Management in both small and large organisations tends to underestimate the costs and impact of workplace injury.

Ironically, stationary purchase systems are in place to save hundreds of dollars, yet the mismanagement of return to work (RTW) can mean that tens of thousands of dollars are spent without a clear understanding of the issues or a sensible decision-making process.

When an organisation understands the costs associated with different approaches to injury management, it can make business-savvy decisions about what approach is best. There are strong business benefits to best practice injury management: there are also substantial health benefits for injured or sick workers.

How do you put a price on injuries?

The total cost of work injuries is made up of direct and indirect costs:

• Direct costs are payments made as a direct consequence of an injury. They include:
  • Direct premium costs -  ie, impact of the claims on WorkCover premium
  • Any lost wages - that are paid for by the employer before the WorkCover premium is activated
  • Health and safety fines that occur as the direct impact of the injury; and (in most cases)
  • A threshold medical expense due from the employer to activate the insurance claim.
     
• Indirect costs are more difficult to identify but can be much higher and are often ignored. They include:
  • Supervisor time
  • Human resources time
  • RTW and Health and Safety staff time
  • Staff replacement costs
  • Reduced productivity
  • Impact on company morale
  • Impact on customer service
  • Company reputation

Direct costs are easy to identify and are often the main focus when injury management systems are reviewed, but the indirect costs of poor practice are higher. In fact, in poor practice systems, indirect costs are estimated to be between 2-10 times the direct costs.

Research has identified two equations that can be used to get a reasonable estimate of indirect costs:

Indirect costs = Direct costs x 4

Daily indirect costs = absent employee's daily salary x 2  * ^{when the employee is on an average wage.}

Reducing the price of injury or illness

Research shows that best practice injury management systems save money and have better organisational outcomes.

An effective injury management system will:

• Reduce costs (both direct and indirect);
• Improve staff morale;
• Free up supervisors to concentrate on productivity; and
• Improve customer service through better staff engagement.

How do you implement a best practice injury management system?

The above information has been extracted from our Workplace Systems Handbook that is available to all members of Return to Work Matters. This is a comprehensive 157 page online handbook that supports return to work coordinators and senior management in designing a system that works specifically for your workplace.  The Workplace Systems Handbook includes design, implementation and checking systems.  In it you will find:

• Key player roles and responsibilities
• Assessing the current RTW system - How good are your systems?
• Eight injury reporting system 'must-haves'
• Size matters: Choosing the right system for your organisation
• Getting it right: The six key elements of best practice RTW culture
• Which statistics? Using data to analyse injury management performance
• Plan, implement and review: Strategic and business plans, action plans and kick starting the system.

Visit our secure online payment form and join today for instant access to the member-only handbook and many other resources.