WHY EXPRESS EMPATHY?

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1 Retail safety solutions Employee accident investigations 3rd Quarter 2014 Inside this issue: Why express empathy? Final impact of accidents Conducting root cause analysis The hidden costs of accidents Accident investigation kit checklist WHY EXPRESS EMPATHY? First, empathy means the ability to place yourself in the other person s shoes. When an individual is injured, it can be counterproductive to respond using an accusatory or blame ridden tone. Responding to the injured party with concern and intent, to ease their pain, will help build their confidence in you and the company. An aggressive investigator can cause employee discontent. Use this as an opportunity to demonstrate how the company cares for its employees. Purpose of the investigation The least expensive method of reducing losses relating to accidents is to never have the accident in the first place. The purpose of establishing an employee accident investigation process is to help: professionals. Processes should be documented and retained in an area easily accessible, should investigators have any questions regarding the process. However, procedures are only as good as they are known, understood and followed. To this point, it is essential that managers or supervisors receive training about your company s requirements before an accident occurs or when assigned to a leadership role. Develop an accident investigation kit Many companies have developed portable accident investigation kits so that all the materials needed for the investigation are readily available. Possible items that should be contained in this kit are provided in the attached checklist. Determine the factual cause of the accident Prevent recurrence Track and show evidence of corrective action Trend leading and trailing measures It is important to keep in mind that the accident investigation should be focused upon the behaviors that contributed to the incident. Additionally, accidents that DO NOT result in injury or near misses should be investigated with the same rigor as those that have resulted in bodily injury. Establish a written process Regardless of the size of your operation, development of an established written process will help direct the expected behavior of the team following an incident, so that quality data can be gathered and shared with your claims handling Use an investigation team approach Depending upon the severity of the incident, it may be necessary to interview several different witnesses. For this reason, it is suggested that organizations develop a team of individuals that will be trained to respond to the scene of an accident. This is simply one reason, but the more important reason for creating a team approach is that you will ensure that there are several individuals that will be able to gather the necessary information. Information gathering is a critical part of the process and a sound investigation will aid in reducing loss costs following the accident. Claims adjusters will use this initial information to determine the appropriate levels of reserves that should be applied to each claim. 1

2 Your first order of priority is to survey the accident scene, looking for any additional hazards that might harm the injured party, emergency responders, customers or employees. Responding to the scene of the accident Your first order of priority is to survey the accident scene, looking for any additional hazards that might harm the injured party, emergency responders, customers or employees. Once you are satisfied that the scene is secure and that there are no hazardous conditions that could cause further harm, you should attend to the injured person looking for any life threatening conditions, such as, loss of consciousness, shallow or no breathing, irregular or no pulse or severe bleeding. Remember, protect the scene and do no further harm. Not every incident will necessarily be severe and require emergency services or care greater than immediate first aid. In many instances, the injured person will report the incident long after the time of occurrence. In these circumstances, effort should be made to visit the actual accident location and record what happened using fixed objects as points of reference. Timeliness is critical to reduce loss costs Increased insurance costs can be directly correlated to late reporting. Delayed claim reporting can delay treatment. Delays can also add to the recovery time and cost of medical care and wage replacement. It can also hinder returning the injured employee to work in a timely manner. Zurich and industry studies also show that delays in claim reporting can increase the likelihood of litigation. A best practice would be to report all claims within 24 hours. FINANCIAL IMPACT OF ACCIDENTS The table below illustrates the impact on revenue of on-the-job accidents in which a company has a deductible or self-insured reserve. The table below helps calculate a company s lost revenue, using a net operating profit margin based on accident costs (Table was developed by Zurich Risk Engineering for this article 2. In order to calculate the financial impact of an accident, the following formula is provided: a. Divide the direct and or indirect costs of the accident by your company s profit margin. b. Keep the profit margin in decimal form (for example:.05%) Accident Cost = Lost Revenue to offset accident cost Profit Margin % (ex. 5% =.05) Example $10,000 = $200,000 lost revenue to offset accident cost based on a 5% Net Operating Margin.05 In the highlighted example below, an accident that carries a cost of $10,000 in the left column is not paid for until the company having a 5% net profit margin sells $200,000 worth of goods. Accident Cost Net Operating Profit Margin by Percentage 1% 2% 5% 10% 20% $1,000 $100,000 $50,000 $20,000 $10,000 $5,000 $5,000 $500,000 $250,000 $100,000 $50,000 $25,000 $10,000 $1,000,000 $500,000 $200,000 $100,000 $50,000 $25,000 $2,500,000 $1,250,000 $ $250,000 $125,000 $100,000 $10,000,000 $5,000,000 $2,000,000 $1,000,000 $500,000 2

