For the second time in 14 months, I’ve recently found myself preparing for a hurricane. Last year it was Irene, this time it was Sandy. Until last year, I had never had to prepare for a hurricane and therefore hadn’t really put any serious thought into the risks associated with a hurricane. Hurricanes are about wind speed, heaving rains and flooding. I live on an island (Manhattan) so flooding is a major concern. Sandy knocked out power to at least 3.1 million people, and New York’s main utility said large sections of Manhattan had been plunged into darkness by the storm, as water pressed into the island from three sides, flooding rail yards, subway tracks, tunnels and roads.
My experience has been that it’s the wind that presents the most serious and varied risks. Falling trees, fast spreading fires and power lines that had been knocked down by heavy winds are risks I had never thought about before. As it turns out, it was the catastrophic damage caused by high winds that claimed a significant number of lives.
My family and I were lucky; no one was injured and we never lost power. Now that things are slowly returning to the new normal, I’ve been thinking about – “what it means to be prepared?” The first critical step of being prepared is to identify the risks, large and small, that you may be dealing with in a given situation. Every day I advise organizations on the risks associated with their use of contingent workers. The first question I always ask is: do you know what your risks are? Some can rattle off a few but rarely has an organization thoughtfully considered the full breadth and depth of the risks their contingent workforce programs on a daily basis, let along in a catastrophic disaster. Workplace injuries and fallen IT systems are common risks that most organizations focus on but what about the risks associated with intellectual property, trade secrets, and confidentiality as it relates to contingent workers?
The next big “storm” of risk in our industry is the full implementation of the Patient Protection and Affordable Care Act, also known as healthcare reform. Many staffing and other human capital management companies are working with their legal counsel, HR and finance departments to understand how the impending law will impact their business, employees and customers. Staffing companies are busy analyzing the costs associated with the pay (penalties) versus play (offer the insurance) provisions of the law to determine whether they simply pay the fines and no longer extend benefits to their employees. Undoubtedly suppliers will look to pass along some portion of the costs to their customers. How much is still an open question. According to the Contingent Workforce Buyer’s survey, buyers and suppliers of temporary staffing do not agree on who will shoulder the extra costs associated with the employer mandate in the Patient Protection and Affordable Care Act. A majority of buyers expect to absorb none of the costs with the average percent that they expect to absorb being 15%. The average percent that staffing firms expect to pass on the cost is 60%.
As is the case with many pending threats, it’s a race against time. The implementation of the Patient Protection and Affordable Care Act comes into effect in 2014. Companies should begin by assessing all the potential risks that might be associated with it. That, much like preparing for a hurricane, is difficult considering the exact rules for implementing the law are still being written. A good place to start is by reviewing supplier agreements to add provisions as to how the costs of the act are to be handled. And it’s time dust off your contingent workforce program’s Business Continuity and Disaster Recovery plan. You don’t have one? Get started on one in 2013 – just in time for the next big “storm”.