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MANAGEMENT: Waste Firms Seek New Ways To Cut Workers' CompMANAGEMENT: Waste Firms Seek New Ways To Cut Workers' Comp

August 1, 1995

4 Min Read
MANAGEMENT: Waste Firms Seek New Ways To Cut Workers' Comp

William E. Brown

Workers' compensation claims - and the high costs that come with them - are a fact of life in the waste industry.

Many firms currently have a plan to reduce on-the-job injuries and accidents by forming a safety committee that includes 10 percent of a department and implementing accident prevention programs, return-to-work programs and disability prevention techniques.

However, these programs require time and money. Despite these investments, many employees still experience the typical injuries that occur in the waste industry, such as strains and sprains, puncture wounds, contusions, lacerations and foreign objects in the eye.

In 1992, businesses spent an average of $564 per employee on workers' compensation insurance, which amounts to $62 billion nationally. These expenditures are expected to double by the year 2000, according to the National Safety Council. Further, the average cost of a workers' compensation claim in 1982 was $8,680; in 1991, that same claim averaged $22,795.

Also on the rise are indirect costs, or "soft dollars," which include the money value of time lost by non-injured workers for filing accident reports, providing first aid and slowing production. Often, these indirect costs are not calculated or are overlooked completely. However, they can add up quickly - ranging between $3 to $32 for every dollar spent in direct cost on an injury or accident.

Faced with these statistics, risk managers, CEOs and safety managers are trying pro-active safety awareness programs. These programs include behavior modification and incentives aimed at stopping unsafe behavior.

Research shows that 96 percent of all accidents result from unsafe behavior. Naturally, encouraging safe workplace behavior by creating a positive work atmosphere can reduce these incidents. Of course, in an industry as labor-intensive as this, injuries cannot be eliminated entirely. The first step in reducing accidents is for managers to ask themselves what motivates them and their employees, and examine the various perceptions and expectations their employees may have.

Take, for example, the Hawthorne Studies conducted by Elton Mayo at the Western Electric Co., Hawthorne, Ill. Mayo believed that, by increasing the level of light in one area of the plant, the area's production would go up. It did - but so did production in areas where the light was not adjusted. After several months of research, Mayo returned to the original lighting levels and output jumped to an all-time high. Mayo concluded that the changes were a direct result of the perceived attention the employees were receiving and the expectations of having certain basic needs met. In short, the employees began to feel like an important part of the company.

To guide employees toward safer workplace behavior, focus their attention on an expectation. This can be achieved by providing an incentive, such as stock ownership, profit sharing, cash prizes, award programs, gifts or perks.

However, if an incentive has too high a monetary value, it could create "walking wounded." If the incentive is too low, unsafe behavior may continue. A balance must be attained between employee attitudes about incentives, workplace conditions and the company's return on investment. If employers implement a cash incentive program, they must consider which format will cost the least while yielding the highest return in overall cash outlay. Be sure to include the indirect costs.

In selecting an incentive program, consider the following: * Results should be displayed in highly visible areas such as break areas or near time clocks. Make the display colorful.

* Use a format that meets each individual's expectations, yet will have both positive and negative results with a group.

* Choose a program that gives a positive daily reminder to work safely and keeps awareness high.

* Design a program that's easy for bilingual and under-educated workers to understand, without taking time away from their work.

* Provide something tangible that the employee will see daily, such as a colorful card or small token.

* Use safety- and work-related games when appropriate. For example, games can enhance team spirit and the employees' perception of the corporate culture.

Using these concepts, Oak Brook, Ill.- based Waste Management Inc.'s Cedar Hammock Refuse in Bradenton, Fla., has experienced a significant reduction in workers' compensation claims and costs (see table). For example, during 1994, injury incidents decreased by 48.7 percent and the cost of those injuries decreased by 56.2 percent over 1993, according to Robert Dunning, division president and general manager.

The right safety awareness program should enhance worker safety while fostering increased team spirit among employees. Last but not least, a well-designed program can facilitate and encourage more positive interaction between company management and employees.

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