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Cutting Workers Comp Costs — Not Just a Dream

When you hear someone say you can reduce your workers’ compensation (WC) costs, do you just smile and nod, then continue on with the business of the day? You are not alone.

"A lot of people think that workers’ compensation goes up no matter what you do, but that does not have to be the case," says Jerry W. Nolen, HR director for the City of Pelham, Alabama. "I’m not saying it’s going to be simple, but just doing some small things can make a real difference."

Nolen uses incentives, education, and visuals to modify workers’ behaviors in an effort to control WC costs, and as he says, "It has worked unbelievably well."

Results tell the story

When Nolen came to work for Pelham in 1995, the city had 31 WC claims, all involving lost work time and costing the company $188,326. (Numbers are from the City of Pelham’s third–party administrator, which administers all the municipalities in the state of Alabama.) "Now," cautions Nolen, "the way we classify what is lost time is as follows: If a person is injured today, I am going to pay for the rest of the day because they are hurt. It’s considered lost time only if they miss their next shift."

After Nolen put in place his plan for reducing WC costs, the numbers started dropping dramatically. In 1996 the city had 30 WC claims, but only two of them involved lost time, and they totaled only $56,576. In 1998, the last year Pelham’s third–party administrator for WC claims had available, the City of Pelham had only five WC claims, one involving lost time, and the total cost to the city was a mere $2,274. During the period from 1995 through 1998, Pelham reduced its number of claims by 56 percent and its claim costs by 89 percent. That’s some reduction!

The three cornerstones to Nolen’s program are incentives, education, and visuals.

Incentives

Offering employees incentives not only helps with safety and WC, notes Nolen, but it also helps with productivity and morale. Employees who have been with the city for 90 days and have been accident–free receive an individual award each quarter they make the goal.

"Each quarter we have a different reward, but all of them have the city logo and the year’s theme on it. This year the theme is ‘Safety 2000,’" says Nolen. "The main thing is to be sure it is quality merchandise that they will be proud to have or wear."

The city also offers yearly incentives to teams in the city. "I have 10 teams with about 30 people on each team, and whichever team has the most safety points at the end of the year wins," Nolen explains. "Prizes include something nice like a quality windbreaker with the city logo on it."

Education

One way that teams can rack up safety points is by having their members attend the many safety talks that are given twice a quarter. Speakers include doctors, nutritionists, and chiropractors. The teams earn points if they have 70 percent or more of their team members in attendance.

Another way to get points has proven to be a real safety benefit for the entire city. Employees are encouraged to share safety suggestions. If the suggestion is accepted, they get two points.

Even if you don’t have a full program like Nolen’s, this is one aspect you still may want to incorporate anyway.

"One of the first safety suggestions I received in 1995 was that we might want to store gasoline and dynamite in separate buildings," chuckles Nolen. "We didn’t even know we had dynamite; it was left over from a long time ago. But there it was, not only in the same building with gasoline, but on the same shelf, stacked on top of one another."

Visuals

Nolen has big poster–size visuals that show exactly what prizes are being offered for each quarter. He places these in every department on the bulletin board. "This way, every day they come to work, they can see exactly what they are going to win. That is a very good incentive."

Helpful hint

Have a well–written safety manual for your employees. In it, specifically list all the rules and procedures for each department. Also, explain exactly what the consequences are for not following safety rules and regulations. Include people from every department when developing your manual.



Article by Nancy Hatch Woodward, Contributing Editor, Best Practices in HR
This article is provided by BenefitsNext.com. Visit BenefitsNext for plain–English compliance information, work–saving forms and checklists, daily news, and free weekly E–Zine. Copyright 2002, BLR Inc.


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