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The Eight Major Mistakes Employers Make When Workers' Compensation Rates Go Down, Part III |
Throughout much of the country declining Workers' Compensation rates are music to employers' ears. After all, that seems like long-awaited good news, particularly since Workers' Compensation is more often than not viewed as a necessity and a significant cost of doing business.
Yet, looking at Workers' Compensation as a business necessity or a commodity is a major fallacy. Although most employers fail to recognize it, Workers' Compensation is a core business practice and a means for improving the bottom line.
Rather than diverting attention and finances during periods of lower Workers' Compensation rates to other business priorities, employers can benefit by taking steps to guarantee long-term savings. There are eight mistakes employers should avoid so they can achieve long-term Workers' Compensation savings.
In a series of articles, we will examine the eight major mistakes. The fifth and sixth are as follows:
5. Viewing Workers' Compensation as an expense
Employers should recognize that Workers' Compensation is more than a necessary expense; it is a controllable aspect of business that if managed properly will have a measurable and positive return on investment (ROI).
In ROI Selling, authors Michael Nick and Kurt Koenig note three measures of ROI: "Return on investment occurs when a company realizes an increase in revenue, a reduction in cost, or an avoidance of cost."
6. Separating Workers' Compensation from Employee Retention
Retaining skilled employees is one of the most difficult challenges facing businesses today. Turnover is extremely costly. According to estimates it is anywhere from 50% to 150% of an employee's annual salary.
If a work-related injury is not managed properly it can result in the unnecessary loss of a skilled, trained employee. The longer employees are away from the job, the less likely they are to return. Statistics show that if employees are not back to work within 12 weeks, they only have a 50% chance of ever returning.
The fundamental reason for most lost time is not medical necessity but the non-medical decision-making and lack of a process that occurs after an employee is injured. The workplace response is key - studies show that employees' satisfaction with their employer's response has a much larger impact on employment stability than does their satisfaction with health care itself . Being guided by a plan that focuses on communication and return to work will be far more effective than declining rates in both reducing Worker's Compensation costs and improving productivity. |
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To avoid these mistakes and improve profitability focus on the financial impact of indirect claim costs and prompt claim reporting. |
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Financial Impact of Prompt Claims Reporting |
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Everyone realizes the importance of timely claims reporting but do they realize the bottom line financial impact? The first step in proactive claims management is reporting claims as quickly as possible. This allows Eastern Michigan Agencies the time to apply our cost-saving claims management techniques. |
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Financial Impact of Indirect Claims Costs |
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Direct claims costs are easily identified but what about those indirect costs that are harder to quantify? Consider the additional expenses to train and compensate a replacement worker, time and effort to investigate the accident and implement corrective action, as well as downtime during equipment or property repair. Higher incident rates also affect the employee population with lower morale and increased absenteeism, ultimately leading to poorer customer relations. |
| If you are not reviewing these items on a monthly basis, please contact Eastern Michigan Agencies immediately to schedule a meeting and begin analyzing your indirect claim costs and claim reporting procedures.
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