Zero Culture Begins at the Top: Part 2

Sunday, February 29, 2004 | 0

Zero Culture Begins at the Top: Part 2
"The Building Blocks of Zero Culture"
By Brent Heurter
Part 2 of a 3-part series

In the first article, we discussed how change is driven from the top down. Companies that are able to achieve Zero Culture are those whose top executive has the courage to change. Zero Culture is a revolutionary mindset in which the top executive takes control of workers' compensation and instills a total cost-control culture within the organization. But in order for a total cost-control culture to gel, the CEO must be the driver.

Achieving Zero Culture requires an analysis of all aspects of your workers' compensation program. There are seven basic building blocks that must be in place to attain Zero Culture. In this article, we'll go over each of those building blocks and how they work together to help you gain control and reduce workers' compensation costs to a minimum.

1. Zero Injuries. Every injury you prevent saves you money, because the least expensive claims are the ones that never occur. By putting safety first, you'll avoid both medical costs and lost-time costs. The average claim cost in California is $47,000. Considering that claims stay on your mod calculation for three years, this average claim can balloon to more than $90,000 in premium increases. In addition, a corporate culture that values safety all the time, every time, will do more than save out-of-pocket injury costs. You'll be keeping your people on the job, which enhances your company's productivity and profitability. And your demonstrated commitment to keeping employees safe from harm sends a strong message to them that they are important, which helps build a positive workplace culture.

2. Zero Delays. Study after study shows that the longer you delay in reporting a workers' comp claim, the higher the costs of the claim-up to 30% higher. The sooner an injury is reported, the sooner care and planning can begin. In addition, early reporting ensures that the employee receives benefits in a timely manner, reducing the likelihood of litigation. This is one area where you have 100% control. Make it a corporate policy that employees report all injuries to their supervisors and that supervisors report all claims within one hour. Zero delays also means working with urgency, handling safety hazards immediately, providing quick, prompt care for injured workers and staying on top of open claims throughout the claims cycle. This kind of urgency needs to be committed from the top down or it will fail.

3. Zero Lost Time. In California alone, 25% of all workers' comp claims lead to disability leave of more than 16 weeks-despite the fact that only 5-10% of claims are actually serious enough to warrant more than a few days off the job. Employers who plan ahead and immediately provide transitional work assignments for all injured workers can reduce the proportion of injuries that end up as lost time claims--and achieve substantial claim cost reductions.

4. Zero Errors. There's only one thing worse than paying high workers' comp premiums, and that's overpaying them. Recent estimates show that almost two-thirds of employers are overpaying on their premiums because of mistakes in classifications, premium audits and experience modification calculations. The average overcharge found is 8% of the premiums involved. For example, rating a dispatcher for a trucking company as a "driver" rather than as "clerical" can lead to thousands of dollars in overpayments.

5. Zero Fraud. A Zero Fraud policy that is communicated to employees and enforced 100%--to the fullest extent of law--will extinguish fraud in your organization. As an employer, there are measures that you can take regardless of how active the carrier is in investigating and/or fighting a claim. The key is knowledge of how to use the system to your advantage. In order to stop the "domino-effect" from happening in your company-when one employee files one questionable claim after another--you must be aggressive when it comes to enforcing your antifraud policy. In some cases, we even advise clients to file a civil lawsuit against certain employees and their attorneys; in 40% of those cases, the employee drops the claim immediately--and the employer effectively stops the domino effect.

6. Zero Litigation. When employees seek legal assistance, claim costs rise. In California, attorney involvement in claims is both frequent and costly. Defense attorney fees alone add an average of about $3,600 per litigated claim. While a few employees start out in search of deep pockets, most employees turn to attorneys because they feel they have been treated unfairly or have not been given enough information to assure that they will get a fair deal within a "system" they perceive as complex and unfriendly. Employer best practices can do much to reduce the employee's perceived need for an attorney. Taking the time to explain workers' compensation rights and responsibilities, responding promptly to injured employees with both concern and assistance, providing support throughout the recovery period, and protecting job security with stay-at-work programs all help to dispel many of the typical reasons that drive an employee into a lawyer's office. Really, it's all about showing you care. And by helping your company, you are helping the injured employee as well. Hiring an attorney can hurt injured employees in the long-term. It is often the attorney who advises the employee from to stay out of work and on disability for as long as possible, thus hurting the employee's chances of ever returning to suitable employment. 7. Zero Mod. The benefits of implementing Zero Culture results in obtaining your Zero Mod. Also known as the minimum mod, Zero Mod is the lowest mod your company can obtain. To achieve your company's Zero Mod, you cannot have any claims for a period of three years; this results in the lowest possible workers' compensation costs for your company. The cost savings can be significant. Most employers believe a mod of 1.0 is good, whereas their Zero Mod could be .60 or lower-a 40% difference!

Each of the first six building blocks will bring you one step closer to achieving Zero Mod and becoming a Zero Culture company.

Next up: Part 3 of this series will show you, building block by building block, just how much you can save by working toward becoming a Zero Culture company.

Brent Heurter is the Founder and Chief Solutions Officer of ClearComp, a workers' compensation alternative for companies that desire to control and reduce their workers' compensation costs with guaranteed costs savings of up to 30%. Brent can be reached at 888-CLEAR-89 or email brent@clearcomp.com.

The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.