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Controlling Workers’ Compensation Costs - June 2017
Has your construction business experienced rising workers’
compensation costs due to on-the-job accidents? If so, your first response was
most likely aimed at trying to reduce insurance costs and spending. While this
may seem like the best approach, a sound safety program designed to
continuously improve can yield significant savings by reducing injuries and
illnesses—ultimately reducing workers’ compensation costs in the long run.
5 Steps to Building a Solid Safety Program
You can control workers’ compensation costs with five easily
implementable steps designed to create a well-rounded safety program that
produces a safer job site, achieves OSHA compliance and reduces accidents—saving
your bottom line.
Develop Programs Required by OSHA Standards
- Develop safety programs required by the OSHA standards.
- Integrate those programs into daily operations.
- Investigate all injuries and illnesses.
- Provide training to develop safety competence in all
- Audit your programs and your worksite on a regular basis to
stimulate continuous improvement.
In addition to being a requirement for those in the
construction industry, OSHA standards provide a good pathway to incident
reductions. Many accidents stem from poorly developed or poorly implemented
OSHA programs: not using the proper fall restraint system when working at
heights more than 6 feet, improper use of personal protective equipment when
working with hazardous job site materials and poor lifting techniques resulting
in back strains are just a few examples.
OSHA construction standards require that written programs be
developed and then communicated to workers. Experience shows that companies
with thoroughly developed, OSHA-compliant programs have fewer accidents, more
productive employees and lower workers’ compensation costs.
Integrate Programs into Daily Operations
Policies alone won’t get results; your safety program must
move from paper to practice to impact your bottom line. Achieving this requires
a strategic plan clearly communicated to workers, good execution, and a culture
that both inspires and rewards people to do their best.
When developing your safety initiative, there must be an
emphasis on helping your site foreman succeed. If the site foreman understands
the safety program and is motivated to make it work, it succeeds; if not, the
program is a source of struggle and an endless drain on resources. Providing
your site foreman with knowledge and skills through training is critical to the
success of your safety program.
A solid OSHA program, integrated into your worksite’s daily
operation and led by competent site supervisors, is just the beginning.
Successful safety programs are also proactive instead of reactive.
Investigate All Injuries and Illnesses
Accident investigations provide an excellent source of
information on real or potential issues present on the job site. Because
workers’ compensation covers a worker’s wages for injuries or illnesses that
arise from or out of the course of employment, increasing claims drive up
workers’ compensation costs. To reduce costs, you must reduce accidents. And
the ability to reduce accidents is significantly enhanced when they are fully
investigated instead of simply being reported.
Accident reports cite facts; accident investigations go
deeper to uncover the root cause of an accident and make improvements to
prevent its reoccurrence. To stop your workers’ compensation costs from rising
unnecessarily, you must have an effective accident investigation process. Unless
you can determine the root cause of an accident, recommendations for
improvement will remain fruitless. Again, training proves beneficial because a
site supervisor skilled in incident analysis is a better problem solver for all
types of project management issues, not just safety.
All accidents should be investigated to find out what went
wrong and why. Some may suggest investigating every accident is a bit over the
top and only those that incur significant costs are worthy of scrutiny, but
this approach is shortsighted. If your emphasis is only on those incidents that
have to be recorded on the OSHA 300 log, you ignore the single largest accident
category: first aid-only incidents. Many firms focus solely on recordables or
lost-time accidents because of the significant costs involved, but they don’t
realize that the small costs and high numbers of first aid-only incidents
really add up.
Reducing serious accidents means you must reduce your overall
rate of all accidents—including first aid-only incidents. That only happens
when every incident is fully investigated, and corrective actions are
identified and integrated into daily job tasks.
Training and Auditing for Continuous Improvement
The final steps focus on training and auditing your program
for continuous improvement. Training plays a significant role in safety and in
reducing workers’ compensation costs. The goal of training is to develop
competent people who have the knowledge, skill and understanding to perform
assigned job responsibilities. Competence, more than anything else, will drive
down costs. Site supervisors must have the knowledge and ability to integrate
programs into each job on the job site so that employees know what is expected
Once the programs are developed and implemented, they must
be reviewed on a regular basis to make sure they are still relevant and
effective. This might require a significant change in how you manage your
safety program, but if your workers’ compensation rates are high, it may be
time to make this leap.
- Studies indicate there is a return on investment and that
firms see direct bottom-line benefits with a properly designed, implemented and
integrated safety program.
- A competency-based safety program is compliant with OSHA
construction requirements and therefore reduces the threat of OSHA fines.
- A competency-based safety program lowers accidents, which
reduces workers’ compensation costs. When incidents do occur, a
competency-based safety program fully evaluates the issue and finds the root
cause to prevent reoccurrence and provides a job site that is free from
- A safer job site creates better morale and improves employee
retention. Auditing keeps your programs fresh and effective, and drives
- A competency-based program produces people who are fully
engaged in every aspect of their job, producing high-quality craftsmanship.
How Can We Assist You?
At CMR Risk & Insurance Services, Inc., we are committed
to helping you establish a strong safety program that minimizes your workers’
compensation exposures. Contact us today at (619) 297-3160 to learn more about
our OSHA compliance and safety program resources.