Thompson Machinery initial investment in PureSafety web-based training = $25,000 annually starting in March 1999
Annual reduced worker's compensation rates by year 2 = $200,000 annually
ROI based solely on worker's comp rates = 700%
This case study examines the use of web-based, compliance-oriented training and the resulting decrease in Experience Modification Ratios and corresponding workers' compensation costs experienced by Thompson Machinery, a Caterpillar dealership in LaVergne, TN. This analysis is based on information provided to PureSafety from Thompson Machinery. All results are based on client measurements.
1. Experience Modification Ratio: A ratio that is calculated annually to determine a company's insurance rates. This formula was developed by the National Council of Compensation Insurance and involves computing hundreds of factors including industry, number of employees, percentages of job functions, etc. The ratio = what an organization is predicted to pay out in worker's compensation costs in any given year : the history of payouts in past years. Therefore, an EMR of 1 means that a company paid out exactly what it was expected to pay out in worker's compensation fees in that year. Higher than 1 translates to higher-than-anticipated payouts for that year; lower than 1 means that the company had lower payouts than were expected.
2. Learning Management System (LMS): Refers to a computer-based program that aids in the delivery and management of training programs.
Thompson Machinery is a heavy equipment dealership located near Nashville, Tennessee. Thompson employs just under 500 people at 10 locations in 2 states. Due to the nature of its business, various governmental agencies regulate its operations, including the Occupational Safety & Health Administration (OSHA), the Mining Safety & Health Administration (MSHA), the Department of Transportation (DOT) and the Environmental Protection Agency (EPA). In addition, because of its multi-state presence, various state regulatory agencies must be complied with as well.
In 1998, Thompson endured a tragic incident when one of its employees was killed in an on-the-job accident. Although the company has long been dedicated to maintaining a safety-conscious culture, company officials felt determined that they could do more. At that time, the safety program was largely delivered through instructor-led courses and videos, and was difficult to manage across 8 locations. Attendance rates stagnated between 40 – 50%, and make-up courses were logistical nightmares. In addition, it might be several weeks before a new employee acquired the requisite knowledge he or she needed in order to perform their duties safely, and so were limited in the amount they could contribute in the first few days of employment.
Additionally, Thompson Machinery is a self-insured company. All worker's compensation payouts draw directly from the company bottom line. While its Experience Modification Ratio had never been too far out of line with the rest of the industry (peaking around a 1.2 in 1994), there was room for improvement.
