More contractors finding that safety pays


djc home \| top \| special issues index April 24, 1997

More contractors finding that safety pays

By PATTI IMHOF
IMCO General Construction

For years, managers at Bellingham's IMCO General Construction have been holding weekly safety meetings, handing out "Safety Team" jackets to accident-free workers and recognizing the safest workers on projects and at annual events. The heightened awareness has been encouraging, but IMCO Safety Manager Janie Ross-Johnson admits it's been hard to realize a specific return on safety investment.

No longer. Now IMCO owners Frank and Patti Imhof are discovering a more direct "safety payoff" in their bottom line, thanks in part to their involvement in the Associated General Contractors' "Group Retro" program and a healthy insurance premium refund check.

Group Retro is a tightly supervised plan that calls for strict claims management, safety and return-to-work programs to reduce accidents and claims. The plan opens the way for participating employers to earn refunds on their Workers' Compensation industrial insurance premiums. Refunds are awarded when the developed claims costs are lower than the premiums paid in.

IMCO led the 80-member group by collecting a refund of well over half its Workers' Compensation industrial insurance premiums (58.3 percent) during the past year, the highest return since the start of the Retro program four years ago. In fact, IMCO recently received an award for "top performer" in the group.

In all, a third of Group Retro participants have received over 50 percent of their premium back, while two-thirds have received between 30 and 60 percent of their premium. In addition, the average developed losses of Retro program members was 68 percent during 1996. IMCO'S during the same period was a negligible 1 percent. Taken together, Retro members shared a $3.85 million refund this past year, the largest ever for the AGC.

The Group Retro refunds have helped IMCO to build a larger safety program.

"Naturally, the refunds mean a lot to us," said Ross-Johnson. "Additionally, our improved safety record helps us bid work more competitively. It also benefits the workers directly, because we don't have to pull as much money out of each paycheck for L&I. It's a win-win-win situation -- for clients, for workers and for the company as a whole."

Tough requirements

Retro membership isn't for everyone. Plan participants are evaluated by an independent underwriter, who carefully screens the applicant's prior three-year loss record. Successful Retro applicants must also first make the AGC Safety Team (a safety and accident prevention program), and they must also implement a return-to-work light-duty policy and employ a claims-designated contact person.

"No one ever said it would be easy," said Ross-Johnson. "But we've definitely seen the payoff. Overall, the Retro awards have given us dollars and cents encouragement, maybe even a framework to build a larger safety program."

For instance, the return-to-work light-duty policy is designed to help workers who experience job-related mishaps get back to work more quickly and relearn safe work practices. Ross-Johnson says the program is much better for workers, as well as for the company overall.

IMCO managers say the biggest benefit of their safety success is the opportunity a safe work environment provides for communicating the value of individual employees.

"It's allowed us to establish long-term relationships and common goals with high-caliber employees," said Ross-Johnson. She also points to other key factors in the safety success story:

Maintaining a drug-free workplace, which was instituted in 1991.
Managing claims.
Introducing a return-to-work program.
Recognizing employees who have safe work practices.

The end result is a healthier bottom line and a stable, well-trained workforce.

"Following through on these things has helped us become more productive," said IMCO owner Frank Imhof. "We can prove that running a safer operation is good for our people, plus it's a darn good investment. We're talking about people's lives. But knowing that safety is also a good investment doubles the incentive."

The firm has also seen a decline in employee lost-work days at IMCO, due in large part to efforts taken since 1991 to become a drug-free workplace. The results have been dramatically clear: lost work days dropped from 205 in 1989 to only three in 1992 and seven in 1996. At the same time, the average number of workers increased more than 50 percent, from 65 in 1989 to 125 in 1996.

Since the firm has become drug-free, it has lost less time, workers are becoming more productive and we've been able to improve our workforce while increasing the volume of work we complete annually. The safety payoff has become even more obvious with the cash refund from the Retro program. What's good for individuals and their safety is ultimately better for the company -- and the clients.

Ross-Johnson is obviously pleased with IMCO's success, but she's not slowing down. "We're going to continually reappraise our systems to get better at safety. A substantial portion of the Retro refund is already earmarked for expanded worker training and education."

In addition, IMCO has recently joined a Retro program which has even more stringent guidelines than its former program, assistance by a third party administrator in claims management and multiple training resources.

Frank Imhof agrees with his safety manager, but from the perspective of a contractor with many years of experience in the business:

"Janie tells people we have a new awareness for safety. I just call it 'company pride.' Our open-shop environment fosters strong company loyalty among employees. And it doesn't take new workers very long to figure out how important safety is around here. I am really proud of their attitude and this accomplishment."

Patti Imhof is co-owner of Bellingham-based IMCO General Construction.

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