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1993 Financial Impact Optimas Award Profile Steelcase Inc.

Neil McClellan worked on the assembly line, operating a ma-chine that bends metal parts, at Steelcase Inc., an office furniture manufacturing company. In time, Smith developed elbow problems and had to undergo surgery to correct the increasing disability. During the time he spent recovering, Smith received workers’ compensation. Although he recovered most of his former abilities and became free of pain, Smith was unable to go back to his previous job because of the physical demands it would place on him. Instead of going on the permanently disabled list and receiving workers’ compensation benefits indefinitely, Smith pursued his interest in computers and, with the help of Steelcase’s training department, became a specialist in CAD in the company’s computer-services department at its Grand Rapids, Michigan, manufacturing site.

When a Steelcase worker is injured on the job, as Smith was, the last thing the company wants is for the worker to become permanently disabled. It isn’t good for the worker. It isn’t good for the company. It isn’t good for workers’ compensation claims.

What is good, however, is a company working in partnership with its workers to prevent injuries before they happen, thereby limiting the number of lost workdays and all the other problems associated with these injuries. Unfortunately, no matter how committed a company is to preventing them, accidents and injuries still happen. When they occur, experience has shown that having a stra-tegy in place-one that gives the injured workers immediate medical attention, sees them through the rehabilitation process and finally brings them back into the workplace when they’re able to become contributors again-will increase productivity and reduce workers’ compensation costs.

Such a seemingly simple plan can have an enormous impact both on the workplace culture and on organizational finances. Steelcase, which was founded in 1912, has saved an average of $4 million a year since it implemented its comprehensive return-to-work program in 1986. For its focus on disability management and for managing workers’ compensation costs effectively, the Grand Rapids, Michigan-based organization has been selected to receive Personnel Journal’s 1993 Optimas Award in the Financial Impact category.

What is workers’ compensation?
Workers’ compensation, the oldest social-insurance program in the U.S., started more than 75 years ago as a no-fault insurance system that makes employers responsible for covering medical expenses and lost wages for employees, from the time they become injured on the job until they return to work. The system also was designed to protect employers against lawsuits from employees who were eager to sue for additional compensation for their injuries.

If an employee becomes permanently disabled, workers’ compensation benefits continue tax-free. In the unfortunate instance in which a worker dies because of a work-related accident, injury or disease, the employee’s family receives survivors’ benefits.

Payouts for workers’ compensation in the U.S. have soared from $22.8 billion annually to more than $62 billion from 1980 to 1990. Although the system started out years ago having honorable intentions, much of this increase is blamed on fraud-workers say they’re injured but really aren’t and collect payments for the rest of their lives. Although workers’ compensation represents a smaller bill than the $200 billion that employers currently pay out in health-care costs, the workers’ compensation bill is growing at a faster rate. It also is pushing business out of many states, such as California, because of the high workers’ compensation premiums.

Steelcase finds disability management solutions.
In the late ’70s, Steelcase experienced an increase in the incidence of workplace injuries. Although most individuals stayed at home and recovered their former abilities in time, it often took several months before they could return to their regular jobs. (See “Average Return-to-work Time.”)

Steelcase wanted to give employees who could be productive the opportunity to return to work sooner than that-even if they hadn’t recovered 100%. The company committed itself to finding positions within their original departments or plants for workers who have become disabled. “We make an honest attempt to offer them light-duty work,” says Libby Child, manager of workers’ compensation and medical services.

It was a good start, but by the mid-’80s, it was clear to the human resources department that some workers who were recovering from injuries couldn’t return-even to limited duty-within their own departments or plants right away but still could perform light-duty work of some kind. “That’s when we came up with the transitional-work program,” says Child.

In 1986, the organization opened a transitional-work center at its Grand Rapids facility. Employees spend a limited amount of time in the center. The program is used for employees who are:

  • Still recovering from workplace injuries or disabilities and can do only light-duties work
  • Able to return to their regular departments in a light-duty job but must wait for the company to find positions compatible with their limitations
  • Ready to return to their regular jobs, but with some modifications or accommodations to their work areas.

The center has openings for approximately 30 employees to do various temporary, light-duty jobs, such as washing towels and sorting gloves. Because the company no longer has to outsource these jobs, it saves $400,000 per year, in addition to the savings in workers’ compensation costs. Employees who return to work in any capacity (even if not to their former positions), still receive their same hourly wages and full benefits while they continue to recover. They also rack up hours that later are calculated into their share of the company’s profit-sharing program, which is paid quarterly. The less time an employee works, the less he or she will receive of the quarterly bonus. This plan has been an ongoing incentive for employees to return to work since the plan was first implemented in 1944.

