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Balancing human and economic costs in disability management.

How do employers implement cost-cutting measures and demonstrate the resulting benefits to their employees?

Business belt-tightening has become more and more of a science these days as companies seeking a larger share of the international market pare themselves o their leanest, competitive best. Unfortunately, cost-cutting is often viewed by such companies' employees as a painful process that relies on their sacrifices to create more resources for management. This has presented a new challenge to employers: how to implement innovative cost-cutting measures while demonstrating to workers the positive aspects of these efforts.

One area in which cost-control can result in clear and immediate benefits to budget-watchers and employees alike is disability management. Health care and disability benefit costs are claiming an increasing share of business resources. At Herman Miller, Inc., the company found that the right program for controlling costs and managing disability can actually improve worker job satisfaction and can demonstrate the company's respect for individuals - even as the bottom line improves.

Prior to the economic belt-tightening required in the 1970s, business had little experience with rehabilitation - usually limited to the placement services of public rehabilitation agencies - to help meet companies' affirmative action commitments. By the late 1970s, private-sector rehabilitation services and in-house disability management programs were emerging as one part of health care cost containment and as a direct benefit to business.

Rehabilitation researchers at Michigan State University became aware of Herman Miller's and other major Michigan employers' efforts to solve the economic and human costs of health and disability problems. In 1984, the National Institute of Disability and Rehabilitation Research awarded a research grant to these researchers to investigate three Michigan employers' approaches to disability management and the costs and employment outcomes they experienced. The research focused on the transitional work program at Herman Miller, a policy initiative of the Michigan Department of Mental Health; and an internal vocational rehabilitation program of the Buick, Oldsmobile and Cadillac (BOC) Lansing Product Team of General Motors. self-insured and has a mostly nonunionized domestic workforce of over 3,700 people, largely centered in West Michigan. The objectives of the study were to ascertain the effectiveness of Herman Miller's Transitional Work Center and to study the organizational environment within which their disability management program developed. This article focuses on the experience of Herman Miller to date, the outcomes of its Transitional Work Center as a specific approach for return to work, the policies and programs that help manage related health and disability cost programs, and aspects of the corporate culture that support the achievement of disability management in the company.

Herman Miller's Transitional

Work Center

The Transitional Work Center (TWC) was developed in 1982 to address the problems of excessive lost work time after injury or illness and the need for productive placement of workers with physical restrictions. A cross-department committee obtained assistance from the state vocational rehabilitation agency and studied transitional work programs of other employers. The program that developed was designed both to reduce the direct and indirect costs of injury and illness and to fulfill the company's values regarding its employers.

Intervention in cases of injuries or illnesses begins early through the Employee Health Service (EHS). Every case of injury and/or absence is carefully monitored and coordinated with involvement of the employee, supervisor and treating physician. Once it appears that special recovery needs or physical restrictions will prohibit the employee's returning to the job, the Employee Health Service staff refers the person to the TWC. The TWC manager then works with the employee to find a productive work opportunity or a modified work schedule commensurate to the employee's limitations and abilities and the company's needs. Those employees who cannot return immediately to their home departments are supervised in their transitional placements by the TWC manager.

In almost all cases, TWC employees are placed into existing jobs within the company, thus avoiding the appearance of "favored work" or creating dependence on a sheltered environment. In some cases, new or previously contracted work may be arranged within the TWC for employees requiring this level of assistance. External vendors are used to provide more formal and intensive evaluation and rehabilitation services when permanent restrictions prohibit a return to prior employment.

Policies have been developed to support the return-to-work goal. Two examples are assigning financial responsibility for disability benefits to the department of the disabled employee and giving internal placement priority for vacant or new positions to TWC employees unable to return to their jobs.

About 100 employees a year have been served by the TWC. Of these over half return to their former positions, fewer than one quarter are assigned to new jobs, and more than one quarter remain active in the program at year's end. The exact costs and savings to the company are impossible to determine. But it is evident the TWC is a central component within an interdependent system designed to provide employees with job security and competitive benefits while maintaining the organizational productivity and profitability necessary to support them.

