Magazine article Risk Management

Business Process Management: The Next Evolution in Managing Workers Compensation

Magazine article Risk Management

Business Process Management: The Next Evolution in Managing Workers Compensation

Article excerpt

Until recently, few organizations had efficient methods for orchestrating and managing the interactions among employees, not to mention the corporate systems involved in keeping workplace injuries and workers compensation costs to a minimum. Their methods for identifying risks of workplace injury, tracking employee-specific interventions to mitigate risk of injury, or analyzing information about workplace risk and injuries in ways that were meaningful to the organization's bottom line were usually ineffective or nonexistent. Most importantly, organizations frequently lacked the ability to integrate these human tasks with corporate management systems.

As the global business environment becomes increasingly competitive, an organization's business success depends on its ability to achieve efficiencies in managing these kinds of processes. As a result, today's companies are starting to employ business process management (BPM), which refers to the systematic integration of a set of activities that organizations can perform to either optimize their business processes or adapt them to new organizational needs. For example, one set of business processes might dictate how a company identifies at-risk individuals in its injury prevention program while another process is used to handle the return to work of injured employees.

Managing Workers Compensation Risk through BPM

In 2002, employers spent nearly $350 billion on work-related injuries, and employees who got hurt on the job missed over 41 million days of work according to the U.S. Department of Labor report "The Workers Compensation Crisis." This begs the question of why companies expend so many resources on workplace injuries when injury prevention is a more effective way of handling the problem. A review of many companies' business processes demonstrates that processes exist for post-claim cost management but to a large degree are not as efficient as they could be. Further review shows that many organizations lack a process-centric approach to pre-loss initiatives.

For example, once an employee has become injured, some organizations have used BPM software to efficiently automate the flow of documents between the people and systems involved in processing that employee's claim and return to work. The process may have involved many stakeholders and process executors, each performing discreet yet integral elements in the overall process. In the case of a pre-loss initiative, however, BPM software could have been used to manage activities related to the identification of risk-for-injury factors and the distribution of solutions to supervisors and health and safety implementers to help that employee avoid becoming injured in the first place.

Build or Buy?

Traditionally, IT and risk managers have been faced with the decision of whether to build a custom solution or buy off-the-shelf software when considering workplace injury and workers compensation management. Those who have chosen to "build" have done so because they have found that packaged risk management solutions have not offered the flexibility needed to accommodate their existing or defined processes. Those who have chosen to "buy" have generally found a more attractive timeline for software availability and lower implementation prices.

Many companies whose core competencies do not include software development and delivery have preferred not to invest in building and maintaining their own customized solution. Those that might have once selected "build" over "buy" because of lack of applicability to their own processes should reviewing their options again.

As software solutions have evolved, so have BPM solutions. Increasingly, software vendors have come to understand an organization's need to enable processes, not define them. To do so, they have been forced to increase the flexibility of their software, resulting in the ability to support and enable the dynamic set of processes in that organization. …

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