How to zap your workers' comp costs.

• Author: Kay, Michael Z.
• Position: Compensation - Risk Management

If your workers' compensation expenses are soaring, take a lesson from Sky Chefs, which uses total-quality principles to keep its costs down to earth.

In 1990, Sky Chefs, an airline caterer, found that its workers' comp costs were taking off faster than its dinners. In fact, the reported-injury frequency among Sky Chefs' workers was two to three times the national Occupational Safety and Health Administration rate for the restaurant industry. Just three years later, Sky Chefs is back on course again.

How did we do it? We harnessed the techniques of our total-quality leadership program and identified critical work-process improvements. Now we've dramatically reduced the frequency, severity and costs of work-related illnesses and injuries.

In many companies, workers' compensation costs are threatening budgets, profit margins and sometimes the organization's survival. But you can keep this expense under control. By managing your costs properly, you can lower production costsand generate additional funds for wages and other benefits. And you can increase your profits. To achieve these aims, you must develop a strategy that incorporates cross-functional responsibilities. Also, you need to link your analysis of workers' compensation expenses to the work environment. The result? An efficient, integrated system of claims, medical and disability management. We introduced our quality program in March 1990. In mid-1990, a cross-functional team began expanding a safety policy drafted by workers at our Nashville kitchen, one of our newer and more innovative units. The team developed a safety-process manual, including suggestions for improving safety awareness, safety-management structure and on-the-ground work-process safety.

Based on the team's initial success, we rolled out a safety leadership program company-wide in March 1991. The goal was to reduce the frequency of OSHA-recordable injuries by 50 percent in three years. We achieved that in just 18 months.

By mid-1991, we were making good progress in reducing the frequency of workers' compensation injuries. As time passed, however, we decided to redefine the safety leadership goal. Originally, the program focused on injury prevention. But we began to recognize that reducing workers' compensation costs and severity was equally important and set a goal of cutting costs by 50 percent in threeyears. We knew several of our competitors had already made notable gains in both efficiency and market share by using quality improvement techniques and tools. NO MORE PIECEMEAL PROGRAMS

In the past, Sky Chefs, like many other companies, had assigned the tasks of preventing and managing work-related illnesses and injuries to several unrelated departments. The financial department's tax and treasury group purchased workers' compensation insurance and tracked the financial consequences of comp cases. Line operating departments were responsible for developing and managing safe work processes and conditions, while safety coordinators at several locations were responsible for keeping track of injured workers. Finally, ourinsurer's claims department, along with Sky Chefs' operations staff, handled the claims-management function, including wage replacement, contact with injured workers, claims investigation and medical care management. The net effect was a fractured approach that contributed to dramatic increases in the cost of our program.

We began turning things around by expanding our project focus to include...