This week marks President Trump’s first State of the Union address to our nation. And if I had to guess it’ll be one of the highest rating State of the Union addresses in our recent history. We just have that kind of president, whether you view that as a good thing, or as a bad thing.
Are You Spending More Effort Following Trump Than Your Own Work Comp Program?
Hello, my name is Michael Stack. I’m the CEO of Amaxx. And today I want to talk about the state of the union of the administration of your worker’s compensation program. And I want to ask you a question, and I want you to analyze your strategy and philosophy, and answer this question honestly. Are you spending more time, more energy, putting more effort into following the Trump administration than you are to the administration of your own program? Are you putting more time, more effort, putting more of your attention, gathering more of your emotional willpower into the Trump administration than you are in your own work comp management program, the thing that matters most to your career? The thing that you’re working on, on a day-to-day basis.
The reason that we’re going to have … this will be one of the highest rated State of the Union’s is because Trump is a polarizing president. You’re either going to be watching that State of the Union, rah-rah-ing and cheering everything that he’s saying, or throwing tomatoes at the TV because you have such a disdain for that individual, but you’ll be tuning in.
But you have no idea what’s happening in your program. You have no idea where your program is trending. It’s just sort of a cost of doing business, and you’re going along hoping for the best. So what I want to do today is I want to go over a very specific metric that you can track, that you can trend, that you can tell the story of the financial impact of your organization for exactly what is happening in your work comp program. So if you had to give a state of the union address about where things stand in your program, and you only had one metric to use, this will be the one I would recommend using. And this is the cost per FTE, the cost per full-time equivalent employee.
Cost Per Full Time Equivalent Employee
What this does is it allows you to benchmark against national standards. It allows you to create an apples to apples trending in your program regardless of hiring, regardless of seasonal employees, regardless of the number of workers in your program has gone dramatically up, or gone dramatically down in a year over year period, so that you can understand where it is that you’re going, either up or going down or staying the same.
So let’s talk about how this is calculated. You take your incurred losses times the number 2,000 over your man-hours, so your incurred losses times the number 2,000, and the number 2,000 it’s 40 hours a week times 50 weeks a year. That’s how you get 2,000 for the number of man-hours worked for an equivalent for a full-time employee. So if you have a bunch of seasonal workers, you have a bunch of part-time workers, your hiring has gone up and down as I mentioned, this smooths out this equation and you take it over your actual man-hours worked for that specific period.
So I like to track this by quarter. You could also track it by semi-annually, and then, of course, you’re going to look at this annually in a year over year basis, but the first time you do this, I would start with annually and look through your four years back, so that you could see where it is that your program is going.
Three Uses for Cost Per FTE
And as I mentioned, three things for you to do with this: benchmark against national standards; two, you can trend against where your company is going in a year over year period; and then three, and most importantly, is calculating the actual impact, the financial impact, that your improvements have made, or the decline in your program has actually made on your organization.
Again, I’m Michael Stack, CEO of Amaxx, and remember your work today in worker’s compensation can have a dramatic impact on your company’s bottom line, but it will have a dramatic impact on someone’s life. So be great.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .
Contact: mstack@reduceyourworkerscomp.com.
Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/
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