3 Management s main concern should be ensuring that every accident investigation is thorough and properly conducted. Everyone knows that accident investigation is important, but proper accident investigation is indispensable. So many times in reviewing a manager s written investigation from a store or distribution center we see entries like the following: Cause of accident: Employee was not paying attention. Preventive action: Pay attention. Follow up action: Told employee to pay attention. As a manager, you probably start asking yourself some basic questions. Why wasn t the employee paying attention? Was something on their mind or were they distracted? What was going on that led up to the accident? When more questions come up than are answered, the accident investigation has not been properly completed. Management s main concern should be ensuring that every accident investigation is thorough and properly conducted. When conducting an investigation, it is imperative to get to the root cause of the accident. In order to accomplish this, one must drill down deeper into the facts. COMPLETING THE FORMS AND CONDUCTING A ROOT CAUSE ANALYSIS There are three main elements of concern when completing an accident investigation. These include: 1. Incident description the brief description of what happened. 2. Analysis asking questions and digging deeper to get to the root cause of why it happened. Analysis: Root cause classification 3. Prevention Determination of what actions must be taken to eliminate the deficiency or deficiencies, which allowed the accident to occur. We will focus on element number two, analysis, as it is oftentimes left unanswered or is only partially completed. Elements 1 and 3 will be discussed in future editions of the newsletter. There are four areas to analyze when determining root cause: People, Equipment, Materials and Environment. These factors can contribute to creating hazards when they are inappropriate, sub-standard or allowed to deteriorate. (Alternatively, actions they failed to take.) The four factors can be referred to as PEME. People: Evaluate the actions taken by employees. (Alternatively, actions they failed to take.) Selection (Was the employee qualified for the task?) Training (Was the employee properly trained?) Enforcement (Are supervisors enforcing policies, procedures and rules?) Policies and procedures (If trained, did the employee fail to follow policies, procedures or rules?) Personal or job factor (Is there an external influence driving the employee s behavior?) Equipment: Evaluate the tools and machines employees utilize and look for unsafe or unhealthy conditions. Safe design (What risk factors were involved: force, vibration, repetition, inadequate guarding or barriers, defects, use of incorrect tools or equipment for the job, inadequate warning systems?) Appropriate purchasing (Are there enough tools, or are the correct tools available? Can the existing equipment handle the weight of the loads, its intended use, etc.?) Proper maintenance (Is equipment functioning properly? Do ladders need to be repaired or be replaced? Are periodic inspections of equipment performed?) 3

4 Materials: Evaluate the extent of employees handling materials unnecessarily and the wrong type of materials, products, and hazardous items, which can result in accidents. Safe design (Sharp edges, awkward sizes, weight, packaging, etc.) Safe arrangement (Are products piled up, stored incorrectly, stored based on the product flow to minimize handling, etc.?) Purchasing (Unit size should it be reduced in size and / or weight so that one person can handle, or increased so that equipment has to be used?) Condition/availability (Are different, less hazardous types of materials available?) Environment: Evaluate the physical environment and the nonphysical environment. Physical environment Buildings, enclosures, constraints on posture, poor clearance, condition of all surfaces where employees walk, lighting, noise, air quality, extreme temperatures, security, housekeeping (obstacles in path), overall atmosphere (rush to get job done, etc.) Non-physical environment Leadership style, workplace culture, marketplace factors, regulatory issues and organizational/ management systems which include policies, procedures and work practices. By pinpointing weaknesses and inefficiencies, failures and unsound practices, a good investigation can save a company thousands of dollars in accident related costs (both human and property). Well-spent time investigating today s accident may enable a company to prevent a serious and costly accident tomorrow. Once the root cause has been determined, then appropriate corrective measures can be taken to eliminate or reduce the chance of a recurrence. Always think prevention! Serious accidents can reduce profits significantly. THE HIDDEN COSTS OF ACCIDENTS An area of concern to all employers is the cost of accidents. Serious accidents can reduce profits significantly. Accidents have obvious, direct costs such as medical, hospital and rehabilitation expenses, workers compensation payments, and higher insurance premiums, but accidents also have, less obvious, indirect costs that are usually uninsured. Indirect costs can include any variety of financial impacts such as the loss of a talented and experienced worker, retraining costs, lower employee morale, decreased productivity and lower product and service quality. As a result, both directly and indirectly, accidents can reduce profitability. Total accident costs can be compared to an iceberg. The part of the iceberg that can be seen above the surface is like the smaller, direct portion of the total accident costs. A thorough examination of all costs associated with a serious worker accident can give you a better understanding. For example, let s say an employee falls from a rolling ladder in a retail store onto the concrete floor below and is seriously injured. Many people in the department stop working. Some rush to give first-aid to the injured person, while others call for help. When help arrives for the injured employee, do employees immediately return to work? Not always. They may continue to help or remain merely to watch. In this situation, all idle work time can be included as part of the total accident costs. Softer costs yet include when employees stop work to talk about the incident and commiserate over the cause. 4