The TWC provides that a guaranteed opportunity for productive contribution exists, given appropriate exceptions for acute medical problems, no matter how severely restricted the individual may be. In turn, the company avoids the expense of wage continuation without labor, reduces the cost of workers compensation and long term disability insurance, discourages the unnecessary use of medical services to substantiate disability, and avoids the cost of replacement labor for long absences. By providing early intervention for return to work, the injured or in employees retain their identities as workers and their active relationships with the company.

A sample of 60 past TWC cases was studied to examine more closely the characteristics of users and their outcomes. A typical user was a product assembler, mid-30s, and married. He or she had a high school education and at least seven years of service to the company. Men and women were equally likely to use the TWC. Among men, injuries to arms and legs were common; among women pregnancy-related disabilities and hand injuries were common.

The TWC was used about equally for work-related and non-work-related disabilities. More than half of the employees referred to the TWC were referred within a month of their injuries or illnesses. Eighty percent had been referred within three months. Employees who had had surgery or hospitalization were referred slightly later than those who received outpatient treatment either by private physicians or by the corporate medical staff.

Three out of four users of the center completed their transitional placement within three months following referral to the TWC. And that same ratio of users had returned to work within three months of the date of their illnesses or injuries. A small number of employees who had poor attendance ratings prior to the disability spent more time in the program than employees who had required surgery or hospitalization. This suggests that these employees may require closer monitoring on an individual basis to address problems that may result in extended time loss unrelated to disability.

A companion study was conducted to assess the center's perceived effectiveness in reaching its objectives. It surveyed the opinions of company managers, production supervisors, production employees, and former center users. Corporate-wide perceptions of the center's greatest accomplishments were, first, that it provided temporary work; second, that it exemplified the company's values; third, that it lowered workers' compensation costs; fourth, that it reduced lost work time; and fifth, that it provided alternative permanent job placement. Some interesting differences among the employee groups emerged regarding the relative importance and accomplishment of the objectives. Individuals who have had direct experience as users of the center rated it most highly, indicating that they appreciate the short term benefits of this disability management program in terms of their personal welfare. In general, the center is perceived by managers, supervisors, and employees as having basically accomplished the economic and humanistic objectives it was established to meet.

Disability Management Related Policies, Programs and Outcomes

Herman Miller's involvement in disability management begins long before an injury or illness occurs. The company has a loss control staff and a technical environmental support group. They meet monthly and work together to increase safety and prevent injuries by identifying new risk factors and creating innovative solutions to hazards. Implementation includes a number of activities - from the ergonomic redesign of tools and work environments, to training in safe work habits, and training work teams in the early identification of substance abuse.

Prevention of disability is also approached by encouraging employee wellness and health promotion through the design of benefits and programs. These include a wellness program, access to fitness facilities, regular screening services in the Employee Health Services, health insurance and HMO coverage from 10 different suppliers, and a safe, comfortable working environment.

Since not all risks can be eliminated, however, a plan for action in the event of injury or prolonged illness is necessary. The coordinated approach for early intervention described earlier - beginning with the Employee Health Service, and involving the employee, supervisor, treating physician and Transitional Work Center as needed - is used to assure effective case management and rehabilitation. That employees are involved in the return-to-work strategy is consistent with the company's participative approach to management. At Herman Miner, employees are primarily responsible for their own development, a responsibility shared by their work team leaders and, in the case of injuries or illnesses, by the TWC staff.

A wage continuation benefit provides full economic security to employees whose prolonged absences are necessary for adequate treatment and recovery, regardless of the cause or type of illnesses or injuries. This approach also yields a cost savings to the company because of the return-to-work capacity made possible by the Transitional Work Center. Wage continuation is used as an alternative to workers' compensation benefit or long term disability insurance benefit for the first six months of an employee's absence for illness or injury. This is seen as appropriate to the company's goals and facilitates effective management disability.

Keeping the employee on the payroll guarantees them prompt and timely wages, avoids their possible frustration and confusion in dealing with the insurance carrier or workers' compensation system, provides a visible reminder to the supervisor and the company of the need to accommodate return-to-work, and, most importantly, maintains the tie between the employee and the company.

