Reduce Payroll Costs with a Good Safety Program

A safe workplace is its own reward. But did you know it also confers a competitive economic advantage? Maybe you do know this, but haven’t really committed to the idea. Take a look at this case study to see how one company with a robust safety program wound up paying less than its competitor for workman’s comp. (The names of the companies have been changed.)

Smiley Services has been in business for over 5 years. The owner has developed a great safety program, trains employees regularly and rewards his employees for safe behavior. Before he hires an individual he performs a background check, and then contacts all of their references and previous employers to ask about attitudes and safe behavior. He makes an offer of employment contingent upon passing a drug test and a pre-hire fit-for-duty medical exam.

When employees come to their first day of work, they attend a mandatory safety orientation. The orientation teaches general safety principles and principles specific to the tasks the individual will be performing. Each new hire is assigned a safety mentor that walks them through the worksite and points out all of the potential hazards. The new hire shadows the safety mentor until he or she understands the job processes and what’s expected of him or her.

Smiley Services has only ever had one accident where an employee needed to go to the clinic. This individual stumbled and fell, injuring his back. Another employee of Smiley Services, the designated first responder, checked out the injured employee and sent the employee to a preauthorized occupational clinic where he was checked out and released to modified duty. This employee had a lifting restriction of 15 lbs; however, his job required lifting 50 lbs up to 4 times a day. The supervisor arranged for another employee to lift the material, as required. Smiley services accommodated the employee’s restrictions and the employee didn’t miss any time from work.  Not only that, but another supervisor did a root cause analysis and found an uneven walking surface had caused the accident. The owner evened out the floor with some floor patch to prevent the accident from being repeated.

Smiley Services has an Experience Modification Rate (EMR) of 0.79, which means the owner automatically enjoys a 21% discount on its WC insurance premiums.

Git R Done Services is a direct competitor of Smiley’s. Git R Done has also been in business for 5 years. The owner knows safety is important, but doesn’t really know what to do to manage safety. The owner has background checks done on new hires, but is really too busy to do anything else. Once an employee is hired, someone shows them what to do, but he or she learns the details of their duties by performing them. Git R Done hasn’t been very “lucky” when it comes to accidents. The owner hung several “safety first” posters around the worksite to see if he could cut down on accidents, but you know what they say, “accidents happen.”  

It seems like people are always getting hurt at Git R Done. The owner has noticed that a lot of the injuries are on Monday mornings or to recently hired employees. He has a supervisor investigate how the accidents happen, but the supervisor usually just finds that the employee “wasn’t paying attention.” One employee was off work for three weeks due to a back injury. The treating doctor said the employee could come back to work the day after the injury, but wouldn’t be able to lift over 15 lbs. Unfortunately, that employee’s job required lifting 50 lbs up to four times during his shift, so the supervisor told him to wait until the doctor gave him a full release to come back. 

As a result, Git R Done’s Experience Modification Rate (EMR) is a 1.42. This means Git R Done gets an automatic 42% increase to its WC insurance premiums.

Which company do YOU think has the competitive advantage?

Contact us if you want help or advice to become more like Smiley Services, and less like Git R Done!

Posted in: HRvest
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The information contained in this article was obtained from sources that to the best of our knowledge are authentic and reliable. Fortune Industries makes no guarantee of results, and assumes no liability in connection with either the information herein contained, or the safety suggestions herein made. Moreover, it cannot be assumed that every acceptable safety procedure is contained herein, or that abnormal or unusual circumstances may not warrant or require further or additional procedures. Mention of any product, service or company is not an endorsement from Fortune Industries.