In it for the Long Run is a series of blog posts that follows the journey of a newly appointed environmental, health and safety (EHS) Director. We follow the Director as she wrestles with recognizing initial EHS compliance hurdles for her team (Part 1) and how she will make the case to the C-Suite for investing in environmental compliance (Part 2). In order to overcome obstacles to compliance, the Director will need to determine which EHS solution (content provider) is right for her team (Part 3) and she will need to figure out how to roll-out the EHS solution effectively (Part 4). Finally, she must maintain compliance at her company’s facilities through effective use of the EHS solution (Part 5).
Prior to the holiday break, our EHS Director was considering how to approach the new year and her job opportunity. The Director has decided, in consultation with her environmental managers, that she needs an EHS compliance solution for her team to use on a regular basis. She wants an easy way for her staff to track regulatory changes and to understand what to do to comply with current obligations. She also wants staff that are spread out at different facilities to be able to conduct self-assessments and audits so that she can compare compliance across different locations. The Director needs to make informed decisions about which facilities need more resources and she needs an overarching global view on compliance status.
The Director sits back in her chair. She takes a sip of her coffee, brushes a few locks of hair away from her face and peers out of her office window. The Director has always been a confident person. She has a strong skill set and the ability to be persuasive when necessary for a cause. However, this task – convincing the C-Suite that an EHS solution of this magnitude is necessary – seems like a steep hill to climb. The Director has spent most of her career (and life) caring about environmental issues. She has an inherent connection to clean air and water. She loves nature and knows the value of preserving it; however, not everyone shares in her experience and there are many corporate pressures at play.
So, where should she start?
Know the Budget:
The first step is for the Director to figure out a budget. She needs to know what various EHS compliance tools cost and then she needs to build in some padding in case there are unexpected expenses. It would be wise for her to do this before she makes the budgetary “ask” from corporate. She also needs to consider where the company is in the fiscal year. Should she ask for a budget for this year or next? What makes the most sense? The thing is, the Director needs to make a reasonable and informed request. This means understanding the overall budget for the EHS department (both now and next year) and how much of that should realistically go toward an EHS solution such as a content provider.
Know the Return on Investment (ROI):
ROI a big selling point for the C-Suite and the Director should be ready for this question. What is the company getting from the EHS solution? Why is investing in such a solution worth it? The Director could approach this by calculating past EHS violations and then forecasting how much money the company would save from avoiding those violations through compliance. However, that puts a negative spin on the “ask” up front. Perhaps a better way is for the Director to look at her staff holistically and then estimate cost savings in terms of full-time employees and their salaries.
Let’s hypothesize that the Director has 60 Environmental Managers who work for her (15 in Florida, 15 in Texas, 15 in Alberta and 15 in Berlin). The managers work 40 hours a week. None of them are trained lawyers who are accustomed to reading regulatory notices and interpreting regulations.
In the United States, there are federal regulations that apply to the facilities in Florida and Texas, along with state regulations. In Canada, there are federal and provincial regulations that apply to Alberta and in Berlin, there are federal and state requirements as well as EU Directives to track.
First, the managers (and/or their staff) must determine which regulations apply to the facilities. This means that the managers must search for the regulations on various public websites and determine if they are relevant. To help with the ROI, the Director could estimate how many hours per location this would take to conduct this research.
Then, the managers must figure out what the regulations that do apply, actually mean—and how they apply to individual sites. Some regulations are simple – with a small number of requirements. However, others have numerous requirements, written in legalese and not necessarily organized in a usable fashion. Again, the Director could estimate how much time it would take her staff to read the regulations and comprehend each requirement. But, consider this: even a well-trained lawyer will tell you that it could take hours to read through and comprehend a complex regulation with multiple requirements. In addition, this exercise is not a one- time investment; rather the managers would have to regularly repeat their analysis to incorporate new regulations that are finalized.
Of course, another vital concern is whether the Director’s managers, after doing that exercise, missed relevant regulations that are applicable and/or misinterpreted the requirements. In addition, the staff would need to use relevant requirements to construct a legal register and without a tool to do so, there is more staff time necessary for translating those requirements into a self-assessment or audit protocol.
Knowing the staff salaries, the Director may be able to estimate how much money she would save by purchasing an EHS compliance solution as compared to paying for full time employees.
The Director will be in a better position to ask for budget to help her staff manage EHS compliance obligations if she can estimate an ROI.
Know the Audience:
It is always good to know who you are speaking to. If the C-Suite is made up of the Chief Financial Officer (CFO), the Chief Revenue Officer (CRO or Head of Sales), the Chief Marketing Officer (CMO)and the Chief Executive Officer (CEO), for example, then it is wise for the Director to know their individual motivations and priorities.
The Director should treat the “ask” for budget as a presentation and she should anticipate the unique concerns of each member of the C-Suite. For instance, the CFO might be worried about the cost, not just this fiscal year, but for years to come of investing in an EHS solution. The CRO or Head of Sales may wonder how investing in the solution will help the sales team meet its targets.
The CMO may be motivated by brand awareness and a stellar reputation for compliance and/or sustainability. The CEO should of course, be concerned with compliance generally and that includes EHS compliance. One important point: if the company is privately held, then the C-Suite will need to consider the requests of the Board. If the company is publicly held, then the shareholders are a concern for the C-Suite. Either way, the Director needs to think about the needs and perspective of the C-Suite before making her presentation.
These three suggestions are just starting points for our Director. There are many other ways to prepare for making the case to the C-Suite and some will be tailored to the unique company priorities and culture. By knowing her budget, ROI and audience, the Director is in a good position to ask for investment in a solution that supports her overall mission: namely EHS compliance across facilities worldwide.
For more information, download our previously published WhitePaper on this topic.