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Workplace Culture: A Powerful Factor on Workers’ Compensation Costs

Workplace culture (the values, beliefs, attitudes and behaviors collectively shared by employees) can have a very real and powerful impact on the entire work environment. As a result, culture has a major effect on a company’s workers’ compensation experience and costs. By creating a culture focused on safety, wellness and compassion, a company can realize enormous cost savings.

A Culture of Safety

Safety programs can have a huge impact on workers’ compensation costs. According to a 2001 Liberty Mutual Insurance Company study, 61% of executives say that $3 or more is saved for every $1 invested in workplace safety.

Simple awareness of a defined safety program can markedly improve employees’ safety behavior. This phenomenon is known as the Hawthorne Effect, named for the study done by Hawthorne Works to gauge if productivity would increase in higher or lower levels of light. Surprisingly, the researchers found that workers’ productivity increased while the study was being conducted, and then slumped after the study was completed. Why? Simply because of the increased awareness on the part of employees while the study was being conducted.

According to the Department of Labor, an effective safety and health program will include:

  • A clear safety policy with visible top management involvement
  • Regular training for employees on how to eliminate or avoid hazards
  • Employee buy-in through safety committees
  • Employee participation in the assessment of  losses and job hazard analysis
  • Employee accountability and reward linked to consequences for unsafe behaviors
  • Proactive motivation through public, positive recognition of safe behaviors

A Culture of Wellness

According to a 2003 article in the American Journal of Health Promotion, employers can achieve a 30.1% savings in their workers’ compensation costs through workplace health promotion programs.

Such programs can take many forms, including:

  • Health fairs
  • Health screenings
  • Healthy lifestyle coaching
  • Promotion of work-life balance

Substance abuse programs should also be a key component of a company’s wellness program. Drug and alcohol abuse in the workplace causes decreased productivity and increased accidents, and its more prevalent than we think. A national survey conducted by the Hazelden Foundation found that more than 60% of adults know people who have gone to work under the influence of drugs or alcohol. The Department of Labor reports that drug-using employees are 3.6 times more likely to be involved in a workplace accident and 5 times more likely to file a workers’ compensation claim. (http://www.dol.gov/elaws/asp/drugfree/benefits.htm)

One area that should receive special attention in any Workplace Wellness Program is weight management. A John Hopkins University Medical Center study of 8 aluminum plants, found that 85% of those injured on the job were overweight or obese. A Duke University study showed that obese employees have twice the number of claims per 100 employees as non-obese employees, and lose 13 times as many work days. Indemnity costs are 11 times higher and medical costs are 7 times higher on those claims. (http://www.dukehealth.org/health_library/news/10044)

A Culture of Compassion

A positive workplace climate is key to healthy employee morale. Poor morale can manifest in many ways that negatively impact the workplace and employee productivity:

  • Abuse of leave accruals
  • Accidents
  • Illnesses
  • Litigation
  • Workers’ compensation claims.

Out of frustration with high workers’ compensation costs, many managers take the view that all claims are fraudulent. This mindset can create an adversarial relationship between management and employees, leading to mistrust and the proverbial “self-fulfilling prophecy” of additional workers’ compensation claims being filed.

Our experience has shown it to be much more effective to teach managers to do performance management effectively while proactively building relationships with employees. This effort results in reduced litigation, reduced lost time from work, fewer workers’ compensation claims and faster resolution of claims that do occur.

In the book The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want, David Sirota describes the three basic goals of workers as:

  • Equity (being treated fairly)
  • A sense of achievement (being proud of what one does)
  • Camaraderie (being a part of a team)

A Company that fosters this type of environment will see an improvement in both employee morale and in the financial bottom line.

Athens Administrators – A Key Partner in Creating Workplace Wellness Programs

How can we help? Athens Administrators provides clients with comprehensive stewardship reports that help employers effectively manage and monitor their work environments.

  • Provide detailed information about the causes, frequency and severity of losses
  • Analyze and track trends
  • Facilitate collaboration on strategic initiatives for improvement
  • Benchmark against industry best practices and information
  • Deliver accountability that we are performing as we promised to

Athens employs industry leading professional and personable claim staff professionals that consistently deliver:

  • Prompt and meaningful communication with injured workers
  • Care cards to every injured worker at the time of injury to reduce litigation
  • Payment of  benefits in an appropriate and timely manner
  • Thorough explanations of the workers’ compensation process to the injured workers

Related Links

Department of Labor Safety and Health Programs

The American Society of Safety Engineers

Article on how to start a wellness program

How to Boost Employee Morale on a Budget