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Dec 5, 2010

Organizational Development, Leadership, and It's Impact On Experience Mods

Have you often wondered, (I know I have), just what causes employees to exacerbate an injury and lay claim to financial damages from additional body parts that were not part of the original injury on the First Notice Of Injury Report?

For example, it is not uncommon to see a disgruntled employee lay claims to psyche claims from a simple injury that had no causal effect to a psyche claim. Not only is the employer faced with defending against this, but the reserves established by the insurer for experience rating purposes are based upon the estimated future cost of the claim. So before the employer even gets started on disproving the allegation, they can see spikes in the ex mods from just such a claim.

What causes employees to file claims unrelated to the original injury?

Towers Watson releases an annual survey which surveys the overall workplace environment. The 2010 survey was based upon questions asked of 20,000 employees worldwide and is one of the more encompassing surveys completed for evaluating employee morale and the concerns that employees face in today's uncertain times. Here are some findings from the survey.

50% agree their leaders are effective at leading the company.
38% of the employees surveyed think their leaders are effective.
47% think their leaders are trustworthy
42% think their leaders inspire and engage them
59% think their direct manager is effective, but 53% question whether their managers have time for the people aspect of the job
61% questioned how well managers deal with poor performers.

Under normal circumstances, 15% of the workforce goes to work in some type of pain each day. (Not necessarily physical pain, but emotional pain from a job, or environment that doesn't inspire them to give their best each day). 70% of employees are satisfied with their job, satisfied with themselves (the person), and satisfied with their environment. 15% of the workforce goes to work in gain each day where they feel they are in the right environment, have the right skills for the job they are doing, and have a continuous positive experience with their boss and co-workers.

If we have a poor environment, person with lower self esteem, and the wrong fit for the skills the employees is asked to bring to work each day, is it any wonder why they would feign an injury and seek additional remediation from their employer?

Organizational Development and Leadership Training is often absent from the small to mid sized employer where workers compensation claims can have a significant impact on the companies bottom line. Better understanding the pain thresholds that exists within an organization can give us a window into the souls of the employees and the environment in which they work. Additionally, the tools for conducting these surveys can create a benchmark for us to measure the positive or negative changes in energy over time from an employer's implementation of a new culture. A new tool has come on the market that allows employers to mathematically measure this data and change in culture over time.

A retired NASA mathematician, (visit his site at has created an amazing statistical tool for employers and employees to understand and assess how employees view their job, themselves, and their environment. This assessment (The Job Person Environment Assessment or JPEA), mathematically assesses 206 statements made by the employees to gauge their perception of their job, the environment, and their desired skills as they relate to the job they are performing. This data is then mapped out on a chart where the energy is shown comparing the job fit against the employees personal preference and motivation, the environment the leadership has created, and the person's personal preferences for managing their own lives. It is a revolutionary technology and very good tool for employers that wish to know just how the employees perceive their employer and the environment.

Since this tool measures human energy (which can be either a drain, or gain on the bottom line), it allows an employer to create a written baseline from which to gauge future results in cultural change. Additionally, this tool allows them to create custom tailored Leadership and Organization Development strategies that will match up employees and employers goals more strategically.

If an organization is paying 1M in current workers compensation premiums and has an experience at 150%, a reduction of the mod to 75% will have an impact to EBITDA or 500K. At a 5x multiple, that represents an improvement in valuation of nearly $2,500,000. This potential improvement can be used as a gauge to determine whether the costs of implementing a new Organization Development and Leadership plan is worth the expense.

John Perry can be reached directly at, or at 661-949-7788.
Colin Baird can be reach directly at or 661-332-0382.