Eight steps to controlling workers’ compensation costs in your company

September 29th, 2008 by

Many companies have recognized a basic truth about workers’ compensation: that the worksite is the best place to control losses, and that they, as employers, have the maximum leverage to lower losses. These employers no longer try to hand the problem off to their legislators, their insurers or their attorneys; instead, they manage workers’ compensation as a controllable expense. This fundamental shift in attitude empowers employers to take charge of workers’ compensation.
How have they done this? What are the key steps foresighted employers take? Over the last 25 years, our company, Lynch Ryan, has been privileged to assist many of America’s leading corporations as they struggled with this issue. I’ve now concluded that there are eight essential strategies that help savvy employers turn workers’ compensation liabilities into assets. The principles are simple, founded on basic human values. They involve a concrete action plan and sound management. More important, they work.
Today, we’ll focus on the first three steps, and over the course of this week, we’ll post the other five.
Step 1 – Make a commitment
As with any major corporate endeavor, commitment starts at the top. Make sure that workers’ compensation is afforded priority status throughout the organization. Set realistic and attainable goals, and communicate them to the organization from the top down.
If you approach injury management simply as the “idea of the month,” you will certainly fail. Commitment involves building safety and injury management into the very fabric of your organization. You should never lose sight of your goals. And you should never compromise your commitment to safety by drifting toward expedient, short-term objectives that place production quotas above the safety of your people.
Step 2 – Focus on reducing lost time
Chances are, your company has been working to create a safe working environment. That’s good. Safety is essential in controlling workers’ compensation, but it’s only half the equation. Good safety programs have a positive effect on the frequency of injuries, but the best safety program in the world will not eliminate all accidents. People being human, injuries will happen. Try as we all do, work conditions change and we make mistakes. To really attack workers’ compensation costs, you need to focus on reducing severity: the length of time injured employees stay out of work. Severity is the real cost driver in workers’ compensation. Every day that an employee is off the job costs you money.
When your machines break, you fix them immediately. Think of something as simple and common as a department’s copier. When you purchased or leased that machine, you insisted that prompt maintenance or even replacement was part of the deal. An out-of-order copier slows production. You need to do the same for your most important resource, your employees. So your goal must be to keep days away from work to an absolute minimum. You need to focus, laser-like, on the goal of returning every injured employee to work, through modified or transitional duty if needed, and to the original job as quickly as possible. That’s good for you and it’s also good for the employee.
Steps 3 through 8 will be posted over the course of the week.