Risk control - How do you handle it? By Carmen Daecher

When worker's compensation costs emerge as a threat to corporate profitability, organizations need to refocus efforts on effective loss-management strategies. Such strategies, however, require more than an emphasis on traditional safety programs and regulatory compliance that, historically, have demonstrated limited ability to impact incident rates and workers' compensation costs. Effective loss management requires managerial attention to accident prevention and loss mitigation strategies.

An organization's loss-management capability must extend beyond its safety and risk management functions and become fully integrated into the management structure of the organization. Managers must become proficient in the following core competencies and critical lessons of loss-management success:

1. Workers' compensation (how to play the game by the rules and win in spite of them). Lesson: It's okay to rewrite the rules.
2. Safety strategy (How to recognize and remedy the real causes of accidents in an organization). Lesson: Poor performance has good reasons.
3. Cost containment (How to minimize that portion of workers' compensation loss not medically imposed on the organization). Lesson: We have met the enemy - and it is ourselves.
4. Financial implications (i.e., How to measure the true financial impact of lack of safety strategy on the organization). Lesson: "Pay me now...or pay me a lot more later."

These four areas constitute the critical body of knowledge necessary for effective loss management. They represent an organization's "loss-management IQ."

As Will Rogers once said, "It ain't what you don't know that's a problem, it's what you know that ain't so!" Unfortunately, in many organizations, operations managers know a lot that "ain't so." What's needed is some straight talk about the critical elements of loss management.

In many businesses today, workers' compensation costs continue to stress organizations and pose very real threats to corporate profitability. Safety professionals tasked with leading their organization's response to these tests are finding that traditional strategies (i.e., where to go and what to do) are no longer adequate to meet the challenges.

We have changed from a manufacturing economy to a knowledge and service economy. Many of today's employees don't report to work daily; they "work" continually in their minds.

The business process has also changed. Business and academic leaders have taken us through a restructuring and re-engineering of American business. To be a world-class competitor, organizations now recognize the need to change from hierarchy to teams, from authority to influence, from control to empowerment, and from disciplinary approaches to reinforcing practices. We have literally turned our organizations and mindsets upside down, yet safety hasn't changed. There continues to be a strong attachment to the traditional three E's of safety: enforcement, education and engineering.

Effective loss management, however, isn't the sole province of the safety manager. It's the task of every manager in an organization. The safety practitioner's challenge is to grow organizational loss-management competency at all levels of his or her organization. What's needed is straight talk on those loss-management factors critical to success.

The key is to get managers selling safety to line supervisors. Managers influence the norms, beliefs, and assumptions that influence safe behaviors. They can change your organization.

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