After labor and materials, insurance is the third highest cost for a construction company.  That’s why it’s important to understand — and monitor — your experience modification rating (EMR).   EMR has a direct correlation to how much you pay in Workers’ Compensation Premiums. The lower your EMR, the less you pay in premiums.

But to be able to use your EMR to effectively control costs, you must first understand how it works.

What is an EMR?

In a nutshell, your EMR compares your workers’ compensation claims experience to other employers of similar size operating in the same type of business.

It’s the method for tailoring the cost of insurance to the characteristics of a specific business, but it also gives that business the opportunity to manage its own costs through measurable cost-saving programs.

How is EMR calculated?

The actual process of calculating the EMR is sometimes complex, but the purpose of the formula is pretty straightforward. Here’s how it works: your company’s actual losses are compared to its expected losses by industry type. Factors taken into consideration are company size, unexpected large losses and the difference between loss frequency and loss severity.

EMR usually takes into account three years of claims history, excluding the most recent policy year. For example, the EMR for a policy period beginning January 1, 2018, includes claim costs for the policy periods beginning:

– January 1, 2014

– January 1, 2015

– January 1, 2016

Who gets assigned an EMR?

Not every business is large enough to have an EMR.  Your workers’ compensation premium has to be above a certain dollar threshold specified by your state before your organization will be assigned an EMR. This minimum premium amount is usually around $3,000-$7,000.

What are EMR Classifications?

A workers compensation classification represents a group of employers that conduct similar types of businesses.  Classifications are usually represented by four-digit codes.   Examples of classifications are Roofing (5150) and Plumbing (5183).  All employers assigned to the same classification pay an identical rate (if they are located in the same state).

Classification systems are based on the idea that workers employed by similar businesses are prone to similar types of injuries. For example, employees who install roofs are subject to injuries caused by falls, burns, sun exposure, and lifting heavy objects. The types of injuries these workers sustain are relatively consistent from one roofer to another. Thus, all employers whose business consists of roofing installation are assigned to the same workers compensation classification.

Who Calculates Your EMR?

Your EMR is calculated by the National Council on Compensation Insurance (NCCI) or in some states, by an independent agency.

When the NCCI or a state bureau issues an experience modifier, the agency provides an experience rating worksheet. The worksheet shows how your modifier was calculated. It lists the relevant class codes and applicable payrolls, claim numbers and losses used in the calculations. Note that if you have incurred a large loss, only a portion of that loss is typically included in the calculation of your modifier. If you have incurred several small losses, all of those losses might be included in the calculation.

Pro Tip: Your modifier is generally more adversely affected if you have incurred numerous small losses rather than one large one.

How does my EMR affect my premiums?

Your EMR represents either a credit or debit that’s applied to your workers’ compensation premium. An EMR of 1.0 is considered to be the industry average. While an EMR of more than 1.0 is a Debit Mod, which means your losses are worse than expected and a surcharge will be added to your premium. An EMR under 1.0 is a Credit Mod, which means losses are better than expected, resulting in a premium discount.

Here’s an example of how this works:

Premium

EMR

Modified Premium

$100,000

.75

$75,000

$100,000

1.00

$100,000

$100,000

1.25

$125,000

As you can see, an EMR of 1.25 would mean that insurance premiums could be as high as 25% more than a company with an EMR of 1.0.

How can you achieve & maintain a low EMR?

Of course, this is the question every business owner wants to know the answer to. So here is a list of things you can do to be more proactive when it comes to lowering your EMR:

– Contact your insurance agent or review your policy documents to verify your current EMR is accurate. You might be paying more (or less) than you should due to incorrect or incomplete data.

– Remember that EMR is influenced more by small, frequent losses than by large, infrequent ones. So the fewer losses you have, the better.

– Create a strong, well-documented safety program that incorporates best practices such as toolbox talks, daily safety analysis, frequent inspections, and training.

– Use analytics to determine ways you can be proactive about injury prevention.

– Also create or improve an effective return to work program to help lower your EMR.

– Make sure that all injuries are reported promptly. Studies reveal that prompt injury reporting reduces the cost of claims.

– Implement an active claims management program to manage outstanding reserves and focus on efficiently resolving open claims.

– Train front-line supervisors and managers how to manage injured employees. Supervisors play a key role in managing the injury and recovery process. When there’s a good relationship between the injured employee and the supervisor, chances are you’ll get better results.

– Practice due diligence during the hiring process. Hiring an employee who is not fit for the essential functions of the job will increase the risk of an injury. Of course, you’ll want to take the appropriate, and legal, steps in your “screening” process.

See How Harness Can Help Your Company Lower EMR & Save Money


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Posted in Safety, Tools

Why are there so many darn emails?

Since it came of age in the mid-1990’s, email has been the most heavily used communications tool in business.  Over 269 BILLION emails are sent and received worldwide each day and the average office worker receives somewhere around 121 emails per day.  Emails were useful because they allow for (usually) short concise exchanges with co-workers, clients, and more.  But is email still the best method for all types of communication?  Might there be better tools out there?  Finally, what would be the advantages for construction companies in particular that choose those different tools?
 

