Business Insurance

The Hidden Costs of Workers Compensation Claims

As a business owner you are always aware of the hard cost of workers compensation insurance.  However, there are hidden costs that are not so obvious.  Over time, these costs can take their toll on a business. This article discusses some of the hidden costs of workers compensation claims.

Time is Money

When an employee is injured in the workplace, there are a variety of responsibilities you must take care of that all require your time and attention.  Immediately after an injury has occurred, you must investigate what caused the incident and identify what corrective action should be taken to ensure it does not occur again.  In addition to completing the paperwork necessary to process an injury, you must document your findings of the investigation, get witness statements (if applicable), and follow up on the care of the injured employee.  After the cause of the injury is found, your options may include replacing a piece of equipment, changing a procedure, or even training or re-training employees on new procedures or on how to safely use new equipment.

To Hire or Not to Hire

If it is determined that your employee will be off your schedule for a period of time, you may have to decide if you will need to hire another person to cover the absent employee.  There can be costs associated with advertising the position, not to mention the time taken to interview several candidates for the position.  After a candidate is selected, a trainer will need to be assigned to oversee the training of the new employee in addition to completing their normal job tasks.  Once the injured employee is cleared to return to work, you must also decide whether or not to continue employing the person you hired to cover those shifts.

Should you decide that you will not hire a new person to cover or replace the injured employee, you may incur overtime to pay for employees to work additional shifts or hours.  Having people cover until the employee returns to work can cause undue stress to team members as they may not be used to working extra hours or handling other duties.  This can often lead to compromising the level of service given to customers.  Over the long run, inadequate service eventually results in diminished sales.  Generally customers who receive substandard service do not say anything – they just do not return.

Morale Issues

When a business is missing a valued team player, it can change the dynamics of a team.  If the injured person was key in the leadership of your employees, your employees can feel the absence and deal with it in many ways.  Sometimes it shows in sub-quality production, taking shortcuts to pick up the slack of the missing person, developing bad habits, and experiencing undue stress.  Overall productivity can be affected when a key person is missing from the team.  This can happen whether or not you hire someone to take the injured employee’s place.

If not properly handled, a different type of morale issue can be occurring with the injured employee while recovering at home.  They will be worried about many things, “How am I going to pay my bills?  What about groceries and rent?  Do I still have a job? Will they replace me with someone else?  If I come back, will I still get the same hours that I had before I was injured?”  Unfortunately, while recovering, the injured employee may get ideas from friends, family, or even television commercials that they might do well by suing the business.  This alone can result in thousands of dollars in possible litigation.

What can be done to minimize the damage from these and other effects of hidden costs? It would be simple to say “Just don’t have injuries!”  That, however, is not realistic.  The following are a few suggestions to help minimize the hidden costs of workers compensation claims:

Hire the right people:  Hire the most qualified people for the job.  When hiring, look for potential employees who are keenly aware of their surroundings and already prone to work in a safe manner.

Cross-train your employees:  It is business smart to cross train your employees in the event of the sudden loss of a team member or even to cover vacations and sick leave.  Employees often view learning duties outside of their primary job as adding value to their worth and an indication that they are trusted by management.  Doing so will ensure that productivity and service will not be as affected when one of your team members is out, either due to injury or simply vacation time.

Follow up often with the injured employee:  Show genuine concern and interest in how your employee’s recovery is going.  Note when their medical appointments are scheduled so that you can call afterwards to ask how they are feeling, how they are progressing, and what the doctors are recommending.  Try to belay any concerns they may have about losing their job and remind them that their only concern at this moment is to focus on getting well.

Your premium rests on several variables, so develop an improving three-year history.  The time to start is now.  Reduce frequency and severity of claims by managing a clean and safe operation, training employees to respond to hazards immediately, and conducting ongoing safety training.  Make staying safe a part of your existing culture.  Being safe is just good business.

Julie Beezley joined the Leavitt Group in July 2010 as vice president of safety training. She brings her clients an extensive background in insurance, safety program development and implementation, and the restaurant industry.  At the Leavitt Group, Julie is primarily responsible for the customization of written safety training programs as well as conducting behavior-based safety coaching (BBSC) sessions, injury and illness prevention programs (IIPP), and safety calendar training sessions.