How Purolator dealt with skyrocketing costs

Faced with a $13 million WCB bill, Purolator got managers, doctors on side
By Uyen Vu
|Canadian HR Reporter|Last Updated: 03/15/2006

When Doug Kube describes Purolator’s workers’ compensation premiums as a “pretty big number,” it sounds like an understatement.

With 2,130 claims filed in 2005, the company’s bill for workers’ compensation premiums came in at around $13 million for the year. At Purolator, which employs 11,600 people across Canada including 3,000 couriers, 300 line haul truck drivers and 500 call centre operators, 90 per cent of the workers’ compensation claims can be traced back to employees in two occupations: couriers and sorters. Because their jobs require constant hauling, lifting, pushing and pulling, soft tissue, orthopedic and joint injuries make up the bulk of the claims. Psychological disability is also common, accounting for about one in five claims.

Kube, director of human resources, says the numbers are on par with the industry average. But recognizing that the costs were too high, particularly on the workers’ compensation side, Purolator put in place a program to improve claims management and disability accommodation.

It set out a commitment to “early and safe return to work,” fleshed out the models and processes to support that commitment, and hired a total of six occupational nurses and workers’ compensation specialists to step into the roles of return-to-work co-ordinators. Their primary job is to coach managers and HR people on accommodating injured workers, and to liaise with physicians, unions and workers’ compensation boards.

One of the things the co-ordinators needed was a physical demands analysis for various jobs in the company. So Purolator began analysing 25 jobs in the operations area, where most of the injuries occur. These analyses turned out to be useful not only in helping the co-ordinators identify suitable transitional or modified duties for injured workers, but they also helped the co-ordinators convince union representatives and doctors the workers weren’t at risk of further injury once they returned to work.

Kube says that, like many other employers, Purolator grappled with the amount of work involved in doing physical demands analyses for every job. However, the company started doing analyses in the work environments that saw the most injuries and lost time. By the time it completed analyses for those 25 high-risk jobs, “we realized we probably took care of 95 per cent of the injury and lost-time cases.”

One of the guiding principles in Purolator’s return-to-work program is that it’s not good enough just to put people back in any easy or light-duty job.

“Our belief is we shouldn’t be taking couriers and putting them into an office. We should find jobs that are similar in the depot, that take advantage of the skills and knowledge they have,” says Kube.

That means a courier might be put back into the job he had before he became a courier, or a worker on the dock who was loading trailers before he was injured might return to a job scanning freight or something similar.

“And that’s important because you want to keep them in that social environment with the co-workers that they deal with on a day-to-day basis, instead of taking them out of one department and putting them in another. That can be disruptive psychologically,” says Kube.

Tying injuries to a manager’s bonus

In rolling out the program, Purolator also measured lost time and severity of injuries at each of its 120 facilities across the country. What followed were targets for the company as a whole, for each division, each of the three depots and each of the terminals.

“And one of the most important things we did — and most people are blown away by it — was to attach that key performance to the managers’ compensation,” says Kube. About 10 per cent of the managers’ bonus depends on meeting targets for lost time and severity.

“And that was one of the most important things that we did to drive the behaviour from managers — to support our HR team on accommodating employees, to return people to work who may not be fully capable or fully productive, to find modified duties or transitional duties for individuals,” says Kube.

To be sure, managers were resistant. They saw accommodation as a potential drag on their productivity goals. But instead of softening those productivity goals, Purolator held the line.

“Fundamentally what we believed was a lot of these people sitting at home doing nothing could contribute and help them with productivity goals. And, since 2000, our productivity has improved every year across the board,” says Kube.

To drive home the message for managers, Purulator broke down disability costs in terms the managers can understand. Kube brought out company research that showed for every dollar a claim costs the company in workers’ compensation, another four dollars are spent on indirect costs.

That means a claim that costs the company $6,000 in workers’ compensation actually costs a total of $30,000, he told managers.

“If you have a profit margin of five per cent, how much revenue do we have to generate to pay for that? Then we took it a further level and said, ‘Okay, if we have to generate $120,000 worth of revenue, based on $10 of revenue per shipment, how many shipments do you have to make to pay for those five lost days?’” says Kube. “It was incredibly impactful to them… They couldn’t believe it.”

Challenging doctors

Another set of persistent challenges has to do with the company’s relationship with doctors, says Kube.

“Doctors are all too willing to write you a note saying, ‘Just take two weeks off.’ We are now in a position where our managers will go to our HR saying, ‘This guy has sprained his ankle. Why does he need two weeks off? That’s not right. Why don’t we get someone to call the physician and challenge them?’”

To try to gain doctors’ support, Purolator prepared an information package that employees take to their doctors. It includes a letter stating the company’s commitment and explaining how the program works. It also includes a form asking physicians for specific functional information.

“We don’t want to know the diagnosis. We want to know what functionally the employee can do and what his or her restrictions are,” says Kube.

Once physicians realize the company is progressive and respects its employees, they’re much more willing to work with HR on opportunities to bring people back to work.

And the feedback from employees has been great.

Staff are at work with lighter duties, having a social interaction with fellow employees, not sitting at home and having their problem turn into a psychological issue, and employees seem to show better healing time, says Kube. “And they feel that the company cares about them. So they’re much more willing to come back and be engaged and work for the company.”

The initiative isn’t just about cost containment, says Kube.

“The big driver for that was we started to realize that there’s a war for talent that’s coming, along with the fact that we live and die by our service to our customers. They make decisions based not so much on price or on transportation network — although that’s one advantage of ours — they base a lot of the decision as to whether they use us, UPS or FedEx on the service they receive from our companies. We realize that when we have engaged employees who have great pride in the company, that’s going to affect the service to the customer.”


In numbers

The returns on return to work

Purolator tracked the outcome of its “early and safe return to work” program. Below are some numbers on how its effort has paid off:

Lost day severity

2001: 297 days lost for every 100 employees

2005: 67 days lost for every 100 employees

Total number of lost days

2002: 9,700 lost days

2005: 6,039

“That’s 3,000 days that (people are) working instead of sitting at home,” says Doug Kube, Purolator’s director of human resources.

Modified or accommodated days

2003: 34,242 days

2005: 28,752 days

“What that indicates is we’re not only reducing the number of people taking days off, but when we bring them back to work, we’re also doing a good job of accommodating them. We’re minimizing the number of modified days that they’re on modified duties so that they’re not doing light duty or modified duty forever. We’re managing the process so that we’re getting them into that transitional period and then off of that transitional period, back into being whole and fully healthy,” says Kube.

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