The average employee spends 40% of their working week dealing with internal emails which add no value to the business.

 
Do a quick scan of your inbox.  How many of your email messages are conversations amongst your team?  How many of them are communications with outsiders like suppliers or clients?  Independent research by Atos Origin highlighted that the average employee spends 40% of their working week dealing with internal emails which add no value to the business. In short, your employees might only start working on anything of value from Wednesday each week.  US-based studies by Siemens Group point to the value of this “lost” time.  They estimated that a company with 100 employees loses the equivalent of $528,443 each year.
 

Organizations with effective communication are 3.5 times more likely to outperform their peers.

 
Since email is the primary communications tool for most companies, if a company has a problem keeping workers engaged, they MUST consider that the method of their communications could be a contributing factor.   A lack of engagement certainly seems to be a factor.  According to a 2015 Gallup study, only 32% of US employees feel engaged with their companies.  This disengagement leads to poor productivity, high turnover, and what could be aptly described as a negative company culture.  A separate study found that moving a “disengaged” employee over to “engaged” could add over $13,000 in value to your company.  In the construction sector, where labor shortages are rampant, the need to keep workers engaged is even more important.  Companies must strive to improve communication if they want to attract & retain engaged workers.  And it’s not even just about engagement.  Organizations with effective communication are 3.5 times more likely to outperform their peers.
 

Introducing Slack

In 2013, a small Vancouver, Canada based company called Tiny Speck decided to stop development on a failed online video game and instead launch an innovative chat-based communications tool they had built to facilitate communications between their Canadian & US teams.  Called, “Slack” as an acronym for “Searchable Log of All Conversation & Knowledge”, the service grew to become one of the fastest growing products in the history of software.  Slack is now in use by over 8 million people every day.

“The world is in the very early stages of a 100-year shift in how people communicate, and we’re determined to push the boundaries,” said their founder & CEO, Steward Butterfield.

Slack is a cloud-based communication tool so it works on all types of devices and allows teams to communicate with each other by sending short messages to the whole team, subsets of the team, or individuals.  Over the past few years, messages have become much richer than just text and Slack is now used to exchange documents, images, and other information seamlessly.

Teams across the world have found that Slack helps them:

  1. – Collaborate online just like they would in person.
  2. – Bring the right people and information together in one place.
  3. – Communicate efficiently, stay connected, and get things done faster.

At Harness, we use Slack to focus our internal communications around “channels”, a core feature of Slack.  For instance, we have a channel for discussions between our development team, a channel for marketing, and a channel to collaborate on customer issues.  We even have a channel where we post our latest sales wins.  Channels can be either public, meaning they’re available to anyone in your organization or they can be private.  Generally though, Slack works best when the majority of communication happens in public.  Channels all have one thing in common; they contain the entire message history of the group in a searchable archive.  This means, for example, that any new member of our “development” channel could get insights from past discussions or search to find a specific topic of discussion without having to ask a colleague.  When a more specific conversation is needed, team members can direct message each other, start a video chat, or connect via phone right from within the app.

Slack integrates with nearly everything which makes it even more valuable.  For example, our “new-deals” channel at Harness is populated with messages automatically whenever our CRM system records a won opportunity.  Sharing good news has never been easier.

Slack In A Construction Context

Slack’s early adopters included digital agencies, software companies, and other “high-tech” industries but that doesn’t mean it isn’t also a great tool for construction companies.  How many of your company’s internal discussions revolve around individual projects?  If you use Slack, each project could have its own “channel”.  All discussions for that project now have a central location accessible to anyone on your team.  Things you might put into Slack could include:

  1. – Change order details & approvals
  2. – Daily progress photos
  3. – Copies of submittals, plans, or other documents
  4. – Production issues that need resolving with input from others

Slack makes sure these conversations are easy to have and that each team member is aware of the outcome.  No need to worry about not including someone on an email chain.  The fact that some of your team will be in the field and some others in the office doesn’t mean sacrificing quality of communication.

Let’s say that there needs to be a heavy discussion surrounding an issue that could cause significant delays or cost increases on a project.  The foreman on site could initiate a video chat that could include the project manager, superintendent, or even the owner.  Each of those team members could be in a different location.  The details of the discussion could be recorded and posted in that projects Slack channel so that it could be referred back to later by anyone who wasn’t on the initial call.

Oh Yeah…It’s FREE!!

Probably the greatest thing about Slack is that you can start using it for free. Unlike some “free” products, you’ll get all the features that you need to experience the power of Slack. When you’re ready the paid plans start at $6.67 per user per month. With those plans, you get a longer searchable history and some more integration options, along with the group calling & screen sharing. Slack is definitely worth it in my opinion. But I’m not the only one that feels that way…

Construction companies are made up of teams in the same way as tech companies like Harness. So why can’t we use the same tools for internal communications? Better employee engagement, more complete communications, better productivity. These are some of the many reasons why break up with email and try Slack.

You can create a free account at Slack.com.

Posted in Tools