Fit company = fat profits
Our client's success story
By Kory Dahlberg
It’s a cold Wednesday morning, and I arrive at Salamone Builders, one of our agency’s clients, to attend the monthly safety committee meeting. As risk manager for Prime Meridian Insurance Group, I serve as an active member of the committee. Most of the time, these meetings involve brainstorming and planning. Today, the president of Salamone Builders, Michael Cummings, will hear some good news: The dollar amount saved due to proactive risk improvement is larger than we had anticipated.
In today’s economy, employers are constantly trying to find ways to trim the fat within an organization. That is why Michael Cummings is not surprised when people raise their eyebrows at the company’s decision to invest in safety and wellness initiatives. While these initiatives traditionally have been viewed as extras or perks for employees, Salamone Builders believes these initiatives to be essential to the organization’s continued success.
Located in Aurora, Illinois, Salamone Builders is a large carpentry contractor with about 300 employees during its peak summer season. The company works on commercial projects such as assisted living facilities and condominiums throughout the Chicago area. Due to its size, the company is able to absorb a majority of its workers compensation costs by participating in a large-deductible comp program. Facing both frequent and severe injuries drove upper management to evaluate and start taking control of these incidents.
Working as a team
The construction industry operates in an environment where decisions and people move quickly. It is not uncommon for contractors to respond reactively to the situations they face. In the past 15 months, Salamone Builders has shifted to take a proactive approach by developing a safety committee that meets monthly. The committee’s mission is to design a path to best-in-class contractor status while protecting the company’s most prized asset: its people.
Michael Cummings and his management team have never been reluctant to invest in safety. When employees continued to cut their hands on sheet metal despite the mandatory safety glove policy, the safety committee reached out to employees to understand the root cause of the injury. It seems that employees found the gloves uncomfortable and that foremen were not enforcing personal protective equipment policies. After finding a more comfortable fit that stayed cool during summer months, Salamone Builders purchased new safety gloves for all of its employees and made certain they received disciplinary action when they neglected to wear them on the job.
This is just one of the many changes Salamone Builders has implemented since forming the safety committee. The company has also provided reasonable-suspicion training (relating to drugs and alcohol) to all of its foremen and completely revamped its hiring process to include post-hire physicals, drug testing, and a comprehensive new-hire safety orientation. Using actuarial software, Salamone Builders’ workers compensation losses were projected to be $285,750 for the 2007 policy year. When that policy year expired, comp losses totaled less than $82,000. The 71% reduction in workers compensation costs can be attributed to the company’s progressive loss control initiatives.
For 2008, the safety committee decided to channel 2007’s savings into a safety incentive program that rewards foremen for running safe job sites. They’d like to continue to communicate the importance of foreman accountability, and they know this will only make the company stronger and more profitable in the years to come.
Improving employee vitality
Ed Boltz, a principal with Prime Meridian Insurance Group, has witnessed Salamone Builders’ transformation from reactive to proactive risk management programming over the past few years. “What makes Salamone Builders unique is their compre-hensive approach not only to improving the traditional safety programs, but also to addressing the more difficult areas of employee health and fitness,” Ed explains. “Many employee injuries are not really accidents per se, but the consequence of an employee not being physically fit and capable of doing the work properly. Lower back injuries, rotator cuff tears, and knee injuries are often a result of poor conditioning and deterioration of the lean muscle mass and joints associated with the aging process. This deterioration can be slowed and reversed in many cases through proper exercise and conditioning.”
Duke University Medical Center discovered in a recent study that obese workers (those with a Body Mass Index [BMI] greater than 30) are twice as likely to file a workers compensation claim as non-obese workers. Average medical costs per 100 injured obese employees were $51,019 compared to $7,503 for non-obese injured employees. Obese employees also took 13 times the number of days to return to work after a workplace injury or illness.
While obesity correlates with workers compensation injuries, it also has a significant influence on health insurance costs. In the past, companies did not consider the impact on their costs of employees’ lifestyle choices like smoking, lack of exercise, and unhealthy eating. Today, however, employers increasingly are becoming aware of how they are affected financially by the choices their employees make before they arrive at work and after they leave.
