Article 1: Human Resource Management of Disability Proneness

Article 2: Making Disability Management Accountable

Article 3: Give Feedback, Not Criticism

Article 4: What Skills Does a Young Person Need for a Rewarding Career?

Article 5: Workplace Injury & the Breach of the Social Contract

Human Resource Management of Disability Proneness

By Jasen Walker and Fred Heffner

"Without work, all life goes rotten, but when work is soulless, life stifles and dies." – Albert Camus

Particular employees in specific circumstances can be prone to develop disabling disease or injury. Disability proneness exists in every work population. Human Resources can prevent and manage disability proneness.

Several years ago, Human Resource professionals were introduced to the concept of "Integrated Disability Management." The adjective "integrated" draws attention to the fact that disability management can be most effective when it controls absence and prevents disability subsequent to both non-occupational events, such as short-term disability (STD) and the Family and Medical Leave Act (FMLA), and occupational accidents (i.e., workers’ compensation). In an integrated disability management (IDM) protocol, the company-provided employees’ benefits program is closely coordinated with the organization’s disability management and human capital strategies in an effort to reduce costs. It is important that insurance benefits integration be established. A Disability Management Program that does not make this significant connection between non-occupational and occupational insurance benefits is something less than state-of-the-art.

However, it is crucially important to emphasize that true "integration" of disability management programming involves not only benefits activation when necessary but, more importantly, coordination and linkage of the company’s human capital strategies that intend to not only prevent lost time but enhance productivity and attract new talent. Years ago, Risk Management sought cost control purely on the basis of fiduciary concerns and oversight. Managing risk with effective human capital strategies (i.e., Employee Assistance Programs and Return to Work Programs) took a backseat to properly investing insurance money and controlling benefits costs with aggressive claims handling and legal challenges.

Although the intended objective of an "integrated" program is return on investment, the critical outcomes of the "disability management" program are maintenance of productive workers and the reduction of lost time. Of these two sought-after results, controlling benefits costs and reduction in lost time, the latter is significantly more important. In fact, the reduction in lost time produces cost savings and addresses a critical issue facing most employers today: retaining qualified employees and attracting new employees. IDM works best when employee benefits plans are coordinated and human capital strategies are both proactive and effective in keeping valued employees productive.

To the point, effective IDM involves an equal emphasis on benefits plan coordination and continuous provision of disability prevention and management strategies such as good hiring practices, health and wellness, carefully crafted succession plans, employee assistance, conflict management and mediation, job accommodation when necessary, and effective transition-to-work programs.

Recognizing issues that cause lost productivity and absenteeism in the workplace and appreciating how effective disability management can reduce both financial and human loss in work organizations is enhanced with the HR professional’s understanding of the concept of "disability proneness." For the purposes of evaluating and upgrading existing Disability Management Programs, this "White Paper" provides HR professionals with responsibilities in disability management with information on the antecedents and consequences of disability proneness, a key target in state-of-the-art integrated disability management programming.

Background

Based on anecdotes in the literature and our own observations at CEC Associates, Inc., in more than 4,000 injury cases, we introduced the concept of "disability proneness" in February 2000. In this White Paper, we discuss the concept of disability proneness, its antecedents, its consequences, and how it might be proactively managed by the work organization that wishes to reduce absenteeism, curb disability costs, and increase general productivity.

Retrospectively, we have learned from our experiences of evaluating injured and ill workers for the purposes of either disability assessment or rehabilitation that an employee’s personality difficulties coupled with a troubled life situation can produce an "unacceptable disability," a phenomenon that was identified 40 years ago by two occupational health physicians (Behan and Hirschfeld, 1966). An "unacceptable disability" may be defined as a vocational maladjustment with or without lost time that is difficult to explain from a medical perspective and is nearly always tension-producing for both the employer and employee. Unacceptable disability often reveals itself in an employee’s lack of productivity, increased unhappiness, and interpersonal conflicts manifested in the workplace.

When unacceptable disability is followed by an accident or diagnosable illness, the so-called "explanatory event" (e.g., a work-related slip-and-fall accident), unacceptable disability can be transformed into an acceptable disability for the employee. With resultant lost work time sanctioned by the benefits system and paid for by the employer, the pre-accident occupational maladjustment is no longer the focus of concern. Instead, the accident or explanatory event, not necessarily the beginning but the tangible evidence of disability, serves to justify lost time and absenteeism.