In 1986, Steelcase also expanded its medical center in Grand Rapids to focus more on monitoring the recovery of injured employees through early treatment and rehabilitation. The medical center now has one full-time corporate physician, who diagnoses and treats employees’ industrial injuries. There are also a part-time physician and six industrial nurses to assist in treatment and rehabilitation efforts in the company’s on-site physical-therapy unit.

In spite of incorporating these strategies into daily operations, workers’ compensation claims have continued to rise steadily. Steelcase grew rapidly between 1980 and 1990. (The number of employees grew from 8,000 to 11,300 in North America, and sales tripled from $600 million to $1.8 billion.) The number of workers’ compensation claims doubled. The organization now processes more than 2,000 workers’ compensation claims each year, companywide.

Culture encourages workers’ cooperation.
Realizing the integral need for cooperation from employees for any disability maintenance plan to work effectively, Steelcase invested time and energy in creating a corporate culture that encourages employees to be partners in injury prevention, disability management and work practices in general.

Steelcase began emphasizing the team concept throughout the organization in the mid-’80s, especially at its production sites. It was a concept that, at the time, was only beginning to be used by corporate America. Still, teamwork served as an important part of the company’s plan to bring employees into the mainstream of decision making regarding their work lives.

The company changed the way its production lines were organized. Instead of having employees simply move metal from department to department, teams now build the products.

“That, more than anything else, has brought life to what we’re trying to do with people,” says Dan Wiljanen, director of HR. “We’ve said, ‘No longer do we want you to come in and stand at a machine and produce parts. We want you to come in and work with your teammates to figure out how to work more effectively and more efficiently, and in doing that, we’ll all share in the profits.'”

The team atmosphere also plays a large part in employees’ wanting to return to their jobs after they’ve been injured. Peer pressure reminds workers that if they aren’t there, they aren’t participating in getting the team’s work done.

Another important factor in the disability-management program is the company’s underlying philosophy that all the employees-including management-must treat each other the way they would like to be treated, and that all employees should be treated as adults.

These values are supported strongly, both by CEO Jerry K. Myers and by top management. “The support from our CEO has been terribly important. Although we treat everybody as we’d hope to be treated, there are some supervisors who probably would just as soon have injured employees go home until they’re 100% better,” says Child. “There’s always been a commitment from the top that foremen don’t have that choice.”

Steelcase’s HR department has taken the company philosophy and has refined it into guiding principles. They include the following ideas:

  • All people are important and are treated fairly and with dignity and respect
  • We need the energy and ideas of all workers and therefore encourage, reward and recognize employee involvement
  • We will empower workers to be more active in decisions that affect our customers and our business processes
  • We will create and promote an environment in which everyone has the opportunity to grow, develop, learn and express his or her thoughts and ideas freely
  • Our relationships are conducted in a spirit of partnership, and we will balance the needs of the business with those of our employees and their families
  • We will conduct all company operations so as to protect the health of our employees, neighbors and customers.

A strong emphasis is placed on safety training. There are people in each of the manufacturing plants to conduct safety audits, provide safety training and work with managers and engineers to design some of the work areas so that they’re safe and ergonomically sound.

Supervisors also must take safety seriously. In addition to such areas as schedule completion, efficiency, morale and quality, safety is part of supervisors’ performance reviews each year. “What we’ve tried to do is push the responsibility onto the manufacturing floor, and have supervisors and employees take ownership of safe work practices. We’re striving to build a partnership,” says Wiljanen.

The return-to-work program fosters trust.
Before Steelcase had an on-site medical center, employees who suffered an industrial injury had to travel for their care to a doctor or medical facility in the community. Now employees receive immediate medical attention at the company’s headquarters campus. An ambulance is on call to respond to any medical emergency within two minutes. In addition to the on-site doctors who are there for the first and second shifts, all security personnel are trained and certified as medical technicians to be able to respond to medical emergencies.

Although Steelcase doesn’t operate an on-site medical facility as large as the one in Grand Rapids at its other subsidiaries in California, Texas, North Carolina and Alabama, it does provide doctors, who come to the company to deliver medical services and provide continuing care. Nurses or medical technicians are on the premises at those locations at all times.

“More than having the medical facility, which is certainly helpful,” explains Child, “our success with the program has to do with how we treat our employees to get them back to work or to keep them from going out in the first place. That was a gradual lesson for us to learn here. Now that we see its success and that it does impact our costs, we’re going to share it with our other subsidiaries.”

Once an employee receives medical attention for an acute injury, Steelcase requires that he or she continue care with the company physician for the first 10 days of recovery-a right that employers are given under most state workers’ compensation laws, and which Steelcase chooses, in most cases, to exercise. After the first 10 days, an employee is free to seek a second opinion from his or her own physician. Most employees, however, choose to continue with their care at the Steelcase medical center.

