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Writer's pictureStuart Cytron

Workers Compensation KPI: 3 Suggestions

Updated: Aug 6


Workers Compensation KPI: 3 suggestions


There are numerous KPIs we could utilize depending on organizational objectives and goals. But, here are three suggestions that can help get you started.


1) Workers Compensation KPI: Cost Per Full-Time Employee

This is great to measure and track for a number of purposes, and I'll give you a couple. One is determining ROI of investments in safety, cost containment, etc. A year after a new implementation, take the difference between Cost Per FTE from a year ago and today (hopefully lower now!). Multiply that by number of current employees and you should have a good measure of the savings, ROI, from your investment (you can't just use the total cost from 1 period to the next due to the fluctuation in number of employees). Additionally, Cost Per FTE can also be used for benchmarking by comparing to the RIMS Benchmark Survey which publishes this data by industry annually. *


2) Workers Compensation KPI: Return To Work Ratio

Track what percentage of your injured employees return to work within 0 – 4 days. Among other things this is a leading indicator (unlike your Experience Mod) of where your work comp expenses are headed. Also, for benchmarking purposes, your target should be 95% to put you in league with best-in-class performers. Only 28% of organizations meet this objective. *


3) Experience Modification Rate

The Experience Mod is a workers compensation KPI that causes much angst for many companies due to the fact it is confusing, prone to errors, and a driver of premiums (unless you are self-insured or on a large retention program). Also, it is a lagging indicator and efforts to improve it are realized slowly over a period of years. But, it is not going anywhere and I have never heard of any discussion to remove it from the Premium Algorithm (formula to determine how much workers compensation premium you pay). And, even if your are on a large-retention program, the practice of using this as a qualifier for new business proposals is entrenched in certain industries. Keep this consistently below a 1.00 (average) to reduce premiums and bid projects. It's a good idea to know what your minimum mod is (what your Experience Mod would be without any claims) and try to drive it as close to your minimum mod as possible.


Let us know if you'd like assistance determining your minimum mod or if you'd like ideas for other KPIs/metrics to assist in achieving your work comp savings objectives.


* Michael Stack is the source of benchmarking ideas and information.


Stuart Cytron, MBA has been published in trade journals such Construction Forum St. Louis and St. Louis Business Journal among others. You can read more about Stuart and how he developed a passion for helping businesses reduce work comp expenses on his website.

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