Business owners know that workers' compensation insurance is a must - especially in high-risk industries such as those involving manual labor. But what they often fail to realize is that the cost of an employee injury extends far beyond the coverage of most workers' compensation insurance plans.
Consider this scenario:
It's just another day on the job when you get the call. Your field manager says that one of your employees is on the way to the emergency room after suffering an injury while working. A few x-rays later, it's confirmed that your employee has a broken leg and will be unable to work for at least three months. How will your business cover the three-month gap of recovery time?
It's important to take into account the loss of time, productivity and efficiency in the face of an accident. While workers' compensation insurance covers medical expenses and wage replacement, there's a laundry list of other items that must be dealt with to keep your business running smoothly. And dealing with those items can cost your business time and money.
OSHA says that the higher the cost of a claim, the higher the indirect cost to your business - with the highest direct-to-indirect claim cost ratio of 4:5. That means for every $1,000 claim your business faces, you could pay $1,250 out of pocket for indirect costs, including the time and productivity lost at the accident site, time spent on paperwork, hiring and training a replacement for your injured team member and loss of morale. To avoid these costs and protect your employees, it's important to reduce the chance of a workplace accident through proper safety education and practices.
Having strict safety protocols in place helps mitigate risks, but, unfortunately, accidents happen and sometimes there's nothing you can do to prevent them. By implementing an accident preparedness plan, you can lessen the direct and indirect costs of workplace injury and be prepared to handle an accident when it happens.
Here are five things your accident preparedness plan should cover:
1. Train for crisis. Though completely necessary, the time spent responding to a crisis is money lost for your company. Teach employees how to deal with an accident before it happens – your injured employee will have faster care, and your company will spend less time in crisis mode. Include an emergency plan in your regular safety trainings so that employees can respond efficiently when a claim arises.
2. Minimize administrative work. Paperwork will always accompany an accident. By keeping all necessary emergency forms and contact info in a centralized location, you can spend less time hunting down documents and more time handling other tasks.
3. Prepare your "bench." Very few businesses can continue day-to-day operations without replacing a team member that is unexpectedly injured and will be out for an extended period of time. To ensure the operation keeps running, many companies need to hire and train temporary or permanent assistance - a costly, but necessary solution. By constantly fielding resumes and interviewing applicants, your business can build up a bench of potential employees so you're ready to hire at a moment's notice.
4. Streamline onboarding. If your team operates like a well-oiled machine, then the loss or replacement of a key player is sure to slow it down, even if just temporarily. Even if you can quickly fill the missing spot thanks to your strong bench of applicants - what good is it if you don't have an efficient and thorough onboarding process in place? By streamlining your onboarding process, you can set up your new employee – and therefore your business – for success from day one.
5. Review safety procedures. When an accident happens, it's important to determine what went wrong. Is there something you could have done to prevent the accident? Are your safety procedures up to date? Once the problem is identified, adjust your business' safety protocols to prevent similar accidents in the future. Learning from your mistakes can improve the safety of your employees and your company's bottom line.
Though there's no way to completely prevent an accident from happening, you can prepare your business to manage crisis situations efficiently. With a proper continuity plan, you can lessen the indirect cost of a workers' compensation claim.
Parker Rains, a Chattanooga native, is vice president of Fisher Brown Bottrell Insurance and may reached at prains@fbbins.com.