Behan and Hirschfeld concluded that particular employees, under certain stressful conditions, could manifest "disability without disease." From hundreds of case studies, these physicians concluded that unacceptable disability required an accident or explanatory event in order to be acceptable, even though the occupational dysfunction (disability) began well before the identification of an injury (disease). Behan and Hirschfeld first identified "disability proneness," although they never used that term.

For many years, Behan and Hirschfeld, as well as others (i.e., Weinstein, 1979), proposed that unresolved anger, particularly among men who struggled with verbally expressing their frustrations, was an identifiable precursor to the so-called explanatory event(s) (occupational injury or disease) that made lost time tangible and acceptable. Four decades after the Behan/Hirschfeld proposal, Daniel Vinson and his research colleagues (2006, Annals of Family Medicine) found that higher levels of anger increase the risk of injury, especially among men. Our experiences have led us to believe that ignored or poorly handled anger, frustration, resentment, unrecognized depression in the individual employee, and interpersonal conflict often sabotage work/business productivity. These human experiences frequently manifest as disability proneness that actually seeks an accident or injury to justify and explain inevitable lost time, or what most professionals think of as vocational disability.

It has become evident in our thousands of case histories that disability proneness is a significant concept in lost work time and it not only reduces organizational productivity, but also drives disability costs. More importantly, we have come to believe that disability proneness can be recognized by front-line supervisors, co-workers, employee assistance personnel, occupational health professionals, and nearly any well-oriented company employee committed to proactive disability management. In addition, we conclude that disability proneness can be a target of human capital strategies and workplace interventions, such as employee assistance and managerial mediation programs in a comprehensive, integrated disability management program. In pursuit of this conclusion, we begin with the complex emotion of anger, and look, in turn, at depression, substance abuse, employee helplessness, and other work dysfunctions that can result in disability proneness. We close the paper with an understanding of how key organizational personnel, led by an HR professional, can assist individual employees and organizations to recognize and proactively manage the antecedents and causes of disability proneness.

Anger in the Workplace

Anger in the workplace is a problem. There is evidence that workplace anger is common. Nearly 25% of respondents to a 1996 Gallup survey said they were "generally at least somewhat angry at work." Anger is a strong emotion that is often misdirected. Workplace anger is commonplace enough that we sometimes conceive of the significantly frustrated employee as potentially "going postal." According to the National Institute for Occupational Safety and Health (NIOSH), the Bureau of Justice Statistics (BJS) reported that an average of 1.7 million people were victims of violent crime while working or on duty in the United States each year from 1993 through 1999. An estimated 1.3 million (75%) of these incidents were simple assaults while an additional 19% were aggravated assaults.

While estimating over 111,000 violent incidents annually, NIOSH introduced a 1993 study showing that workplace violence costs $4.2 billion each year. Although anger does not always result in workplace violence, it serves as a form of control over others or it lingers as a personal preoccupation—anger that causes employees to be tense and at risk for accident and injury. Furthermore, workplace bullying, a form of chronic anger, is a significant problem that has led to proposals for federal legislation to prevent it.

After analyzing data from more than 2,500 injured patients, Vinson found that anger was significantly associated with increased injury risk among men and women combined. Of course, it is difficult for the purpose of doing research to define anger, but it is evident in retrospective analyses that employee tension buildup and anger are frequently antecedents to, if not causes of, workplace injury.

The Effects of Depression

Another very common human experience often described as "anger turned inward" that can be linked to workplace dysfunction and disability proneness is depression. According to the National Institute of Mental Health, "in any given 1-year period, 9.5% of the population, or about 20.9 million American adults, suffer from a depressive illness." The economic cost of depression is estimated to be in the tens of billions of dollars (1993). Left untreated, depression is as costly as heart disease or AIDS to the U.S. economy, costing over $43.7 billion in absenteeism from work with over 200 million days lost from work each year. Depression can also be shown to directly contribute to lost productivity, while at the same time increasing treatment costs (1993). Depression ranks among the top three workplace problems for Employee Assistance professionals, following only family crises and stress (1996).

