Using Metrics to Measure Workers' Compensation

HR Resource
December 11, 2012 — 3,857 views  
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Tangible Metrics are an ideal resource for measuring the elements that drive claim costs. They indicate the specific interventions that employers should focus on. A long-term view informs them of the underlying situations and conditions that drive up work-related injury costs. This valuable information often leads to significant policy changes. Even a short delay in reporting an injury can increase claim costs by 10 percent. Workers' Compensation provides coverage for medical expenses and replaces wages for employees who are disabled by an occupational injury or illness. Other expenses include legal and investigative as well as settlement costs. A performance metric is a measure of an organization's activities and performance that can be used in decision making. It is important that the people in charge understand numbers and trends. Metrics allow managers to assess strengths and weaknesses and should be simple, meaningful, consistent and continuous.

A simple metric is easy for senior management to understand. A meaningful metric is anticipated and valued by leaders. Once leaders are trained to see performance in a certain way the metric should remain consistent because course changes are disruptive. A good metric should also be effective over the long run and be a continuous and routine process. Factors that are consistently well-measured have a high value.

Worker’s Comp monthly reports that go to senior management should always measure two things: Incurred losses for each full time equivalent employee done by department and incurred losses for every hundred dollars of payroll split out by department. Before any measurement is done management should focus on targets. The targets should be compared to actual performance in the 3 or 4 previous years. They can be influential in determining the percentage of cost reductions that a company can make in a current year.

Many senior managers have short attention spans and a limited amount of time to complete tasks. The most appropriate workers' compensation performance measurement should be on one page and in a scorecard format that senior management can peruse for just a few minutes. If the information is cogent enough, then that is how long it should take to discern it. Managers can use it to have an informed conversation about the steps management can take to enhance performance.

An effective employee performance review system requires quantifiable metrics to gauge each employee's performance. Metrics help identify the types of performance that can be measures and improved.


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