Work Comp as an Employer Marketing Tool

Saturday, April 26, 2003 | 0

Workers' compensation is typically viewed upon as a cost item for most employers - that line item on the budget that recently has grown out of control adding millions of dollars in cost to business' ability to earn a profit. But at this moment in current history employers have a very unique opportunity to change that line item cost into a marketing opportunity. With work comp at the fore front of business news on a daily basis (mostly bad news) companies have a small window to take advantage of media attention in the topic to actually promote their business and their work!

This thought occurred to me upon reflection of all of the press releases that have been issued recently by professional employer organizations, or PEOs. A PEO is in the business of supplying temporary labor to a business, and taking care of all of the human resource needs related to that employee, including providing workers' compensation insurance coverage. The PEO industry recently was placed into a crisis situation with many workers' compensation insurance companies pulling out of the market, essentially placing the entire PEO industry at risk - no work comp, no PEO, plain and simple.

As PEOs started getting coverage they were sure to issue press releases to place the business community, and their customers, at ease. Even short term policy extensions were the topic of press releases - the PEO community needed to tell their customers that everything would be okay, that their employees were covered for work injuries.

There are many industries where workers' compensation is often ignored by unscrupulous businesses that don't wish to compete on a fair basis. The construction trades are notorious for failing to secure workers' compensation (one need only look at Washington's Department of Labor & Industry's recent crack down on the framing business to see the pervasiveness of this illegal activity). Yet, the consequences of not having workers' compensation insurance to the hirer of an uninsured contractor can be devastating. The remedy to the injured worker is to go against the hirer and the actual employer will get away, albeit illegally, but nothing a bankruptcy can't fix. Sure, the illegal contractor faces jail time, but that is no consolation to the hirer who now has an additional problem on his hands other than just getting the project completed.

The legally insured contractor (or any service business for that matter) should make it a point to tell the customer that he is completely covered for workers' compensation. The education of the customer as to the risks of hiring an illegally uninsured contractor should be a key point in the selling of services regardless. Marketing materials, such as brochures, yellow page advertisements, and the like, should prominently point out that the business is completely insured against work comp risks. You may offer the name and number of the insurance company providing coverage and perhaps even the policy number to your customer as verification that you are an above board, legitimate business that keeps the customer in mind by ensuring that as much risk as possible is under control.

This tactic doesn't stop with contractors either. Any business that sells service should ensure that the customer and employees know that the work force is well taken care of. For some reason, the mandatory nature of workers' compensation is viewed upon negatively, while other employee benefits, such as health or disability insurance, aren't. Yet, functionally there isn't any difference - workers' compensation is an employee benefit. Customers want to feel secure that the employees of your business are providing the best service possible. If customers know that you care about your employees by standing behind them with a good work comp program, they are going to feel more at ease with your service. This can be a distinct selling point.

This works in hiring as well. If work comp is promoted to a potential employee as something that the employer stands behind, and that the employee will be taken care of in the event of a work accident, then that employee is going to feel more secure and provide better output.

Certainly this is not to say that the employer should condone fraud, and in fact it should be made absolutely clear to both the customer and the employees that fraud is taken very seriously. But both would also be impressed by knowing that the company stands behind return to work efforts, does everything possible to ensure speedy recoveries, and works with the insurance company to ensure that benefits are delivered timely and in an appropriate manner.

While pricing is a part of the competitive landscape, justification of your pricing is also a part of the marketing to get secure that business. Workers' compensation shouldn't just be an excuse on pricing, it should be promoted as an active part of management's commitment to ensure that the customer is receiving the best possible service available at any price.

David DePaolo is President and Managing Editor of workcompcentral.com. He can be reached at david@workcompcentral.com.