The Behan and Hirschfeld formulations of more than 40 years ago (1966) and Weinstein’s subsequent construct (1979) hold true today: in the buildup stage of the disability process, before an explanatory event (such as a workplace accident or depression, which can be observed as increased irritability, increased blaming, and decreased productivity) becomes the seed for "unacceptable disability." Employee depression need not go unrecognized and untreated. Competent and sensitive supervisors, leaders of health and wellness programs, and active employee assistance intervention can interrupt the disability process precipitated by depression.

Substance Abuse

The vast majority of drug users are employed. Unfortunately, when they come to work, they do not leave their substance abuse and related problems at the workplace door. According to the U.S. Department of Labor, of the 16.7 million illicit drug users aged 18 or older in 2003, 12.4 million (74.3%) were employed either full or part time.

Research indicates that between 10 and 20% of the nation’s workers who die on the job test positive for alcohol or other drugs. In fact, industries with the highest rates of drug use are the same as those at a high risk for occupational injury, such as construction, mining, and manufacturing. The National Institute on Drug Abuse has estimated that employed drug abusers cost their employers about twice as much in medical and workers’ compensation claims as their drug-free coworkers.

The term "self-medicate" can be defined as the process by which some individuals may abuse substances while attempting to relieve other problems such as depression, anxiety, pain, sleeplessness, or other symptoms of illness. Therefore, substance abuse can be a symptom of an underlying problem, and individuals experiencing job stress (from promotion, demotion, failure, reduced seniority or status, or other changes) and/or family tension may be inclined to self-medicate.

Employees self-medicate with prescribed medications, illicit drugs, and/or alcohol. Substance abuse is an international problem, and it most certainly finds its way into the workplace. Historically, Occupational Assistant Programs (OAPs) have focused on substance abuse, and with their evolution, OAPs have evolved into more comprehensive Employee Assistance Programs (EAPs) with "broader brush" concerns and targets.

Employee (and Injured Worker) Helplessness

After years of research, Martin Seligman, a psychologist at the University of Pennsylvania, discovered that when an individual believes he or she has no control over life’s events, he is likely to develop helplessness, to give up, and to experience depression. The helplessness may become chronic and refractory (hard/impossible to manage) depending on what Seligman terms as the individual’s attributional style. Attributional style is how one generally perceives and explains life events.

Building on the Seligman model, in 1992, we described the debilitating effects of injured worker helplessness and the importance of work organizations endeavoring to keep injured employees productive and in control of their work lives as opposed to separating them through the so-called benefits system, e.g., workers’ compensation. We have shown that "benefits" programs designed to aid injured or sick employees actually engender helplessness in them. Productive meaningful work is more therapeutic than the receipt of disability benefits.

Since formulating his theory of Learned Helplessness, Seligman, also a best-selling author, has realized the more beneficial aspects of focusing on learning optimism. Human capital workplace strategies and proactive Disability Management Program administrators would be wise to integrate (there is that word again) Seligman’s concepts of Positive Psychology with their disability management philosophies.

It becomes very evident that work organizations and workplace relationships can create situations that set the stage for an employee to learn helplessness. Moreover, for particular individuals who tend to believe that personal control and job outcomes are beyond them, the lost time system becomes fertile ground for "injured worker helplessness." Depending on the workplace dynamics and the individual’s attributional style, the employee can learn helplessness that will, in turn, make him or her vulnerable to injury or illness. Once the lost time process begins, the workers’ compensation or disability systems only add fuel to the process of learning helplessness.

The lesson here—keep people productive in meaningful work in which they perceive control over outcomes! Resist releasing them into the lost time system where they have little control and making them recipients of "benefits." Not incidentally, research has also shown that "non-contingent reward" or benefits programs can produce a phenomenon known as "learned laziness" (Walker, 1992).

Work Dysfunction

Rodney Lowman (1993) defines work dysfunction as a psychological condition in which there exists a significant impairment in the capacity to work caused either by the personal characteristics of the employee or by an interaction between those characteristics and working conditions. Organizations vary in the extent they create or ameliorate stress. Jobs can be badly designed; supervisors can be ogres or behave very aggressively in an attempt to meet their own needs. Co-workers can be petty, vindictive, and antagonistic. Work conditions, particularly those characterized by high levels of responsibility with limited opportunities for control, can have demonstrable effects on an individual employee’s health and well-being. On the other hand, dysfunctional workers themselves may not be aware of, or accept responsibility for, the extent to which their own shortcomings and personal characteristics may contribute to problems on the job. Work dysfunction is often a precursor to disability proneness. Integrated disability management programs can be instrumental in identifying work dysfunction and truly assisting individuals who may manifest it through poor work performance, interpersonal conflict, or absenteeism.