“One thing we’ve worked on is developing workers’ trust and faith in our doctors, because if employees are content with the medical treatment and think that it’s fair and reasonable, they’re more apt to stick with us through the course of their treatment and rehabilitation,” says Child.

To help build that trusting relationship, the doctors and medical personnel visit the company’s industrial work sites often, to meet with employees and see their jobs firsthand. This helps prevent employees’ taking an adversarial role if they become injured on the job, because they’re already familiar with the medical personnel and the quality of care.

As soon as a worker suffers an industrial injury, which can include everything from a broken arm to an amputation, the company does everything it can to continue the employer-employee relationship so that he or she doesn’t lose the connection to work. The workers’ compensation department (which is part of the human resources function) tracks the case and maintains contact with the employee to make sure that he or she is receiving paychecks and isn’t having problems with unpaid medical bills.

Workers’ compensation claimants at Steelcase typically return to work within two months; many people return within a few weeks. The longest time a Steelcase worker has been out from work on workers’ compensation is nine months.

Just before returning to work, the person typically will be invited to lunch by the supervisor or an employee-relations representative, to discuss any questions that may arise about going back to work-especially if the person is going to return to a part-time or light-duty job or work in the transitional work center.

Currently, approximately 450 people perform industrially restricted jobs; approximately 30 work at the transitional work site. Steelcase’s average number of lost-time workdays is 25, although the number of restricted days (which counts the number of days that people perform light-duty jobs, rather than their regular jobs) is higher-approximately 25 to 40 days.

Most companies simply allow workers to stay out from work until they have recovered fully, rather than bring them back under physician-prescribed restrictions on how much and what kind of work they can do. Restricted days are less-expensive days, says Child. “We flip-flopped the national average in the number of restricted days we have, but in turn, it costs a whole lot less.”

If an individual’s physician recommends never returning to the former position, Steelcase makes every attempt to help the worker find another meaningful job within the organization, and will provide the necessary training, such as the CAD training provided for McClellan.

The system works well.
Steelcase is a nonunion organization, in which three of every four employees work in manufacturing. Although the company isn’t self-insured, the HR function does manage its workers’ compensation claims, thus saving the company a lot of money in insurance payments.

The workers’ compensation area, now under the compensation, benefits and health department, consists of six employees, who process the workers’ compensation claims at the headquarters location. Each of the subsidiaries also has one person responsible for workers’ compensation. The department also is responsible for overseeing the defense of cases that end up in litigation.

“We have very few cases that end up in litigation, although many employers cite this as one of their number-one problems,” Child says. Of the workers’ compensation claims that Steelcase sees, only about 60 to 70 cases corporatewide end up in litigation.

Wiljanen reorganized the human resources department about a year ago by moving the workers’ compensation, benefits and health functions together under one umbrella. “In the past, we had workers’ compensation in the safety department, and medical and benefits were each separate,” explains Wiljanen.

He cites two reasons for the change. “One is that health care costs continue to increase, and workers’ compensation claims seem to be increasing nationwide. There was a high-level need to manage that part of our business effectively,” says Wiljanen. “The other part of it addresses the interdisciplinary nature of workers’ compensation management-it truly is a team effort. I saw it as an opportunity to get people from different functions working together on a problem that cuts across a number of different departments. It was also a good opportunity to get a number of the stakeholders in a room together and start them working on how to manage a process,” he adds.

With the same philosophy in mind, the HR department also formed the Disability Management Board, headed up by Child, which brings together individuals from different departments, such as wellness, counseling, medical, workers’ compensation, group insurance and manufacturing, to make disability management a total corporate issue, rather than just a departmental one.

“What we found in the past was that we were looking at our worker in slices and pieces instead of as whole people,” says Child. Previously, Steelcase delegated the responsibility to different departments for helping employees deal with personal issues (such as child care, substance abuse or health care) and work-related problems or injuries.

“When all those problems are treated separately, the impact on the speed and outcome of recovery is more likely to be negative than if all those efforts are coordinated and work together,” says Child. The disability management board is working to integrate the system so that the employee ultimately is served best.

Steelcase is doing well in controlling it’s workers’ compensation program, but the company has set an even higher goal to reach by 1996-to reduce the number of safety-related incidents by 90%. “We aren’t going to drop our guard. We aren’t going to say, ‘Well, gee, we solved that.’ We’re going to keep working on it until we get it right,” says Wiljanen.

Personnel Journal, February 1993, Vol. 72, No. 2, pp. 72-87.