Previous posts addressed the importance of aligning value proposition and employee incentives. In a nutshell, if you tell employees to do X, but pay them to do Y, don’t be too surprised when they mostly do Y.  But many of us work in “shareholder value” cultures and we still want to drive better product safety & regulatory compliance (PSRC) results. What can we do in the meanwhile? Here are 8 ideas I’ve seen used to good effect. Hopefully one or two of these ideas will resonate with you. Please feel free to share or comment on this post. Thank you.

1. Appoint an executive sponsor to the PSRC function

This executive can help navigate barriers and to make sure the PRSC function has the resources necessary to fulfill their mandate. This would be someone who reports directly to the CEO. Depending on risk and enterprise size, a Chief Compliance Officer (CCO) can act as sponsor or the Chief of PSRC can report directly to the CEO. This is a tall order, but with all the product compliance issues in the news recently, now is as good a time as any.

2. Know what you care about, care about what you know

Use Pareto analysis to identify the specialties (e.g., welding, fasteners, etc.) and processes (problem-solving, DFMEA, escalation, etc.) that are critical to the PSRC function. Make a spreadsheet listing just two or three employees for each area. This should be the folks with the most knowledge, skill, and ability in each area. Track names, contact info, expertise, location, and retirement (for succession). Let the experts and their bosses know that they’re important and may be called for DFMEA, root cause analysis, corrective action, etc., even outside their business unit or region. A separate non-managerial development path can help retain these important people.

3. Integrate product compliance early in product development

As products move through capital intensive milestones (e.g., tooling, production part approvals, start of production, etc.) several things increase exponentially: (1) institutional resistance to recognizing and addressing potential PSRC issues; (2) the costs of investigation, containment and corrective action; and (3) regulatory, reputation and litigation risk. The best way to head off this perfect storm is to address PSRC issues early.

4. Counter resistance with dual path issue escalation

One escalation path should follow the business unit reporting line straight up. The other escalation path should trace directly up the Regulatory Compliance reporting line. Even in business units where employees are discouraged from raising potential problems (because of culture, the perception that such reporting may interfere with short-term earnings, an unforgiving boss, or whatever), where there is a dual path escalation system, escalation is more likely to rise promptly through the business unit because otherwise the head of the business unit will be embarrassed when the Regulatory Compliance unit reports it first.  Both lines will be motivated to act promptly and accurately.

5. Maintain independence, but stay close to the business

As with other compliance functions, the PSRC function requires specialized expertise and insulation from business unit pressure. A hybrid shared services model can be effective. Core product safety professionals can be a shared service, but stay close to the business units via embedded staff (as many companies do with HR, IT and finance), or through partisans – business unit employees passionate about root cause or product compliance – who have a dotted line reporting role to the PSRC function.

6. Leverage collaboration to deliver unexpected value

The PRSC function is expected to reduce product compliance risk by working with engineering, quality, and manufacturing to find and eliminate product compliance risks. But leveraging collaboration across other functions can deliver unexpected value. For instance: PSRC + Risk Management = reduced premiums; PSRC + Legal = reduced product liability costs; and Finance + PSRC + Legal = tighter reserves & Sarbanes-Oxley reporting.

7. Plan for the “black swan”

One characteristic of “black swan” events (major recall or product crises) is that they appear predictable in hindsight. This prevents planning for the next “black swan” because we think that next time we’ll see it coming. The PSRC function should be an integral part of the product crisis response team along with Corporate Communications, Legal, etc.

8. Create a feedback loop from “lessons learned” to DFMEA

These days, most organizations have a lessons learned process, but employees complain that: (1) the process is too time-consuming or complex; (2) they don’t know what should and shouldn’t go into the process; or (3) they don’t know how to extract value from the process at the other end. One solution is to have the PSRC subject matter experts capture the most meaningful lessons and feed them back directly into DFMEA. These are the people with the judgment to know which issues warrant inclusion in the process.

Thanks. I hope you enjoyed this post and found it useful. If so, please feel free to share, comment or like. Have a great weekend.

Also published on LinkedIn.