Three Things the Construction CFO Should Know About Risk Management
Sep 21, 2022
There’s no shortage of risk management advice out there, especially for CFOs in the construction industry. If anything, there’s information overload. But finding concise, on-point information that is relevant and actionable can be a big challenge. In this blog we speak specifically to the construction chief financial officer and others with a financial stake in the construction industry, providing high-level advice that can make a difference.
Consideration 1: Risk management can have an outsized impact on customer and employee attraction and retention.
The cost of attracting and retaining talent is surely one of the most pressing concerns for every construction contractor. While it may be possible to pass on some cost increases to customers, competition is an enduring fact of life and pricing discretion remains limited. All of the less painful responses have seemingly already taken place. What creative opportunities still exist?
Risk management may not be the first initiative that comes to mind, but it can be one of the most valuable and under-addressed ways to improve talent and customer attraction and retention. In particular, adverse safety metrics such as injury and illness rates or experience modification factors can pose a barrier to being able to even bid on the projects your company most wants to undertake.
When it comes to your employees, studies show that in order to be truly engaged, people need to identify with the values of their employer and believe their employer has their best interests in mind. When the marginal cost of hiring is high, small improvements in retention — including less employee turnover due to lost-time accidents — will have outsized financial benefits. Demonstrating a safety-first culture that goes beyond tired rhetoric and links to specific actions and behaviors is a compelling way to improve retention and engagement while lessening turnover, not to mention the financial saving you’ll experience by reducing claim frequency.
These benefits don’t stop with talent. The most profitable customer partnerships exist when the customer shares a mutual interest in keeping workers safe. These are the customers that the construction contractor most wants to attract, but the contractor needs tangible evidence of superior practices and outcomes in order to do so. Again, risk management can be the path to success.
Consideration 2: When evaluating technology, think big-picture.
There exists a daunting spectrum of domain-specific risk management tools that can be effective in addressing particular issues but usually can’t take you much farther. Meanwhile the one-platform-for-everything approach too often fails to meet company-specific needs, or involves prohibitive cost and hopeless complexity. There are also hurdles that affect getting this technology in the hands of your employees, such as user access or mobile readiness.
There’s no substitute for a platform that is informed by experience and expertise in your industry, supported by a stable provider who is investing in the growth of its product and able to adapt to your specific needs while also bringing a spectrum of new possibilities and solutions to the table. Beware of building yet another silo that might actually impede progress toward larger objectives.
Consideration 3: Technology’s effectiveness depends on its adoption.
The best risk management technologies are those that aren’t limited to a handful of power users at headquarters. Rather, they also empower daily business operators to manage costs by proactively addressing site safety and efficiently dealing with incidents promptly after they occur. The right tool can facilitate a transformation of the culture of the organization.
None of these lofty aspirations will happen unless the chosen technology tool is genuinely embraced by the everyday business operator. For this to happen, it must be intuitive, speak to the operator’s needs, save time and address real-world issues. When the end user wants to utilize a risk management tool, adoption will occur to an extent that top-down mandates can never achieve.
Adoption among management is equally critical. These users need visibility into both transactional priorities such as critical-incident management, and high-level analytics that cut through noise to pinpoint the things that matter most. When armed with information that is relevant and specific and doesn’t require excessive time and effort to generate, the management team becomes empowered to make a real difference in costs and outcomes, and to demonstrate such outcomes to critical stakeholders.
At Aclaimant, we believe that risk management technologies can transform business results while keeping people safer and allowing scarce talent to be deployed to its best advantage. We do this by enabling organizations ready to take the next step to digitize their risk and safety practices, and getting buy-in from every level of the organization.
Make every employee a risk manager, and book a demo of how Aclaimant can help you achieve the ambitious objectives mentioned in this message, all at a cost and within a timeline that is surprisingly attractive. Please visit Aclaimant.com or contact us for more information.