5 As soon as the injured person receives proper medical treatment, the next step is to investigate the accident. All time spent on accident investigation and reporting should be included in the total accident costs. If the injured person misses work for only a short time, a company may be able to make up for the production loss by having the rest of the department work overtime. Overtime wages paid should also be considered part of the total accident costs. If the injured employee is gone for a significant time, say several months, a replacement worker may have to be hired/trained, and may not be as efficient as the previous experienced worker or manager. If tools and equipment are damaged in the accident and the job must be performed with less effective equipment, the output can drop further. All this reduced efficiency can represent more indirect costs. Indirect costs of accidents sometimes can be greater than the direct costs. A conservative estimate is that for $1.00 of direct accident costs, there is at least $3.00 of indirect costs. Some studies indicate the hidden costs can be 3 to 5 times more than the insured costs 3. Indirect and hidden accident costs to consider include: Loss of a key manager or employee Loss in employee earning power Unproductive time or recovery time needed by fellow employees, post accident Loss of efficiency due to break-up of crew Time spent interviewing replacement worker candidates Damage to tools and equipment Time that damaged equipment is out of service Additional time needed to load/unload trailers by inexperienced worker(s) Product damaged by fire, water, etc. Failure to fill orders Overhead costs (while work was disrupted) Miscellaneous There could be 100 other items of cost that appear one or more times with every accident. Just as there are many hidden costs due to accidents, there are hidden savings in accident prevention. This is the reason loss control is often used in the management of safety. Every accident you prevent saves direct and indirect accident costs. This is money that is added to a company s bottom line. Accident investigation kit checklist: Pens, pencils Tape measure Location of first aid kit and bloodborne pathogen response kit Camera Extra film or digital memory, or a disposable camera at a minimum List of emergency contacts and phone numbers Including 911 or local emergency service provider Local hospital or pre-arranged health service provider Spill response numbers Management contacts Accident investigation forms Witness forms Graph paper for mapping the area of the incident, if not included in the investigation form Business cards with call back numbers for the injured party 5

6 References 1. OSHA Safety and Health Program Management: Fact Sheets-Accident/Incident Investigation 2. Zurich Risk Engineering Table to calculate lost revenue based on accident cost and net operating profit margin 3. ASSE Direct and Indirect Costs of Accident, Professional Safety Magazine, April 2009, Pages A A (05/14) If you have any questions regarding the content of this publication, please send them to: The Zurich Services Corporation 1400 American Lane, Schaumburg, Illinois The Zurich Services Corporation Risk Engineering The information in this publication was compiled from sources believed to be reliable for informational purposes only. All sample policies and procedures herein should serve as a guideline, which you can use to create your own policies and procedures. Any and all information contained herein is not intended to constitute legal advice and accordingly, you should consult with your own attorneys when developing programs and policies. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this publication and sample policies and procedures, including any information, methods or safety suggestions contained herein. In the United States, risk engineering services are provided by The Zurich Services Corporation The Zurich Services Corporation