The $15 Million Dollar Mistake: Don’t Let Your Business be like Enterprise Rental Car

The key to operational excellence and having a fully optimized business is having the operational processes in place that are executable, measured, tracked and reported. Here is an example of operational failure at best.
It was 8 years ago on October 7, 2004, when Attorney Cally Houck life changed forever. On this day, Cally didn’t realize that as she hugged and kissed her two daughters: Raechel (24) and Jacqueline (20) outside her law office it would be the last time because a few hours later, they were fatally killed in a car accident as their rental car smashed head on with an 18-wheeler. The car was badly burned as a result.

Because of the car fire, it took days before Houck learned that the Chrysler PT Cruiser her daughters had rented, after being offered to them as a free upgrade, had been recalled because the power steering fluid could leak and cause a fire. A leak of power steering fluid could also result in a loss of car control.

Unfortunately, Enterprise Rental Cars, never made repairs to that PT Cruiser after the recall. The Houck sisters were the fourth customers to rent the PT Cruiser after Enterprise learned of the recall. Ultimately, their negligence resulted in the death of Houck sisters. Enterprise Rental Cars has since admitted it was at fault for leasing out the car and paid the family $15 million in damages.

Cally Houck and her state senator and representative are fighting to pass a bill introducing legislation that will prevent rental car companies from renting or selling a vehicle until any safety recall issue is addressed.
Reading this sad story, we realize this could be any of us, our children, family member or friend. Your customers may think the same thing for your line of business. The question is, are you going to be a proactive business or a reactive business like Enterprise Rental Cars and pay a hefty price of $15 Million because you failed to have adequate operating procedures for your business? Hopefully, you made the decision to take the proactive approach.

Here are some operational excellence lessons businesses can learn from Enterprise Rental Cars $15 Million mistake.

• Always have a policy, process and/or procedure that manage, tracks and reports safety. Safety violations or injuries that result in poor safety practices can put a company out of business because of the price tag. Whether it’s having ergonomic workstations for your staff to reduce workers compensation claims, environmental disposal processes to avoid EPA/ISO violations or preventative maintenance procedures to ensure safe equipment use; the key is to have guidelines in place that has oversight by the senior leadership team and in grained into the company’s culture. Enterprise Rental Cars and all other rental companies admitted to not having a policy in place for managing vehicle recalls. This was proven by the National Highway Traffic Safety Administration report that only 10-30% of recalled rental cars had been fixed.

• Incorporate operational checklists in your business. With cars being the product (bread and butter) of Enterprise Rental Cars, there should have been a checklist that qualifies a car to be used for service and/or be sold. The checklist should include features that can present a customer service, safety, operational and financial issues.

• Audit your business operations to ensure compliance. It’s not enough to put the processes in place. Business leaders must also incorporate self-audits to check and verify the processes they have in place work and it also serves as a layer of protection from potential failures that can result in a $15 Million settlement.

As you can see, just as Enterprise Rental Cars failed to have effective operational processes in place to minimize their risk level, the same can happen to your business if you fail to take option. Unfortunately, the difference between you and Enterprise is they make billions of dollars and have the cushion to adjust and bounce back and you may not. So, I must ask, what will you do differently to avoid a similar situation from occurring in your business? Do you have the discernment to review your business or will you be willing to invest in an independent reviewer? The bottom line is this; the lack of action can cost you millions or worst yet, your business. It’s your choice, so choose wisely.