Overcoming Resistance from Senior Management When Implementing a Workers Comp Program

A Reader Writes:
I am a newly hired workers' compensation management specialist tasked with creating a workers' comp management program at my company. Right now, we have one site, with plans to acquire more within the next five years. I've been assigned this project by the company's new president who thinks workers' comp is a good idea. But the other members of senior management are stonewalling the concept – they are subtle, but impenetrable. They have been with the company for years and have entrenched viewpoints. They view workers' comp costs as just another operating expense.

This is going to have a negative impact on my ability to design and implement a cost-savings program for the departments they manage. How can I convince them workers' comp costs are not set in stone and costs can be reduced, resulting in better fiscal health for everyone?

Bob Elliott Replies:
You are right on target when you say management commitment is a must when moving ahead with a workers' comp management plan. You need their clout to assure departmental cooperation, and you need their buy-in to obtain the resources you need to get this program started.

So where do you start? In my experience, management is primarily interested in the monetary impact and how it affects them. If you can head off the monetary impact before it affects them, you will be a hero, but first they need to know how close to danger they really are.

First, I would get assurance the company president is solidly behind me when I present the facts. It is unrealistic for the president to task you with program without supporting you. The president needs to be ready to institute a charge-back system so management feels the sting of unresolved costs where it counts most: their own pocketbooks.

Then, I would develop a small presentation detailing the financial impact of workers' comp costs. I would develop a Sales Required to Pay for Accidents matrix, tailor it to your business. Use the calculator at the bottom of this blog or at this link: http://www.ReduceYourWorkersComp.com/calculator.php

For example, if you sell nuclear generators providing power to large facilities – Ask: How many generators must be sold just to break even on just one open workers' comp claim, with no signs of closing? Answer: The company probably must sell a dozen generators. But, since the claim is still open and time is running, until the claim closes, it continues to bleed company coffers dry. Multiply that by the number of actual open, going nowhere claims, and it's a huge figure.

If your company installs carpeting – how many rooms of carpeting will you have to sell – minus labor and travel costs – to compensate for the open claims you have? If you sell widgets, how many widgets must you sell and gain net profit in order to cover the costs of open claims?

When you present workers' comp in this light, — in terms of the real business of making money, your management must then take a step back and take notice — especially if it's their cost centers being charged for these claims.

So, on slide 1 show how much workers' comp costs in terms of the business you perform.
Slide 2 could contain some benchmarking — How well do your costs measure up against the national average or to other companies?

After you've scared them to death though, you must be ready with concrete workable solutions. Keep it VERY high level. Management isn't interested in the details. Provide them with a timeline or calendar of program events and milestones. (WCxKit)

Then wow them with the cost savings they can expect to see within the first year. This will really get their attention and they will be delighted.

\Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.

WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.