Workplace Conflict

People do not always get along in the workplace and workplace conflict is inevitable. And, while it is costly, it is also reducible. According to Daniel Dana, a management consultant, over 65% of performance problems result from strained relationships between employees—not from deficits in the individual employee’s skill or motivation. Value differences, racial and gender prejudices, personal needs and emotional issues, perspective, role conflicts, and power struggles are but a few of the reasons that interpersonal conflict is common in the workplace and why these issues become a major focus of attention for managers. Most organizations spend little time training people how to communicate, cooperate, and solve interpersonal conflict. Yet, a classic study found in the Academy of Management Journal (1966) determined that 25% of the typical manager’s time is spent responding to conflict, and that figure rises to 30% for first-line supervisors.

Ignoring interpersonal conflict at work has even greater consequences. Some results of unresolved conflict in the workplace are injury and accidents, lost productivity, increased client complaints, absenteeism, sabotage, increased use of sick leave, and "presenteeism." Presenteeism, as opposed to absenteeism, is the phenomenon of lost productivity of employees who have a high intent to turnover but who do not leave the organization. This situation is sometimes referred to as "retire on the job."

What Corporate Strategies Can Prevent and Interrupt the Dynamics of Disability Proneness?

There are a number of human capital strategies to deal with disability proneness that have been deemed essential to exemplary and truly integrated Disability Management Programs. To be "truly integrated," these strategies must not become corporate silos operating independently in a bureaucratic fashion. Most of these programs can be effectively operated by a disability management team, led perhaps by a Human Resource professional, and integrated not only with each other, but into the very fabric of the workplace.

1. Safety/Wellness programs

For mid- to large-sized companies, the essential correctives to injury proneness are aggressive and continuing Safety and Wellness programs. (For smaller companies, understanding the basics of what these formal programs include is the minimum, essential ingredient.) Ergonomics, smoking cessation, relaxation/meditation methods, stress management techniques, nutrition classes, and other such prevention strategies are made a regular part of the operational process. In Pennsylvania, for one, employers get a 5% discount on their workers’ compensation premiums if they implement safety programs. If the work organization maintained a philosophy that all accidents could be prevented, and successfully acted on that philosophy, no one would be injured.

2. Communication Skills training for all supervisory and front-line management personnel

Whether a supervisor is attempting to teach a concept or intervening in a dispute, how well that supervisor interpersonally communicates is key to continuing productivity and morale. The most vital element in effective management and supervision—communication—must be learned. Unfortunately, most of us are "taught" communication styles from our first supervisors, our parents, and more often than not, these are ineffective in the workplace.

In The Assertive Manager, Elaine Zuker writes, "Communication is the cornerstone of business. Managers use many different channels to communicate with others, and [they] spend between 50% and 90% of their day in communication of one-kind or another. Communication is a set of skills you learn."

Most communication between front-line supervisors and subordinates is verbal. Listening and sending messages are more complex than we realize. Listening is an art that takes some of us many years to learn. When another’s behavior is unacceptable to us, the messages that we send them to change their behavior can be destructive rather than constructive to the relationship. Of course, no one wants to be told that their behavior is unacceptable. Learning to listen is tough, and learning to confront appropriately is probably even more difficult. Instead of acquiring and consciously learning listening and confrontation skills, most of us who engage in interpersonal communication at work follow our idiosyncratic styles of relating to others, and whether we want to admit it or not, we probably communicate like our parents communicated with us.

3. Employee Assistance Programs

The EAP is a basic process designed to assist management to identify and resolve an individual worker’s problem that interferes with work. EAPs are most effective when they can identify and address problems before they manifest themselves as such. Effective EAPs provide "24/7" access (including telephone access). The functions of an effective EAP in chronological order are supervisory training, assessment, consultation, referral, and crises management. The stages of how these functions develop are awareness of the problem, predicting consequences, identifying causes, and applying corrective resources. The more effective EAPs are "broad brush" and recognize that personal problems that interfere with work behaviors are highly variable and not limited to substance abuse alone.

