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SELLING COMP COST CONTROL INTERNALLY

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ATLANTA-Risk managers are spending so much time developing programs to solve their workers compensation cost problems that many never get to the last step of selling their programs within the company, a workers comp consultant says.

When risk managers reach that step, they will have to tailor their message to the different audiences within their organization, all of which want to know what they have to gain by buying into the program, the consultant advised.

"I have quickly learned that risk managers are marketing managers, particularly in terms of workers compensation, where there's so many misunderstandings and misconceptions not only among employees but also among managers," said Catherine D. Bennett, a consultant with Cost Control Concepts Inc. of Madison, Tenn.

"The more effectively we communicate, the more cost-effective our programs will be," she said during a session at the Risk & Insurance Management Society Inc.'s conference last week.

"One of the first lessons I learned is that you can't carry the same message to the entire organization," she said.

That is because each audience within the organization has its own misconceptions about workers comp, she said.

For example, senior management often mistakenly chalks up workplace accidents to an insignificant cost of doing business. They also often want to include workers comp loss control programs in across-the-board cost-cutting efforts, she said.

The risk manager's job is showing senior management its judgment error in language it understands and cares about-by equating the cost to revenue or production costs.

Take, for example, a company that operates with a 2% profit margin. The risk manager should point out that the company has to generate $50,000 in additional revenue to recover the profit it loses by incurring a $1,000 workers comp claim, she said.

The risk manager, though, also should humanize the system by showing senior management how an effective program improves employees' quality of life, she said.

And, risk managers should not be shy about detailing past successes in trying to sell senior management on new programs, she said.

Selling senior management on a new program does not guarantee the program's effectiveness unless management understands and accepts its role and responsibility, she noted. That is up to the risk manager to define.

"If people routinely are not attending safety meetings or turning in injury reports, chances are they are not being held accountable. So, you need that kind of support," Ms. Bennett said.

Risk managers can make their pitch to senior management in various ways, including face-to-face presentations or through written summaries. Regardless of how a risk manager presents a program, a surgical strike with convincing information is important, she advised. "Get in, get out and say what you have to say."

Supervisors require a different level of detail before they will buy into a program. Their most common misconceptions are that they have to meet production quotas at all costs, that all workers comp claims are false, and that the more workers know about workers comp, the more they will abuse it.

In addition, many supervisors think that with the availability of workers comp insurance, safety programs are the first logical cut in trimming operating budgets.

As it is with senior management, workers comp is a cost issue with supervisors-but on a different level, Ms. Bennett said.

"Show them the (cost) difference between claims reported in 21 days versus 21 hours," she recommended. Referring to transitional or light-duty return-to-work programs, which many supervisors fight because the injured worker is not coming back at 100% capacity, she said: "Show them the difference between someone who returns to work four hours a day for six weeks versus someone who's off for two months."

Risk managers should demonstrate to them how runaway costs eat into their profit-sharing and bonuses and, at the plant, how those costs delay or prevent new equipment purchases and new hires.

"They probably understand hidden costs as well as anyone in the organization, because they are the ones dealing with them," Ms. Bennett said.

The key messages to supervisors once risk managers have their attention are:

Keep safe workplaces.

Report injuries immediately.

Make reporting injuries easy for workers.

Know the company's preferred provider arrangements.

Welcome back injured employees.

Confront employees with substance abuse problems.

Hire quality employees by, among other things, checking into their criminal backgrounds.

In educating workers, risk managers should remember they are battling conflicting messages from workers' "family, friends, attorneys and chiropractors."

Workers are confused about how the workers comp system works, she said, citing a survey that showed only 60% of employees knew that their employers are responsible for paying to treat their workplace injuries.

"They need to understand what's going to happen, especially if they have a family to support and rent to pay," Ms. Bennett said.

Billie Fae Fuschi, workers compensation assistant director for Methodist Health Systems Inc. of Memphis, Tenn., also spoke during the session.

Michael J. Jan, director of risk management for Flagstar Inc. of Spartanburg, S.C., moderated the session.

Ms. Bennett coordinated the session.