Problem: One of the country’s largest food distributors was experiencing an upward trend in the frequency and severity of claims. To make matters worse, safety measures such as Accidents per Million Miles (AMM) and Recordable Case Rates (RCR) were higher than its competitors. “Keeping people safe is one of our main goals,” notes the company’s senior risk analyst, “so this trend was concerning from both financial and safety perspectives.”
Solution: The food distributor uses Marsh ClearSight’s solutions to help build a culture of safety and reduce risk. Every claim entered into Marsh ClearSight now must go through a Root Cause Analysis. The process starts by recording incident information from the field directly into Marsh ClearSight’s Interview Entry. Pertinent information, including a description of each accident and the RCA status, is summarized by location in weekly and monthly “Root Cause Discussion” reports. Regional safety managers review the status and recommend follow up actions.
This data then feeds into a monthly ranking report that shows how each location is performing in 17 separate safety categories, including AMM, RCR, required training compliance, root cause completion percentage, and how quickly the incident was reported into Marsh ClearSight. The company has assigned point values to each category, and the total number of points earned out of a possible 160 represents a location’s overall safety score. The report is distributed company-wide so everyone can clearly see what has been achieved, what is in progress, what areas still need work – and how their location’s safety performance compares to the rest of the company.
Results: The goal in 2016 was to reduce AMM and RCR by 20% — and for the first time bonuses for most employees, from the CEO to warehouse workers, were tied to achieving this goal. Business units also had a financial incentive for improving their loss experience through their captive allocation. The allocation is based on three years of a location’s claims data, with the current year’s performance the most heavily weighted at 50%, followed by 30% for year 2, and 20% for year 3. “This is a huge win for those units that put in the effort,” she explains. “Locations where claims are trending in the wrong direction, however, will have to pay significantly more.”
“The first year of this initiative was very painful,” she acknowledges. “People were not used to being held to internal visibility and accountable for their actions, and the change did cause some turnover.” The company reinforced its commitment to building a safety culture by hiring more safety managers in its operating companies and strengthening the existing team through various safety trainings.
Now that the RCA initiative is into its second year, everyone is on board. Locations eagerly await the ranking report, and an improving safety score has become a point of pride. “Employees now understand the value of fixing a problem at the root – and they can see how their actions can really make a difference.”
The company’s senior risk analyst offers advice for others looking to link bonuses to improving safety through RCA.
- Be transparent. Employees must understand what data is being used and where it comes from.
- Know what you want to achieve. Are you capturing the right data? Every report needs to have a purpose.
- Quality is everything. Everyone needs to have full confidence in the accuracy of the data before implementing a financial factor.