Since prevention and early intervention are the objectives, EAPs must be constructed with the philosophy that supervisors are on the front line. Supervisors must receive specialized training in how to recognize potential problems and when, where, and how to refer the worker to the EAP component for services. Training supervisors in small companies is as important as training them in larger companies: the difference is in the referral source. Referral sources for small companies are frequently community-based resources. Safety/Wellness and EAP coordinators are responsible for designing the supervisor training, initiating it, and conducting follow-up training in regularly scheduled intervals.

In fact, because many of the causative factors in EAP cases are family-related (including domestic violence), model EAP services are available to family members as well. That is, the family may be a cause of the problem and will have to be treated along with the employee. In any event and in all cases, the familial unit will be affected by the employee’s dysfunction and will have to be brought into the referral/treatment process to optimize outcomes.

The objectives for Safety/Wellness programs and EAPs for employers include:

The specific services of the EAP include:

The overriding interest for employers in operating Safety/Wellness programs and EAPs is to put prevention and early intervention policies in place. While the value of the services that flow from such policies may, on first blush, appear to benefit the employee most, the greater value accrues to the employer.

4. Managerial Mediation Training

Since anger plays such a significant role in workplace injuries, the single most productive preventative is managerial mediation. Generally, strife in the work site is between co-workers or between an employee and his or her supervisor. Since this condition is a commonplace event, there has been, for more than a decade, a strategy to deal with it. The strategy is called Managerial Mediation Training.

The specialized methods and materials of mediation in the workplace are those that were developed in conflicts outside of this environment. There are now mediation (conflict resolution) services available through most court systems, counselors specializing in marital/divorce conflicts, and even in nation-to-nation conflicts: President Carter (Nobel Peace recipient in 2002) brought in mediation specialists when he worked on the Middle East conflict.

These methods of mediation have long since been adapted to workplace disagreements and are called "Managerial Mediation Training" (Dana, 1990). Workplace supervisors are trained in the specialized methods of mediation and are required to bring the methods to those conflict situations that, if left unaddressed, would likely escalate. The process is designed to bring "mutual acceptance" to the disputants in the conflict.

Unmanaged employee conflict is arguably the largest reducible cost in organizations today. It is estimated that over 65% of work performance problems result from strained relations between employees—not from deficits in an individual’s skills or motivation.

Federal legislation, notably the Family Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA), requires disputants under the direction of the EEOC and the Department of Justice to engage in mediation before they will sanction litigation.

Lastly, we recommend that various members of an organization develop a team approach to Integrated Disability Management. When delivered in an integrated fashion and managed by an interdisciplinary team that is led by a Human Resource Professional, these human capital strategies can be the core of a proactive, integrated Disability Management Program. True integration of disability management requires primarily the delivery of human resource programs and secondarily activation of lost time benefits programs.

Summary

The purposes of this White Paper are to describe the various workplace dynamics and human situations that can result in disability proneness and to address the basic elements and methods of effective disability management. More importantly, we emphasize the importance of integrating effective disability management not only in terms of benefits, but also primarily through collaboration of human capital strategies. In this paper, we examine the genesis of disability proneness and posit strategies to prevent causes of disability proneness and ameliorate, if not eliminate, the process—one that begins prior to lost time, injury, or illness. It is hoped that an understanding of disability proneness and a greater appreciation of how truly integrated disability management can prevent and interrupt the process of becoming disabled will assist HR professionals in helping design, implement, evaluate, and upgrade Disability Management Programs.

We propose that work organizations, preferably under the supervision of a Human Resources administrator, organize and integrate the various personnel programs that can collectively combat the antecedents and potential causes of disability proneness. By assisting employees at risk with the right services in a timely fashion, disability can be prevented. Integration of disability management is as much an effective combination of employee help programs as it is an integration of benefits programs and insurance plans. With an emphasis on prevention of disability rather than benefit payment for lost time, Integrated Disability Management programs can reduce costs by having a significant effect on keeping members of a work organization healthy and productive.

References:

1. Walker, Jasen. "Disability Management and the Disability Prone Employee." Pennsylvania Self-Insurers Association Newsletter, 1990.

2. Walker, Jasen. ""Injured Worker Helplessness: Critical Relationships and Systems Level Approaches for Intervention." Journal of Occupational Rehabilitation, Vol. 2, No.4, December 1992.

