Fighting costs with culture.

In the fight to control workers' comp costs, the $40 billion Albertsons grocery chain works on two fronts, says CEO Larry Johnston: "The development of a safety culture inside the company, and working with health care providers to manage costs to the greatest extent possible."

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Two years ago, Johnston tackled the cultural part of that equation with a "zero accident challenge" addressed to the Boise, Idaho-based company's 240,000 employees in 2,500 stores and 17 distribution centers. He kicked off the effort with a company-wide broadcast, and the topic has since been a regular part of company meetings, monthly newsletters and other communications. Store directors are encouraged to share best practices, and those in the bottom 20 percent in terms of safety performance participate in weekly teleconferences to discuss the issue.

"We're getting our associates focused on working safely," says Johnston. The upshot of such efforts was a 9.6 percent reduction in workers' comp accidents in 2004, "and we expect savings over the next several years as a result of those improvements," he says.

Accidents still happen, of course. With that in mind, Albertsons has instituted an enterprise-wide return-to-work program. "We're able to bring people back to work handling restricted duties based on physician recommendations," says Johnston. "Our managers work very carefully with these individuals to help them slowly return to their full workload. It's designed to help them get back to work and back into the mind-set sooner. It really keeps them engaged and helps them to be productive." In addition, "it's another way to drive down the cost of workers' compensation."

To be successful, the effort to control workers' comp costs "has to start at the top of the company," Johnston explains. "You need to engage the associates at every level of the business, and that takes teamwork, it takes communication, it takes motivation. People have to understand why it's important, that it's a priority for the enterprise, and that it makes us more competitive."

LARRY JOHNSTON * CEO, ALBERTSONS