After six months of disability, the employee's income benefit is paid through a commercial insurance carrier from either the long-term disability insurance plan or the workers' compensation plan, depending on the cause of disability.

The results of these programs and policies have been positive in recent years. The short-term absenteeism of hourly workers in West Michigan has been maintained at slightly below 2 percent. In 1986, 67 employees - less than 2%-used the wage continuation benefit for an average of 9 days each. Typiclly, four employees a year with non-work related injuries or illnesses exhaust their wage continuation benefit and require use of the long-term disability insurance plan.

While incidence of work-related injuries at Herman Miller has increased over the past five years, the proportion of cases resulting in lost work time during the same period has decreased markedly at the West Michigan plants, where the transitional work program is used. One could conclude, therefore, that while Herman Miller's attempts to prevent work injuries has been difficult during this period of rapid growth, its efforts to limit the effect of disability and to promote return to work through rehabilitation and accommodation have been successful.

Similarly, Herman Miller has been successful in controlling its health care and dental costs to employees and dependents during the past five-year period - an increase of some 15 percent compared to average national cost increases of about 20 percent per year. Cost containment measures have included education of employees about the impact of ineffective health care use on the economic welfare of employee-owners and ways to reduce these costs, about the careful design of its health insurance plan, and about the importance of wellness.

Effective Disability

Management Requires a

Caring Culture

In order for specific disability management programs such as Herman Miller's Transitional Work Center to achieve the desired outcome of lowering disability costs and returning injured or disabled employees to work, these programs must be supported by and consistent with the behaviors and values of the organization as a whole.

Companies that have achieved effective programs related to prevention and disability management are usually described by terms such as "enlightened" or "healthy." They understand the dynamic interrelationship of employee satisfaction, customer satisfaction, and economic profitability and are committed to maintaining equity among these interests. These companies respect they employees, see them as valuable members of the organization and as resources to be cultivated, challenged, disciplined, maintained, and rewarded. Such companies usually have financial incentives like bonuses or stock ownership plans to promote individual and company productivity, aggressive safety and prevention programs, early intervention for problems of all kinds, effective communication at and across all levels of the organization, and strong management committment to new initiatives.

At Herman Miller, the organizational, environmental, and corporate culture were found to be significant factors in the evolution of the Transitional Work Center and necessary for its continued successful operation. The company's formal statement of values shapes its mandate, guides management decisions, and influences the physical and interpersonal environment of the workplace. These values include both economic and humanitarian goals and provide a yardstick for decisions regarding health and disability issues that maintain the balance of cost containment and employee well-being and are listed below:

Innovation and Excellence

Through Participative

Ownership A Statement of the Herman Miller, Inc.,

Corporate Values Innovation

We seek and encourage appropriate problem-solving designs and innovative solutions that deliver results for our customers and meet our business challenges. Excellence

We create value for our customers by providing quality and excellence in all that we do and the way in which we do it. Participation

We work together in teams with each person contributing to the level of his or her capabilities. Accountability

We are each held accountable for our performance and for producing results. Performance

Through participation we achieve superior results. Relationships

We believe in the dignity of each individual and expect quality relationships based on mutual trust and integrity. Ownership

We each have a stake in the organization in which we invest our lives and share the risks and rewards of ownership. Business Literacy

We expect a knowledgeable, professional team of people who understand the values, goals, and operation of our business. Equity

We strive to achieve an equitable return for our customers, employee-owners, and investors. Spirit

We expect a sense of excitement, enthusiasm, energy, and positive attitude and believe in the importance of celebration and tradition. Leadership

We can lead best by enabling others and by being dedicated to achieving our corporate vision.

The TWC has been a valuable component in Herman Miller's ongoing effort to maintain this balance between economic and humanitarian concerns. While the Herman Miller study promises no magic formula for managing disability costs effectively, it does indicate that those costs are best managed when the program for doing so is consistent with an organization's culture - when the program is given a chance to develop in close alignment with the organization's values.
COPYRIGHT 1989 National Rehabilitation Association
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Article Details
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Author:Ewing, Martha E.
Publication:The Journal of Rehabilitation
Date:Oct 1, 1989
Previous Article:Dr. Robert Davila: the man and his mission.
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