Job Eliminations Lead to Increases in Disability Claims
American Management Association-CIGNA Corporation Survey Shows Disability Claims Are on the Rise
NEW YORK, Nov. 21 /PRNewswire/ -- Ongoing job eliminations are contributing to an increase in disability claims, according to a study released today by the American Management Association (AMA) and CIGNA Corporation.
The survey of nearly 300 large and mid-sized companies shows a correlation between job cuts and a rise in claims for a variety of occupational and non- occupational disabilities, particularly in areas related to tension and stress. It also reveals that companies are not effectively tracking their employees' disabilities on a consistent basis.
Among companies responding to the AMA-CIGNA survey, 70 percent reported seeing an increase in disability claims from 1990-1995. The survey also revealed that organizations that have carried out job cuts since 1990 are more likely to report increases in the number of the employees filing claims, both among workers directly affected by the eliminations, and by those who survive job cuts.
"The AMA's 1996 study on job elimination and job creation found that downsizing is no longer the dominant theme of change in the workforce," said Eric Rolfe Greenberg, Director of Management Studies, American Management Association. "Companies are instead redistributing their employees to support their realigned business strategies."
"An increase in disability claims is one of the unintended consequences of job elimination. The recognition of this phenomena is critical to today's manager because where disability claims are increasing, so are costs," said Mr. Greenberg.
"There has always been the assumption among those in the disability industry that disability claims increase during periods of job elimination," said Eric Reisenwitz, Senior Vice President, CIGNA Group Insurance Managed Disability. "This assertion was generally attributed to the idea that people who may have been working with a disability decided to file a claim only once they suspected their job was going to be eliminated. This survey shows that not only is there a rise in disability claims among those directly impacted by job cuts, but the population of workers who keep their jobs are also experiencing a higher rate of disability."
Today, more than 9 million Americans have physical or mental conditions that keep them from work, school or maintaining a household. According to recent statistics (not attributable to the findings of this survey), employers will spend about $80 billion by the end of 1996 on disability and workers' compensation claims. Additionally, over 780,000 employees this year will suffer a disability and become so physically disabled that they cannot return to work for five months or more.
The Findings: Trends in Disability Claims at Time of Job Elimination
According to the survey, companies that eliminated jobs between 1990-1995 were more likely to report increases in seven of the eight disability categories listed in the questionnaire than companies that didn't eliminate jobs. The differential was greatest among disabilities which could be exacerbated or brought on by stress, with 32 percent of companies which eliminated jobs showing an increase in disabilities related to mental/psychiatric/substance abuse and 15 percent reporting increases in cardiovascular/hypertension-related disabilities as compared to the companies who did not eliminate jobs.
"Once job eliminations occur, employees who continue to work become insecure about their current work environment," said Deborah Bright, Ph.D., a stress and management consultant to human resource professionals at Fortune 500 companies and President of Bright Enterprises, Inc. "Also, after job elimination, employees left behind are often assigned to new jobs, additional responsibilities, and are forced to work in a changed environment. These changes contribute to increased stress levels which can result in higher disability claims."
Trends in Specific Types of Claims and the Type of Worker Impacted
Of the companies reporting job eliminations, 33 percent saw an increase in occupational claims and 24 percent reported an increase in non-occupational claims among hourly blue-collar wage earners, as compared with 24 percent reporting an increase in occupational claims and 16 percent reporting an increase in non-occupational claims among salaried workers.
According to the survey, companies who have cut jobs were more likely to see claims from white collar workers than those who have not cut jobs. For example, 13 percent of respondents saw an increase in occupational disability claims at the supervisory level and 7 percent reported an increase among managers. In the non-occupational category, the survey showed that the increase in claims is consistent, with 13 percent of employers seeing a rise at the supervisory level and 10 percent reporting a rise among managers.
"The AMA's research shows that those at the supervisory and managerial levels are the groups increasingly targeted when companies restructure," said Mr. Greenberg.
"Companies are actually cutting three managerial and two supervisory positions for every new job they create in those categories. Only 40 percent of American workers are salaried, but more than half of the jobs companies have cut in the past decade belonged to salaried employees."
Duration Of Disability Claims Increases
Not only can companies that eliminate jobs expect to see an increase in disability claims, on the non-occupational side, they can also expect their short and long-term disability claims to last an average of 25 percent longer. This longer duration can partially be attributed to the fact that employers are admittedly less aggressive in returning their employees to work after a non-occupational claim has been filed than an occupational claim. This could be due in part to the more regulated reporting of workers compensation.
"Early intervention is critical to shortening the duration of a disability claim and ensuring that the employee is receiving appropriate care," commented Mr. Reisenwitz. "Additionally, it is important for employers to partner with their carriers to develop aggressive return-to-work programs."
Going Forward: What Can Management Expect After Job Eliminations
And How To Mitigate the Rise in Disability Claims
Based on the survey's findings, after job eliminations due to restructuring and re-engineering initiatives, employers can expect the following to occur:
-- More occupational and non-occupational claims filed among employees
affected by job cuts;
-- Increase in claims in all categories of diagnoses, particularly
-- Longer durations of non-occupational claims; and
-- Disproportionately more claims filed by salaried workers, as well as
managerial and supervisory staff on the non-occupational side.
CIGNA recommends that when eliminating jobs, companies should take steps to minimize the impact job cuts have on employees' health and well-being. Some of these steps include:
1. Bring in the benefits manager and risk manager early in the job
elimination process, so contingency plans can be developed.
2. Encourage frequent and candid communications during job cuts. Let
employees know what is happening, how it affects them, and what supporting resources are available to help those whose jobs are eliminated. -- Refer employees to an employee assistance program (EAP) or other sources of counseling to help them deal with the stress of job elimination; -- Refer displaced employees to financial counseling services to help them conserve and protect their financial resources; and -- Offer resume development, career counseling and job placement services to help them find a new position as soon as possible.
3. Also, recognize the stress and anxiety that job elimination can have
on "survivors" -- those employees that stay on the job. They also need to be reminded of support services such as employee assistance programs that are available to help them through difficult times.
"The bottom line is that disabilities and the human and financial costs related to them are skyrocketing," said Mr. Reisenwitz. "Employers need to actively prevent disabilities and effectively manage them once they occur."
Companies responding to the AMA-CIGNA survey represent an accurate sampling of the AMA's corporate membership of 9,500 organizations, which employ one-fourth of the American workforce.
The American Management Association, a not-for-profit educational organization with over 9,500 corporate members, trains more than a million managers world-wide with seminars, books, self-study programs, and multimedia projects. Headquartered in New York since its founding in 1923, the AMA maintains management centers in five U.S. cities and around the world.
CIGNA Group Insurance and CIGNA Property & Casualty are operating subsidiaries of CIGNA Corporation (NYSE: CI). With assets of approximately $85 billion, CIGNA Corporation is a leading provider of insurance and related financial services throughout the United States and the world.
The 1996 AMA-CIGNA Corporation survey on organizational staffing and disability claims was conducted with the assistance of Technometrica, Inc., of Emerson, New Jersey, a full-service research organization specializing in proprietary computer software and unique statistical analysis techniques.
SOURCE American Management Association
/CONTACT: John Demming or Gretchen Roede of The Tierney Group, 215-732-4100, for AMA/
/EDITORS' ADVISORY: For a copy of the complete survey report, contact John Demming at The Tierney Group at 215-73l-6302./
CO: American Management Association; CIGNA Corporation ST: New York IN: SU: ECO
MZ -- PHTH028 -- 5425 11/21/96 13:06 EST http://www.prnewswire.com
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|Date:||Nov 21, 1996|
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