3. Behan, Robert C. and Hirschfeld, M.R. "Disability without disease or injury." Archives of Environmental Health, Volume 12, May 1966.

4. Vinson, Daniel and Arelli, Vineesha. "State anger and the risk of injury: a case-control and case-crossover study." Annals of Family Medicine. 4:63-68. 2006.

5. Weinstein, M.R. "The concept of the disability process." Psychosomatics, 1978, 19, pp. 94-97.

6. National Institute for Occupational Safety and Health. www.cdc.gov/niosh/homepage.html.

7. National Institute of Mental Health. www.nimh.nih.gov.

8. "Fact sheet: alcohol and other drugs in the workplace." National Council on Alcoholism and Drug Dependence. www.ncadd.org/facts/workplac.html.

9. Seligman, Martin. "Learned helplessness." www.noogenesis.com/malama/discouragement/helplessness.html.

10. Lowman, Rodney L. "Counseling and psychotherapy of work dysfunction." American Psychological Association, Wash. D.C. 1993.

11. Dana, Daniel. "Talk it out! 4 steps to managing people problems in your organization. Human Resources Development Press, Inc. 1990.

12. Academy of Management Journal (1966). www.aom.pace.edu/amjnew.

13. Zuker, Elaine. The Assertive Manager: Positive Skills at Work for You. AMACOM, 1989.

Making Disability Management Accountable

by Fred Heffner, Ed.D., and Jasen M. Walker, Ed.D., CRC, CCM

Disability management initiatives will need to consider measuring cost-effectiveness. This article delineates how disability management can impact organizational costs and provides numerous ideas on how to construct cost monitoring systems while determining the overall accountability of the Disability Management Program.

INTRODUCTION

Disability in the workplace is expensive. The Census Bureau predicted that the total medical, income replacement, and productivity-level related costs of workplace disability would top $340 billion in 2000. That year, The Mercer Human Resource Consulting Group reported absenteeism costs were 14.3% of payroll. The US Department of Labor reveals that companies lose 2.8 million workdays each year because of employee illnesses and injuries. Disability management consultants cite studies that indicate of the 500,000 newly disabled workers each year who remain out on disability five months or more, only half will ever return to work. Workplace disability is expensive, but no planned interventions or solutions to preventing and managing lost time will be acceptable to business leaders unless the proposed programs offer more than anecdotal results to justify continuing support.

THE FULL COST OF DISABILITY

According to research models employed by Rutgers, the State University of New Jersey, in conjunction with UNUM and the Washington Business Group on Health, a framework for conceptualizing losses and expenditures has yielded information on what employers generally spend and how they spend it on workplace disability. For nearly 20 years now, it has been well documented that the full cost of workplace disability is composed of Direct Costs + Indirect Costs + Disability Management Costs.¹

Direct Costs are thought of as benefits for medical absence (sick leave), short-term disability, long-term disability, disability pension, workers’ compensation, the disability component of Social Security taxes, and miscellaneous accident insurance.

Indirect Costs are expenses that occur when an employer is absent due to a disability. These costs of disability, which are in addition to the more straightforward direct costs, include: 1) the added expense of using replacement workers; and 2) lower productivity typically resulting from initial use of replacement workers, lack of replacement, or disabled worker before after absence.

Disability Management includes a variety of activities and programs intended to prevent disabilities from occurring and/or to minimize the impact on employers and employees. Included in these costs are resources used for claims management, return-to-work programs, wellness programs, employee assistance plans, medical clinics, and safety programs. As noted, using this type of framework, The Mercer Human Resource Consulting Group has reported that absenteeism costs were 14.3% of payroll in 2000, and it was predicted that these costs would steadily climb.

Disability management expenditures have historically represented approximately 1/8 of total disability costs on average. Every organization is unique and commitments to disability management vary tremendously. However, Disability Management Programs (DMPs) have been utilized increasingly over the past decade by businesses seeking to control the cost of workplace disability. The Washington Business Group on Health, in collaboration with human resources consulting firm Watson Wyatt Worldwide, has surveyed large employers since 1996 regarding their DMP activities and concerns. The most recent survey results indicate that 43% of large corporations have implemented some form of integrated DMP, up from 23% in 1996. As the workforce ages, the incidence of disability among the employed population is expected to rise thereby challenging employers to maintain proactive disability management initiatives, programs that recognize the importance of prevention and the necessity to accommodate the needs of a very skilled, but aging workforce.

