Want to know more about where you could be losing profits in your organization? Or, has your company had to deal with an employee lawsuit in the past few years stemming from EEOC issues or workers’ comp claims?
“If you have, you know that workers’ comp claims and lawsuits are frustrating and they are costly, and are a major loss of profits when they occur,” explains Rick Dalrymple.
Dalrymple is CEO of RJD Risk Management, Inc., a company that helps CEOs reduce operating and insurance costs. He’s also owner and Senior Vice President of IOA Risk Services, a risk management and insurance brokerage.
“An underlying principle here is that reducing your business risk as a company is critical. If you reduce your risk, you will in turn help to increase your profitability as a company,” adds Dalrymple.
In our two-part series with Dalrymple, he’s sharing an important perspective on risk management: proven ways to reduce strategic risk, financial risk, operational risk, and hazard risk—all factors that can negatively impact your bottom line.
This understanding and philosophy is part of why Dalrymple has created an approach called the DIAMOND Risk Reduction System®, an approach designed to decrease barriers and increase profitability for organizations.
The system includes the following steps:
- D: Determine operational blind spots
- I: Invite multiple leaders to participate
- A: Analyze and/or aggregate data
- M: Meet to discuss results
- O: Organize checklist and establish accountability
- N: Needed policies are deployed
- D: Design narrative summary to secure better terms
Determining Your Operational Blind Spots
“’D’ stands for determining your operational blind spots,” says Dalrymple. “So many times, the biggest threats to your company come from strategic and operational risks.”
Companies can begin this process by taking a simple risk assessment.
Dalrymple points out just how important it is to know more about your business’ risks. In the 10 years alone, he says, the settlement costs of lawsuits have risen to over $310,000.
“If you were sued by one of your employees, and the settlement was a mere $15,000, how much do you think that would cost your company? Would you be surprised to learn a claim like that would cost your company over $50,000?” says Dalrymple.
If your profit margins in this example were around 4 percent, for example, you’d have to generate sales revenue of $1,250,000 just to break even to pay for that claim.
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Inviting Leaders to Become Involved
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The “I” in DIAMOND is about inviting multiple leaders, within a company, to be a part of your initiative. Knowing just how important it is for everyone to have an awareness of recruiting, hiring, training, and everyday operational policies and procedures, it’s critical to have buy-in.
“We use a football analogy that when you assemble your team on the field each day of business, everyone needs to know where to go when they play starts.”
“Safety” isn’t something that should just be handed off to those with safety in their title. “For success, it should involve the CEO, the CFO, HR, people up and down the organizational food chain,” says Dalrymple.
Aggregating Your Data
When multiple people are involved with taking the risk assessment, you’re then able to “A”, aggregate holistic responses and other forms of data. Ideally, data should be able to help you proactively reduce risks and spot trends that are important to your company’s sustainability.
Meeting to Share Results
The “M” in the model represents meeting to share and communicate a company’s risk score and facilitate dialogue among team members. Organizations may take the steps to find out risks, but they then need to address those risks.
Organizing Your Checklist
“O” stands for organizing checklists and establishing accountability—a critical point in the process. “That’s when we learn that even in the best of companies, there are communication silos that exist. When you’ve got everyone around the table talking about different issues and having access to the information they need, that’s really when the magic starts to happen.”
When CEOs are able to say, “What are we doing in this area?” or, “What is the status [on a certain issue]?” that is when you are able to work together to lower risks, improve performance, and drive higher engagement.
“Then someone can report back and show exactly what is being done to improve safety and/or performance for the business. All of those people at the table—HR, senior leaders, safety team members—are able to infiltrate and set policy really quickly,” explains Dalrymple. “Everyone then, synergistically knows more about where things are in the process, and how they are impacting others. Policies are set more quickly and are more streamlined. And, more effective work can be done.”
Needed Policies Are Put Into Action
The “N” in the approach represents how team members can determine what needed policies and procedures they want to change, improve, or add to the organization. “We don’t dictate what that needs to be. We tell them what best practices are for their peer group,” explains Dalrymple.
Designing Narrative Summary
The last “D” in the DIAMOND system is about designing a narrative summary. “That articulates to the underwriting community what that client has put in place.” The objective with such a document is to make sure the underwriter is comfortable with what the company is doing, and can work to help them quality for better pricing.
“For example, last year I had a client receive a $249,000 workers’ comp renewal. When the underwriter saw what the client had implemented a number of policies and procedures, they ended up revising their insurance renewal down to $200,000. The client immediately saved $49,000 just because they put various policies and procedures in place. The underwriter felt they were a safer company—and a lower risk.”
Reduce Your Largest Risks—and Become More Profitable
While simplified here, this system is effective at helping companies to reduce risk, improve the safety of workers, and increase expectations for your workers’ comp program performance. “86 percent of the last 50 clients who implemented these best practices had a reduction in claims of over 50 percent,” says Dalrymple.
“We know that using these practices can predictably reduce claims with clients who really want to become best in class.”
Lay the Foundation for a Stronger Safety Culture
iReportSource lays the foundation for shaping a best-in-class safety program. Your insurance premiums are based on an assessment of your risks. Through leading indicators—your proactive activities—iReport can help you show your insurance carrier how you’re being diligent in creating a safer, lower risk workplace.
Learn more about improving performance, lowering your risk, and staying compliant with iReportSource today.