Posted by Robert Phelan on Mon, Mar 15, 2010 @ 12:49 PM
Preventing Losses
Written by Robert Phelan
Can pro football offer lessons about how to run your construction business? Well, some of the challenges you face are much like those that face Coach Bill Belichick of the Patriots or Coach Tom Coughlin of the Giants.
Like them, you have to protect your "blind side." Failing to do so can bring big losses on a football field and in your business.
In his book "The Blind Side," author Michael Lewis reveals how football strategy has changed over the past 25 years.
One player in particular spurred change. Lawrence Taylor - the legendary "LT" - was right linebacker and a feared defenseman who typically made quarterbacks shake in their cleats.
Taylor always said his mission was to "destroy" the quarterback - which he nearly did when he once broke two bones in Joe Theismann's leg in a famous Redskins game.
Most quarterbacks are right-handed, so their blind side is their left. When they turn their heads to follow their right arm, they can't see what's coming at them from the other side. If it happens to be Lawrence Taylor fast approaching, they need the best protection they can possibly have in the left tackle position.
Because of Taylor, the left tackle position on the offensive line suddenly became one of the most important positions on the team.
Meanwhile, Bill Walsh, coach of the San Francisco 49ers, built an offensive strategy based on short passes. Joe Montana and his successor, Steve Young, moved the ball down the field and won three Super Bowl championships with this new strategy. The key element was the ability of the left tackle - the best player on the offensive line - to protect the quarterback's blind side.
What's the lesson for your business? It's one that affects you every day when you bid on jobs and try to fulfill contracts you already have. You have to know that you have a blind side that contains all those risks that can potentially destroy your business. These risks that exist in our world today are bigger and more complex than ever before.
As a business owner, do you ever go to sleep at night staring up at the ceiling, wondering what's going to get through your "offensive line?" There's a world out there full of Lawrence Taylors ready to destroy your business. As you look out at your construction operations, you may see heavy equipment, workers exposed to extreme and stressful work environments, and fleets of automobiles and trucks on the highway every day, which are vulnerable to weather conditions and other drivers who are not paying attention. All of those things look like accidents waiting to happen.
In 2001, a salesperson working for a building supply wholesaler was talking on his cell phone while driving a pickup truck. He ran a stop sign and plowed into a vehicle, injuring a 78-year-old passenger. She sued the wholesaler, a large multistate company, and the jury ultimately awarded her $21 million. The company was insured, but it had much less than $21 million worth of liability insurance.
This is a frightening number for any company to see because probably all of
us have gotten distracted while driving. It just takes one moment and a catastrophe could wipe out a company built and sustained for generations.
Last year, a job site crew for one of my clients had just finished a safety meeting when the foreman, who was sitting in a loader and wasn't paying attention, dropped a bucket on another worker's leg. If it weren't for the quick response and medical attention he received, this worker probably would have lost his leg. It would have been a multimillion-dollar loss instead of a relatively quick recovery.
Another sobering example occurred when a bridge contractor had an employee working in an elevator shaft. He was their most experienced and safest employee. It was the end of his shift, and he thought to himself, "I just need to do one more task, take one more minute." He stretched himself beyond the safe zone and fell 30 or 40 feet down the elevator shaft, landing on his back and his legs, breaking the femurs in both legs. He would have been killed if there hadn't been loose pieces of plywood stacked in the bottom.
Everything you've worked for can vanish in a moment. It would only take one multimillion-dollar catastrophe to either leave your business with an uninsured loss or stuck with such exorbitant insurance premiums that you can't really compete anymore.
Force yourself to ask this question, "If one of our workers was involved in an automobile accident where someone was seriously hurt because the worker was texting on a cell phone, could I afford a $21 million jury verdict?"
When you have a serious accident, your workers' comp experience mod rate will soar. This is a number that compares your claims experience to other contractors of your type. If your mod rate is say, 2.0, your premiums will be twice as expensive as average. A high mod rate can put your construction company on the edge of viability.
So, who - or what - is your "left tackle?" Here are a couple real-life ideas:
First, it's an unremitting, 24/7 effort on safety. Hazards never sleep. Safety can't ever take a break, either. You have to create a safe culture. Some of the biggest companies, notably Turner Construction, have done an exemplary job with safety, striving to get as close as possible to zero losses. Small- and middle-market construction companies can do the same thing - and they must.
Second, it's having enough of the right kind of insurance, which becomes more affordable over time as you rack up an outstanding safety record year after year.
These two ideas alone could provide you with a measure of safety equal to a left tackle holding back Lawrence Taylor. It's a blind side you simply must patch up.
Robert Phelan is CEO of Construction Risk Advisors in Torrington, Conn.
Link to the article on Building & Construction Northeast's site
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Posted by Robert Phelan on Mon, Nov 30, 2009 @ 08:05 AM
What contractors can learn about risk from Lawrence Taylor
Last week the hit movie "Blind Side" opened. It chronicles the life of a disadvantaged young man from homelessness to college football stardom. Based on the book by Michael Lewis, it explains how the modern football offense evolved. One man caused this evolution. His name was Lawrence Taylor. If Lawrence Taylor hadn't set out to destroy quarterbacks, the left tackle on the offensive line would never have become the star character in a movie.lawrence taylor tackle
When Lawrence Taylor played linebacker for the New York Giants in the 1980's, he quickly became the most feared player on the field. Since most quarterbacks were right-handed, Taylor's coach Bill Parcells had him attack from the quarterback's left side or "blind side" as it became known. In Taylor's words, "It wasn't really called the blind side when I came into the league. It was called the right side. It became the blind side after I started knocking people's heads off."
Why am I writing a football story on a blog focused on business risk? Simple. Every business has a blind side, particularly construction companies. The blind side of a construction company is the place where all the unknown or unanticipated risks lie. Here are some examples:
• Construction companies sign contracts where risk is transferred upstream and downstream, from one party to another. The complexity of modern-day insurance language makes compliance a challenge even for the most diligent companies. What if your coverage doesn't respond as it should? That's your blind side.
• You've chosen an insurance company to protect your business. You think they're financially stable. You have a multimillion dollar claim. They file for bankruptcy shortly after you file your claim. That's your blind side.
• You think the $5 million umbrella you've always carried is plenty of coverage. Then a subcontractor's employee falls off a roof and becomes a quadriplegic. You're sued for $10 million because you didn't provide the proper safety on the jobsite. That's your blind side.
• In the clinic where your injured workers go for treatment, the doctor doesn't understand Return to Work. You have three claims in one year that end up costing much more than they should. As a result, your experience mod goes to 1.25. You then lose a $10 million dollar job that you couldn't bid because your mod was too high. That's your blind side.
The modern football offense evolved to where the left tackle became a critical position protecting the quarterback, the team's most valuable asset. Your business needs someone to protect its blind side as well. Have you chosen an insurance agent whose focus is solely on insurance or a Risk Advisor who can protect your blind side? Discover the difference by visiting www.constructionriskadvisors.com.