailed a virus or unknowingly allowed a hacker into your computer system.

Before discussing the ways to minimize your cyber liability, I want to highlight a few areas of exposure that every tree service has. As with any exposure to loss, there are internal and external risks that a business faces.

External Cyber Risks

1. Transmitting a Virus to a Customer/Vendor – Tree care companies rely on email to communicate with their customers and vendors. Email is the most efficient method of communication and also presents the easiest way for your company to be liable for a cyber breach. If one of your employees sends an email that contains a virus to a customer or, worse, your entire customer database, you could be facing a huge unexpected expense. It costs anywhere between $100 – $350 to remove a virus from an infected computer and that cost does not include if any personal data was compromised or any business shutdown occurred because of it.
2. Customer’s Personal Data – Every tree service has some personal information from their customers. Names, addresses, phone numbers, email addresses and credit card numbers are all considered Personally Identifiable Information (PII) and is therefore information that must be protected from a data breach. If a hacker gets into your computer system and gains access to this basic customer information, you will be responsible for notifying the customer of the breach and providing credit monitoring for one year.
In 2016 the average cost for a data breach was $158 per record – How much would a breach cost your business at that price point?

Internal Cyber Risks

1. Employee’s Personal Data – When hiring someone onto your team, there is a lot of personal information that you gather – Social Security numbers, birthdays and driver’s license numbers, to name a few. Do you have a direct deposit payroll system set up? If so, your employee’s bank information is in your system. As the business owner, you clearly have a responsibility to protect your employee’s data. What would happen to your employee loyalty if you failed at keeping their information safe?
2. Business’ Computer System – Interruptions seem to happen fairly often when using technology for your business. Sometimes the internet goes out due to a cut wire down the street. Your phone system may suffer a break in service due to something on the provider’s end. Those are out of your control, however, what you can do something about is your internal business system. Is your computer network backed up in the cloud or off-site? What would happen if your system got hacked and held for ransom from a cyber-attack?

Now that you know the common cyber exposures that all tree services face, here are three areas to focus on to reduce the chance of a cyber liability event. Implementing these changes can reduce your chances of a breach by almost 70%!

1. Inbox Security – Studies have shown that 93% of all computer hacks begins with email phishing. Email phishing is a tactic that hackers use to get the email user to click an infected link embedded in an email to gain access to their system. These can be specific to an individual and look VERY similar to an email that you would get. I’m sure you have received these before but may not have even realized it – an email from UPS about a package delivery or that your Amazon order needs more information. They look very real and ask you to take action by clicking the link included in the email to resolve the issue. Once you click the link, your system is compromised. Working with a proactive IT company will help you get the proper email controls in place to limit the phishing attempts on your employees.
2. Browser Security – The next part of cyber security is enabling the proper security features on your internet browsers. This can again be controlled by your IT firm and will help you restrict access to potentially damaging websites. We’ve all heard stories of how one employee used a work computer to search for something that wasn’t work related and the shady website that was viewed infected the computer and it spread to the other networked computers. Tighten up what sites can be opened and this exposure disappears.
3. Employee Behavior – Training employees on what to look for from a phishing attack or questionable website is the best way to limit the accidental “oops, I shouldn’t have opened that email.” In our agency, we signed our employees up for a six part training on email phishing. As the owner of my company, I need to do whatever I can to make sure my team understands how these schemes work so we don’t cause a data breach.

The world of cyber security can be overwhelming, however, if you focus on these three simple areas, you will drastically limit your exposure to a crippling data breach.

For more information on how to properly protect your business against a cyber event, contact our agency.

Written by: Eric Petersen

Make it Your Best Year Yet

by | Nov 28, 2018 | Business Strategy | 0 comments

Make It Your Best Year Yet

Raise your hand if you dread creating an annual business plan! Well you’re not alone.
We’ve all heard the famous quote from Benjamin Franklin, “failing to plan is planning to fail”, yet how often do you hear people say “I don’t have time to do an annual business plan”.

Taking time to do an annual plan saves time and increases productivity. This article is designed to give you a simple framework of how to perform an annual business planning session. The key is to set aside uninterrupted time for it, preferably on a couple different days so you can have some time to think about it in between sessions.

1. Start With Why – The Cheshire Cat of Alice in Wonderland said it simply, “If you don’t know where you’re going, any road will get you there.” If you have not clearly defined the why you do what you do, now is the time to do so. Your Why is your Mission Statement and serves as the north star for your business. Your annual business plan defines how and what you need to do to advance the company and its mission. In addition, review your vision statement, the what you do, and your core values, how you do it. Combined, these three elements create a culture for your business.

2. SWOT Analysis – Next have a clear understanding of where your business is today. Review the goals and your performance from the prior year. Where did you do well and be brutally honest about where you did not meet your goals. The SWOT Analysis is one of the most common ways to start planning for your company. List out all of your current company’s Strengths, Weaknesses, Opportunities and Threats. Gather input from team members in all areas of your business so your plan can be as robust as possible. Compare these findings with your successes and failures from the prior year. Tony Robbins sums it up like this: “Success leaves clues. Go figure out what someone who was successful did and model it. Improve it, but learn their steps. They have knowledge” It is pretty remarkable what happens when you include your team in this part of the annual planning. We do this in our agency using Survey Monkey so each team member has a chance to respond anonymously.

3. Big Picture Goals – In my opinion, it is best for companies to have no more than 3 big picture goals for the year. When setting goals use the acronym S.M.A.R.T. to help guide you. S.M.A.R.T. stands for Specific, Measurable, Attainable, Realistic and Time. Each goal must be specific enough that your team members can understand what the desired outcome is. That means the goal must have something measurable assigned to it. Whether that is a total amount of new customers, an increase of the number of five star reviews on Google or a decrease in the number of injuries for the year, make sure you can track it. The goal also should be attainable and realistic given the current state of your organization. Stretch goals are great if they are accomplished, however, stating a large stretch goal can have a negative consequence on employee morale if the year does not go as planned. Lastly, each goal needs to have a time element to it. When do you want the goal to be achieved? A goal without an end date is not a goal that your team members can rally behind. Give your organization a chance at accomplishing the goals you set by making them S.M.A.R.T.

4. Objectives for Each Goal – When you have your three big picture goals written down, take a look at each one of them and break them up into smaller objectives. Assign these objectives or tasks to individuals who have the ability and responsibility to accomplish them. Make sure each team a member understands their role and is willing to do what it takes to complete their part. Go back to the SWOT analysis and align objectives with the people on your team with the strengths in the area needed to accomplish the objectives. If there is an area of weakness, incorporate training needs to bolster your team’s resources and effectiveness.

5. Check-in and Make Adjustments – Because each goal has an end date, create a timeline of when to check-in on the progress of the goal. Paying attention to the status of the goal throughout the year will allow you and your team an opportunity to make any adjustments necessary to achieve the goal. In addition to setting up a series of small check-in points, schedule a semi-annual review. Here is an article devoted specifically to your mid-year review.

To learn more about how strategic planning can enhance your organization, take a look at our Thrive Risk Management Strategic Planning Package. In just 4 short weeks we can help you identify who you are as a company, what you want to become, and what strategic milestones will be needed to achieve your goals.

Written by: Jim Skiera