MEASURING THE "RETURN" FOR EMPLOYERS WITH DMPS

There are three distinct ways employers can achieve significant gains from operating quality DMPs:

·         Return-on-Investment (ROI)

·         Productivity increases

·         Improved employee relations

Each of these outcomes carries significant potential for employers. To determine whether their DMPs are cost effective, employers must accumulate and analyze relevant data. This can be accomplished by having an external audit or by facilitating interdepartmental cooperation through a committee designed to gather and analyze costs before and after a planned DMP development. The most fundamental and critical function of a quality DMP is to gather and accumulate data relevant to the programs. These data include, at minimum:

Direct Costs:

·         Benefits for medical absence

·         Short Term disability

·         Long Term disability

·         Disability pension

·         Workers’ Compensation

·         Number of absences (by department)

Departmental personnel can help a DMP planning committee by tracking and reporting the number of days lost for all employees secondary to injury or illness, the total number of claims per year, the average number of lost time days per employee, and the average length in claim duration, among other things. [A worksheet which might be used as a template for accruing data is given in Appendix A.]

Indirect Costs:

While the greatest value of a quality DMP derives from the Direct Cost savings, there are substantial Indirect Costs savings as well. The primary Indirect Cost savings are:

·         Expense of replacement workers.

·         Productivity differentials associated with using replacement workers.

Additional Indirect Cost savings that are not as easily assessed include:

·         Reducing the number and severity of accidents and illness as a results of disability management education through safety and wellness programs and other efforts to educate employees.

·         Reducing the number of employees seeking legal representation and litigation.

·         Increasing in-house efficiencies achieved by Human Resources and supervisory staff in dealing with accidents/illnesses immediately, comprehensively, and with heightened expertise.

·         Reducing lost-time duration through the aggressive application of transition-to-work programming.

·         Enhancing the loyalty and dedication of employee as they come to appreciate the interest of management in their welfare.

·         Decreasing the potential for non-compliance to federal, state, and local laws.

The resultant values of a quality DMP may be couched in positive terms as well. A quality program should:

·         Increase productivity.

·         Create a safer workplace.

·         Provide for fairer and higher quality heath care and treatment for employees.

·         And above all, ensure healthy and committed employees.

DISABILITY MANAGEMENT RATIONALE

Disability management brings together human resource managers, occupational health and safety personnel, employee assistance program coordinators, rehabilitation case managers, departmental supervisors, and union representatives in a collaborative effort to maintain employee health and productivity while ensuring legal compliance with government mandates such as the Americans with Disabilities Act and the Family and Medical Leave Act. When appropriate, internal legal experts or "house counsel" may be involved in disability management issues that confront a governing team. Interdepartmental cooperation can be time consuming and expensive, and in addition to the costs of these previously stand-alone human capital programs, a disability management team can absorb time and costs. However, coordination, and when appropriate, integration of human capital strategies, is necessary to reduce costs associated with injury, illness, and absenteeism. The cost of constructing and maintaining a proactive DMP will need to be part of the organizational rationale or justification for moving the program forward year after year.

RETURN ON INVESTMENT

Having baseline data for Direct, Indirect, and Disability Management Costs at the start of proactive disability management allows an organization to make comparisons with similar data following intervention and further allows the organization to make decisions regarding ineffective and/or unnecessary strategies implemented during a comprehensive disability management protocol. For example, organizations utilizing contract rehabilitation case managers

Employers are becoming increasingly dissatisfied with anecdotal results to justify their support of DMPs and are more and more insistent on verifiable measures (the so-called "metrics") for these programs. There are no national benchmarks or standards for evaluating DMPs. Individual employers need to develop and rely on their own evidence-based practices. It should be noted that Human Resource professionals are not necessarily supportive of return-to-work commitments and disability management programming. Top level management will need to recognize this reality and work through any internal resistance operationalizing disability management. Another caveat is that older workers will have higher incidences of chronic illness, but these realities are offset by the experiences and loyalties these workers bring to the organization.

