Workplace safety impacts bottom line

November 1, 2005 By    

Workplace safety impacts the bottom line in so many ways that we sometimes take accident causes for granted. Or worse, we do nothing but read the bad news when it comes.

 Jay Johnston
Jay Johnston

The high costs of liability insurance, steel, employee training, safety compliance and propane are ripping through your margins like Brett Favre picks apart a bad defense on a good day. What can you do about it?

There are many ways you can avoid problems and protect your bottom line with regard to safety in the workplace. I suggest you read two LP Gas Magazine articles to establish perspective on the issues and prevention. “Finding Good Drivers is a Tough Haul” (September 2005) and “Lower Back Injuries: Prevention and Treatment Strategies” (March 2005) can be found on the LP Gas Magazine Web site at www.lpgasmagazine.com.

The first article addresses the challenge of finding and keeping good drivers in light of the government’s tightened security requirements. Issues such as background checks, hazmat, DUI penalties, physical labor and pay scale can be tough recruiting obstacles.

However, I believe that the propane industry is a great place to work when an employee is well trained and knowledgeable about safety and product delivery. Fresh air, physical labor and the opportunity to be an independent thinker who helps people sounds better than most jobs.

I encourage you to appreciate your drivers as valuable assets of your company. Any one driver would be sorely missed if they miss days or weeks with an injury. This is where costs begin to soar and impact the bottom line. Add the cost to replace the driver or spread the workload to the future increased workers compensation insurance costs, and it’s easy to appreciate accident prevention training.

The physical labor of propane delivery can create strains on backs, knees and joints when improperly executed by drivers physically unfit for the job. They are lifting tanks, pulling hoses, climbing in and out of large trucks. They must be capable of such physical requirements. Personal protection equipment designed to assist workers with heavy loads may also prevent injuries.

The second article offers some great observations about cause and prevention. Training and educating employees are two separate functions. Training should focus on lifting techniques and proper use of equipment. The educating should focus on strengthening and balance exercises, dealing with strains and problems associated with lifting, overall wellness and fitness for the job.

Pre-employment physicals should include tests of the applicant’s physical ability to lift and pull per job requirements. I recommend such testing be done with existing employees as well.

Lastly, I recommend screening all prospective employees with a process that tests their potential to manufacture or infer a workplace injury that did not happen at work. I have seen many cases where the employer was stuck by such misrepresentation. In my opinion, better to be safe in advance than sorry later.

All this impacts your bottom line as it relates to the way your workers compensation premiums are calculated.

There is a factor called the experience modifier and the average rate is 1. A good rate might be .7 and a bad rate might be 1.5. To calculate the impact on your premium, multiply the experience rate by your base premium. Using a base premium of $50,000, a 1 modifier would result in keeping the premium at $50,000. If the modifier is .7 the premium would be reduced to $35,000. A modifier of 1.5 would increase the premium to $75,000.

The gap between a good rate and a bad one represents a $40,000 swing in cost to your bottom line. This factor can impact your premiums for three years. Add in costs such as replacement workers and/or lost productivity, and you’re looking at replacing big money each year.

Jay Johnston is president of Jay Johnston & Associates, specializing in insurance consulting, safety communication design and educational safety seminars. He can be reached at 888-725-2705 or
Jay@thesafetyleader.com.

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