Workers’ Compensation: The Big Disconnect

cause drivers of loss

When it comes to Workers’ Compensation claims, the data is there and for the most part the risk managers have access to it. They know what types of claims are being filed and where worker injuries are occurring. That’s the good news – because that data represents a powerful tool that organizations can use to address the areas of greatest risk for work-related injury.

Here’s the bad news: That tool is largely sitting idle on the collective desk of most organizations. The reason? A disconnect between risk management and operations.

Risk management has the information that can reveal the causes of loss that are driving costs and human suffering. Yet operations does not allocate the precious time, talent and treasure that they have available for risk management in proportion to these causes. They are not getting the message – at least not in a way that they can put into operational practice. The result? They spend their resources managing risks that are not the primary drivers of loss.

Here’s a real-world example of this misalignment. The graphic below shows a five-year loss run for a regional grocery chain analyzed to determine cause drivers. Not surprisingly, musculoskeletal disorders accounted for more than 40% of costs. However, when the operational safety management processes were reviewed, only 16% of the self-inspection questions, 7% of audit questions and 14% of safety topics were related to musculoskeletal disorder control. Drilling down to departmental levels the gap between the long-term cost drivers and the operational procedures used to manage them was even more obvious.

So what’s the solution to this disconnect? Operationalizing risk management.

Operationalizing Risk Management

Workers’ Compensation claims data is sensitive and unpleasant. It can read like a list of worst-case scenarios. Taking out the personal side of it – which can vary from troublesome to tragic – the data can be a map of where and what operational safety issues need to be addressed. Understanding what kinds of injuries are happening and where they are occurring tells a company where to put the training and safety efforts now.

Data from across an organization can also help risk managers understand Workers’ Compensation risk by allowing them to compare operations in different locations and different areas of the business. Teams need to know how they’re doing, and properly analyzed data can offer benchmarking they can’t get elsewhere.

Comparing disparate operations can help a company understand exactly which operations are the most dangerous and why. Comparing similar or identical operations in different places can be potentially even more valuable. If one location is doing better than the others, a risk manager can investigate and begin to establish safety best practices for that type of company operation. If one location is doing worse, then the company knows where some immediate attention to safety details needs to be paid.

Internal information like this is gold: it’s not something that comes from a generic safety manual or training film. It’s information that points to areas of immediate risk and areas where people may be finding solutions.

Communicating the Analytics

Workers Comp Performance Dashboard

In a vehicle dashboard, graphical displays of relevant operational information help drivers make decisions about their journey. (Click image to see it at full size.)

With benefits so obvious and the data on hand, why isn’t this operationalizing happening? We believe the problem is the way the data is communicated. The data must be presented as information that operations can understand and put to use. Making sure everything works is the primary challenge for operations people. Taking the time to step back and review the flow of work with a useful perspective is difficult – at best. The challenge for risk management is to deliver the information in a way that is simple, objective and clear – and in a way that compels action.

In the data analytics world, the term dashboard is a common one. Perhaps it’s overused. But it offers a useful analogy. In a vehicle dashboard, graphical displays of relevant operational information help drivers make decisions about their journey. Operations people need the same thing: concise graphical displays of relevant risk management information that will communicate how they’re doing and what course adjustments might be needed.

The Right Information to the Right People

Another key to communicating analytics effectively is getting the information to the right people – the people responsible for what the information tells the company about itself. Given the sensitivity of Workers’ Compensation data, this is not always an easy task. But it’s one that risk management needs to consider when they deliver the information they’ve assembled to their counterparts in operations.

Who are the right people? That will vary with each company, but in short, the right people are the ones whose decisions impact operational safety. These are usually operational leaders at the regional, location and department levels. In some larger organizations this can also include line-of-business leaders.

Connecting the right data to the right people in a way that is useful – that’s the key to analytics. In Workers’ Compensation, that key could unlock the door to overall savings and better use of the time, talent and treasure spent on risk management.

About Eric Kennedy

Eric M. Kennedy, MSIE,  CPE, is a Certified Professional Ergonomist and Senior Risk Control Consultant at Willis T…
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