Costs drive safety training needs: workers' comp, OSHA and indirect costs of accidents shed light on a company's safety training needs - Agenda Safety & Security

HR Magazine, Jan, 2003 by Shawn Adams

Workers' compensation rates are increasing, and that trend is likely to continue-- based on indicators such as high insurer losses and rising medical costs. For employers, the financial fallout from safety risks can be significant. In addition to workers' comp costs, the federal Occupational Safety and Health Administration (OSHA) can levy fines of up to $70,000 for each violation. And, indirect costs related to turnover and lost productivity add up quickly.

Organizations trying to do more with less need someone in management to help keep those costs in check. Often, that person is not a trained safety specialist but the busy human resources professional. Unfortunately, many HR practitioners are not as experienced in this area. How, then, does an HR professional effectively deal with the important responsibility of safety and risk management?

Training is one of the key elements to reducing workplace accidents and the costs associated with them. HR is well versed in training and development, but knowing how to train is one thing; knowing what to train on is an entirely different matter. To find this out, HR must conduct a safety training needs analysis. And a good place to start is with the big three culprits of workplace safety costs--workers' comp, OSHA and indirect losses.

Slashing Workers' Camp Costs

The first step HR must take when assessing safety training needs is to determine the types of workers' comp losses the organization has experienced in the past, and what types of losses should have been expected based on industry norms. Answering those two questions will help HR determine the organization's true safety needs.

Records from the company's insurance carrier should identify the firm's loss history. Insurers must keep records about previous losses, not only to assess the risk the company represents and the rates that should be charged, but also to meet states' statutory accounting requirements. Insurers are relying on the accuracy of loss records to keep their own companies solvent, so these records are an excellent source of information.

But keep in mind that some insurers choose not to file claims for small losses, which helps to keep their rates lower. This might or might not be legal, depending on state law. However, if your insurer has opted to avoid filing such claims, OSHA records and internal accounts payable records can help you complete the picture.

The size of your organization will help determine how far back into your company's safety history you need to dig. The law of large numbers dictates that the larger the sample pool, the more accurate the final projection. So smaller firms need to go back farther to get an accurate picture of loss history.

Next, HR must benchmark its organization's loss history. The insurance company maintains complex actuarial formulas to determine what types of losses a particular firm should experience when compared with similar firms. Unfortunately, even if your organization obtained these figures, you would need another actuary to explain the results, but the dollar value of losses your organization has sustained in the past is a good indication of your company's safety problems. Once you've identified these shortcomings, you can develop appropriate training.

To benchmark your company against industry standards, turn to the federal government, which provides guidance, based on incidence rates, about the types of injuries the average company is likely to sustain. The Bureau of Labor Statistics (BLS) surveys selected companies annually. These companies must provide information directly from their OSHA records. These results are tallied and categorized into Standard Industrial Classification (SIC) codes. BLS also categorizes data by the type of injury or illness suffered. This information allows a company to determine its SIC code and compare injuries or illnesses sustained with those experienced by other firms within the same SIC code based on frequency, severity and lost days.

HR also can use OSHA incidence rates to benchmark safety practices.

Once you've compared your loss history with similar organizations, you can note areas in which further safety training is required to prevent future incidents.

OSHA Compliance

OSHA itself requires certain levels of training for organizations in its jurisdiction. This compliance may help prevent injuries and workers' comp claims. Failure to comply can result in fines of up to $70,000 per worker for a willful violation, or $7,000 per worker per day for "failure to abate" violations. Certainly, the lack of training records can be used as evidence that you have not trained your workforce.

OSHA identifies its training requirements in OSHA Publication 2254, "Training Requirements in OSHA Standards and Training Guidelines," and on the agency web site.

OSHA's regulations, in its General Industry Standards and Construction Industry Standards documents, list more safety regulations than any company could possibly comply with. But if you search its database of citations by SIC code, you'll see that there are 300 areas in which OSHA issued citations during the last report year. Although these 300 areas change from year to year, they remain relatively the same. In some ways, it's as if OSHA is giving your company the questions on the exam in advance.