Each of the costs/benefit domains identified above carries significant potential for employers. To determine whether their DMPs are cost effective, employers must accumulate and analyze relevant data. The most fundamental and critical function of a quality DMP is to gather and accumulate data relevant to the programs. These data include, at minimum:

Monetary Costs:                                                                                                        

^{Productivity Gains:}

^{Employee Relations Improvements:}

In addition to these kernel measures, there are factors that might be classified as accruing to Administrative efficacies. These measures would include:

·         Claim and benefits analysis (timeliness, accuracy)

·         Program administration costs

SETTING DISABILITY MANAGEMENT OBJECTIVES

Employers desirous of gaining control of their DMPs for the purpose of realizing significant cost savings should start by deciding what they hope to gain from their program. The Weyerhaeuser Corporation, a long-time exemplary of such programs, implemented their program with the following objectives:

·         A significant decrease in the number of employees injured on the job.

·         An increase in return-to-work rate and fewer lost days.

·         An improvement in the quality of services provided to injured workers.

·         A reduction in workers’ compensation costs.2

It is important to note that Weyerhaeuser and other exemplary programs felt that they were not well served by "third party administrators" and subsequently brought all of their disability management planning and administration in-house. Employers seeking full, and quality, control of their DMPs will be well served by emulating the Weyerhaeuser model in respect to third party services.

When they decided twenty years ago that gaining control of their DMPs was an important thing to do, several companies like Weyerhaeuser made public the results they achieved by implanting carefully crafted DMPs into their operational procedures. Some selected outcomes (dating from their inceptions) of implementing in-house DMPs include:

      A. The Weyerhaeuser Company:

1. Reduced its workers’ compensation claim rate from 24 per 1000 employees in 1985 to 15 per 100 employees in 1989.

2. Reduced its lost-work-day rate from 102 per 100 employees in 1985 to 53 per 100 employees in 1985.3

B. The Walbro Corporation:

1. In 1985, invested $100,000 in a revised DMP and returned the investment in 10 months.

2. Reduced its workers’ compensation cost by more than 55 percent the first year of the revised program.

      C. The Will-Burt Company:

1. Reduced its workers’ compensation costs from $200,000 in 1985 to $9,000 in 1990

2. Medical costs declined from $1,961 per employee in 1985 to $1,993 in 1990, even though the medical cost index increased by 83% during this time period.

1. In 1993, the Philadelphia self-administered workers’ compensation program of the ThyssenKrupp Budd Company was renovated using the ideas presented in this compendium.
2. Stephen J. Fireoved, Esquire, led the DMP over the next 10 years using an interdisciplinary team approach as recommended by CEC Associates.
3. 90% of participants (injured workers) in that program transitioned to full duty with no ongoing restrictions, and that particular location of the Budd Company essentially functioned without the support of a third-party administrator.⁴

CURRENT STATISTICS

For employers who want more extensive data on disability management, CEC Associates, Inc., has found that the three most prolific sources of the costs factors in disability management programming are:

While the format by which they report on disability costs for employees varies as their Web sites upgrade from time to time, there is a wealth of information on costs available on these three sites. The National Business Group has an affiliation with Wyatt Watson which does regular employer surveys, and Liberty Mutual also conducts employer surveys and reports their results. Currently, the Liberty Mutual Web site has a "Lost Productivity Calculator" that can be useful in ascertaining costs.

References

¹ UNUM Life Insurance Company of America, "The Full Cost of Workplace Disability Study," 1989, 1992, and 1996.

²Akabas, Sheila H., Gates, Lauren B., and Galvin, Donald E. Disability Management: A Complete System to Reduce Costs, Increase Productivity, Meet Employee Needs, and Ensure Legal Compliance. AMACON (A Division of American Management Association). New York, 1992.

³Akabas, Sheila H., Gates, Lauren B., and Galvin, Donald E. "How Weyerhaeuser Improved Its Workers’ Compensation Program." Disability Management Sourcebook. Washington Business Group on Health, 1989.

⁴Fireoved, Stephen J. "Development and Implementation of a Successful Disability Management and Return To Work Program." Presented to the Philadelphia, Pennsylvania Association of Occupational Health Nurses, November 9, 2004.

APPENDIX A: Quantifying the Cost of Employee Disability

The following units can serve as a guide for employers to establish base-line data in respect to the cost of employee disability. The recommendation is that data be gather on each of the units and then accumulated for management review. (Employers may choose to add additional cost factors. Data may be –should be-- divided by such factors as salaried employees, hourly employees, specific department employees, etc.)