Enlightening our customers about the rising costs of poor lifestyle choices makes clear the benefits of a “well workplace.” In order to place a real dollar cost on unhealthy employees, Prime Meridian uses obesity cost calculators that incorporate the wages and Body Mass Indexes of our clients’ employees. Using these software programs allows the agency to determine the costs of health insurance premium increases and lost work time associated with the various BMI levels.
Several years ago, Salamone Builders made a strategic choice to offer a consumer-driven health plan (CDHP). As a result, employees are more aware of health care costs and are able to make informed decisions regarding their lifestyle. Unlike traditional health plans, many CDHPs offer their members wellness programs that encourage healthful living. Because healthy employees mean fewer claims, insurance carriers gladly reward members with financial incentives for behavior such as participating in 5K runs, completing an online Health Risk Assessment, being a non-smoker, and completing a Vitality Check (where physical measurements and a blood sample are taken to determine blood pressure, cholesterol, glucose, and BMI).
Earning rewards for healthful choices
Sue Coleman, office manager for Salamone Builders, uses the points earned from her health data to purchase iTunes gift cards for her husband, John, a self-declared music junkie. She says she’s “sick of seeing 99-cent charges on our bank statement!” Others are saving for weekend getaways at the Ritz-Carlton. Salamone Builders’ “Vitality Program” recognizes the fact that individuals are motivated to participate in healthful activities by offering all kinds of rewards. Successful wellness programs offer members hotel vouchers, frequent flier miles, movie tickets, and magazine subscriptions, as well as functional and desirable merchandise. Salamone Builders’ wellness program also provides rebates to subsidize some or all of its employees’ gym membership dues, weight loss programs, and smoking cessation programs.
After completing a successful 12-week session of Boot Camp at Life Time Fitness, Michael Cummings decided to improve company vitality in a very creative way. Salamone Builders offered its employees the opportunity to work out at Life Time Fitness and subsidized their enrollment in Boot Camp.
For these employees, the day starts at 5:30 a.m. when they report for duty to Life Time Fitness personal trainer “Drill Sergeant” Alan Costello. Sergeant Costello encourages participants to run with weights above their heads, carry people across swimming pools, or complete as many pushups as possible within one minute. “It’s hard work, but we benefit from the camaraderie,” says Cummings. “The team spirit creates an energy that carries us through some of the long days during the busy construction season.”
Cashing in on wellness
Salamone Builders’ health plan is modeled to provide coverage when medical assistance is necessary, but it also increases employees’ vitality while they are well. A study titled “The Case for More Active Policy Attention to Health Promotion” found that, on average, one corporate dollar spent on corporate wellness and prevention yielded $3.48 in direct health care savings. Salamone Builders has found that for every $1 invested in employee wellness, a corresponding $7 per employee is saved in insurance costs. The company also realizes that the indirect costs related to absenteeism, workers compensation claims, and presenteeism (the act of coming to work without being productive) will continue to decline significantly over time.
Board chairman Joe Salamone is very pleased with both the direct and indirect returns on this investment. “Vitality is paying big dividends back to our company, our employees, and their families—both financially and by improving the quality of people’s lives,” he declares.
While some companies continue to believe that the only way to stay afloat in today’s economy is to lay off workers, reduce employee benefits, and scale down operations, Salamone Builders will continue to invest in the well-being of its employees. That is why to Salamone Builders, the phrase “trimming the fat” will always invoke images of their foremen running on treadmills, and not the dreaded pink slip. *
The author
Kory Dahlberg is a risk manager and corporate wellness consultant for Prime Meridian Insurance Group. She has received OSHA certifications, with a specialization in the construction industry. Prime Meridian Insurance Group (www.prime-meridian.com) is a commercial lines agency located in West Chicago, Illinois. The agency targets middle market clients in a select group of industries throughout the Midwest. Dahlberg can be reached at KDahlberg@Prime-Meridian.com or (630) 443-7300.