Best Practices— PEO Risk Control

Florida Workers Compensation Institute

Orlando, FLAugust 20, 2002

The Challenge

Fatality each 100 minutes

Disabling injury each 8.5 seconds

$127 Billion annual cost to the economy

A workers comp market that avoids PEO exposures

Why PEOs?

On-the-job accidents and injuries have a profound effect on small employers

OSHA State Consulting Services ineffective in providing results

National Safety Council programs are good, but voluntary

PEOs can leverage the workers compensation relationship

Why PEOs?

A well-run PEO committed to risk control can provide a measurable return on investment for a small business owner

A well-run PEO can provide a professional risk control resource to a pool of small employers that might otherwise have no assistance

NAPEO “Best Practices” for Loss Prevention

The PEO should include specific safety and risk management requirements in the client service agreement

Do you use a qualified safety professional to conduct “presurveys” of higher risk classes?

NAPEO “Best Practices” for Loss Prevention

The PEO should assist each client with a safety policies/rules manual adapted appropriately to address the key loss drivers and OSHA compliance requirements unique to each client exposure

Do you have the data to analyze loss drivers?

NAPEO “Best Practices” for Loss Prevention

The PEO should conduct regular site safety inspections…

Do you have a specific service plan for each client?

NAPEO “Best Practices” for Loss Prevention

The PEO should monitor claims experience (including the nature and frequency of claims) by client at least quarterly, including a review by top management

Do you use a “watch list”? What are the criteria?

Top Safety Practices—NSC Survey

Senior Management publishing a policy and expressing its attitude on safety

Making safety training a part of every new employee’s orientation

Supervisors setting an example by safe behaior Supervisors maintaining high standards of

employee safety performance Senior management setting an example by

behavior in accordance with the rules

Bottom Safety Practices

Offering incentives to employees through individual safety contests

Using posters to promote safety Keeping records of off-the-job injuries Coordinator enforcing safety regulations Offering incentives for good safety

records by departments

How Strong is Your Risk Control Effort?

What do your clients do to prevent accidents on a daily or routine basis?

How do you know?

How do you measure and motivate clients?

Existing Culture—the “Real World”(common in many companies today)

No ownership or line management involvement in accident prevention

Safety efforts driven by a staff designee, if at all

To the extent safety performance is measured, it is measured solely on outcomes

Heavy reliance on gimmicks and incentives to “prevent” accidents

Six Criteria to Safety Success

Top Management Commitment Middle Management Involvement Forced Supervisory Performance Hourly Employee Participation Flexibility Perceived As Positive

Four Components To Management Accountability

Defined Accident Prevention Roles for Each Level of the Organization

Training to Enable Performance Metrics That Measure Quantity and

Quality of Performance Reward/Feedback System Based on

Performance

Creating a Positive Loss Prevention Program

Work with owners/principals to create management accountability for safety performance

Provide training to enable client performance

Build the loss prevention action plan into the “front end” of the relationship

Creating a Positive Loss Prevention Program

Develop a loss prevention service plan that meets the client’s specific needs

Attack specific frequency and severity drivers across your book of business

Utilize a watch list process (and have the self discipline to follow through)

Do not assume the client’s loss prevention obligations