Five Strategies for Reducing Workers’ Compensation Costs

Building a Solid OSHA Program

There are five basic steps a business can take to build a well-rounded safety program that produces a safe work environment, meets OSHA requirements, reduces accidents, and ultimately reduces workers’ compensation costs.

1. Develop the various programs required by the OSHA standards.
2. Integrate those programs into the daily operations.
3. Investigate all injuries and illnesses.
4. Provide training to develop safety competence in all employees.
5. Audit your programs and your work areas on a regular basis to stimulate continuous improvement.

Develop Programs Required by OSHA Standards

Aside from being a requirement for general industry, OSHA standards provide a good pathway to reducing incidents. A good number of accidents stem from poorly developed or poorly implemented OSHA programs: failure to keep walking and working surfaces clear may result in slips or trips, not using personal protective equipment may result in excessive lacerations, and poor lifting techniques can result in strains.

Many of the OSHA standards require some type of written program to be developed and then communicated to employees. Experience shows that companies with thoroughly developed OSHA-compliant programs have fewer accidents, more productive employees and lower workers’ compensation costs.

Integrate Programs into Daily Operations

Policies alone won’t get results; the program must move from paper to practice in order to succeed. Putting a policy into practice requires a strategic plan clearly communicated to key participants, good execution of that plan based on developed competencies and a culture that inspires and rewards people to do their best.

When developing any business initiative, there must be an emphasis on frontline supervisors and helping them succeed. Every good business person knows that any new program, whether it is safety, quality, or anything else, lives and dies with the frontline supervisor. If the frontline supervisor knows the program and wants to make it happen, the program succeeds; if not, it becomes a constant struggle and an endless drain on resources and energy. Providing supervisors with knowledge and skills through training is critical to the success of any program.

A solid OSHA program, integrated into daily operations and led by competent supervisors, is just the beginning. Successful safety programs focus on being proactive instead of always reacting to issues. Accident investigations provide an excellent source of information on real or potential issues present in the workplace.

Investigate All Injuries and Illnesses

Workers’ compensation is designed to recompense employees for injuries or illnesses they suffer in the course of their employment. This should not come as a surprise, but increasing numbers of claims drive up workers’ compensation costs. To reduce those costs, you must simply reduce your accidents, and the ability to do so is significantly enhanced when those accidents are fully investigated rather than simply reported.

Accident reports are historical records that cite facts, while accident investigations delve deeper to identify the root cause and make improvements. Businesses that stop rising workers’ compensation costs have an effective accident investigation process that discovers the root cause of the problem. Unless the root cause is discovered, recommendations for improvement will remain fruitless. Again, training proves beneficial because a supervisor skilled in incident analysis is a better problem solver for all types of production-related issues, not just safety.

All accidents should be investigated to find out what went wrong and why. Some may suggest investigating every accident is a bit over the top, and only those that incur significant costs are worthy of scrutiny. But ask yourself this question: If you only investigated serious quality concerns instead of every little deviation, would your quality program still be effective? Companies with solid quality programs investigate and resolve every deviation from quality standards.

If your emphasis is only on those incidents that have to be recorded on the OSHA 300 log, you close your eyes to the biggest accident category: first aid-only incidents. Many companies get upset about recordables or lost-time accidents because of the significant costs involved, but they don’t realize that the small costs and high numbers of first-aid-only incidents really add up.

Statistics show that for every 100 accidents, 10 will be recordable and one will be a lost-time incident. If you investigate only recordable or lost-time accidents, 89 accidents go unnoticed. Would you consider a quality program successful if it had an 89% failure rate? Reducing serious accidents means you must reduce your overall rate of all accidents – including first aid-only incidents. That only happens when every incident is fully investigated to identify the root cause, and remedial actions are identified and integrated into daily operations.

Training and Auditing for Continuous Improvement

The final steps focus on training and auditing your program for continuous improvement. Training plays a significant role in safety and in reducing workers’ compensation costs. The goal of training is to develop competent people who have the knowledge, skill and understanding to perform assigned job responsibilities. Competence, more than anything else, will improve all aspects of your business and drive down costs. Supervisors must have the knowledge and ability to integrate every safety program into their specific areas of responsibility. Every employee must know what is expected of them when it comes to implementing safe work procedures. Once the programs are developed and implemented, they must be reviewed regularly to ensure they remain relevant and effective.

This might require a significant change in how you manage your safety program, but if your workers’ compensation rates are high, it may be time to make this leap.

Tangible Benefits

1. Studies indicate there is a return on investment and that companies see direct bottom-line benefits with a properly designed, implemented and integrated safety program.
2. A competency-based safety program is compliant with OSHA requirements and therefore reduces the threat of OSHA fines.
3. A competency-based safety program lowers accidents, and fewer accidents lower workers’ compensation costs. When incidents do occur, a competency-based safety program fully evaluates the issue, identifies the root cause to prevent recurrence, and provides a workplace free from recognized hazards.
4. A safer workplace creates better morale and improves employee retention. Auditing keeps your programs fresh and effective, driving continuous improvement.
5. A competency-based program produces people who are fully engaged in every aspect of their job and are satisfied and fulfilled, producing high-quality goods and services.

How Can We Assist You?

Reducing workers’ compensation costs takes strategy, planning, and the right resources. By focusing on safety, training, and proactive risk management, businesses can make a real impact on their bottom line. Murphy Insurance Agency can connect you with tools, programs, and expert resources to support these strategies, helping keep your team safe, claims low, and your business thriving.

Note: This Workers’ Compensation information is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact an appropriate professional for guidance for their specific situation and needs.