Managing Workers’ Comp: Prequalifying Your Business Can Be Money in the Bank

But it doesn't need to be this way. Things can go right under the right conditions:

• Obtaining the full support of owner and executive management staff to implement cultural changes within an organization.

• Giving appropriate consultants the time necessary to conduct specific training programs with frontline supervisors and implement necessary policies and procedures.

• Conducting a comprehensive loss trending analysis to identify those losses that are driving the companies claim frequency and severity. Then, with an evaluation of the findings, develop and implement processes to change the negative culture that is driving both claims frequency and severity.

Management commitment is the most important factor in changing the attitude of the work force. Next is installing the necessary elements to achieve the desired results. Usually, business owners fail to recognize the impact accident costs have on the business. This is why they need to see the data to understand that injury prevention and injury management are 100 percent controllable expenses. Since these are employee costs, it starts at hiring, training, monitoring employees for continuous improvement: Plan, do, check, act.

Since companies differ, it's critical to gain an understanding of how to formulate a plan that produces the desired results. All companies are different, both culturally and functionally. Identifying these differences in the early stages of engagement is important in order to formulate an effective plan to achieve the desired results. This includes developing standardized operating procedures and conducting training in hiring, accident investigation, workplace inspections, audits, etc.

HAPPY AND PRODUCTIVE

All of this is anything but an academic exercise. It's the process for creating a happy, productive and injury-free work force, along with a business that is successful because it has a competitive advantage that makes it attractive to customers.

And behind it all is the experience modification factor which, rather than OSHA Recordable and DART (Days Away, Restricted Time) rates, is used by risk managers as a benchmark. Unlike the OSHA log, third parties that are viewed as reliable sources — such as the state workers' compensation rating bureau and insurance companies — create and provide the data that promulgates the MOD.

Unfortunately, however, the MOD is subject to the severity of claims or even a single large claim, where frequency (the number of injuries adjusted for individual size for comparison) may be a better indicator of safety performance. However, many risk managers view these records as unreliable, feeling that they can be altered by a company that is not reporting all incidents. As a result, the modifier is viewed as a reliable basis for review.

The bottom line is clear: making a diligent effort to get a company's experience modification factor to the lowest allowable level may determine whether a company in this economy gets a job or not.

David R. Leng, CPCU, CIC, CRM, CWCA, is vice president of the Duncan Financial Group in Irwin, Pa. He can be contacted at dleng@duncangrp.com. Michael G. Lukart, CSP, CWCA, is president of East Coast Risk Management in North Huntingdon, Pa. He can be contacted at mlukart@eastcoastrm.com.